Budget resolutions

Permanent and annual taxes

'Permanent' taxes include most UK taxes, including all indirect taxes, petroleum revenue tax and taxes on capital.
Annual taxes include income tax, corporation tax and advanced corporation tax.

Annual taxes must be renewed every year, this annual review of certain taxes gives the House of Commons the opportunity to review the imposition of these taxes.

If annual taxes are re-imposed as a whole, their detailed provisions, with one exception, remain as they were in the previous year.

This important exception concerns the indexation of personal allowances and rate bands for income tax; this is discussed in more detail below.

Legislative process

The re-imposition of annual taxes, and most other tax changes announced in the Budget are legislated in the annual Finance Bill . This is normally published in early January and is considered by Parliament in the Spring, with Royal Assent being given by the start of May.

One of the key features of tax legislation, which distinguishes it from any other legislation is that measures announced in the Budget may take effect before the Finance Bill is enacted. The approval of Budget resolutions permits this to take place.

The Budget resolutions are tabled as soon as the Chancellor has finished the Budget speech. Under the Provisional Collection of Taxes Act 1968 , these resolutions, once passed by the House of Commons, authorise the imposition of certain taxes or of changes in their rates. Under the Unified Budget procedures, there is also a resolution (unconnected to the Finance Bill) which welcomes the Budget spending plans.

Rules for tax changes

All tax changes that are to be enacted in the Finance Bill have to be covered by resolutions. Some changes, such as those that increase or extend a tax, take away or reduce an existing relief, or are to have immediate effect need specific resolutions. Other changes can be covered by a more general resolution known as the Amendment Law Resolution . The Amendment Law Resolution is generally the first resolution in the list tabled at the end of the Budget speech and is the formal subject of the Budget debate. Only the Government can move an increase in taxes. This is because the right to impose taxes derives from the Crown's right to demand revenue (or supply); a demand which can only be expressed through the Government of the day.

There is another general resolution known as the Incidental Charges Resolution . This covers situations where the complexities of the tax system mean than an increase income tax relief can, in some circumstances, lead to taxpayers having to pay more on a different tax, even though their overall tax bill is not going up.

Immediate tax changes

The Budget resolutions are tabled at the end of the Chancellor's statement and they are voted on at the end of the Budget debate. If passed they can then take effect. In recent years the Budget debate has lasted for five days. To cover the intervening period, a Resolution under Section 5 of the Provisional Collection of Taxes Act can be moved immediately the Chancellor finishes speaking. This Resolution cannot be debated or amended and, if approved by the House, gives authority for specified changes to have immediate effect pending the passage of the main Resolutions. The effect of such a Resolution lapses if the main Resolution, to which it gives effect, is not passed within ten sitting days. Under the procedures for Autumn Budgets the changes on excise duties often take effect from 6pm on Budget Day, but sometimes a later implementation date is chosen.

Time limit on main resolutions

Furthermore, the main Resolutions themselves are temporary; the changes to which they give effect are nullified if the Finance Bill does not receive a second reading within 30 sitting days of the Resolutions being passed, or if the Bill does not receive Assent within a certain period. The 30 sitting days period was set in the 1993 Finance Act; previously it was 25 days. The deadline for Royal Assent to the Finance Act is 5 May for an Autumn Budget (for a March/April Budget it had been 5 August). The Resolutions also lapse if Parliament is dissolved or prorogued.

Guide to the Budget
Budget dates and Chancellors since 1900
About the Treasury