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The government have delayed cutting the dividend tax-free allowance for self-employed professionals and Making Tax Digital after Theresa May announced that a snap general election will take place on June 8, 2017.

The changes were proposed by Philip Hammond, Chancellor of the Exchequer, in the Spring Budget 2017, causing outrage from senior party members and the public.

He announced that the annual tax free allowance on dividend income would be slashed from £5000 to £2000, effective from April 2018, this was forecasted to generate £1bn more tax per year, until 2020. This measure has now been delayed.

The Making Tax Digital (MTD) scheme was part of the government’s plan to make recording tax returns easier. The initiative would replace submitting an annual tax return, as businesses would be required to record them on a quarterly basis through the new scheme.

Briefly after the Spring Budget announcement, Hammond announced that the MTD scheme would be delayed for businesses under the VAT registration until April 2019, after facing backlash. This implementation of the scheme has now been delayed.

Several amendments were made to the finance bill, including the U-turn on dividend allowance and Making Tax Digital, before parliament closed on April 27, 2017, ahead of the snap election. The government have decided to keep 25/84 of the proposed clauses, which means that more than two thirds of the changes have been ousted, and some delayed.

The delayed measures are expected to come into force in the early stage of next parliament.

Following the Spring Budget 2017, the Conservative government faced harsh criticism for breaking their 2015 manifesto pledge. Hammond told MPs in a statement at the House of Commons that, “there will be no increases in National Insurance rates this parliament.”

The government decided to step against their party pledge and raise Class 4 NIC for self-employed professionals from 9% to 10%, effective from April 2018. After facing harsh criticism, May made a U-turn and announced that the NIC increase will be delayed, to then announce that the change will be entirely cancelled.

Theresa May said, “In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the budget.”

Jeremy Corbyn, Labour party leader, said that the U-turn showed a government ‘in chaos’, but supported that NIC for the self-employed shouldn’t face an increase.

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