A Second Finance Act which was anticipated before Parliament’s summer recess to provide further clarity on a number of measures, including Making Tax Digital, has been pushed into autumn.
All measures that were dropped from the Finance Act in the run-up to the General Election are expected to be reinstated in a Second Finance Bill when MPs return to Parliament for a week from 5th September before the conference season starts on 14 September. Parliament will then return to the House on 9th October.
“We are publishing the draft legislation for [second] Finance Bill 2017 and it will go through the scrutiny process. All measures removed in the wash-up Bill will be reinstated and all retrospective measures will apply from the original effective date of April 2017” said a Treasury spokesman.
The Treasury also confirmed that “nothing is being deferred, except for Making Tax Digital” putting pay to hopes that some of the more complex measures would be deferred until 2018.
Under Making Tax Digital plans, businesses and landlords will keep digital records and report quarterly to HM Revenue & Customs but the timetable for its introduction has been relaxed in this Second Finance Bill. The new Bill also hints that businesses may be encouraged, not forced, into going digital. It promised that three million of the smallest businesses and landlords with a turnover under £85,000 would be able to move to the new digital system “at a pace that is right for them”.
One of the measures to feature in the Second Finance Bill unchanged, is a cut to the dividend allowance from £5,000 to £2,000 in April 2018. Dividends paid within the dividend allowance are tax-free so the change will have a significant impact on the owners of small limited companies who rely on dividends to pay themselves. It is estimated that this cut alone will generate almost £1 billion in extra tax a year.
John Preston, President of the Chartered Institute of Taxation said: “Taxpayers and their advisers have been waiting with bated breath for news of the measures dropped from the pre-election finance bill, especially those due to take effect from April 2017.
“The announcement that the measures will all be reintroduced in more or less the same form, from the initially planned commencement dates, will therefore provide some guidance on the basis on which they should be working and planning.”
If you would like to know more about how the Second Finance Act may affect you or your business, or have a question, please get in touch with TaxAssist Accountants on 0800 0523 555 or use our online contact form.