The briefing note sets out the key legislative changes with a very brief description of each measure and clarifies whether the measures will
be retrospective including loss relief reform for non-doms through to changes to Inheritance Tax on overseas properties.
The enactment of the second Finance Bill was delayed because of this year’s general election, which left MPs and select committees insufficient time to examine the proposals and consult on detailed draft legislation.
The majority of the measures will be enforced retrospectively and backdated to the beginning of the 2017/18 tax year except of course for Making Tax Digital which has been delayed.
Pressure from the accountancy profession, businesses, MPs and the Lords has seen the Treasury succumb to calls for a delay to the ambitious Making Tax Digital programme. This is good news for the 3.5m sole traders, small businesses and landlords who will not have to start quarterly reporting until ‘at least’ 2020 according to the Treasury.
This means the government could delay the programme further if required, although digital VAT reporting will go ahead from 2019.
As expected, the rule changes affecting non-doms will go ahead, although there is no clarity on the final legislation, which will make provision, including with retrospective effect,for tax purposes. Likewise it makes provision, including with retrospective effect, for changes to the way in which profits are calculated for income tax purposes.
On disguised remuneration schemes, some of the aspects of the new rules will be retrospective including the income tax treatment of loans, or acquired rights, but the application of Chapter 2 of Part 7A of the Income Tax (Earning and Pensions) Act 2003 will take effect in a future year.
The briefing note also confirms that changes to the rules for taxing employment income paid through third parties will come into force immediately, so are effective as of 21 July 2017. This will restrict a specific relief for payments of tax to exclude payments of income tax and national insurance contributions. This removes an unintended consequence of the relief.
The document does indicate that some measures have been delayed, with the note on the dividend nil rate stating that the Finance Bill will ‘make provision taking effect in a future year about the dividend nil rate of income tax’. This means that the proposal to cap the dividend nil rate at £2,000 will come into force in a subsequent Finance Bill. When the cap was announced in Budget 2017, the Chancellor Philip Hammond stated that the measure would be effective from April 2018.
A copy of the Treasury briefing note can be found here.
If you’re unsure how these changes will impact upon your tax position get in touch and speak to one of our team today.
