Prime minister Theresa May has reportedly struck a deal with Northern Ireland’s Democratic Unionst Party (DUP), which has 10 MPs, to form a new government and reach the majority benchmark of 326 MPs.
Finance Bill
The result casts uncertainty over whether the postponed elements of the Finance Bill will be pushed through, including the reduction in the pension money purchase annual allowance (MPAA), which should have gone from £10,000 (€11,520, $12,948) to £4,000 on 6 April, said Jon Greer, head of retirement policy at Old Mutual Wealth.
“The snap election left areas of the finance bill and pension policy in limbo. This result means that period of uncertainty continues.
“Major pension reforms are unlikely, particularly controversial ones. It would be a surprise therefore if they tinker with pensions tax relief any time in the next parliament,” he said.
In early May 2017, a number of key changes were dropped from the Finance Bill so it could be rushed through parliament before the snap election.
These include proposed cuts to the tax free dividend allowance, which was set to be slashed from £5,000 to £2,000 by April 2018, as well as the shock decision to delay long-anticipated changes to the way non-UK domiciles are taxed, which were set to come into force on 6 April.
Richard Woolich, UK head of tax at global law firm DLA Piper, said if May succeeds in forming a government with the DUP then the policies postponed in the Finance Bill are likely to go ahead.
“The provisions in the Finance Bill which were deferred because of the election should now be enacted either in July or September. We wait to see if they will be retrospective to April 2017, as expected, because they were budgeted for this year.
“These include the corporate interest restriction rules, the substantial shareholding exemption reforms, and the reformed IHT rules for non-doms owning indirect interests in UK residential property,” he said.
Adviser concerns
Speaking to International Adviser, Scott Gallacher, a chartered financial planner at UK-based IFA firm Rowley Turton, said the result is “probably a relief for higher earners” concerned about the Labour Party’s plans to introduce a new top rate of 50% on earning over £150,000.
“I suspect little will change for the moment. Although the self-employed might be concerned that the government revisit their plans to increase National Insurance.
