Last week we reported how the government plans to introduce a ‘basis period reform’, which will simplify taxation for self-employed people, sole traders and partners. This reform is just one piece of draft legislation that will be included in the Finance Bill 2021-22. On 20th July, the Financial Secretary to the Treasury, Jesse Norman, gave a written ministerial statement. This outlined a range of other draft legislation – much of which will be of interest to THP clients.
You can read the ministerial statement in full here. Below we have summarised some of the key points you need to know about.
New inclusions in the Finance Bill 2021-22
Most importantly, new legislation will increase the normal minimum pension age (NMPA) from 55 to 57 in April 2028. This means you have to wait an extra two years before you can draw benefits from your pension scheme without incurring unauthorised payment charges. However, there will be exemptions – notably for people who are members of uniformed public service pension schemes and those with unqualified rights to take their pension below the age of 57.
Also on the topic of pensions, the draft legislation addresses something called the ‘Scheme Pays’ deadline. ‘Scheme Pays’ is when you ask your pension scheme to settle annual allowance charges from previous years by reducing future benefits. The change will extend the reporting and payment deadline during which you can do this.
Additional measures include sanctions to tackle tobacco duty evasion, along with powers to tackle electronic sales suppression. The latter refers to the fraudulent practice of using technology to artificially reduce reported sales and thus tax liabilities.
In addition to the new legislation, the government has also made a number of policy announcements. In brief, upcoming legislation will ensure that payments made by the London Capital & Finance Compensation Scheme will not be subject to Capital Gains Tax. Similarly, new laws will ensure that payments made by local authorities to families are not subject to income tax. These include payments from the Covid Winter Grant Scheme, Covid Local Grant Scheme and other similar schemes.
New Making Tax Digital publication
Finally, the government has announced the publication of a new report, entitled ‘Impact of Making Tax Digital for VAT’. This looks at the extent to which MTD for VAT is achieving its objectives. We will take a closer look at Making Tax Digital in a future post, particularly in light of upcoming changes such as the introduction of MTD for buy-to-let landlords.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.