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The Finance Bill plans for 2015

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The forthcoming general election on 7 May cuts across the normal Finance Bill timetable. There is no set procedure for what happens to the Finance Bill in these circumstances, as in each previous general election it has been handled somewhat differently. As a rule, there will be at least one ‘extra’ Finance Act in a general election year.

What happened in previous election years?

In 2005, the Finance Bill was introduced in the House of Commons on 24 March 2005. The general election was called on 5 April 2005, and on the following day a shorter version of the Bill was published. That Bill received all its stages on the same day (6 April 2005), and received royal assent on 7 April 2005, becoming FA 2005. After the general election, the government introduced what was, in effect, the other half of the Finance Bill. This was later enacted as the F(No. 2)A 2005.

In 2010, the Finance Bill was introduced on 31 March 2010, and was about half the length that would have been expected for a non-election year. The notes issued with the Budget report indicated whether a measure would be included in this first Finance Bill, or in another Bill to be introduced after the election. The general election was called on 6 April 2010, and again all of the Finance Bill’s stages were taken in a single day, with royal assent for FA 2010 on 8 April 2010.

With the coming to power of the coalition government, the previous Labour government’s plans for the next Finance Bill were shelved, and the new chancellor held an ‘emergency’ Budget on 22 June 2010. This was followed by a Finance Bill of just 11 clauses, introduced on 1 July 2010 and receiving royal assent as F(No. 2)A 2010 on 27 July 2010. In July 2010, the new government also published draft legislation for a further Finance Bill, containing more detailed and technical measures. This was introduced to the House of Commons on 15 September 2010, and received royal assent on 16 December 2010, becoming F(No. 3)A 2010.

2015 is the first year in which the date of the general election has been known in advance, and it is therefore the first year in which we have advance notice of the date by which the first Finance Bill will have to be passed. We now know that the Finance Bill will be published on Tuesday 24 March and it must be enacted before the dissolution of Parliament on 30 March. The Bill will therefore need to be passed with minimal parliamentary scrutiny.

Once Parliament returns after the general election, there will almost certainly be a new Finance Bill, or Bills. The contents of this post-general election legislation will depend on the composition of the new government.

Why do we need a Finance Bill before the election, and what can we expect in that Bill?

Income tax and corporation tax are annual taxes, meaning that they can only be charged in a year (a tax year for income tax, or a financial year for corporation tax) for which an Act provides that they may be charged. This means that a Finance Bill authorising the continued collection of income and corporation tax must be passed before the dissolution of Parliament on 30 March 2015.

This Finance Bill will also contain any measures coming into immediate effect, such as anti-avoidance measures, and changes to excise duties, such as the rates of alcohol and tobacco duty.

All of the stages that are necessary for the first Finance Bill 2015 must be completed between its publication on 24 March and its enactment by 30 March. As a result, the government is highly unlikely to include all the draft clauses that were published on 10 December 2014. It will have to make a judgment as to how many to include, and has already announced that diverted profits tax will be enacted at this stage.

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