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The general election and the Finance Bill

Announcements from HM Treasury state that a slimmed down version of the Finance Bill will be presented to Parliament in order for it to be passed before the general election on 8 June. It is important to pass the Finance Bill so that the UK Government can continue to collect taxes; however, given that the original Bill was over 700 pages, a shorter version will help it pass the necessary steps before the dissolution of Parliament.


The provisions being removed include:

  • The changes affecting UK resident non-UK domiciles, making individuals deemed domicile once they have been resident for more than 15 out of 20 tax years, and extending the deemed domicile status to income tax and capital gains tax. This will also affect other areas such as the rebasing for CGT purposes and the ability to allocate mixed funds into their constituent parts.

 

  • The ability to recalculate large artificial gains under an investment bond. The proposal to allow a process of rectification followed the high-profile Lobler case where a large artificial gain had arisen under a bond and HMRC consulted on ways in which to deal with these.

 

  • The reduction in the Money Purchase Annual Allowance (MPAA) from £10,000 to £4,000.
  • The charging of UK inheritance tax on UK residential property owned by overseas companies and trusts.


The announcement does not mean that these changes will fall away and not happen but it is possible that removed clauses could form part of a second Finance Bill, as was the case in 2015, after the previous general election when Parliament was up against time constraints.


These omissions may also mean that there will be another Budget after the election or the removed provisions could form part of the Autumn Budget towards the end of the year. Either way these changes could still occur but there is a question as to when they would be effective from; April this year, April next year or some other date in-between.

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