Two new income tax allowances that aim to simplify the tax affairs of so-called ‘micro-entrepreneurs’ have been put on hold in the run up to the general election.
The new property and trading allowances offered individuals a new £1,000 additional income tax allowance for money earnt from property, including rental income, and selling goods on eBay, for example.
The new allowances had supposedly come into effect from 6 April, the start of the new tax year, but they had not gone through the Finance Bill 2017 and so were not, in effect, law.
The extensive Finance Bill was scheduled to be debated and passed during April, however, following the announcement of the snap general election of 8 June, ministers were forced to drop a number of elements from the Bill in order to pass it before parliament closed.
Commenting on the move, Adrian Rudd, tax director at Price Waterhouse Coopers, says there is nothing sinister in the government’s actions: “This happens every time we have a general election. Anything that needs to be debated in the Bill tends to be put on hold.”
“It is parliamentary process, rather than government quietly withdrawing on promises,” he adds. “95% of what gets dropped is re-enacted.”
This is likely to be by the Autumn once the dust has settled after the election, although of course this would depend on the outcome of the election.
Other items to be dropped from the Finance Bill as a result of the election include the reduction of the tax-free dividend allowance from £5,000 to £2,000 and the reduction of the money purchase annual allowance (the money you can pay into your pension once you have accessed it under the pension freedoms) from £10,000 to £4,000. The £500 pension advice allowance also failed to make it through. This would allow savers to take £500 out of their pension tax free to pay for advice. See Pension savers left in limbo for more on this.
Controversial changes to probate fees have also been scrapped in the run-up to the election. At the time, the Ministry of Justice said it would be up to the newly elected government to decide whether or not to reinstate the plans.