House of Commons Library

2018 Budget & Finance (No.3) Bill 2017-19

Published Wednesday, November 21, 2018

The Chancellor Philip Hammond presented the 2018 on 29 October. The Finance (No.3) Bill 2017-19 was published on 7 November, and the Bill's Second Reading was on 12 November.

Introduction

Each year the Chancellor of the Exchequer presents the Budget, which contains all the tax measures for the year ahead. Traditionally the Budget has been in March, prior to the start of the tax year on 6 April.  The statutory provisions to give effect to these tax measures are set out in a single Bill: the annual Finance Bill.  

It has been the practice in recent years for Chancellors to make tax announcements twice a year, using the Pre-Budget Report or Autumn Statement as a second fiscal event. In his Autumn Statement on 23 November 2016 the Chancellor Philip Hammond announced that from autumn 2017 the Government would present a single autumn Budget, to allow for greater Parliamentary scrutiny of Budget measures ahead of their implementation. For details see, The Budget and the annual Finance Bill, Commons Library briefing CBP813, 5 November 2018.

Budget 2018

On 29 October 2018 Mr Hammond presented the Conservative Government’s fifth Budget.[1]

The Budget report - HC 1629 - and associated documents are collated on Gov.uk.  Three key sources are:

Commons Briefing Papers are available on the context for the Autumn Budget (CBP 8422, 23 October 2018), and a summary of the measures announced (CBP 8428, 29 October 2018). The Lords Library has also published a paper on the Budget (LLN 2018-0114, 7 November 2018).

The Institute for Fiscal Studies published its post-Budget briefing on 30 October. The Treasury Committee has an ongoing inquiry on the Budget; details are on its site.

Finance Bill (No.3) Bill 2017-19

The Finance (No.3) Bill 2017-19 was published on 7 November.[2] The Treasury has also published the explanatory notes to the Bill, and collates other relevant material on this page. As noted, the Bill received its Second Reading on Monday 12 November.

As is common practice, the Government published a series of draft provisions to be included in the Finance Bill 2018/19 some months before the Budget, on 6 July. Some of these follow earlier consultation exercises, others provide for certain technical changes, while a third group are to have immediate or retrospective effect (Written Statement HCWS834, 6 July 2018). This draft legislation is on Gov.uk; HMRC published tax information & impact notes on each of these measures.

Generally selected clauses from the Bill are debated by the Committee of the Whole House over two days at the start of the Bill’s Committee stage.  The selection of clauses is set out in a programme motion, which was agreed at the conclusion of the Bill's Second Reading on 12 November (HC Deb cc 54-148). These are listed below, with links to the relevant tax information & impact notes for each:

Clauses 5, 6, 8, 9 and 10 (income tax thresholds and reliefs)

Income Tax Personal Allowance and basic rate limit from 2019 to 2020, 29 October 2018

Workplace charging for all-electric and plug-in hybrid vehicles, 6 July 2018

Changes to the treatment of emergency vehicles for private use, 6 July 2018

Abolition of receipt checking for benchmark scale rates and changes to overseas scale rates, 6 July 2018

Clause 15 and Schedule 3 (offshore receipts in respect of intangible property)

Offshore receipts from intangible property, 29 October 2018

Clause 16 and Schedule 4 (avoidance involving profit fragmentation arrangements)

Tax avoidance involving profit fragmentation for Income Tax and Corporation Tax,

Clause 19 (hybrid and other mismatches: scope of Chapter 8 and “financial instrument”)

Corporation Tax changes for hybrid and other mismatches regime, 29 October 2018

Clause 20 (controlled foreign companies: finance company exemption and control)

Controlled Foreign Companies and EU Anti-Tax Avoidance Directive, 7 November 2018

Clause 22 and Schedule 7 (payment of CGT exit charges)

Deferral of exit charge payments for Capital Gains Tax, 6 July 2018

Clause 23 and Schedule 8 (corporation tax exit charges)

Changes to the Corporation Tax exit charges, 6 July 2018

Clause 38 and Schedule 15 (entrepreneurs’ relief)

Minimum qualifying period extension for Entrepreneurs’ Relief, 30 October 2018

Changes to personal company tests for Entrepreneurs’ Relief, 29 October 2018

Entrepreneurs’ Relief where shareholding ‘diluted’ below the 5% threshold, 6 July 2018

Clauses 39 and 40 (gift aid and charities)

Simplification of donor benefits rules for Gift Aid, 6 July 2018

Increases to charities’ small trading exemption limits, 29 October 2018

Clauses 41 and 42 (stamp duty land tax: first-time buyers in cases of shared ownership)

Extension of Stamp Duty Land Tax First Time Buyers' Relief, 29 October 2018

Clauses 46 and 47 (stamp duty and SDRT)

Stamp Duty, Stamp Duty Reserve Tax transfers of listed securities and connected persons, 7 November 2018

Clauses 61 and 62 and Schedule 18 (remote gaming duty and gaming duty)

Remote Gaming Duty increase, 29 October 2018

Changes to Gaming Duty accounting periods and administration of the tax, 31 October 2018

NB : Following the Government's written statement on 14 November regarding its decision to implement the cut in the stakes for B2 gaming machines from April 2019 (HCWS1089), the Treasury tabled amendments to clause 61 for consideration by the Committee of the Whole House.

Clauses 68 to 78 (carbon emissions tax)

Carbon Emissions Tax, 29 October 2018

Clause 83 (international tax enforcement: disclosure arrangements)

International Tax enforcement disclosable arrangements, 6 July 2018

Clause 89 (minor amendments in consequence of EU withdrawal)

Amendments to tax legislation to reflect EU exit, 29 October 2018

Clause 90 (emissions reduction trading scheme: preparatory expenditure)

Carbon Emissions Tax, 29 October 2018

This two-day debate occurred on Monday & Tuesday 19-20 November.

Government amendments tabled to clause 61 (remote gaming duty) were agreed. In addition, the House agreed three new clauses and one amendment, tabled by the SNP and the Labour Party, without a division:

  • New Clause 12, to require a review of the public health effects of the provisions in the Bill relating to remote gaming duty - tabled by the SNP (HC Deb 20/11/2018 cc757-779).
  • Amendment 23 to clause 83 (internatlonal tax enforcement: disclosable arrangments), to require a report on how the power under this provision is to be exercised in the case of either a negotiated withdrawal agreement from the EU or a 'no-deal' Brexit - tabled by the Labour Party.
  • New Clause 5, to require a review of the impact of the tax avoidance provisions in the Bill, with regards to child poverty, households on different levels of income, people with protected characteristics and on a regional basis - tabled by the Labour Party.
  • New Clause 14, to require a review of the effectiveness of the tax avoidance provisions in the Bill - tabled by the SNP (HC Deb 20/11/2018 cc779-833).

Library briefing material on the Finance Bill

It is long-standing practice for there not to be a single impact assessment on the Bill; as noted, HMRC publish tax information & impact notes on individual Budget measures (see PQ6549, 6 September 2017). Similarly, given the scale and scope of the annual Finance Bill, the Library does not publish a single paper on the Bill, but aims to publish briefing material relating to the clauses selected for debate by the Committee of the Whole House.

and of related interest to the last of these:

Notes : 

[1] HC Deb 29 October 2018 cc653-669. The Chancellor had announced the date of the Budget on 26 September (HM Treasury press notice, Budget 2018 date confirmed, 26 September 2018).

[2] The date for the Bill's publication was confirmed last month: Finance (No.3) Bill: Written Statement, HCWS1002, 15 October 2018

Commons Debate packs CDP-2018-0241

Author: Antony Seely

Topic: Taxation

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