So, good news for businesses and individuals but bad news for the government? Well, maybe, but unfortunately it’s not that straightforward.
The Chancellor Philip Hammond was forced to backtrack on increases to Class 4 contributions just a week after the Budget in March. Now, just a couple of months later, more reversing takes place… for the time being at least.
Election winners likely to make further changes
With the recent announcement of a snap election to take place on 8th June, cynics might say there’s a strong connection between the reversals in the revised and much ‘lighter’ Finance Act 2017 and the upcoming vote.
Regardless of the reason, there’s a window of reprieve for non-doms, retirees and businesses – but beware, it might only be a temporary delay.
If the Conservatives win the June election, they’re likely to bring the legislation back into play and to have its commencement date retroactive from 6th April 2017. On the other hand if Labour wins the election, they might go forward with the non-dom legislation but with a harsher approach to the transitional phase currently planned…
Current reversals
The dividend tax, planned to further reduce the tax-free amount of dividends from £5,000 a year to £2,000 has been cut. This will be welcomed by small business directors who are already shouldering the burden of additional tax effective from 6 April 2016 and by individuals who rely on dividends for a substantial portion of their income.
Self-employed people whose turnover is over £85,000 would have faced an additional administrative burden from April 2019 through a move from filing one tax return per year to five as part of the Making Tax Digital project.
Non-doms have a reprieve for the moment. The earlier iteration of the Finance Bill was set to make non-UK citizens who have lived in the UK for 15 of the last 20 years considered as UK domiciles for tax reasons and would have increased their tax burden in areas such as UK properties owned within offshore structures.
The revised Finance Act was passed on 27th April with our suspicion that some of these measures will be resurrected post-election.
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