In hindsight, Chancellor Hammond didn’t have much luck with what he said would be his “first and last Spring Budget”.
The proposal to increase Class 4 national insurance contributions from April 2018 survived literally a week before being dropped. However when the Finance Bill was published in March, Hammond won the dubious accolade of producing the longest ever Bill, at 722 pages!
Then, just over a month later, the early election forced him to scrap over half the Bill’s substance so that he could push through a slimmed down ‘consensus’ version of the Bill before Parliament closed its doors.
As a result, several important Spring Budget changes which were proposed have now disappeared. For example:
- The reduction in the money purchase pension annual allowance from £10,000 to £4,000 from 6 April 2017. This could have created problems for people who ‘phase in’ their retirement, both drawing pension benefits and contributing to a pension.
- The cut in the dividend allowance from £5,000 to £2,000 from 6 April 2018.
- The introduction of making tax digital. This was due to begin for traders with income above the VAT threshold level from 6 April 2018, with others starting one year later.
- The pension advice allowance. There was to have been a new tax exemption from 6 April 2017 for up to £500 per tax year for employee pension advice, paid for by an employer. The old, more restricted £150 allowance now remains in place.
- The property and trading allowance of £1,000 each from 2017/18. These new allowances were aimed at keeping small amounts of trading income and property income out of tax.
It is quite likely that much of the ‘lost’ legislation will re-emerge in a summer Finance Bill after the election, should the pollsters be right (…big assumption there, given past track records!) and the Conservatives are returned to govern.
However, the start date for some of the measures, such as the money purchase annual allowance cut, could easily be pushed back to 2018/19 because of delays in reaching the statute book. Other measures could be overtaken by fresh proposals given that a new Theresa May led government would not be constrained by the Conservative pledges of the 2015 manifesto.
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Please Note: The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
