Brexit dominated Queen’s Speech opens new Parliament

Brexit dominated Queen’s Speech opens new Parliament

With no deal yet signed with the DUP the Queen formally opened the new Parliament on 21 June.

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In the same week that Brexit negotiations began, the Queen’s Speech on 21 June paved the way for the start of Theresa May’s new minority Government. With debates across the houses occurring in the coming days and no deal yet signed with the Democratic Unionist Party (DUP) there is still much uncertainty around the long term stability of this Government. This uncertainty led to a slimmed down Queen’s Speech with less of the usual pomp and regalia.

27 bills were set out in the speech with eight of these relating to Brexit. Whilst 27 bills is not unusual in itself for a Queen’s Speech, this speech is due to cover two years’ worth of parliamentary business. Many of the measures set out in the Conservative manifesto, such as the so called ‘dementia tax’ to fund the increasing costs of social care and the scrapping of free school lunches did not make it in to the speech.

One of the eight Brexit bills is a Customs Bill to enable the UK to operate standalone customs, VAT and excise regimes upon exit from the European Union (EU). A National Insurance Contributions (NIC) Bill was also put forward in the Queen’s Speech to legislate for the NIC changes announced in the 2016 Budget and Autumn Statement, the main policies here being the abolition of Class 2 NIC and changes to the NIC treatment of termination payments. The increase in Class 4 NIC announced in the Spring Budget 2017, but subsequently cancelled, will not be included in this NIC Bill. To take a look at what we said in 2016 on NIC please see here.

Taxpayers are still unsure if measures such as the new corporate interest restriction regime and corporate loss reform regime will have a backdated 1 April 2017 start date as originally proposed. The Queen’s Speech and the Chancellor of the Exchequer’s Mansion House speech did not offer much in the way of direction or certainty for taxpayers on these issues. Not surprisingly, Brexit dominated both agendas.

The background briefing for the Queen’s Speech noted that there will be three Finance Bills in the next two years. Notably there will be a Summer Finance Bill 2017; neither a date nor details have yet been confirmed but we may expect to see many measures dropped from the draft Finance Bill 2017 reappear. With less than three weeks until summer recess of Parliament, this Bill may be imminent. If indeed that is the case, we will be providing commentary in future Tax Matters Digest articles.

We will wait to hear the debate in Parliament in the coming days and in particular any comments from the Financial Secretary to the Treasury, Mel Stride, which may flag some clues on the date of or any details potentially contained within the Summer Finance Bill.

In recent articles we noted that a confidence and supply deal with the DUP looks set to be the way forward for the minority Conservative Government. Although, with warnings from the DUP not to take them for granted and reports that the DUP are seeking an extra £2bn spending on health and infrastructure in Northern Ireland, this deal could prove to be more difficult than originally appeared on the morning of 9 June. However at present it does not appear as if the DUP would vote against a Conservative Government and bring about the possibility of another election.

As the Queen headed off to Royal Ascot after opening Parliament it remains to be seen if this Government has the staying power of a prized thoroughbred or whether it will have problems getting out of the starting gate. Whilst this uncertainty continues we will be keeping up to date with the latest developments and reporting these in Tax Matters Digest.

For further information please contact:

Paul Harden

Patrick Martin

 

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