Lindsey Wicks looks at personal tax measures that apply from the start of the 2017/18 tax year or another date before the introduction of the Autumn Finance Bill.
The snap general election led to many of the measures in the Finance Bill introduced on 20 March 2017 being dropped ahead of the dissolution of Parliament. In July 2017, the Treasury confirmed that the application dates of these measures would be retained and clauses making technical adjustments to the proposed legislation were released. A list of provisions that apply before the introduction of the Autumn Finance Bill was also published.
The provisions previously dropped before the general election were subsequently included in Finance (No 2) Bill 2017 published on 8 September 2017, which has not received Royal Assent at the time of writing.
Employment income
The following three measures have been confirmed as applying from the 2017/18 tax year onwards:
- a £500 exemption for employer-provided pensions advice;
- tax-free legal support for employees (and former employees) that are called to give evidence; and
- a new deadline for making good benefits-in-kind, of 6 July following the end of the tax year.
Pensions
The money purchase annual allowance, which applies to those who flexibly access registered pension schemes, will decrease from £10,000 to £4,000 from 6 April 2017.
Trading and property income
The cash basis capital expenditure rules are to be simplified from the 2017/18 tax year onwards. The cash basis will also become the default method for calculating the taxable profits of eligible unincorporated property businesses.
New trading and property income allowances of £1,000 each apply from the 2017/18 tax year onwards. Full relief will be available where the gross income is less than £1,000, but cannot create a loss. Partial relief is also available where gross income exceeds £1,000, permitting the allowance to be deducted instead of the actual allowable expenditure.
Chargeable gains
When assets are appropriated into trading stock, an election can be made for the transfer to be at no gain/no loss to avoid a ‘dry’ tax charge arising before disposal proceeds are received. To prevent capital losses being converted into trading deductions, this election will no longer be possible where there is a capital loss if the appropriation takes place on or after 8 March 2017.
Domicile
A new deemed domicile rule will apply from 6 April 2017. Anybody who has been resident in the UK for 15 out of the past 20 years will be deemed UK-domiciled for all taxes. Anybody with a UK domicile of origin who has subsequently obtained a different domicile of choice will become UK-domiciled immediately if they become UK resident. The existing inheritance tax (IHT) deemed domicile rules will also be amended.
Transitional rules will allow rebasing of assets if a person becomes deemed UK-domiciled under the 15 out of 20 rule on 6 April 2017 and prevent qualifying trusts from being subject to income tax and capital gains tax, provided the deemed domiciled individual does not benefit from the trust. Former remittance basis users with overseas mixed funds will have a facility to remit clean capital from overseas ahead of income and gains.
For those who remain non-UK domiciled, the scope of the business investment relief regime will be extended for investments made on or after 6 April 2017.
The definition of excluded property will be changed so that UK residential property held by non-domiciled individuals through offshore structures will fall within the scope of IHT from 6 April 2017.
Disguised remuneration
New disguised remuneration rules (similar to existing rules for employees) will apply for the self-employed from 6 April 2017. Furthermore, a tax charge for existing disguised remuneration loans that remain outstanding on 5 April 2019 is being introduced for both employees and the self-employed. Tax relief for employer contributions is also potentially restricted.
Capital allowances
First-year allowances for expenditure on electric vehicle charging points will be available where the expenditure was incurred on or after 23 November 2016.
Disposals of UK land
The commencement rules that applied to the changes to the territorial scope of the taxation of trading and developing UK land are amended so that the legislation will apply to all amounts recognised under generally accepted accounting practice on or after 8 March 2017, regardless of the contract date.
Practical Tip:
Some of these provisions experienced technical changes since the original Finance Bill was published. Taxpayers affected by these rules and their advisers should ensure that they are well aware of the proposed legislation and be mindful that further changes could be made before they become law.
