This paper gives a brief summary of the structure of inheritance tax before looking at the debates there have been about the tax in recent years.
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.
In 2011 the Coalition Government reformed the Parliamentary timetable, moving the Queen’s Speech and the beginning of the annual session to the spring. In turn provision was made to allow for the Finance Bill to be carried over from one session to the next to ensure that this did not substantially reduce the amount of time available for its scrutiny.
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 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 this, the Government published details of a revised annual Budget timetable for policy announcements, consultations, and the passage of legislation. As this explained, “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.”
Over the last two 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.
For further details see, The Budget and the annual Finance Bill, Commons Library briefing CBP813, 4 March 2021.
- the Treasury’s Policy Costings document;
- the Treasury’s Impact on Households document, and,
- HMRC’s series of Tax Information and Impact notes, dealing with each of the tax measures announced, collated in the Overview of Tax Legislation & Rates
The Institute for Fiscal Studies published its post-Budget briefing on 4 March; this included some analysis of the impact of the Budget on household finances, and the major changes announced to business tax.
The Government published a number of tax consultations and calls for evidence on 23 March. Full details are given in, Tax policies and consultations (Spring 2021), CP404, March 2021. The current status of ongoing and closed tax consultations is provided by the Treasury’s public tax tracker.
Finance Bill 2021
The Finance (No.2) Bill 2019-21 was published on 11 March. The Bill’s Explanatory Notes and full details of the Bill’s scrutiny to date are collated on its Bill page on the Parliament site. The Bill’s second reading is set for Tuesday 13 April.
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. Provisionally these debates are scheduled for Monday 19 and Tuesday 20 April.
The selection of clauses is set out in a programme motion, to be put to the House at the conclusion of the Bill’s second reading, on 13 April. These are listed below, with links to the relevant tax information & impact notes for each:
Clauses 1 to 5 (income tax charge, rates etc)
Clauses 6 to 14 and Schedule 1 (corporation tax charge and rates, rate of diverted profits tax and capital allowances: super-deductions etc)
Clauses 24 to 26 (employment income: provisions relating to coronavirus)
Easement for employer provided cycles exemption, 3 March 2021
Clause 28 (pensions: freezing the standard lifetime allowance)
Clause 30 and Schedule 6 (construction industry scheme)
Changes to tackle Construction Industry Scheme abuse, 25 March 2021
Clauses 31 to 33 (coronavirus support payments etc)
Updates to tax charges when a person is no longer eligible to Self-Employment Income Support Scheme payments & Updates to taxation of the Self-Employment Income Support Scheme grants for Income Tax, 3 March 2021
Tax deductibility of business rates repayment, 3 March 2021
Clause 36 and Schedule 7 (corporation tax: hybrid and other mismatches)
Clause 40 (capital gains tax: annual exempt amount)
Clause 41 (capital gains tax: hold-over relief for foreign controlled companies)
Capital Gains Tax relief for gifts of business assets, 3 March 2021
Clause 86 (inheritance tax: rate bands for tax years 2021-22 to 2025‑26)
Clauses 87 to 89 and Schedules 16 and 17 (stamp duty land tax)
See also, HMRC, Budget 2021: Overview of tax legislation and rates, 3 March 2021 (“1.58: Non-UK Resident SDLT”)
Clauses 90 and 91 (annual tax on enveloped dwellings)
Clauses 92 to 96 and Schedule 18 (value added tax)
Extension of Making Tax Digital for VAT, 3 March 2021
See also, HMRC, Budget 2021: Overview of tax legislation and rates, 3 March 2021 (“1.54 S4C Section 33 VATA”)
Clause 97 and Schedule 19 (customs duty)
Northern Ireland Steel Import Duty, 3 March 2021
Clauses 109 to 111 and Schedules 21 and 22 (freeports)
Designation of Freeport tax sites, 3 March 2021
Stamp Duty Land Tax relief for Freeports, 3 March 2021
Clause 115 and Schedule 27 (follower notice penalties)
See, HMRC, Budget 2021: Overview of tax legislation and rates, 3 March 2021 (“1.62: Follower Notices and Penalties”)
Clauses 117 to 120 and Schedules 29 to 31 (avoidance)
See, HMRC, Budget 2021: Overview of tax legislation and rates, 3 March 2021 (“1.61: Tackling promoters of tax avoidance”)
Clause 121 and Schedule 32 (conditionality)
Clauses 128 to 130 (banking)
The tax impact of the withdrawal of LIBOR and other benchmark rates, 12 November 2020
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. 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 those clauses selected for debate by the Committee of the Whole House.
Budget 2021: personal allowance & higher rate threshold, CBP9186, 2 April 2021
- Of related interest, see,
- Income tax: increases in the personal allowance since 2010, CBP6569, 15 November 2018
- Direct taxes: rates and allowances 2021/22, CBP9146, 6 April 2021
Corporate tax reform, CBP9178, 2 April 2021
- Of related interest, see, Corporate tax reform (2010-2020), CBP5945, 2 April 2021
Coronavirus: Self-Employment Income Support Scheme, CBP8879, 18 March 2021
Inheritance Tax, CBP93, 8 April 2021
Pension tax relief – the annual and lifetime allowances, CBP5901, 12 March 2021
Stamp duty land tax on residential property, CBP7050, 28 March 2021
Tax avoidance and tax evasion, CBP7948, 7 April 2021
- Of related interest, see, Tax avoidance: a General Anti-Abuse Rule, CBP6265, 7 April 2021
Taxation in the construction industry, CBP814, 15 March 2021
UK Government policy on freeports, CBP8823, 19 March 2021
VAT on tourism, CBP6812, 28 March 2021
 HM Treasury, The new Budget timetable and the tax policy making process, 6 December 2017
 HM Treasury press notice, Government strengthens tax policymaking with over 30 updates, consultations and documents published, 23 March 2021. Written Statement HCWS873, 23 March 2021
UK tax law is specifically targeted rather than purposive: in tackling the exploitation of loopholes in the law, governments have legislated against individual avoidance schemes as and when these have come to light. This note looks at the case that has been made recently for a general anti-avoidance rule, and the Coalition Government's introduction of a 'narrower' General Anti-Abuse Rule in 2013.
In recent years concerns as to the scale of mass marketed tax avoidance schemes have led to three major initiatives to undermine this market, and encourage a sea change in attitudes, both in the accountancy industry and its customers: the Disclosure of Tax Avoidance Schemes regime (DOTAS); the General Anti-Abuse Rule (GAAR); and the system of follower notices & accelerated payments. Following these initiatives the Government has continued to introduce provisions to tackle both tax avoidance and tax evasion, including measures in both the Spring & Autumn Budgets in 2017, and the 2018 Budget. This note provides an introduction to the issue of tax avoidance, looking in detail at the development of follower notices and accelerated payments, before discussing the current Government’s approach.