Last minute amendments to Finance Bill

by | Apr 25, 2017

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The government has today published amendments to its Finance Bill and you can find the document here

Items from the Bill which have been dropped include the:

  • reduction in the Money Purchase Annual Allowance from £10,000 to £4,000;
  • reduction in the tax free dividend allowance from £5,000 to £2,000;
  • £500 pension advice allowance increase dropped.

It also appears that the Government’s plans to ban cold-calling are likely to be put on hold.

Tom McPhail, Head of Policy at Hargreaves Lansdown, said : “The government is rushing through the legislation wash-up, prioritising key policy measures and jettisoning anything which could slow-up the process. The good news is the suspension of the cuts to the Money Purchase Annual Allowance and the dividend allowance, however investors would be wise not to assume this is a permanent reprieve.”

“Politically, it makes sense to ditch unpopular policies during an election campaign, in order to avoid upsetting voters. The MPAA cut in particular is particularly pernicious as it is retrospective. We do currently expect to see these changes reintroduced the other side of the election, in the event of a Tory victory. We suggest investors should continue to assume that by the end of this tax year, they may have to work within the reduced MPAA and dividend tax allowance.”

“The Government’s decision to drop the increase to the £500 advice allowance financed by employers, as well as the inevitable suspension of the cold-calling ban are disappointing, particularly as these are not contentious measures. Investors are reaching retirement every day and are missing out on the benefits of these interventions. We hope to see these measures reinstated the other side of the election, if the Tories win.”

Richard Parkin, Head of Pensions Policy at Fidelity International, said: “I’d love to believe that government has changed its mind on the MPAA reduction but it seems that it’s just a temporary casualty of the pre-election wash up period. However, because Parliament is being dissolved the bill can’t carry over and a new bill will need to be introduced after the election. That at least gives the opportunity for government to rethink this policy which we believe will have a negative impact on those saving responsibly for their retirement. Indeed, HM Treasury has since confirmed that they have no evidence of the abuse that this measure was intended to curtail. Fidelity reiterates its commitment to work with government and industry to find a better solution.”

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