The Government has confirmed it will reintroduce all the measures dropped from the Finance Bill 2017 as a result of the general election. It also intends to stick to the original implementation dates, which would mean some changes being backdated to 6 April 2017.
Amongst the key measures that will be put to Parliament in a new Bill when it returns from its summer recess are:
Money Purchase Annual Allowance Cut
The Finance Bill included measures to reduce the Money Purchase Annual Allowance (MPAA) from £10,000 down to £4,000. This is the restriction that limits what can be paid to money purchase pensions once DC benefits have been flexibly accessed.
However, the Government has confirmed that it will be reintroduced in the autumn Finance Bill and that they intend to backdate it to the start of the current tax year – so those subject to the allowance should be aware that contributions to money purchase pensions greater than £4,000 this tax year are likely to incur the annual allowance tax charge.
Dividend Allowance Cut
The annual dividend allowance cut from £5,000 to £2,000 will go ahead from April 2018. This will mainly hit small and medium sized business owners who take their profits as a dividend. Business owners may have to consider the best way to extract future profits from their business. A cut to the dividend allowance will narrow the gap between salary and dividends but further strengthens the case for making employer pension contributions.
If you think that you may be affected by this, please contact us today.
Our specialist advisers will be happy to help.
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