Finance Bill 'political football' of Autumn Budget?

With the Budget looming, it is almost easy to forget about the fact that the Finance Bill will be revealed not long afterwards.

Although the Budget is the biggest point of contention – mainly due to the fact that not as much has been revealed about it – the Finance Bill will undoubtedly include more in-depth information on any financial points that may be raised on Monday 29 October.

Stella Amiss, head of tax policy at PwC, has said that “the announcement of an October Budget was an eyebrow-raiser to many but, given the political landscape, shouldn’t have come as too much of a shock.

“With a Brexit deal still up in the air, and two key EU meetings on the horizon, the chancellor will want to minimise the chances of the Finance Bill becoming a political football that gets caught in any fallout from the negotiations.”

The draft release of the Bill highlighted that there will be a focus on the likes of HMRC powers and Making Tax Digital (MTD), so it will be interesting to see if either of these features in the Autumn Budget. Regardless of the specific changes that may be introduced in the Budget, PwC’s head of tax policy has emphasised that it is incredibly important for the chancellor to “box clever”.

In such a time of uncertainty, it has become very clear that any policies made in the Budget will be softer, until the future is more clearly established. As Stella Amiss has said: “[The chancellor will] likely also look at tinkering with various rates and reliefs, with a view to raising a bit here and a bit there.”

A prevalent concern is that the focus will be too much on short-term solutions that will help to stabilise the current economy, rather than focusing on long-term investments that will ensure the UK’s economic climate remains attractive when out of the EU.

“The Prime Minister has reaffirmed that the UK will have the lowest corporation tax rate in the G20 post-Brexit,” Amiss said. “But, in the longer term, the country would benefit more from a step back, a proper look at the tax system, the activities that are taxed and the basis for taxation. A concerted effort to reform what’s become an unwieldy and over-complex system is needed now more than ever.”

There is a risk that further legislation will be applied to the Budget, in an attempt to remedy issues in the tax industry that have been identified as points of concern. However, as Amiss has stated, further complexity being applied to already complicated policies runs the risk of creating more problems in the long-term.

Moreover, similarly to Melissa Geiger from KPMG’s earlier insights, Amiss has claimed that, “while the present uncertainty hardly lends itself to swingeing reforms, the government has pledged to increase NHS funding by £20bn a year by 2023.

“Some revenue-raising measures appear likely, with pensions tax relief for the most wealthy a potential target. The taxation of digital business and the self-employed are other areas that are likely to draw attention.”

Stella Amiss concluded: “There are thoroughly understandable concerns in the UK about the redistribution of wealth and some of the gaps that exist within our society. This needs to be addressed, but in a balanced and thought through way.

“What is needed now is stability, simplicity, and a proper conversation about how we address those concerns and create a tax system that breeds confidence, provides clarity, and is fit for the modern world.”