Dropped for now, effects of General Election
A number of key measures have been delayed ahead of the General Election.
Changes to pensions, investment and death taxes have been delayed at the eleventh hour because of the General Election. A raft of measures have been pulled from the Finance Bill as the Government rushes the bill through ahead of Britain going to the polls on the 8th of June.
The measures that have been put on hold are:
1. Pension allowance cut
The amount you can save into a pension, annually and in total, has been falling for years. In theory, the latest cut was to take effect from the start of the tax year, April 6, 2017. Up until now, people who had flexibly accessed their pension could still save £10,000 a year into a pension. The planned cut would bring this limit down to £4,000.
2. Probate Fees
Though not part of the Finance Bill, a rise in probate fees for estates of £50,000 or more has also been shelved. The move was meant to take effect from May 2017. It would have introduced a “slab” system with probate fees paid on death determined by the value of an estate. Estates of £2m or more would pay £20,000 in fees, those under £50,000 would pay nothing. Currently, there is a £215 flat fee if probate is applied for by friends or family, or £155 if a solicitor completes the process.
3. New advice allowance
This proposal is to allow savers to take up to three tax-free £500 withdrawals from their pension to pay for financial advice. Withdrawals can only be made from ‘defined contribution’ pensions, not ‘final salary’ schemes.
4. Tax free dividends
At the moment someone can earn £5,000 a year from dividends without paying any tax. It is proposed that from April 2018 this will fall to £2,000. Again, this has been removed from the Finance Bill.