Budget push-back delays Finance Bill

The announcement of a general election on 12 December 2019 means the Finance Bill 2019-20 will not be passed in the current parliamentary session

The Budget normally involves four days of debate on the budget resolutions, and is followed by votes before the Act is passed. There is no time left for debate as parliament is likely to be dissolved tomorrow.

Draft legislation for FB 2019-20 was issued in July and closed for comment on 5 September 2019. Due to the attempted prorogation of parliament on 9 September, there was no time for the government to respond to the feedback on the consultation process. There has still been no response to this draft, which includes the off-payroll working regulations for the private sector, for example.

A Budget is needed to set tax rates ahead of the next tax year which starts in April 2020, and to comply with the Budget Responsibility and National Audit Act 2011, introduced under the Coalition government. 

The Treasury told Accountancy Daily: ‘The upcoming general election means that Parliament would not have the opportunity to debate or vote on a Budget on 6 November in the normal way, or the subsequent Finance Bill. The resolutions typically mean that Finance Bill needs to have its second reading within 30 sitting days of the budget’.

‘A Budget will be needed to set tax rates ahead of the next financial year and to comply with the Budget responsibility and national audit act. As previously stated, it is usual procedure for FB to be introduced to parliament following the budget.’

George Bull, senior tax partner at RSM, said: ‘Even if the new parliament meets before 23 December it is unrealistic to expect that the new Chancellor will be able to deliver a Budget until January 2020 at the earliest. That will be some 15 months since Philip Hammond’s last Budget on 29 October 2019.

‘Apart from the practicalities of enacting new tax law, on which expectations were low because Chancellor Sajid Javid has limited room to manoeuvre, this delay will have major impacts elsewhere.'

The decision affects the Scottish Budget which is scheduled for 12 December, and as yet has not been deferred.

The Chartered Institute of Taxation (CIOT) is cautioning that the decision to postpone the UK Budget will damage the Scottish parliament’s ability to scrutinise tax and spending plans ahead of the new tax year.

Alexander Garden, chair of CIOT’s Scottish technical committee, said: ’Scotland’s budget process has potentially become the latest victim of Britain’s Brexit impasse.

‘In any normal year, there would already be many moving parts to the Scottish Budget process. The announcement only complicates matters further and leaves [finance minister] Derek Mackay in a tight corner.’

The Scottish government office has been contacted for comment.

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