Finance Bill delay adds uncertainty

As the EU referendum concentrates minds, let’s spare a thought for the current Finance Bill. The annual cycle of tax legislation has been interrupted to make way for the Brexit debate.

There are some complex and contentious measures that have hardly begun their passage through parliament.

By the first week of June in 2014 a public bill committee of MPs had already sat nine times to consider that year’s Finance Bill, and royal assent followed in July.

Last year’s first Finance Bill was unusual. The Bill that became Finance Act 2015, running to 127 sections and 21 schedules, was rushed through parliament in just a few days because of the general election. Following the election there was a second Bill, which became Finance (No2) Act 2015.

This year’s Finance Bill (179 clauses, 25 schedules and 570 pages) passed its second reading on 11 April, when a carry-over motion was agreed to enable the Bill to be considered in the new parliamentary session that began in mid-May.

No date has been set for the Commons committee stage, and further consideration of the Bill has been postponed until after the EU referendum.

(In the meantime I’ve reviewed several of the measures in the Bill and drafted commentary for Tolley’s Finance Act Handbook.)

John Endacott has pointed out that the delay means royal assent seems unlikely to follow until October. As he says, it is not just a matter of “things running behind schedule”. The delay brings added uncertainty for people and businesses.

Many of the measures in this Finance Bill are intended to take effect from March or April 2016. There are some complex changes to income tax rates with effect from 2016/17 or 2017/18 – and consultations are either under way or awaited on further, significant changes (such as the Making Tax Digital project) to the tax system.

Many people will have planned their business and financial affairs to take account of the new tax rates, set out in the Finance Bill, for savings and dividends. While those changes have been earmarked for scrutiny by a public bill committee, there may be very little time for careful consideration. Some measures will be difficult to change, anyway, at such a late stage.

The suspension of normal parliamentary business is understandable as we approach the EU vote but there is a risk that, once again, a Finance Bill will be passed without the benefit of adequate scrutiny.