In background notes to the Queen’s Speech on Wednesday, the UK government said it will release a Summer Finance Bill to “include a range of tax measures including those to tackle avoidance”.
“The programme will also include a technical bill to ratify several minor EU agreements and further bills, which will be announced in due course, to effect the UK’s withdrawal from the EU. The government will also be taking forward a range of other measures which may not require primary legislation,” it said.
Tax policies in ‘limbo’
Financial advisers were hoping for some clarity in the Queen’s Speech, which set out the government’s legislative programme over the next two years, on key tax changes postponed in the run up to the snap election.
These included policies such as the new non-dom rules and cuts to the money purchase annual allowance (MPAA), which were set to go live in April 2017.
However, Rachael Griffin, tax and financial planning expert at Old Mutual Wealth, said: “Several policies remain in limbo as the fate of the Finance Bill remains in the air.”
Tom Selby, senior analyst at AJ Bell called on the government to provide “urgent clarity” on policies including the Spring Budget proposal to slash the current tax-free dividend allowance from £5,000 to £2,000 by 2018.
“With all the noise surrounding Brexit negotiations it’s easy to forget vital domestic personal finance reforms need addressing.
“In particular, we now need urgent clarity on how the [MPAA] cut will be applied and whether the proposed dividend allowance reduction will still be introduced in April next year. This legislation is likely to be swept up in a new Finance Bill this year,” he said.
Social care consultation
The Queen’s Speech announced a government consultation on social care funding for the elderly which is unlikely to feature the contentious ‘Dementia tax’ which backfired on prime minister Theresa May during her election campaign, said Selby.
“The UK’s social care system is also urgently in need of reform and the government has promised a consultation later this year setting out possible ways forward.
“The Queen’s Speech confirmed a consultation will put forward reform proposals but given the hostile reception given to the Tories so-called ‘Dementia Tax’, it would be no surprise to see this confined to the dustbin,” he added.
Old Mutual’s Griffin said the new government will need to come up with cross-party policies that will encourage people to save for their own long-term care.
“Social care got a cursory mention in the speech. The controversial policies, which wounded Theresa May’s reputation, were unsurprisingly absent. Instead, the Conservatives simply said they would put forward policies for consultation,” she said.
Pension policy
David Newman, head of pensions at Close Brothers Asset Management said: “Pensions policy was conspicuous by its absence from the Queen’s Speech, with any drive to reform sliding down the political agenda in the wake of the result of the snap election, Brexit negotiations and the complexity of forming a new government.
“The pensions industry has experienced rapid change in recent years, so a ‘business as usual’ approach may be no bad thing for UK savers for the time being as they adjust to new options and products. However, there are still elements we need clarity on.
“The future of the triple lock and confusion around the [MPAA] to name but two. This may become clearer in due course, as we see the new pensions minister settle into the role, but it’s clear that major reform is off the table.”
UK election
Earlier this month, the UK election resulted in a hung parliament where no major political party secured enough seats to form a majority government.
The Queen’s Speech took place despite May still being in talks to secure the backing of Northern Ireland’s Democratic Unionists Party (DUP) in order to stay in power with a minority Conservative government.
