In a surprise move, the Government’s hotly contested Making Tax Digital (MTD) project has been dropped from Finance Bill 2017 – the last Bill to be debated in the House of Commons prior to the snap General Election.
The controversial plans, which were initially due to be phased in from April next year, would have forced millions of businesses and self-employed taxpayers to submit quarterly tax updates to HM Revenue & Customs (HMRC).
However, on Thursday 25 April, the Government decided to shelve HMRC’s digitalisation plans – alongside numerous other changes initially proposed in the Finance Bill – before Parliament adjourns for the General Election.
Commentators have suggested that, following this surprise decision, MTD is now likely to be delayed by at least a year – and may even be scrapped altogether.
Anita Monteith of the Institute of Chartered Accountants in England and Wales (ICAEW), said: “This is a sensible decision by Government. Making Tax Digital plans remain controversial and need more scrutiny by those who will be affected, and most importantly proper parliamentary debate – a clear roadmap as to how MTD will work in practice is needed”.
The snap election will also see plans to cut the tax-free dividend allowance from £5,000 to £2,000 dropped, as well the reduction in the money purchase annual allowance for people over the age of 55.