HM Treasury has published 'Tax Policy Making Principles'. This outlines the Government's approach to the delivery of tax policy changes via a single annual Budget. It details how the Government will engage with stakeholders as tax policy develops, and confirms 'Legislation Day' (L-Day) can be expected in the summer.
The document outlines that the Government must work in a smart and agile manner to deliver change quickly, while engaging with individuals, tax practitioners and businesses in the development of tax policy. To achieve this, three principles are set out to guide the design and delivery of changes to tax policy.
Predictability and stability
The Government is committed to a single major fiscal event each year.
- Tax policy measures will be announced at the annual Budget and legislated in an annual Finance Bill (or other appropriate legislative vehicle).
It is argued that further predictability and stability will be provided by giving a clear direction of travel for the tax system.
- HM Treasury states that an example of this is the Corporate Tax Roadmap published at the 2024 Autumn Budget.
A smart and agile approach to consultation
Tax professionals have indicated to the Government that responding to multiple consultations published at single points in the tax policy-making cycle is resource-intensive, and spreading the burden of responding more evenly throughout the year is preferable.
- The Government says it will take a more agile approach to consultation by publishing any supporting documents flexibly following announcements.
A more flexible approach will also apply to technical consultations on draft legislation.
- While draft legislation will typically continue to be published on Legislation Day (L-Day) in the summer, the Government will publish technical consultations at other times, sufficiently before the Finance Bill, to reduce the burden on stakeholders.
To provide stability and predictability to taxpayers, the Government will update tax announcements at key points throughout the fiscal event cycle (e.g. at the Budget).
The Government says that it recognises the importance of engaging with taxpayers on the development of tax policy wherever possible, but it must be able to deliver change quickly.
- It will consider when to engage with external stakeholders on tax policy, and the best way to do it.
- Consultation is not always appropriate or practicable, such as with simple rate and threshold changes or where there is a forestalling risk.
- Consultations will be targeted, precise and only seek necessary information.
- The duration of consultations will be proportionate to allow sufficient scrutiny without unduly delaying policy implementation. This will be considered on a case-by-case basis, with standard timeframes for formal written consultations on draft legislation being used where possible.
Transparency
The Government states it is committed to ensuring tax policymaking is open, transparent and clear on the rationale for change and the assessment of impacts.
- Tax impact and information notes will be published when legislation is laid. Certified policy costings will be published in the Budget.
To assist in tracking policy development, where consultation is necessary, the Government will make the objectives and scope of the consultation clear so that interested parties can track policy development.
- The Government will explore options for creating a dedicated resource that will provide the latest information on all technical tax announcements, an overview of work to date, and links to any relevant publications.
External link
HM Treasury: Tax Policy Making Principles