Finance Bill 2023-24 passes second reading

The Finance Bill 2023-24 passed its second reading in the House of Commons on Wednesday 13 December 2023, agreed on division by 291 ayes to 54 noes¹. An amendment moved by the SNP's Drew Hendry to decline the Bill a second reading was negatived on division by 46 ayes to 296 noes¹.

The Bill follows the Autumn Statement, which Chancellor Jeremy Hunt presented to the House on 22 November 2023¹. In that statement the Chancellor announced a cut in the main rate of National Insurance contributions paid by employees, known as primary Class 1 NICs, and the main rate paid by the self-employed, Class 4 NICs¹. The Government then introduced 37 ways and means resolutions covering the measures to be included in the Bill, and the Commons debated them on 22, 23 and 27 November 2023; the House did not divide on any of them¹. The Bill was introduced and received its first reading after that¹.

Two measures in the Bill have drawn most interest, according to the House of Commons Library: the abolition of the pensions lifetime allowance, for which HMRC has published a tax information and impact note explaining the policy from 6 April 2024, and the announcement that capital allowance full expensing would be made permanent¹. The Library notes that an overwhelming majority of the proposals in the Bill had already been published by the Government in July 2023¹.

Opening the second reading debate, Financial Secretary to the Treasury Nigel Huddleston said the Bill would:

Shadow Financial Secretary James Murray said Labour would not oppose the second reading but would welcome scrutiny at Committee stage, and commented that the UK's tax burden is "on track to be the highest since the second world war"¹. The Liberal Democrats did not support the Bill, with spokesperson Sarah Olney saying issues including health care, the tax burden and the cost of living crisis were not addressed in it¹. Concluding for the Government, Exchequer Secretary to the Treasury Gareth Davies said the Bill would mean companies "will pay less tax if they invest more" and would deliver "growth, investment, work and reward"¹.

Why it matters for households

The Bill is the vehicle for tax measures announced in the Autumn Statement, so its progress determines when those measures reach the statute book. The National Insurance cuts affect the main rates paid by employees and by the self-employed¹. The abolition of the pensions lifetime allowance is set out in a tax information and impact note covering abolition from 6 April 2024¹. The Bill also makes permanent the capital allowance full expensing announced in the Autumn Statement, a change to how companies can deduct investment¹. The Library records that separate legislation was introduced on 23 November 2023 to give effect to some changes, and that this separate legislation undertook all its remaining Commons stages on 30 November 2023¹.

What happens next

The Committee of the Whole House stage took place on 10 January 2024, and the Public Bill Committee stage on 16 January 2024¹. The deadline for Members to table amendments was Wednesday 31 January 2024¹. The Bill returned to the floor of the House on Monday 5 February 2024 for Report Stage and third reading, where the House divided on third reading and agreed it by 283 ayes to 39 noes¹. The Bill received Royal Assent on 22 February 2024 and became the Finance Act 2024¹.