Certain legislative measures that affect financial services did not complete their passage through Parliament before the chamber was dissolved ahead of the General Election. This means that the provisions will not become law in the near future as was previously anticipated.
Now that Parliament has been dissolved, if the measures are to become law, they will need to be re-introduced from scratch when the Commons re-opens for business after the election. It is likely however that most, if not all, of the legislation will be proposed once again if another Conservative Government is returned on June 8, which looks likely according to current opinion polls.
Some of the legislation which did not complete its passage through Parliament includes:
• A cut in the Money Purchase Annual Allowance (MPAA) from £10,000 to £4,000. This allowance is the amount someone who has already started to access a pension flexibly can make in annual contributions to defined contribution schemes without attracting additional charges
• A reduction in the tax-free dividend allowance from £5,000 to £2,000, although this was never due to come into force until April 2018 anyway. For the time being at least, investors will continue to receive their first £5,000 of dividend income tax free each year
• The introduction of a £500 tax exemption for employer-sponsored pension advice provided to employees
• Moves to introduce digital tax returns
Legal experts confirmed that the MPAA cut had not taken effect, even though the Government originally announced it would come into force on April 6 2017.
Francois Barker, head of pensions and a partner at law firm Eversheds Sutherland, said:
“The short answer is that the £4,000 MPAA is not in force and won’t be until it is enacted in the finance bill in a future parliament.”
“The legal sticking plaster, which allowed the cut to £4,000 to be applied from April 6, had a limited political lifespan that was dependent on it being enacted in this parliament — which won’t happen.”
Other measures proposed in the Spring Budget have come into effect as planned, including the increase in the ISA allowance to £20,000, the introduction of the lifetime ISA and the changes to the income tax and national insurance bands.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.