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Tony Wickdenden: Advisers must keep up with second Finance Bill

Royal Assent is on course for collision with the autumn Budget and the industry should not rule out surprises

From the MPAA to pension advice allowance, we need to keep on top of where the Finance Bill  (No.2) stands

Almost as soon as Parliament re-assembled following the summer break, it broke again for the conference season. All this stopping and starting got me thinking about where we are on the travellator of legislation this year.

The truncated pre-election Finance Bill and actual election itself, together with the changes to the timing of the Budget and against a background of Brexit-driven uncertainty, has left many far from clear. So, let’s do a short recap.

The last spring Budget was on 8 March but, thanks to the general election, the legislation to implement its proposals is still far from being finalised. Indeed, it is in imminent danger of colliding with the first autumn Budget, now set for 22 November.

Where are we now as far as legislation implementing change is concerned? Let’s look at where we are with the Finance Bill (No. 2) and then the parliamentary timetable.

Finance Bill (No. 2) 2017

The Finance Act 2017 was passed on 27 April, shortly before Parliament was prorogued for the general election. It was reduced by about 80 per cent from the Finance Bill (No. 2) 2017, leaving a large amount of proposed legislation in limbo where, to some extent, it remains.

On 20 July, the day on which the House of Commons rose for the summer recess, the Government tabled a set of Finance Bill (No. 2) resolutions and issued explanatory notes.

With one important exception (see below), all the measures that disappeared between the Finance Bill (No. 2) 2017 and Finance Act 2017 will be reintroduced in the new Bill, with their original commencement dates unchanged. The confirmed backdated measures include:

  • £500 employment-related exemption for pension advice
  • Reduction in the money purchase annual allowance from £10,000 to £4,000
  • No pre-arranged exits for enterprise investment schemes and seed EIS
  • Social investment tax relief
  • £1,000 trading and property allowances
  • Corporate interest relief restriction
  • Changes to the domicile rules
  • Inheritance tax treatment of overseas-owned UK residential property.

The one important change from the original Finance Bill (No. 2) content was a deferral of the start of making tax digital. Under the revised making tax digital timetable:

  • Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records, and then only for VAT purposes
  • They will only need to start doing so from 2019, and
  • Businesses will not be asked to keep digital records, or to update HM Revenue & Customs quarterly, for other taxes until at least 2020.

Parliamentary timetable

Add in the autumn Budget and the above indicates MPs are facing an onslaught of Finance Bill legislation over the next few months. It is far from clear how all the Finance Bill work is going to be fitted in alongside consideration of the European Union Withdrawal Bill 2017-2019 (aka the Great Repeal Bill/Great Scissors and Paste Bill) and associated legislation.

The second reading of that Bill was scheduled House of Commons’ business for Thursday 7 September. A week later, the House of Commons stopped work for conference season, and did not resume activity until 9 October. MPs also have almost a week off, starting in the first half of November, so Royal Assent to the Finance Bill (No. 2) 2017 could well be running into the autumn Budget.

The general assumption is that the Finance Bill (No. 2) 2017 will not suffer any difficulties in its passage through to Royal Assent, given the Democratic Unionist Party has said it will support the Government on money Bills. However, with such a thin majority and fractious EU politics, there could be surprises.

Tony Wickenden is joint managing director of Technical Connection.
You can find him Tweeting @tecconn

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