Major tax changes that were announced in the Spring Budget have been dropped by the government, due to a lack of time to pass them into law ahead of the 8 June General Election.

With 135 clauses, 29 schedules and 776 pages, Finance Bill 2017 was the largest on record, containing a number of key tax changes on personal and corporate tax. With a snap election called, Parliament did not have the time to scrutinise the detailed legislation and so it had to be shelved for now.

The Finance Bill was shortened to just 63 clauses, 11 schedules and 156 pages, and received Royal Assent before Parliament dissolved on 3 May.

Whether the changes that were dropped will re-emerge after the election in a new Finance Bill, and in what form, remains to be seen. Any re-introduction of a measure that has been dropped may now be from a different date to that previously planned.

Key proposals dropped include: Making Tax Digital, the reduction in the dividend allowance and changes to the non-dom rules. Proposed rises in probate fees were also shelved for now.

Making Tax Digital

Making Tax Digital will require businesses to keep their records in a digital form, including spreadsheets, and file quarterly updates to the tax office, with a fifth and final clearing up return after each tax year end.

The regime was meant to start for unincorporated businesses and landlords with a turnover above £85,000 (the VAT threshold) from April 2018, with smaller businesses joining a year later, and companies in 2020. There has been blanket criticism of the project, with nearly all calling for it to be delayed by at least a couple of years.

As Making Tax Digital has now been dropped, for the moment at least, there is time for an in-coming government to re-appraise the proposals and take on board the various representations that have been made. The tax office will, in the meantime, continue a pilot exercise with selected businesses over a two year period to identify and iron out any issues.

We won’t know until after the election whether significant changes will be made to the rules and whether they will be delayed. It is worth noting that the previous Chancellor – George Osborne – was the architect of tax digitalisation, and with him no longer in government or even an MP, there is some likelihood that it will not proceed as originally planned when it is re-introduced in a subsequent Finance Bill.


Another Spring Budget surprise was the proposed reduction in the dividend tax allowance from April 2018. Where a GP receives dividends on shares, the first £5,000 in 2017/18 is taxed at 0%. The intention in the Budget was to reduce the 0% band to £2,000 from 2018/19. However, following the general election announcement, this was dropped to ensure the Finance Act received Royal Assent. This may, however, be restored by the new government. A reduction in the allowance to £2,000 would mean extra tax of £225, £975 or £1,143 a year depending on whether the recipient pays tax at the basic rate, higher rate or additional rate.

Probate fee rise

Controversial plans to increase probate fees were shelved due to the election. They had been set to rise in May 2017 from as little as £155 up to as much as £20,000 for some estates in England and Wales. The proposals had been dubbed a “stealth death tax”.

Non-domicile rules

Some UK residents from overseas were due to have their tax status changed from 6 April 2017, and had already planned around the new regime. But with the changes dropped, this leaves them in limbo, awaiting the outcome of a second Finance Bill.

The changes would have meant that a non-domiciled person who had lived in the UK for 15 out of the last 20 years would no longer have been able to use the remittance-basis, meaning they would have been liable to UK tax on all their income and gains wherever they arose in the world.

The changes would also have meant that someone born in the UK, but who later acquires a domicile of choice outside the UK, would likely remain liable to UK tax on all their worldwide income and gains, whenever they returned to the UK.

Two key areas where action may have already been taken by affected nondomiciles that may be problematic if the proposals are not reintroduced with an effective date of 6 April 2017, are asset rebasing, and cleansing of foreign bank accounts.

Employee benefits

An increase in the tax-free allowance for employer-funded pension advice is another casualty of the truncated Finance Bill. The allowance was due to increase from £150 to £500 per employee on 6 April. The increase has been scrapped.

A new Pension Advice Allowance, allowing people to withdraw £500 on up to three occasions from their pension pot to pay for financial advice has not been changed.


From 6 April 2017 pension savers aged 55 and over were due to have their Money Purchase Annual Allowance (MPAA) cut from £10,000 to £4,000. This change has been scrapped.

People saving for their retirement can invest £40,000 a year into a pension, whilst those aged 55+ have a restricted £10,000 MPAA. The proposed change had been to prevent people withdrawing money from their pension pot and recycling it back in again, gaining more tax relief on the sum. We shall have to see if the measure is re-introduced in a subsequent Finance Bill, and from a new date.

Other measures dropped

Other changes dropped for the moment include termination payment changes from April 2018 and corporation tax changes to carried forward losses from April 2017. Measures going ahead Some measures did make it into the final version of the Finance Bill, including changes to IR35 rules in the public sector, and salary sacrifice restrictions.


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