Finance (No. 2) Bill 2017 — Decline Second Reading — 18 Apr 2017 at 21:19

The majority of MPs voted to raise the threshold for paying higher rate income tax, to introduce a Soft Drinks Industry Levy, to restrict the national insurance benefits of remuneration other than salary and for other changes to the tax system.

MPs were considering a Finance Bill^[1].

The motion rejected by the majority of MPs in this vote was:

• That
• “this House declines to give the Finance (No. 2) Bill a Second Reading because it derives from the 2017 Budget which confirmed the continuation of austerity, it fails to provide the necessary stimulus to compensate for the economic impact of Brexit, it fails to address the inequity of VAT being charged on the Scottish Police Authority and the Scottish Fire and Rescue Service, it fails to provide concrete measures to support the oil and gas industry, it increases Insurance Premium Tax above the level of inflation, it increases duty on Scotch whisky, and it is a wholly inadequate response to the economic challenges being faced by Scotland and the UK.”

The Finance (No. 2) Bill^[1]:

• imposes an income tax for the tax year 2017-18. (Parliament has to explicitly decide if to levy an income tax each year.^[2])
• keeps income tax rates unchanged for 2017-18 at a basic rate of 20%, higher rate of 40%; and additional rate applying to income over £150,000 per year of 45 (the "basic rate limit" was raised from £32,400 to £33,500 for 2016-16 in section 2 of the Finance Act 2016, consequently raising the higher rate threshold to £45,000, and section 3 of the Finance Act 2016 had raised the income tax free personal allowance to £11,500 for 2017-18].)
• continues an exemption from income tax applying to the first £5,000 of savings interest.
• reduces the nil rate applying to dividend income from £5,000 to £2,000 for tax year 2018 onwards.
• does not change the rate of Corporation Tax for the financial year 2018 from that set at 19% via section 7 of the Finance (No 2) Act 2015.
• establishes a new tax called the Soft Drinks Industry Levy; at rates of £0.24 per litre for drinks with at least 8 grams of sugars per 100ml; and £0.18 per litre for those with a lower sugar content.
• removes the income tax relief and hence also the national insurance contributions relief which applied to the first £2,000 worth of employee shareholder shares, and also removes the capital gains tax exemption from such shares where an agreement was entered into on or after 1 December 2016.
• restricts the national insurance benefits of "salary sacrifice arrangements" or "optional remuneration arrangements".
• rises in taxes on alcohol and tobacco
• makes no changes in fuel duties

The lack support the amended motion enabled the Bill to continue on its path to becoming law.

• [1] Parliament's webpage on the Finance (No. 2) Bill 2017
• [2] Explanatory notes to the Finance Bill

Debate in Parliament |