The calling of an early general election for 8 June 2017 has had a knock on impact on a number of parliamentary procedures. Any measures that have not become law by the time Parliament is dissolved are delayed until after the election, or scrapped.
The reduced time to complete the Finance Bill caused a delay to the implementation of Making Tax Digital (MTD), which was to see quarterly digital tax reporting introduced from April 2018.
While the tax system’s digitisation is widely supported, a pause is very welcome as many professional bodies have highlighted gaps and the lack of detail in the proposed legislation. Deferred to a later Finance Bill, MTD could be better thought out and implemented to the benefit of businesses and individuals, especially the self- employed and landlords with turnover over the VAT threshold who were to implement MTD first.
Another result of the ‘wash-up’, which sorts the processes that get finished or delayed, was to remove the reduction in the dividend nil-rate band. Currently £5,000 of dividends can be received, tax-free, by everyone; the proposal was to reduce this threshold to £2,000.
Also welcomed is the stalling of changes to probate fees. While not usually thought of as a tax issue, the increase in probate fees has been labelled ‘a tax on estates’. From May 2017, estates worth over £2m would have seen a £20,000 charge for probate costs to transfer control of assets, including property, money and possessions after death. The fee today is £155. This was to be a sliding scale with estates valued between £50,000 and £300,000 charged £300. As at February 2017, the average value of a UK residential property was £217,000 most likely tipping many estates into the next band, attracting fees of £1,000.
Given the impending election, the Ministry of Justice has announced that there is now insufficient time for the statutory instrument introducing the fees to be properly debated and go through Parliament.
While these initiatives will not become law before the election, a new Government could reintroduce either scheme, with amends, at a later date, we will update you as the picture becomes clearer.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.