Finance (No.2) Bill 2022-23

How does the Budget fit with the Government’s approach to tax policy?

In his Autumn Statement in November 2016 the then 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.

Mr Hammond presented the last Spring Budget on 8 March 2017, and the first Autumn Budget on 22 November 2017.

Following the Autumn Budget 2017, the Government published details of a revised annual Budget timetable for policy announcements, consultations, and the passage of legislation (HM Treasury, The new Budget timetable and the tax policy making process, 6 December 2017). An extract is given below:

"Under the new cycle of a single fiscal event each year, most tax policies will continue to be developed through an established cycle, whereby a policy announcement at the Budget is followed by a policy consultation, the publishing of draft legislation, and proposals are finally legislated in the next Finance Bill.

However, to reflect the move of the Budget from spring to autumn, the timing of this cycle will change. Policies will be announced at the Budget in the autumn, and consulted on in winter and over the spring. Draft legislation will then be published in July for technical consultation ahead of the Finance Bill being introduced in the autumn."

What has happened in recent years with the presentation of the Budget?

Over the last three years this timetable has been affected by the timing of the 2019 General Election and the Covid-19 pandemic. In the first case the 2019 Budget, planned for 6 November, was deferred to 11 March 2020. In the second case, the Chancellor’s presentation of three economic statements over 2020, resulted in the Autumn Budget being postponed to 3 March 2021.

Following an Autumn Budget in October 2021 and a Spring Statement in March 2022, the then Chancellor Kwasi Kwarteng announced a series of major tax and spending decisions on 23 September 2022. In a statement on 17 October 2022 the current Chancellor Jeremy Hunt announced that many of the tax changes Mr Kwarteng had set out would be reversed. In turn Mr Hunt set out a further series of tax decisions in the Autumn Statement on 17 November 2022. The Chancellor proposed that some of these measures would be included in an Autumn Finance Bill, and some in a Spring 2023 Finance Bill to be introduced after the next Budget. Subsequently the first of these Bills received Royal Assent on 10 January 2023 (Finance Act 2023), and the Chancellor announced that the Spring Budget 2023 would be on 15 March 2023.

Further Commons Library briefings on the Budget

Other Commons Library briefings provide a checklist of Budgets since 2010 with a list of key documents and recommended sources on tax policy, and a longer historical list of Budgets and Finance Bills since 1968. A Commons Library Insight, What is the Budget? gives a short summary of what happens during and after the Budget.

Spring Budget 2023

The Chancellor presented Spring 2023 Budget on 15 March 2023, along with the Office for Budget Responsibility's Economic and Fiscal Outlook. Spring Budget 2023 report (HC 1183) (PDF) and associated documents are on Gov.uk, including:

• the Treasury’s Spring Budget 2023 Policy Costings (PDF);
• the Treasury’s Impact on households: distributional analysis to accompany Spring Budget 2023 (PDF);
• HM Revenue & Customs' Tax Information and Impact notes, dealing with each of the tax measures announced, collated in the Overview of Tax Legislation & Rates.

Library briefings are available on the context for the Spring Budget 2023, a summary of the measures announced, and a summary of the initial reaction to the Budget.

Both the Institute for Fiscal Studies and the Resolution Foundation have published briefings on Spring Budget 2023.

The Treasury Select Committee is holding an enquiry on Spring Budget 2023, and has held three evidence sessions: with a number of economists on 21 March; with officials from the OBR on 22 March; and with the Chancellor and Treasury officials on 29 March.

Finance (No.2) Bill 2023-23

The Finance (No.2) Bill 2022-23 was published on 23 March. The Bill, with its explanatory notes, is published on the Bill’s page on Parliament.uk, which also provides details of its parliamentary progress. Chapter 1 of HMRC’s Overview of Tax Rates and Legislation, mentioned above, provides a summary of all of the provisions in the Bill. The Bill received its second reading on Wednesday 29 March 2023.

In a written statement on 5 July 2022 the Government had set out plans to publish draft clauses for the next Finance Bill. In a written statement on 20 July 2022 – ‘L Day’ – the then Financial Secretary Lucy Frazer announced the publication of these draft provisions, along with a number of consultation responses and policy announcements. Full details were published by HM Revenue & Customs (HMRC): Draft Finance Bill 2022-23 legislation: impacting definitions and declaration, 20 July 2022. These provisions are included in Finance (No.2) Bill 2023-23 (HMT and HMRC, Spring Finance Bill 2023, updated 23 March 2023).

Committee of the Whole House

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 to be considered in these debates is set out in a programme motion, which was put to the House at the conclusion of the Bill’s second reading (Order Paper No.143 (PDF), 28 March 2023 - Part 1, item 3). These are listed below with links to the relevant tax information and impact note:

Clauses 5 and 6 (corporation tax charge and rates)

Clauses 7 to 9 (capital allowances)

Capital allowances: full expensing for companies investing in plant and machinery from 1 April 2023 until 31 March 2026, 15 March 2023

Legislating the Annual Investment Allowance (AIA) at £1m, 15 March 2023

First-year allowance for electric vehicle charge-points, 15 March 2023

Clauses 10 to 15 and Schedule 1 (other reliefs relating to businesses)

Research and Development Tax relief reform changes, 15 March 2023

Patent Box – Corporation Tax main rate consequential amendment, 15 March 2023

Energy Profits Levy: Decarbonisation Allowance, 15 March 2023

Two year extension to Museums and Galleries Exhibition Tax Relief sunset clause, 15 March 2023

Two year extension of higher rates for theatre, orchestra, and museums and galleries exhibition tax reliefs, 15 March 2023

Increasing the limits of the Seed Enterprise Investment Scheme, 15 March 2023

Clauses 18 to 25 (pensions)

Pension Tax Limits, 15 March 2023

Collective money purchase – winding up, 15 March 2023

Relief relating to net pay arrangements, 15 March 2023

Clause 27 (power to clarify tax treatment of devolved social security benefits)

Income Tax: Taxation of new social security benefits, 15 March 2023

Clauses 47, 48 and 50 to 60 and Schedules 7 to 9 (alcohol duty: charge, rates and reliefs)

Alcohol Duty: rate changes, 15 March 2023

Reform of Alcohol Duty Rates and Reliefs, 15 March 2023

Clauses 121 to 264 and Schedules 14 to 17 (multinational top-up tax)

Clauses 265 to 277 and Schedule 18 (domestic top-up tax)

Multinational top-up tax and Domestic top-up tax: UK adoption of OECD Pillar 2, 15 March 2023

Clauses 278 to 312 (electricity generator levy)

Electricity Generator Levy, 15 March 2023.

The Government tabled a number of amendments for consideration at this stage of the Bill: to Schedule 1 (relief for research and development); and, to clause 174, clause 223 and Schedule 16 (multinational top-up tax) (see, HMT, Spring Finance Bill 2023: Committee of the Whole House, 14 April 2023).

These were all agreed on the first day of the Committee's consideration of the Bill (Votes and Proceedings, No.147 (PDF), 18 April 2023). No other amendments were made to the Bill on this day, and the succeeding day for the Committee's consideration (Votes and Proceedings, No.148 (PDF), 19 April 2023).

Public Bill Committee

The remaining provisions in the Bill were considered by Public Bill Committee in four sittings over two days, on 16 and 18 May 2023. The Government tabled a number of amendments for consideration by the Committee: to Clause 29 and Schedule 2 (Estates in administration and trusts); Clause 34 and Schedule 3 (Corporate interest restriction); Clause 41 (Separated spouses and civil partners); Clause 42 (Carried interest); and, Clause 324 and Schedule 22 (Reform of HGV road user levy). Details are set out in HM Treasury, Spring Finance Bill 2023: Public Bill Committee, 15 May 2023; and, A Letter from the Financial Secretary - Government Amendments to the Spring Finance Bill 2023, (PDF) 15 May 2023. All of these amendments were agreed without a vote. No other amendments were made to the Bill, although the Committee debated one amendment and one new clause tabled by the SNP, and one new clause tabled by the Chair and several members of the Treasury Select Committee.

Report Stage and Third Reading

The remaining stages of the Bill in the House of Commons took place on Tuesday 20 June (Votes and Proceedings No.176 (PDF), 20 June 2023). The Government tabled a number of amendments and two new clauses for consideration at Report Stage (HM Treasury, Spring Finance Bill 2023: Report Stage, 13 June 2023). These were agreed without a division. No further amendments were made to the Bill, prior to its Third Reading (HC Deb 20 June 2023 cc716-765). The Finance (No.2) Act 2023 received Royal Assent on 11 July 2023 (Votes and Proceedings No.188 (PDF), 11 July 2023).

Library briefings on the Finance (No.2) Bill 2022-23

It is long-standing practice for there not to be a single impact assessment on the Finance Bill (see, PQ6549, 6 September 2017). Similarly, given the scale and scope of the annual Finance Bill, the Library does not publish a single briefing on the Bill, but aims to publish briefing material relating to clauses selected for debate by the Committee of the Whole House. Relevant Library briefings will be added to this page when they are available.

Commons Library briefing CBP5901, Pension tax relief: The annual allowance and lifetime allowance, 30 March 2023

• Of related interest see:
  • Commons Library briefing CBP7505, Reform of pension tax relief, 22 March 2023
  • Commons Library briefing CBP8626, Public service pensions: Impact of pension tax rules on NHS consultants and GPs, 17 April 2023

Commons Library briefing CBP9765, The new alcohol duty system, 4 April 2023

• Of related interest see:
  • Commons Library briefing SN01373, Alcohol taxation: Government policy up to 2020, 4 April 2023

Commons Library briefing CBP9178, Corporate tax reform, 11 April 2023

Commons Library briefing CBP341, Taxation of North Sea oil and gas, 12 April 2023 - see in particular, Section 5: Recent developments: the Energy Profits Levy and the Electricity Generator Levy (2022/23)

Commons Library briefing CBP8719, Digital Services Tax, 14 April 2022 - see in particular, Sections 4 and 5, which cover the development of the OECD's 'Two Pillar' Framework, one part of which - Pillar 2 - is to be implemented in the UK by provisions in the Bill for multinational top-up tax and domestic top-up tax.

Commons Library briefing CBP9771, Finance (No.2) Bill 2022-23: Taxation of new social security benefits, 17 April 2023