Among the various ramifications of the snap general election are a number of items having been dropped from the Finance Bill - and Neil MacGillivray feeling the need to apologise to CISI members in Belfast
I have tried to keep away from any discussions on Brexit and its impact. While there is no denying its importance, or that we are heading into the unknown and have already seen some unexpected outcomes, with so little to go on other than pure conjecture I would rather wait until we have actual facts.
That said, I had the feeling of Brexit-related despair when on 25 April, just minutes before I was to give a presentation to the members of the CISI in Belfast on the Budget changes, the news started to trickle through that a number of items had been dropped from the Finance Bill to allow it to pass speedily through Parliament as a result of the 8 June general election.
Now, we had some advance warning this was to happen and it is not the first time such action has been taken after the announcement of a snap election. That said, it does not help that we are in a void - not knowing when, or even if, the ditched legislation will eventually make the statute books. I can also assure you it does not help when you are about to present on the Budget that never was.
There was a great deal of coverage of the shelving of both the reduction to the Money Purchase Annual Allowance from £10,000 to £4,000 and the decrease in the dividend allowance from £5,000 to £2,000. The dividend allowance change was not due to come into effect until April 2018, however, so that is not so much of an issue in comparison to the changes that were to apply in this tax year.
There were a number of other changes that were due to start from this April that have been dropped and did not receive the coverage. The biggest of these was the proposed modification to the deemed domicile rules. This has been ongoing since 2015, with the intention of non-domiciled individuals becoming deemed domiciled after being UK-resident for 15 out of the last 20 years.
Unlike the previous rules that only impacted inheritance tax (IHT), however, those who become deemed domicile under the planned rules will no longer be able to claim the remittance basis and will be liable to income tax and capital gains tax on an arising basis on worldwide income and gains. In addition, IHT was to apply where a non-domiciled individual held UK residential property through an offshore structure, but this also has been pulled.
Put on hold
Two other items of interest put on hold, which were also due to start from 6 April, were the income tax exemption on the first £500 of cost on providing pension advice to an employee and changes to the taxation of insurance policies where an artificial gain had arisen. The latter change was brought about as an outcome of the Joost Lobler case.
Though not part of the Finance Bill, both the announcement on changes to the state pension age and the legislation allowing an ISA to maintain its tax advantage status up to three years after the investor's death have also been delayed.
One thing out of all this that raises a chuckle is that, should a Conservative government be re-elected, Chancellor Philip Hammond can look again at increasing Class 4 National Insurance contributions (NICs) in his next Budget. After all, at the time of his U-turn he committed to no further NIC changes during this Parliament and he will honestly be able to say he has done so.
What will be of interest is when that next Budget will be. Will the new government, assuming it is a Conservative one, plump for one straight after the election or hold of till the autumn? If they take the latter option, then many of the changes proposed for this tax year must surely be carried forward to 2018/19. Time will tell.
Finally, my apologies to the members of CISI in Belfast for making you sit through a 90-minute presentation in which half the content was no longer applicable and to my team for pushing them to update the James Hay Technical Hub only to have them to review and change much of the content again. My excuse, if one is required, is we are living in extraordinary times.
Neil MacGillivray is head of technical support at James Hay
The chairman isn’t answering his email
Reforms not enough
An economic cocktail
To encourage consumers to shop around
Will report to Pat Shea