The government’s precarious majority is preventing it from pursuing some of the more controversial tax changes which had been proposed in this year’s Budget.
Among the proposals in the 2017 Finance Bill which have been postponed are the reduction in the annual tax-free allowance for dividends from £5,000 to £2,000 and the requirement for businesses and the self-employed to file tax returns on-line each year.
The government had also proposed that the Money Purchase Annual Allowance (which restricts pension contributions for people who are already drawing income from their pensions), should be reduced from £10,000 to £4,000. This proposal was omitted from the Finance Bill but will be introduced retrospectively with effect from 6 April 2017. The objective is to reduce the scope for savers to recycle their savings and claim tax relief twice on the same contributions.
As a result of the omission of this provision, the limit on contributions for people who have already drawn income from their schemes will remain at £10,000 – at least for the time being.