Legislation to implement Making Tax Digital was dropped from the Finance Bill 2017 during its third reading in Parliament.

During the third reading debate a number of proposed measures were dropped, reducing the Bill to its key elements, allowing for more complex measures to be considered after the General Election on 8 June.

The delay in implementing Making Tax Digital (MTD) will be welcomed by many. Practitioners and businesses alike have urged for more debate and consideration be given to MTD measures before rolling out a clear road map for implementation. However, the Government have stated that there has been no policy change and they will legislate at the start of the new Parliament for MTD. A statement from the Financial Secretary to the Treasury stated that the Government remain committed to the digital future of the tax system, a principle widely accepted on both sides of the House. We now have to wait to see whether or not the original timetable for implementation will remain in place.

The original Finance Bill published in March was 776 pages whereas the current Bill, after debate, is only 150 pages. From a personal tax perspective other notable measures that have been dropped from the Bill include:

• Changes to non-domicile tax.
• IHT treatment of UK residential property. 
• The proposed 2018/19 reduction in dividend allowance from £5,000 to £2,000.

It is likely that most of the legislation that has been removed will be revisited and reappear in the Finance Bill later in the year (perhaps with effect from 2018/19), although this clearly will depend on the result of the General Election. 

Got a Question?

The team at Johnston Carmichael will be keeping a close eye on digital tax developments and will provide you with regular updates on HMRC’s digital agenda. Visit our dedicated Making Tax Digital page for more information.

If you have any questions in the meantime, please get in touch with me at Susie.Walker@jcca.co.uk or your usual Johnston Carmichael contact.