The first of three Finance Bills over the next two years is expected to be released soon. Following on from the announcement made in the Queen’s Speech in June, the Treasury has confirmed that the Summer Finance Bill will arrive as soon as possible after the summer recess, which ends on 5 September.
72 of the 135 clauses originally included in the Finance Bill this past April were eventually removed partly due to the disruption caused by the shock snap election. The Government has confirmed that the Summer Finance Bill is likely to contain all of the measures that were put on the backburner as a result.
Here we give a run-through of the key changes that you or your business may have to look out for come September.
Changes to corporation tax loss relief rules
The original changes also sought to ensure that businesses still pay tax in each accounting period where they make substantial profits, by placing a 50% cap on future profits against which losses can be offset.
Dividend Allowance set to be slashed
The £5,000 tax-free allowance, which was only implemented in April 2016, is set to be reduced to £2,000 from 6 April 2018. Basic rate taxpayers, who would otherwise have made use of the full £5,000 allowance, would pay an extra £225 in tax each year as a result, whilst the Treasury estimates that it will yield almost £1bn more in tax per year by 2020.
Further clarity over Making Tax Digital (MTD)
As a result, only companies with turnovers exceeding the £85,000 VAT threshold will be required to keep digital records from April 2019. This will initially be for VAT purposes only. Otherwise, MTD is expected to continue along the recently amended timetable, but the Finance Bill will most likely provide more clarity over the taxman’s plans.
Changes to the taxation of non-domiciled individuals
The Government has confirmed that it will use the Summer Finance Bill to reinstate the proposals, which will include the abolition of permanent non-domiciled status for anyone who has lived in Britain for at least 15 of the past 20 years.
National Insurance changes to come separately
The Government instead intends to legislate the changes to NICs announced in the 2016 Budget and the 2016 Autumn Statement. This is expected to result in the abolition of Class 2 NICs.
Navigate the Summer Finance Bill changes with Hillier Hopkins
This article is written for general interest only and is not a substitute for consulting the relevant legislation or taking professional advice. The authors and the firm cannot accept any responsibility for loss arising from any person acting or refraining from acting on the basis of the material included herein.