Finance Bill 2017: What next?

The snap 2017 General Election meant the Government had to put forward a much reduced Finance Bill for parliamentary consideration in April.  It had been rightly pointed out that there was insufficient time to give due consideration to the full proposed content.

Measures dropped

A series of measures were removed, most notably:

  • Making Tax Digital (MTD);
  • Changes to dividend allowances for 2018/19;
  • Changes to the taxation of termination payments;
  • Corporation tax loss restrictions; and
  • Changes to deemed domicile rules for non-doms.

The CIOT produced a comprehensive analysis of the clauses and schedules that were dropped.

At the time, most political commentators expected this to be merely a brief pause during the run up to the Election, and then the removed clauses would be re-introduced at the first opportunity.

Post-election uncertainty

The outcome of the Election has potentially raised doubts over this assumption, with a minority administration supported by the DUP.

The Queen’s Speech did very little to fill the information void, containing next to no detail on likely tax measures.  The background notes released to accompany the Speech add very little.  They announce that the two year parliamentary term would contain three Finance Bills.

Parliamentary Bills

The first such Bill would be the Summer Finance Bill 2017 that would “include a range of tax measures including those to tackle avoidance”.  At the time of writing there is no more detail available beyond this statement.

The only other piece of notable legislation referred to in the notes, was a National Insurance Contributions Bill, introduced to “legislate for National Insurance contributions (NICs) changes announced at previous fiscal events (Budget 2016 and Autumn Statement 2016)”.  The notes make it clear that this will not cover the Class 4 NICs proposals that were controversially included in the Spring Budget 2017 and then withdrawn.

What happens next?

So the question remains – what will happen next?

The summer parliamentary recess starts on 20 July, so one would assume a Summer Finance Bill would need to be tabled and debated before then.

The trickier questions surround what will be included in that Bill.

Making Tax Digital

Making Tax Digital remains short on clarity and detail.  A pilot is underway, but tax professionals remain sceptical over the timescales previously announced.  These concerns have been compounded by recent stories of HMRC software being unable to keep up with the complex interactions between allowances under self assessment.

The Treasury minister responsible for MTD, Jane Ellison, lost her seat at the General Election and the passing of the baton to Mel Stride will inevitable not help the situation.

Non-domiciled changes

The removal of these clauses were something of a surprise, since the legislation was supposed to come into effect on 6 April 2017.  Many individuals had already taken action to prepare for the changes, and would now be exposed to large tax bills should they not come into effect.  Originally the risks in this area would have seemed minimal, but with the opposition likely to seek every opportunity to defeat the government this area may be one where we need to watch this space.

What the profession and its client base needs now is certainty and clarity, hopefully coupled with common sense.  The coming days and weeks will reveal how much of any of these requirements are fulfilled.