In the 2016 Autumn Statement, Chancellor Philip Hammond announced the introduction of a new Budget timetable. Up until recently, there were two fiscal events in the year, with changes in tax and spending announced at both the Spring Budget and the Autumn Statement.
What was the reason behind the change?
A single annual event is, according to the government, the ‘international norm’, and potentially allows for greater stability and certainty for the country. A single Autumn Budget will mean that any tax changes are announced well in advance of the start of the tax year in which they will take effect.
It also reaffirms the government’s commitment to making tax ‘simpler, more predictable and stable’.
The first Autumn Budget in the new timetable was presented in November 2017, with the Chancellor’s first Spring Statement having been delivered in March 2018.
The new process
The general process of making tax policy remains the same, however, the timescale for policy making and consultation has changed. The new timings are as follows:
1. Spring Statement – early consultation
The Spring Statement will primarily be the time for the government to respond to the forecast compiled by the Office for Budget and Responsibility (OBR). The OBR is legally obliged to produce two forecasts during a tax year: one at the time of the Autumn Budget, and one at the time of the Spring Statement.
Following announcement during the Autumn Budget, proposed changes to tax policy will be consulted on, with the consultation period ending ‘by March’. The government has outlined that, under the new system, most new policies will be announced ‘at least 16 months’ before they come into effect at the beginning of the next tax year.
Any new measures that are consulted on during the Spring Statement will not normally be included in the Finance Bill later in the year. The Spring Statement will provide the government with time to explore the options open to it. Measures announced at the Spring Statement will then be confirmed during the subsequent Autumn Budget.
Finally, and only if the ‘economic circumstances require it’, the government has retained the flexibility to makes changes to fiscal policy at this stage. However, this is not expected to be the norm at the Spring Statement: the Chancellor has indicated that he will typically only make significant tax or spending changes during the Autumn Budget.
2. Autumn Budget – initial policy announcement
Any new measures announced in the Autumn Budget will be open to consultation over the Winter and the Spring.
3. Winter-Spring – policy consultation
This is the official consultation period for any new measures announced in the Autumn Budget. The nature of the consultation will vary according to the detail and stage of the policy.
4. Summer – publication of draft legislation
After the consultations, draft legislation will be issued. The legislation will be passed through parliamentary scrutiny and further technical consultations. Any amendments will be made at this stage before the legislation comes into effect.
5. Autumn Budget – final decision on legislation
As this stage is well in advance of the new tax year, it will give tax stakeholders plenty of time to adapt to the new tax policy.
6. Winter – introduction of the Finance Bill
A post-Budget Finance Bill will mean the legislation should pass through parliament fairly quickly and easily, as parliamentary adjustments will have already been made.
7. Spring – Royal Assent
Legislation is expected to receive Royal Assent before the start of the new tax year.
Minor technical amendments such as changes to straightforward rates, allowances and thresholds may not always require lengthy consultations. In these cases, policies announced at the Budget may take effect four months later.
The government has stated that the changes to the Budget timetable will be ‘reviewed regularly’, and that it will continue to engage with tax professionals and other stakeholders in order to evaluate the process.
As always, Practice Track will be keeping up to date with any changes to the government’s fiscal timetable.