What the “snap” General Election means for the world of Finance
Most of us have come to terms with the fact that the country is now gearing itself up to go to the polls once more, after parliament’s shock decision a […]
Most of us have come to terms with the fact that the country is now gearing itself up to go to the polls once more, after parliament’s shock decision a few weeks ago to hold a snap general election. The political ramifications are, of course, huge, but how is the move affecting the world of finance? We take a look at what’s happening right now, and what we might be able to predict come June 9th when the results are in.
Finance Act 2017
Before Prime Minister Theresa May called the election, her government were working on a new Finance Bill. However, as a result of the announcement, most of the provisions of the draft 2017 Finance Bill published on 20 March were left out of the bill that went on to receive Royal Assent on 27th April.
Some of the removed measures included significant proposals, such as the introduction of the new corporate interest restriction, the reforms of the corporate losses regime and the substantial shareholding exemption, and the changes to the taxation of UK non-domiciliaries. Many of the “dropped provisions” were already meant to have taken effect (from April 2017), and so their current status is in question.
One option for the new government would be to implement the dropped measures from April 2018, with the imposition of transitional rules for those who acted in good faith on the expectation of the changes being implemented from April 2017. However, there is precedent for the second Finance Act passed following a snap election to have effect from a date before the election was called.
In recent years, the UK government has enacted various retrospective legislative provisions and, despite challenge from taxpayers, the courts have been willing to uphold the effectiveness of such provisions on the grounds that they are proportionate measures, of which the taxpayer received adequate warning.
What does all this mean? Those confident of a particular outcome might start hedging their bets and plan for this predicted new legislation – as well as preparing for any complicated “transition” rules. Others might sit tight to see what happens.
But what’s happening now?
There has been some instability in the global markets, as can be expected, but a lot of people are sitting tight and coming up with Plans A, B and many more based on what is likely to happen. As parliament is currently dissolved it’s really only the private sector we can look to for news on market movements over the coming weeks, and many businesses are keeping their cards close to their chest.
However, various experts are lining up to offer their thoughts and predictions immediately following the results on 9th June, and for those interested in investments, one resource we think will be particularly useful is J.P. Morgan Asset Management’s free webinar. Find out more and sign up here.
We’ll provide you with another update when we know more following the results.