Finance (No. 2) Bill

Wednesday 11th March 2026 Commons Chamber

Consideration of Bill, as amended in the Committee and in the Public Bill Committee.

New Clause 5

Offshore income gains

“(1) In the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)—

(a) in regulation 20 (application to gains of non-resident settlements), omit paragraphs (2) to (5);

(b) in regulation 21 (application of transfer of assets abroad provisions), omit paragraphs (4) to (6).

(2) In consequence of the amendments made by subsection (1)—

(a) in section 734 of ITA 2007 (reduction in amount charged: previous capital gains tax charge), in subsection (5), omit “20 and”;

(b) in Schedule 7 to FA 2008 (remittance basis), omit paragraphs 100 to 102;

(c) in the Offshore Funds (Tax) Regulations 2009—

(i) in regulation 18 (charge to tax on disposal of asset: further provisions), in paragraph (5), omit sub-paragraph (c);

(ii) in regulation 19 (income treated as arising under regulation 17: remittance basis), omit paragraph (5);

(iii) omit regulation 130 (amendments of FA 2008);

(iv) in Part 2 of Schedule 3 (index of defined expressions), omit the entry for “OIG amount”;

(d) in Schedule 10 to FA 2025 (temporary repatriation facility)—

(i) in paragraph 3(7), for “paragraphs 4 and 5” substitute “paragraph 5”;

(ii) in paragraph 3(9), for “paragraphs 4 and 5” substitute “paragraph 5”;

(iii) omit paragraph 4;

(iv) in paragraph 5(7), for “paragraphs 3 and 4” substitute “paragraph 3”;

(v) in paragraph 10, omit sub-paragraphs (7) and (8).

(3) Section (Offshore income gains: savings) makes provision preserving in certain cases the effect of the law as it applied before the amendments made by this section.

(4) This section—

(a) is to be treated as having come into force on 6 April 2025;

(b) has effect for the tax year 2025-26 and subsequent tax years.”

This new clause would make amendments in relation to certain offshore income gains so that certain provisions of the Taxation of Chargeable Gains Act 1992 that previously applied to them no longer apply.

Brought up, and read the First time.

15:31

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Judith Cummins)]

With this it will be convenient to discuss the following:

Government new clause 6—Offshore income gains: savings.

Government new clause 7—Pensions: abolition of the lifetime allowance charge.

New clause 1—Report on fairness and scope of the loan charge settlement opportunity—

“(1) HM Revenue and Customs must, within 12 months of the passing of this Act, lay before the House of Commons a report on the operation and impact of any loan charge settlement opportunity established under section 25 of this Act.

(2) The report under subsection (1) must in particular consider—

(a) whether the terms of the settlement opportunity are available to individuals who have previously settled or fully paid liabilities arising from disguised remuneration loan arrangements,

(b) whether the terms of the settlement opportunity are available to individuals with disguised remuneration loan arrangements falling outside the loan charge years specified in Part 7A of the Income Tax (Earnings and Pensions) Act 2003,

(c) the extent to which any differences in treatment between these groups and those eligible for the settlement opportunity affect perceptions of fairness, and

(d) the potential impact of such perceptions on future tax compliance and trust in the tax system.

(3) The report must include—

(a) an assessment of whether extending more favourable settlement terms to the groups described in subsection (2)(a) and (b) would improve fairness and consistency, and

(b) any recommendations HMRC consider appropriate in light of that assessment.”

This new clause would require HMRC to report on the operation and fairness of the new loan charge settlement opportunity. It would consider whether more favourable terms are, or should be, available to those who have a already settled or fully paid liabilities, and to those with arrangements outside the loan charge years.

New clause 2—Report on implementation customer service standards in relation to sections 253 to 258—

“(1) The Commissioners must, within six months of the commencement of sections 253 to 258, lay before the House of Commons a report setting out—

(a) customer service standards for persons granted exemptions under regulations made under paragraph 14 or 15 of Schedule A1 to the Taxes Management Act 1970, including—

(i) maximum waiting times for telephone helpline calls,

(ii) minimum call answering rates,

(iii) maximum response times for written correspondence, and

(iv) availability of in-person support;

(b) measures taken to ensure adequate staffing and resources to meet those standards;

(c) data on actual performance against those standards in each quarter; and

(d) remedial action to be taken where standards are not met.

(2) The customer service standards published under subsection (1) must ensure that persons granted exemptions under regulations made under paragraph 14 or 15 of Schedule A1 to the Taxes Management Act 1970 can access support through non-digital channels with service levels comparable to those historically provided before the introduction of Making Tax Digital.

(3) The Commissioners must publish an annual report on compliance with the customer service standards established under subsection (1), and lay a copy of the report before the House of Commons.”

This new clause would require HMRC to establish and publish customer service standards for tax payers exempted from Making Tax Digital requirements due to digital exclusion.

New clause 3—Report on winter fuel payment charge and related compliance and collection measures—

“(1) The Commissioners for HM Revenue and Customs must lay before the House of Commons a report on the operation and effects of the charge applied to winter fuel payments where an individual’s income exceeds the relevant threshold, including the compliance and collection arrangements introduced under section 55 and Schedule 10 in relation to that charge.

(2) The report under subsection (1) must in particular consider—

(a) the effect of the charge on people whose income exceeds the threshold by a small amount, and any resulting behavioural impacts,

(b) the administrative complexity and proportionality of introducing a tapered abatement for winter fuel payments,

(c) the potential effect of updating section 7 of the Taxes Management Act 1970 so that a winter fuel payment charge becomes a notifiable liability for tax assessment purposes, including the operation of penalties for failure to notify, and the interaction with existing exceptions for liabilities reflected in PAYE tax coding adjustments or where a taxpayer has already been issued a notice to file a self-assessment return, and

(d) the operation and effectiveness of any new PAYE regulation provisions that allow winter fuel payment charges to be collected via tax code adjustments in year, and which allow HMRC to repay any overpaid income tax related to the charge via the tax code within the same year.”

This new clause would require HMRC to report to Parliament on the operation of the winter fuel payment charge, including its effect on people whose income exceeds the threshold by a small amount. The report would also cover the implications of updating section 7 of the Taxes Management Act 1970 to make winter fuel payment charge liabilities notifiable for tax assessment purposes.

New clause 4—Implementing the prohibition of the promotion of certain tax avoidance arrangements—

“(1) The Treasury must, within six months of the passing of this Act, consult and report on—

(a) how to ensure the regulations specified under section 156(2) of this Act can address the potential for harm to individuals and small businesses from the promotion online and via social media of tax avoidance arrangements by professionals and by social media tax influencers,

(b) the potential for detriment to individuals who are liable for tax arising from such promotions, and

(c) what steps HMRC should take to inform the public of the risks posed by online tax avoidance arrangements.

(2) The Chancellor of the Exchequer must lay before Parliament a report on the outcome of the consultation under subsection (1), including the steps they plan to take to address any issues identified.

(3) In this section, “tax influencer” means an individual who—

(a) is not a tax professional,

(b) promotes, markets or otherwise encourages participation in a tax avoidance arrangement, and

(c) does so by means of a social media service, where that promotion is carried out—

(i) in the course of a business or trade, or

(ii) in consideration of, or in expectation of, any payment or other benefit, whether from a promoter of the arrangement or from the social media service, or

(iii) with the intention of increasing engagement with, or the monetisation of, content relating to the arrangement.”

New clause 8—Impact of section 84 (General betting duty charge on remote bets)—

“The Chancellor of the Exchequer must, before 1 April 2027, lay before the House of Commons an impact assessment on the potential effects of the implementation of section 84 of this Act on the size of the illegal betting market.”

This new clause would require the Chancellor of the Exchequer to undertake an impact assessment on the potential effects of implementation of section 84 on the illegal betting market.

New clause 9—Impact of changes to gambling duties on the economy of Gibraltar—

“The Chancellor of the Exchequer must, before 1 April 2027, lay before the House of Commons an impact assessment on the potential effects of the implementation of sections 83 and 84 of this Act on the economy of Gibraltar.”

This new clause would require the Chancellor of the Exchequer to undertake an impact assessment on the potential effects of implementation of sections 83 and 84 on the economy of Gibraltar.

New clause 10—Review of operation of the carbon border adjustment mechanism—

“(1) The Treasury must, each calendar year for five years following the passing of this Act, undertake a review of the operation of—

(a) Part 5, and

(b) Schedules 16 to 19.

(2) A review undertaken under subsection (1) must be conducted in accordance with sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015.

(3) A review undertaken under subsection (1) must be completed as soon as reasonably practicable after the calendar year to which it relates.

(4) The Treasury must lay before Parliament a copy of each review carried out under this section as soon as reasonably practicable following the completion of the review.”

This new clause would place a duty on the Chancellor to conduct a post-implementation review of the operation of the carbon border adjustment mechanism one year after the implementation of the UK CBAM and every subsequent year.

New clause 11—Uprating of allowance amounts for agricultural property—

“The Chancellor of the Exchequer must, within six months of the passing of this Act, undertake and publish an assessment of the potential merits of uprating annually the relief allowance amount for agricultural property by the change in the value of agricultural land.”

New clause 12—Review of anti-forestalling provisions relating to Agricultural Property Relief—

“(1) The Treasury must conduct a review of the effects of the anti-forestalling provisions relating to Agricultural Property Relief.

(2) The review must, in particular, consider the effects of those provisions on—

(a) succession planning and intergenerational transfer of agricultural land and businesses,

(b) the viability and continuity of family-run farms,

(c) food security and domestic agricultural production,

(d) land management, environmental stewardship, and the condition of the countryside, and

(e) the availability of agricultural land for active farming.

(3) In conducting the review, the Treasury must consult such persons as it considers appropriate, including representatives of the agricultural sector.

(4) The Treasury must lay before the House of Commons a copy of the report within 12 months of the coming into force of the anti-forestalling provisions under this Act.”

New clause 13—Review of impact of Act on complexity of the tax system and administrative burdens—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a report setting out the impact of the measures contained within this Act on the complexity of the tax system and the costs of tax administration.

(2) The report under subsection (1) must identify the measures in this Act which—

(a) add to the complexity of the tax system;

(b) reduce the complexity of the tax system;

(c) increase the number of individuals, businesses or other organisations liable for tax or for tax reporting;

(d) reduce the number of individuals, businesses or other organisations liable for tax or for tax reporting;

(e) increase the resources required for HM Revenue and Customs to administer the tax system and ensure compliance; and

(f) reduce the resources required for HM Revenue and Customs to administer the tax system and ensure compliance.

(3) The report must include an assessment of the impact of this Act on the complexity of the tax system, and on the time and cost of tax administration and compliance, for each of the following groups—

(a) pensioners;

(b) taxpayers on low incomes;

(c) personal taxpayers as a whole;

(d) self-employed people;

(e) microbusinesses;

(f) small and medium-sized businesses;

(g) large businesses;

(h) personal representatives who administer a person’s estate after their death;

(i) professional tax advisers; and

(j) HM Revenue and Customs.”

This new clause would require the Chancellor to conduct an assessment of the impact of the Act on the complexity of the tax system and on the time and cost of tax administration for taxpayers and their representatives, and for HMRC.

New clause 14—Review of impact on unemployment and youth employment—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a report reviewing the impact of the provisions of this Act on levels of unemployment in the UK.

(2) The report under subsection (1) must, in particular, assess—

(a) the impact of the provisions of this Act on overall unemployment levels;

(b) the impact on employment levels for persons aged 16 to 24;

(c) the impact on rates of economic inactivity among young people;

(d) the effect on youth participation in apprenticeships, training, and entry-level employment;

(e) regional variations in youth unemployment arising from the provisions of this Act; and

(f) the impact on sectors with high levels of youth employment, including hospitality, retail, and the creative industries.

(3) The report must include an assessment of—

(a) the extent to which changes made by this Act have affected hiring decisions by small and medium-sized enterprises;

(b) any disproportionate impact on disadvantaged young people, including those from low-income households or with disabilities; and

(c) projected impacts over a three-year period following the passing of this Act.

(4) The Chancellor of the Exchequer must, following publication of the report under subsection (1), make a statement setting out what steps, if any, the Government proposes to take in response to its findings.”

This new clause requires the Chancellor to review and report on the impact of the Act on unemployment, with particular regard to young people aged 16 to 24.

New clause 15—Notification of taxpayers affected by frozen thresholds—

“(1) HM Revenue and Customs must take reasonable steps to identify individuals who, as a result of—

(a) the freezing of the starting rate limit for savings under section 9 of this Act, or

(b) the freezing of the personal allowance or the basic rate limit under section 10 of this Act, will—

(i) become liable to income tax for the first time, or

(ii) become liable to income tax at a higher rate than in the previous tax year.

(2) HM Revenue and Customs must ensure that each individual identified under subsection (1) is provided with a written notification before the start of the relevant tax year.

(3) A notification under subsection (2) must—

(a) explain that the individual’s tax liability is affected by the freezing of income tax thresholds,

(b) state whether the individual will pay income tax for the first time or move into a higher tax band, and

(c) provide information on where the individual can obtain further guidance about their tax position.

(4) HM Revenue and Customs must publish, no later than six months after the end of each affected tax year, a report setting out—

(a) the number of individuals notified under this section,

(b) the number of individuals who became income taxpayers for the first time as a result of sections 9 and 10, and

(c) the number of individuals who moved into a higher tax band as a result of those sections.

(5) In this section “written notification” includes electronic communication.”

This new clause would require HM Revenue and Customs to notify individuals who, as a result of the freezing of income tax thresholds in the Act, will pay income tax for the first time or move into a higher tax band.

New clause 16—Review of the impact of tax changes on household finances—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of changes introduced by sections 9,10 and 69 on household finances.

(2) The assessment must evaluate how households across different income levels are affected by these changes.”

This new clause requires the Chancellor of the Exchequer to assess and publish a report on how the freezing of tax thresholds to 2030-31 impacts households at various income levels.

New clause 17—Report on impact of sections 9, 10 and 69—

“Within three months of this Act being passed, the Chancellor of the Exchequer must lay before the House of Commons a report setting out—

(a) the number of taxpayers who will pay income tax at each rate during each tax year between 2026-27 and 2030-31 under sections 9, 10 and 69,

(b) the number of those taxpayers who are pensioners or are of State Pension Age,

(c) comparative figures for each tax year since 2020-21,

(d) comparative projected figures for each tax year to 2034-35, and

(e) comparative figures with a scenario under which normal uprating policy had been implemented for financial years 2020-21 through 2030-31.”

This new clause requires the Chancellor of the Exchequer to assess how many people will be in each income tax bracket from 2026-27 through to 2030-31, together with comparative figures before and after that period.

New clause 18—Review of the effect of sections 63 to 68—

“(1) HM Treasury must carry out a review of the effect of sections 63 to 68 of this Act (Pension interests).

(2) The review under subsection (1) must include an assessment of—

(a) the impact of those sections on individuals’ pension savings and beneficiaries, including on estate values and inheritance tax liabilities,

(b) the administrative effects on personal representatives, pension scheme administrators, and HM Revenue and Customs, and

(c) any behavioural effects on how pensions are used during life and on death.

(3) HM Treasury must lay before the House of Commons a report setting out the findings of the review under subsection (1) no later than six months after the date on which sections 63 to 68 come into force.”

This new clause would require HM Treasury to review and report on the effects of Clauses 63 to 68 of the Bill, which introduce inheritance tax charges on unused pension funds and death benefits, including their impacts on individuals, administrators, and behaviour, and to publish the findings to Parliament.

New clause 19—Administration of inherited pension pots—

“(1) HM Revenue and Customs must review the tax administration arrangements relating to inherited pension pots.

(2) The purpose of the review under subsection (1) is to ensure that—

(a) inheritance tax and related tax checks do not cause unreasonable delays in the payment of pension death benefits to beneficiaries, and

(b) bereaved families are able to receive pension benefits within a reasonable period following a member’s death.

(3) In carrying out the review, HM Revenue and Customs must have regard to—

(a) the cumulative administrative burden placed on personal representatives, pension scheme administrators, and beneficiaries,

(b) the interaction between inheritance tax reporting, clearance processes, and pension scheme payment rules, and

(c) any evidence of prolonged delays in the payment of inherited pension benefits.

(4) HM Revenue and Customs must publish the outcome of the review, including any proposed changes to its processes or guidance, within 12 months of the passing of this Act.”

This new clause would require the Government to address delays in the payment of inherited pension pots by reviewing HMRC’s tax administration processes, with the aim of preventing prolonged waiting periods for bereaved families.

New clause 20—Review of cumulative impact on the hospitality sector—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before the House of Commons a report assessing the cumulative impact on the hospitality sector of—

(a) the measures contained in section 86 of this Act, and

(b) changes to taxation and business costs affecting that sector introduced outside this Act since 2020.

(2) For the purposes of subsection (1)(b), changes to taxation and business costs include, but are not limited to—

(a) changes to employer National Insurance contribution rates or thresholds,

(b) changes to business rates, including reliefs and revaluations, and

(c) any other fiscal measures which materially affect operating costs for hospitality businesses.

(3) A report under subsection (1) must include an assessment of the impact of the matters listed in that subsection on—

(a) levels of employment across the United Kingdom within the hospitality sector,

(b) the number of hospitality businesses ceasing to trade,

(c) the number of new hospitality businesses established, and

(d) the financial sustainability of hospitality businesses.

(4) In this section, “the hospitality sector” means persons or businesses operating in the provision of food, drink, accommodation, or related services.”

This new clause would require the Chancellor of the Exchequer to assess and report on the cumulative impact on the hospitality sector of alcohol duty measures in the Act alongside wider fiscal changes, including employer National Insurance contributions and business rates.

Amendment 1, page 2, line 7, leave out clause 4.

This amendment removes the increase in dividend rates from the Bill.

Amendment 2, page 2, line 16, leave out clause 5.

This amendment removes the new savings rates of income tax from the Bill.

Amendment 3, page 2, line 21, leave out clause 6.

This amendment removes the new rates of income tax on property income from the Bill.

Amendment 4, page 4, line 31, leave out clause 7.

This amendment removes the property rates of income tax for 2027-28 from the Bill.

Amendment 5, page 5, line 20, leave out clause 10.

This amendment removes the freeze in income tax thresholds from the Bill.

Amendment 112, in clause 13, page 6, line 13, leave out from “means—” to “fifteenth” on line 16.

Amendment 113, page 6, line 20, leave out from “(1)” to end of line 23 and insert

“for “£3 million” substitute “£6 million””.

Amendment 114, page 6, line 27, leave out subsection (3)(d).

Amendment 115, page 7, line 1, leave out from “(1)” to end of line 4 and insert

“for “£30 million” substitute “£120 million””.

Amendment 116, page 7, line 5, leave out from “(2)” to end of line 13 and insert

“for “£30 million” substitute “£120 million””.

Amendment 117, page 7, line 10, leave out from “(1)” to end of line 13 and insert “for “250” substitute “500””.

Amendment 118, page 7, line 14, leave out from “(2)” to end of line 15 and insert “for “250” substitute “500””.

Amendment 119, page 7, line 25, leave out from “15 years” to end of line 27.

Amendment 120, page 7, line 28, leave out subsection (7).

Amendment 121, page 8, line 28, leave out sub-paragraph (4).

Amendment 122, in clause 14, page 8, line 36, leave out from “(5A))” to “, and” in line 38 and insert “, £20 million”.

Amendment 123, page 8, line 40, leave out from “company” to end of line 1 on page 9, and insert “, £10 million.”

Amendment 124, page 9, line 5, leave out from “section 252A)” to “, and” in line 7, and insert “, £40 million”.

Amendment 125, page 9, line 10, leave out from “company” to end of line 11 and insert “, £24 million.”

Amendment 126, page 9, line 15, leave out from “section 252A)” to “, and” in line 17 and insert “, £40 million”.

Amendment 127, page 9, line 19, leave out from “company” to end of line 21 and insert “, £24 million.”

Amendment 128, page 9, line 24, leave out sub-paragraph (b).

Amendment 129, page 9, line 38, leave out “that is not a specified Northern Ireland company”.

Amendment 130, page 10, line 4, leave out “that is not a specified Northern Ireland company”.

Amendment 131, page 10, line 10, leave out leave out subsections (6) and (7) and insert—

“(6) In section 186 (the gross assets requirement)—

(a) in subsection (1)(a) for “£15 million” substitute “£30 million”

(b) in subsection (1)(b) for “£16 million” substitute “£35 million”

(c) in subsection (2)(a) for “£15 million” substitute “£30 million”

(d) in subsection (2)(b) for “£16 million” substitute “£35 million””

Amendment 132, in clause 15, page 10, line 30, leave out from “(6A))” to “, and” in line 32 and insert “, £20 million”.

Amendment 133, page 10, line 34, leave out from “company” to end of line 36 and insert “, £10 million.”

Amendment 134, page 11, line 4, leave out from “section 331A)” to “, and” in line 6 and insert “, £40 million”.

Amendment 135, page 11, line 8, leave out from “company” to end of line 10 and insert “, £24 million.”

Amendment 136, page 11, line 14, leave out from “section 331A)” to “, and” in line 16 and insert “, £40 million;”.

Amendment 137, page 11, line 18, leave out from “company” to end of line 20 and insert “, £24 million.”

Amendment 138, page 11, line 23, leave out subsection (6)(b).

Amendment 139, page 11, line 34, leave out leave out subsections (7) and (8) and insert—

“(6) In section 297 (the gross assets requirement)—

(a) in subsection (1)(a) for “£15 million” substitute “£30 million”

(b) in subsection (1)(b) for “£16 million” substitute “£35 million”

(c) in subsection (2)(a) for “£15 million” substitute “£30 million”

(d) in subsection (2)(b) for “£16 million” substitute “£35 million””.

Government amendments 12 to 14.

Amendment 6, page 78, line 4, leave out clause 62.

This amendment removes the changes to the thresholds for Agricultural Property Relief and Business Property Relief from the Bill.

Amendment 7, page 78, line 11, leave out clause 63.

This amendment removes the imposition of inheritance tax on pension interest.

Government amendments 15 to 47.

Amendment 9, in clause 74, page 91, line 25, at end insert—

“(7) The Treasury must make regulations under subsection (1) within 60 days of the passing of this Act.

(8) Before making regulations under subsection (1), the Treasury must consult—

(a) organisations representing infected and affected individuals,

(b) the Infected Blood Compensation Authority, and

(c) bereaved families of victims who have died awaiting compensation.

(9) The regulations made under subsection (1) must make provision for identifying and assisting the estates of deceased victims in claiming inheritance tax relief, including—

(a) outreach to known affected families,

(b) assistance with evidence gathering where medical records have been destroyed,

(c) clear and accessible guidance in plain language, and

(d) a dedicated helpline staffed by trained caseworkers familiar with the infected blood scandal.

(10) The Treasury must, within 6 months of regulations under this section coming into force, and every 6 months thereafter, lay before Parliament a report on—

(a) the number of victims who have died since the previous report while awaiting compensation,

(b) the number of estates that have received inheritance tax relief,

(c) the average time taken to process claims for relief,

(d) any identified barriers preventing families from accessing their entitlement, and

(e) steps taken to expedite outstanding infected blood compensation claims.”

This amendment requires the Chancellor of Exchequer to make regulations under this section within 60 days of Royal Assent. It requires mandatory consultation with those directly affected, and a support service to help bereaved families navigate the system. It also places a six-monthly reporting requirement on the Government.

Amendment 10, page 94, line 4, leave out clause 77.

This amendment would maintain the existing zero-rating for the purposes of VAT on the full value of the lease of a vehicle to a disabled person supplied through the Motability Scheme.

Amendment 11, page 96, line 6, leave out clause 78.

This amendment would maintain insurance premium tax relief for all vehicles let to a disabled person and supplied through the Motability Scheme.

Amendment 101, page 103, line 29, leave out clause 86.

Government amendments 48 to 53.

Government amendments 56 to 61.

Amendment 8, page 442, line 2, leave out schedule 12.

This amendment would remove the changes to Agricultural Property Relief and Business Property Relief from the Bill.

Amendment 109, in schedule 12, page 442, line 20, leave out from “and” to end of line 23 and insert—

“(c) either—

(i) is attributable to property that has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family, or

(ii) if the value does not fall within (i), does not exceed the amount of the 100% relief allowance available in relation to that chargeable transfer (see section 124D),”.

This amendment would maintain 100% business relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 110, page 442, line 29, leave out from “and” to end of line 32 and insert—

“(c) either—

(i) is attributable to property that has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family, or

(ii) if the value does not fall within (i), does not exceed the amount of the 100% trust relief allowance available in relation to that occasion (see sections 124G to 124K),”.

This amendment would maintain 100% business relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 111, page 443, line 9, leave out from “and” to end of line 12 and insert—

“(b) either—

(i) is attributable to property that has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family, or

(ii) if the value does not fall within (i), does not exceed the amount of the 100% relief allowance available in relation to that chargeable transfer (see section 124D),”.

This amendment would apply 100% agricultural property trust relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 89, page 444, line 16, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 102, page 444, line 16, after “£2.5 million” insert

“plus

(aa) the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

This amendment, and Amendments 103 to 107, would allow landlords to access 100% relief from inheritance tax where they have let land or farms to tenant farmers on secure agreements under the Agricultural Holdings Act 1986 or on agreements under the Agricultural Tenancies Act 1995 for 10 years or more.

Amendment 90, page 449, line 36, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 103, page 449, line 36, after “£2.5 million” insert

“plus

(aa) the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

See Amendment 102.

Amendment 91, page 450, line 25, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 104, page 450, line 25, after “£2.5 million” insert

“plus the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995”.

See Amendment 102.

Amendment 67, page 450, line 27, leave out “30 October 2024” and insert “1 March 2027”.

This amendment, along with Amendments 68 to 87 would remove the transition period in respect of the changes to agricultural property and business property relief and delay the implementation date so that the changes would take effect for transfers made after 1 March 2027.

Amendment 95, page 450, line 27, leave out “30 October 2024” and insert “6 April 2026”.

This amendment, with Amendments 96 to 100, would remove the transition period in respect of the changes to agricultural property and business property relief so that the changes take effect for transfers made from 6 April 2026.

Amendment 68, page 451, line 6, leave out “30 October 2024” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 96, page 451, line 6, leave out “30 October 2024” and insert “6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 92, page 451, line 22, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 105, page 451, line 22, after “£2.5 million” insert

“plus

(aa) the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

See Amendment 102.

Amendment 93, page 453, line 15, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 106, page 453, line 15, after “£2.5 million” insert

“plus the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995”.

See Amendment 102.

Amendment 94, page 453, line 17, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 107, page 453, line 17, after “£2.5 million” insert

“plus the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

See Amendment 102.

Amendment 69, page 453, line 23, leave out “30 October 2024” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 97, page 453, line 23, leave out “30 October 2024” and insert “6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 108, page 454, line 40, at end insert

“(But see subsection (2A).)

(2A) If the Treasury estimates that the value of agricultural land has increased by more than the percentage increase in the consumer prices index during the same period, then it must instead make an order by statutory instrument amending each relief allowance amount relating to agricultural property by the percentage increase in the value of agricultural land.”

Government amendments 54 and 55.

Government amendments 62 to 64.

Amendment 88, page 458, line 31, at end insert—

“(1A) In Section 227, leave out subsection (3)(a) and insert—

“(a) if the chargeable transfer was made on death and to the extent that it qualified for relief under Chapters I or II of part V of this Act, eighteen months after the end of the month in which the death occurred, or

(b) if the chargeable transfer was made on death and to the extent that it did not qualify for relief under Chapters I or II of part V of this Act, six months after the end of the month in which the death occurred, and””

This amendment would defer the period for the payment of inheritance tax on assets qualifying for payment by instalments by 12 additional months.

Amendment 70, page 460, line 8, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 71, page 460, line 9, leave out sub-paragraphs (2) and (3).

See explanatory statement for Amendment 67.

Amendment 98, page 460, line 9, leave out sub-paragraphs (2) to (4).

See explanatory statement for Amendment 95.

Government amendments 65 and 66.

Amendment 72, page 460, line 23, leave out “sub-paragraph (3) will not apply” and insert

“the transfer will prove to be an exempt transfer”.

See explanatory statement for Amendment 67.

Amendment 73, page 460, line 27, leave out from “paragraph” to end of paragraph 17(5)(b) and insert

“comes into force on 1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 99, page 460, line 27, leave out from “paragraph” to end of paragraph 17(5)(b) and insert

“comes into force on 6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 74, page 460, line 34, leave out “30 October 2024” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 100, page 460, line 34, leave out “30 October 2024” and insert “6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 75, page 460, line 37, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 76, page 460, line 39, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 77, page 460, line 41, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 78, page 461, line 2, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 79, page 461, line 9, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 80, page 461, line 14, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 81, page 461, line 22, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 82, page 461, line 26, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 83, page 461, line 37, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 84, page 461, line 42, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 85, page 463, line 19, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 86, page 463, line 26, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 87, page 463, line 32, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

[Dan Tomlinson]

I am glad to return to the Commons to debate the Finance Bill on Report. Although I am sure that it would have been of interest to Members on both sides of the House, I am also glad that we have not just had a set of two 45-minute debates on the Ways and Means motions. The opportunity was there, but I am glad that Members did not take it in full. We now have ample time for this important Report stage.

I thank Members on both sides of the House for their contributions in Committee. I thank in particular the shadow Exchequer Secretary to the Treasury, the hon. Member for North West Norfolk (James Wild), for his scrutiny and challenge, and for the invitation to his wonderful constituency, which I hope to take up one day. As yet, no other Opposition Front Bencher has offered me such an enticing prospect as a visit to their constituency, but I look forward to those invitations.

Before I turn to individual amendments, I wish to reflect briefly on the Budget that was delivered in November by my right hon. Friend the Chancellor of the Exchequer. That Budget took fair and necessary decisions to deliver on the Government’s promise of change, to support cuts in the cost of living, to enable NHS waiting lists to continue falling, and to ensure that our national debt fell as a share of GDP and that borrowing falls over the course of this Parliament. As the Chancellor said in this place yesterday and on Monday, Government borrowing—public sector net borrowing—has fallen from 5.2% to 4.3% of GDP, which is a fall of 1 percentage point. That is very significant and means that our borrowing is coming down, as part of our plan to bring stability back to the public finances.

[Sir Ashley Fox (Bridgwater) (Con)]

Does the Minister acknowledge that debt reduction is taking place only because the Government have increased taxes by £66 billion? That contrasts with the tax rise of £7 billion that the Labour party promised in its manifesto. Could he explain the huge discrepancy between that manifesto promise and what the Government are imposing on our constituents?

[Dan Tomlinson]

I ask the hon. Member to consider whether his party wishes to identify £66 billion of expenditure cuts or borrow £66 billion more. I do not think that either option is what the British public want; they want us to bring borrowing down and get public finances under control, after they were spun out of control by Liz Truss and the previous Government. The public understand the need for fair and responsible increases in taxation to ensure that we can invest in our public services and in the future of our country.

[Chris Vince (Harlow) (Lab/Co-op)]

On taxation, does the Minister agree that this Labour Government’s decisions have meant increased spending on the NHS? A number of my Harlow constituents are self-employed, and the really long waits in A&E and for hospital operations were having a huge impact on their businesses and on their household finances.

[Dan Tomlinson]

I strongly agree with my hon. Friend. I thank him for making his representations again and for his ability to mention Harlow in his interventions. It is a fantastic part of the country, not too far from my constituency in north London, and I know just how strongly he seeks to represent it and to make sure that the public services in his patch—the local hospitals and schools—get the investment they need. That is why he and I are able to proudly support this Government’s decisions to bring the public finances back into good order, as well as to invest in our public services and to get borrowing down.

Of course, though, since the Budget, and particularly in recent days, the world has changed. As the Chancellor set out last week in responding to the Office for Budget Responsibility’s spring forecast, it is more important than ever that the Government continue to deliver on our economic plan. The choices that we have made at previous Budgets will fix long-standing issues in the taxation system, restore economic and fiscal stability, and lay the economic foundations that we need for higher growth and higher living standards across our fantastic country.

The Bill legislates to deliver on those choices, all while sticking to our commitment not to raise the main rates of income tax, employee national insurance contributions or VAT. We are also providing stability for businesses by keeping to important commitments in our corporate tax road map to keep our corporation tax rate at 25%—the lowest in the G7—rather than having it chop and change up and down, like it did during previous Administrations.

I thank all those who have submitted written evidence throughout the Bill’s passage. Following concerns raised by professional bodies and concerns discussed in the Public Bill Committee, I would like to take this opportunity to reiterate my reassurances to the sector that measures that directly impact tax advisers are intended to create a fairer tax advice market. I have heard concerns that tax advisers might be penalised if they file a client’s tax return late when their client has not provided their approval for filing the return on time. I want to clarify that these powers are not designed to penalise responsible tax advisers who act in good faith, and in that specific scenario, a tax adviser would not be penalised under His Majesty’s Revenue and Customs’ stronger powers. The Government are committed to ensuring that the tax system works effectively for everyone, which is why we are introducing a number of amendments on Report to ensure that the tax system is working effectively and as intended.

I turn to the first group of Government amendments. New clause 5 removes specific provisions that could prevent offshore income gains from being designated under the temporary repatriation facility, or TRF, to ensure that they can be designated as intended. The amendments also simplify the existing treatment of offshore non-reporting funds held by offshore structures for all taxpayers. New clause 6 introduces transitional provisions for offshore income gains arising before 6 April 2025.

Following the abolition of the lifetime allowance, new clause 7, as we were just discussing, ensures that multiple different regimes do not apply, providing clarity for pension schemes and members. It ensures that any necessary regulations can have a retrospective effect back to 6 April 2024, clarifies the scope of the original power, extends the power by a further three months and ensures that regulations are subject to the affirmative parliamentary procedure.

The Government are making a number of minor and technical amendments to help provide greater clarity and address important points that have been raised by stakeholders, particularly during the passage of the Bill. These amendments simply put the original legislative intent beyond doubt.

Amendments 12 and 13 ensure that clause 23 will apply only to general earnings for the tax year 2026-27 and subsequent tax years that are paid on or after 6 April 2026. Amendment 14 tightens the existing provisions under clause 24 to ensure that those rules do not catch legitimate agency structures.

Amendments 48 and 51 remove legislation that is not necessary under clause 43 and ensure that the TRF legislation works as intended, so that beneficiaries from overseas trusts are able to make designations in connection with offshore income gains.

Amendments 49, 50 and 52 are consequential amendments to schedule 3 and clause 43. They remove references to omitted legislation and insert wording to clarify reference to the Taxation of Chargeable Gains Act 1992.

Amendment 53 to clause 49 makes clear that a person concluding contracts on behalf of a non-resident company must be present in the UK when concluding those contracts in order to create a permanent establishment in the UK.

Amendments 56 to 61 to schedule 11 concern the rules preventing fund managers from circumventing the revised carried interest tax regime. These amendments ensure that the provision operates as intended, where two connected persons work in the same business, with each connected person only taxed on their own carried interest.

[Sir Ashley Fox]

It sounds as if the Minister is adding many, many extra pages to our tax code. What provisions will he be bringing forward to shorten and simplify the tax code?

[Dan Tomlinson]

The hon. Gentleman raises an important point. We need to do all that we can to ensure that we are simplifying our tax code in order to make it easier for tax advisers, individuals and businesses. I have also asked that question, but I am reassured by my officials—I am sure that the hon. Member could consult Hansard too—that this is a typical number of amendments to be made to a Finance Bill. This is a long Finance Bill, but there are a whole range of important changes that the Government wish to introduce and to make progress on. I am sure Members from all parties have enjoyed poring over the changes to the tax legislation. I do take his point about simplification, though; it is something that I wish to focus on. If hon. Members have good ideas in that space, they would genuinely be welcome to write to me.

[Mr Joshua Reynolds (Maidenhead) (LD)]

On the simplification of our tax system, I do not see in the Government amendments any changes to the loan charge system, as we proposed in Committee, meaning that people who have already settled their loan charge will be excluded from the changes being introduced. Does the Minister agree that one consequence of this might be that when something like this comes up in the future, people will not want to settle with the Government because they will think that a better deal will be coming up? Would it not be a simpler tax system to say that we could retrospectively apply some of these changes?

[Dan Tomlinson]

I thank the hon. Gentleman for his intervention and for his engagement in the Public Bill Committee. The loan charge is an important issue. I focused on it after receipt of Ray McCann’s independent review into the loan charge, which was commissioned by my predecessor. The scope of that review and the decisions made by the Government are such that only those who are directly affected by the loan charge will have the opportunity to take up the new settlement that was recommended by McCann, to which the Government have added a £5,000 further deduction. The Government’s position was that, because the loan charge was an exceptional decision made by the previous Government, it was right that the changes proposed by McCann would apply only to that group. There will be those who engaged in the use of disguised remuneration schemes from before 2010, and with them, as with all taxpayers, this Government are very clear that individuals do have a responsibility to pay their tax.

Amendments 54 and 55, and 62 to 66, are minor amendments to the definitions of business property qualifying for relief. They ensure that the replacement property provisions relating to reorganisation or amalgamation of unquoted shares reflect the new legislation, and that unquoted securities, such as loan notes, continue to qualify for relief only where they are part of a controlling interest in a company.

Amendments 15 to 47 to clauses 63 to 67 make a series of minor technical changes to ensure that the provisions on inheritance tax and pensions operate as intended. These ensure that excluded and exempt benefits are not subject to inheritance tax, nor to the new withholding and payment notices.

I am sure that Members from all parts of the House have enjoyed that run-through of those minor and technical amendments. I can provide them with the good news that that run-through has now concluded. I sincerely hope and expect that the proposed amendments will ensure that the legislation that was set out, and that has been discussed and scrutinised, works as intended, and that HMRC—the organisation that I am proud to be the Minister with responsibility for—has the powers to responsibly collect tax and revenue, which funds the vital public services on which our country relies.

I therefore commend new clauses 5, 6 and 7 and Government amendments 12 to 66 to the House, and I look forward to hon. Members’ contributions.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

15:45

[James Wild (North West Norfolk) (Con)]

We are grateful to the Minister for running through the plethora of Government amendments that are being added to this already stonkingly large Finance Bill. The sheer number of amendments is an admission that Ministers did not get this right the first time—or even the second time, in Committee, which we enjoyed.

Let me turn to amendments 1, 2 and 8 and 67 to 94, as well as new clause 10 in my name and the names of my hon. Friends. This Bill embodies Labour’s approach of ever-higher taxes, spending and borrowing, for which hard-working families and businesses are paying the price. The measures in the Budget and in this Bill add a further £26 billion-worth of tax rises, bringing the cumulative total from the Chancellor’s first two Budgets to £66 billion. As my hon. Friend the Member for Bridgwater (Sir Ashley Fox) pointed out, that did not feature anywhere in the Government’s manifesto. Those further tax rises are despite the Chancellor promising not to come back for more.

Debt interest is forecast to hit £140 billion by 2030. Unemployment is set to increase to 1.9 million, and youth unemployment has risen to 16.1%. Meanwhile, welfare spending is set to hit £406 billion, and living standards are expected to slow towards the end of this Parliament. Last week, the Office for Budget Responsibility downgraded its growth forecast once again and warned that the Chancellor’s plan, far from working, could “constrain economic activity”. Instead of backing the risk takers and the wealth creators, this Bill delivers slower growth, higher borrowing and higher taxes.

Let me turn to the freeze in income tax thresholds set out in clause 10. The Chancellor said at the Dispatch Box that there would be no extension of the freeze on income tax thresholds, because it would “hurt working people” and

“take more money out of their payslips.”—[Official Report, 30 October 2024; Vol. 755, c. 821.]

That promise has been broken by the measures in the Bill that do exactly the opposite, putting in place a £23 billion-a-year tax rise and bringing nearly 1 million more people into paying higher-rate tax.

It is not just working people who will pay the price. During this period, the state pension is forecast to be higher than the personal allowance. In the spring forecast, the OBR warned that an additional 1 million pensioners will find themselves liable for income tax by 2030-31 because of the Chancellor’s freeze. In anyone’s book, that is a retirement tax.

The Government have promised to protect people who rely solely on the state pension, but where is the detail? There is nothing in this legislation to do that. The public out there will rightly be sceptical, given that the Chancellor has already broken the promise not to freeze this threshold. Amendment 5 offers the House a very simple choice to stand by working people and pensioners and end the freeze.

Let me turn to the Government’s damaging family farm and family business tax. I know that Labour Members are going around their constituencies saying that they got a great win from the Chancellor just before Christmas, but let us be honest: that win was purely a fig leaf. The Government could have actually corrected their mistake, but the partial reversal that the Chancellor was forced into falls short of what is needed. The Country Land and Business Association has said that it only limits the damage—yet another broken promise from a Prime Minister who pledged not to impose an inheritance tax on farms. That measure epitomises Labour’s apparent hostility towards family farms, tenant farmers and our rural communities. I have spoken to farmers, as I am sure other hon. Members have, who are desperate about this situation. That is why we continue to strongly oppose the family farm and family business tax, and amendment 6 would scrap them.

Our further amendments seek to mitigate the worst effects of those taxes. Amendments 67 to 87 would remove the transition period for changes to the reliefs, and would delay implementation until after March 2027, lifting the unfair anti-forestalling rules that have tied the hands of farmers and business owners. The Chartered Institute of Taxation—which provided a lot of support in Committee and at earlier stages of the Bill, for which I am grateful—has warned that the measures particularly affect older farmers, robbing them of the ability to plan properly.

Amendment 88 would defer the deadline for inheritance tax instalments by a further 12 months. This reflects the conclusion of the House of Lords Economic Affairs Committee that the six-month deadline proposed for the first payment

“does not appear to be realistic”.

As we know, farming estates and family business are often asset-rich but cash-poor, which makes it difficult to raise the funds quickly. The National Farmers Union has warned that expecting probate to be granted within six months is

“completely unrealistic, especially given the complexity of valuing an agricultural business”.

Does the Minister recognise the strain that such unrealistic deadlines place on family farms and family businesses, and will he therefore accept our amendment and extend the payment deadline by 12 months? If he will not, will he explain to family farms and family businesses why not?

Amendments 89 to 94 would exclude from inheritance tax the value of any jointly held tenancy on the death of a joint tenant. This issue is causing concern across the sector, and has been raised by the Tenant Farmers Association and by my hon. Friend the Member for Keighley and Ilkley (Robbie Moore). Exempting genuine arm’s length tenancies between unconnected parties from inheritance tax is simply the fair thing to do. I would be grateful if the Minister could explain what engagement he has had with the Tenant Farmers Association on that point, what his response is, and how he intends to rectify this injustice. Of course, this is not just about farms; family businesses, which make up 90% of our firms and employ well over half the workforce, are firmly in the Chancellor’s crosshairs as well. These are firms that focus on the long term, yet according to Family Business UK, over half of affected businesses have already paused or cancelled investment as a result of the threatened tax.

It would be remiss of me to not mention that the Government’s claims do not seem to add up. Will this tax actually end up raising money? While the OBR forecasts a £500 million gain, analysis by the Confederation of British Industry suggests a net loss of nearly £2 billion, once the wider damage to the economy is considered. The family farm and family business tax does nothing to promote growth or fairness. It targets those who anchor our rural economy and communities—the family businesses committed to long-term growth. It is already having a chilling effect on investment, and now there is a prospect that companies that would otherwise thrive under family stewardship will break up. Again, I urge hon. Members to support amendment 6, which would remove this damaging measure from the Bill.

Savers and investors are not safe from the Chancellor, either. Amendments 1 to 4 deal with the introduction of increases in income tax on dividends, savings, and property income in the years ahead. Increases to the dividend tax will hit 4 million people by 2029-30, while the savings tax rate increase will hit a further 3.8 million individuals, and 2.4 million landlords will now face higher bills, making it less attractive to provide the rental properties that our constituents want. These measures are targeted at entrepreneurs, investors, pensioners and hard-working families. Rather than supporting growth, the Government seem determined to stifle it.

The Government are also scrapping the long-standing inheritance tax exemption for pensions. Some 10,500 estates will be targeted under this measure, costing savers £1.5 billion by 2029. We oppose this extension of inheritance tax, which seems predicated on the Government’s belief that people’s money belongs to the Government, rather than being their own. We should be rewarding saving and people who do the right thing, but extending inheritance tax in this way does exactly the opposite. As we discussed previously, there is also a concern about the burden being placed on personal representatives, and I have mentioned the unintended consequences for unmarried couples. In some cases, a surviving partner could lose up to 40% of a pension fund built up over a lifetime. Again, this is manifestly unfair, and amendment 7 would remove this damaging new tax from the Bill.

[Sir Ashley Fox]

Has my hon. Friend noticed a common thread through the Budget, which is that everyone who works hard, saves hard, invests and creates jobs is being penalised, and all that money is being used to benefit Benefits Street? It is no wonder that the growth rate is going down. [Interruption.]

[James Wild]

My hon. Friend is absolutely right, despite the chuntering that we hear from the Minister. The welfare bill is predicted to rise to £406 billion over the forecast period. The Chancellor keeps saying that she is fixing welfare. Where? What is she doing? She had to back away from very modest savings. We have identified £23 billion-worth of welfare savings, and the Minister could make those if he wished, but he does not, and that is why growth has once again been downgraded. The Chancellor boasts about beating the forecast last year. Well, the forecast at the beginning of the year was 2%, and the Government failed to get anywhere near 2%. They beat the downgraded forecast, so let us not hear any more about that. We want to hear what the Government will do to drive growth, and taxing the people generating it is precisely the wrong thing to do.

New clause 10 requires the Chancellor to review the UK carbon border adjustment mechanism. We debated CBAM extensively in Committee, and it is dealt with in a great swathe of the Bill—in the schedules—but there is plenty more to come. Given the complexity of the policy, many industries believe that the absence from the Bill of a formal oversight and review process is a serious mis-step that needs to be addressed.

There are many potential pitfalls in this new mechanism. First, the measure fails to consider several sectors that are at significant risk of carbon leakage, such as chemicals and refining. Secondly, the Government have decided to link the UK and EU emissions trading schemes. Following the announcement of that alignment, the price of carbon in the UK more than doubled, which cost our economy about £5 billion. We should be reducing the burden of carbon taxes on business, not increasing them. The EU has yet to publish its benchmark beyond 2030, which means that the UK would be signing up to a system that would effectively give Brussels a blank cheque. Moreover, CBAM does not address issues with carbon leakage in export markets. There are proposals to exempt our manufacturing exports from UK ETS costs and CBAM to make the industry more competitive, putting it on a level playing field internationally. Has the Minister considered maintaining long-term free allowances for products destined for the export markets? Given those complexities—I could go on about them more, but the Minister gets the gist—[Hon. Members: “More!”] It seems that other Members may want to come in on this issue.

I think that the Minister should recognise the value of regular reviews. I know he will say that the Government keep all taxes under review, but let us have an actual review that is published, so that we can see what is happening. I encourage Members to support new clause 10.

This is a Finance Bill full of tax increases that break trust with the British people. The Labour Government have introduced the family farm and business tax, frozen personal thresholds, hiked taxes on savers and investors, cut relief on employee ownership trusts, taxed inheritance pensions, taxed taxis—we discussed that in Committee—and increased gambling, alcohol and other duties and environmental levies. The list goes on and on. There is 534 pages-worth, which I could read out if there were any appetite for it. Our amendments and new clause would back the taxpayers, and the investors and businesses trying to drive growth in our economy, and I urge Members to support them.

[Ms Stella Creasy (Walthamstow) (Lab/Co-op)]

I rise to support the legislation. In particular, I want to talk about new clause 4.

I have to admit that I am a terrible person to go shopping with. [Laughter.] Wait for it. I grew up in a household where my dad used to stockpile copies of “Which?”. In the family, it was drilled into me that you had to seek advice; you could never just buy things. Pity my poor partner on the occasion when we went to try and buy a sofa; it was a very long, drawn-out day. I was taught the value of information and advice in making good choices in life—although I do not claim always to have followed that teaching—because it is easy to rip people off and mislead them, and there are people who will exploit misinformation to cause harm to others for their own financial gain. It is difficult for individual consumers to fight that, but collectively, with good regulation, we can make an economy work well.

New clause 4 is about good advice empowering consumers to make good choices. I welcome clauses 156 and 157, and the work that the Government are doing to crack down on organisations that promote harmful tax avoidance schemes. We have all seen the companies that promote schemes to avoid paying tax, often to the elites—one can only think of Jimmy Carr, and what he must be thinking at this point in time.

Banning the promotion of tax avoidance schemes that have no realistic prospect of working is the right thing to do because it is causing harm, but I am not here to play a violin for the elites; I am here to bang the drum for the millions of people who are being harmed, but who have not yet had the same level of attention. Elite companies might be promoting tax avoidance schemes for an elite group of people, but online there are hundreds, if not thousands, that are now doing it for the masses, causing financial detriment and harm to our constituents as a result. I would argue that this is a much greater harm, because these are people with too much month at the end of their money. When they realise the mistake that they have made and how much money they have lost, they do not have the savings to be able to pay the bill.

16:01

We know that we are living through a prolonged cost of living crisis in which every penny spent, and every penny saved, matters to our constituents. Frankly, given that I represent one of the poorest communities in this country, I know that members of my community know exactly how much cash they do not have, so every bill makes a difference. Over 4 million people in this country are now behind on their council tax, and bills have risen by an average of 54% in the last 10 years. The Money Advice Trust tells us that around 7 million adults are now behind on at least one household bill, which is why good advice matters for financial planning. People are desperate for advice about how to deal with the situation, and that is where the con artists come in.

A survey released earlier this year found that 14% of the public—around 7 million people—are now following financial advice from online personalities, or what people call “finfluencers”. Among adults aged 18 to 24, the figure rises to nearly one in three. What is the consequence of this? Research from Barclays last year found that over half of those who have acted on financial advice that they found online have lost money as a result. These are people in every one of our constituencies, because this is an issue that affects the entire nation. People are making life-altering decisions based on often deliberately wrong advice and, tragically, sometimes on dangerously wrong advice.

The key problem here is that finfluencers are all too often not driven by a desire to be helpful; they are driven by the perverse incentive that the number of clicks and likes they receive drives the money that they gain from their behaviour. The more outlandish the claim, the more money they will make. In the context of tax and new clause 4, this can have catastrophic personal consequences. I believe very strongly that the Government should do all they can to help tackle personal debt. I also recognise that our tax system is too complicated and that finfluencers are preying on its complexity, so I welcome the fact that the Minister is up for the challenge of how to simplify our tax system.

However, many people who pay their taxes are overpaying, particularly those who are self-employed. According to HMRC’s own data, self-assessment taxpayers in the UK are estimated to have overpaid nearly £9 billion in income tax in the last year, so we can see why this group of people are ripe for exploitation. I thank the tax-dodger-hunter general, Dan Neidle, for his help with this issue and for sharing some examples of the sort of information that people are getting.

Let me give the House some concrete examples of what is circulating among our constituents as a way of dealing with the situation. Four of these are from a particular influencer named Samuel Leeds, who has hundreds of thousands of followers on social media. Let me be clear: when this place previously debated Mr Leeds’s behaviour, he put out a video accusing us of not putting our heart into dealing with him. Well, if you are watching, Mr Leeds, let me tell you that I am going to put a hell of a lot more than my heart into making sure that you are held accountable for the damage that you are doing. He claims that he knows not only a lot about the tax, but a lot about the law, which is like me saying that I know a lot about flying a plane because I have been in one occasionally.

Here are five examples of the things Samuel Leeds is saying. First, he claims that people can buy a rundown property, renovate it, sell it and pay no capital gains tax because they can just claim it was their main residence. He claims that he has done it himself multiple times. That advice is simply wrong. Section 224(3) of the Taxation of Chargeable Gains Act 1992 strips the main residency exemption from any property acquired with the purpose of making a gain. The case law is equally clear: if someone never intended to make it their settled home, it was never their residence at all. This law kills that wheeze twice over. Our constituents who follow that advice face not just the capital gains tax, but potentially income tax at an even higher rate if the taxman decides—frankly, rightly—that they were doing a property development trade.

The second well-known wheeze is that people should put their spouse and their kids, some as young as 13, on their company payroll, pay them £12,500 each and extract the cash tax-free. That sounds brilliant—I cannot wait till my children get older—except that it is not. If they are not doing genuine work, it is not a deductible expense, and for any child under 14 it may well be illegal. We are not talking about a grey area here, yet that advice has been shared millions of times.

The third claim is that people can put their property in a trust and protect it from inheritance tax entirely. That is flat-out wrong. The fourth claim is that people can gift their home to their children, stay living in it and they will pay zero inheritance tax. Again, that is flat-out wrong. If people continue to live in a property after gifting it, which is precisely what most would do, inheritance tax is charged as if the gift has never been made. The seven-year clock, which people may be aware of, never even starts.

The fifth claim circulated by many of the FinTok people is that holidays and almost anything else can be claimed as a deductible business expense. As one finfluencer, Abi Hookway, put it in a video,

“rich people don’t pay for holidays”.

The boring reality is that an expense must be wholly and exclusively for trade purposes. Of course, holidays do not meet that test.

HMRC is actively identifying suspicious claims, and people are being caught and are facing fines and penalties as a result of this fraudulent activity. In total, HMRC handed out £153 million in fines across 46,000 penalties for businesses in 2023. There has been a 38% increase in the serious penalties for what it terms “deliberate” errors. Last year, about 1.8 million taxpayers turned to overdrafts to pay unexpected self-assessment tax bills, according to research by Royal London.

The people giving this advice need to face a penalty of their own. The Financial Conduct Authority has used its powers to regulate this space. Just last month, seven individuals with a combined 4.5 million followers were brought to justice by the FCA for their role in promoting an unauthorised foreign exchange trading scheme. There is no reason why HMRC cannot operate in a similarly direct way if it is given the power to do so, and that means our showing the political will to recognise this problem, not wait for too long to act. Frankly, that is what we did with the payday lenders and buy now, pay later companies. That is why I am asking Members to support new clause 4 and the change that it offers.

In a world of ChatGPT and large language models, we need to recognise that the information these people are creating is also being dragged into servers and reproduced as if it is correct, further compounding the damage, and that highlights the need to act quickly. These people are seeking to make monetary gain from their videos, just as the professional organisations identified in clauses 156 and 157 are seeking to make monetary gain from tax avoidance schemes. Just as Al Capone was taken down by what he was doing on tax, so these people need to be stopped before they cause further harm.

I will end with this point. As well as farming dodgy advice for clicks, Samuel Leeds sells his property investment advice for money. In 2019, Danny Butcher, a soldier from Doncaster, joined one of the seminars and listened to the advice. As his widow puts it, Danny

“thought this was his chance”.

Eleven weeks later, he took his own life, shamed about the amount of money that he had lost.

We do not just need to call out charlatans such as Samuel Leeds or warn our constituents about the danger of taking advice online; we need to act collectively to stop this before it gets any worse. New clause 4 would make it clear that the powers in this Bill also apply to these con artists. I hope the Minister has heard my plea for us to act quickly on this matter, and I look forward to hearing what he has to say in response. To any of them listening, I say, “You can tag me in what you want. I will always stand up for consumers.”

[Madam Deputy Speaker (Judith Cummins)]

I call the Liberal Democrat spokesperson.

[Charlie Maynard (Witney) (LD)]

The Bill, and the Budget it derives from, demonstrates clearly that the Chancellor has implemented stealth tax grabs that will hit some of the lowest paid the hardest, through extending a freeze on income tax thresholds and the national insurance contributions increases which suppress employment and wages. It is full of short-sighted harmful decisions that the Liberal Democrats cannot support. Our amendments aim to highlight and reduce some of its more harmful impacts.

I will focus on four particular areas, the first of which is the impact of frozen income tax thresholds. New clauses 15 to 17 would secure additional information and analysis about their impact. As the worrying figures from the OBR suggest, continuing to freeze income tax thresholds will drag an extra 1 million pensioners into paying income tax for the first time by 2030-31, unless the Government act.

[Mr Joshua Reynolds]

My hon. Friend is right about pensioners being dragged into paying income tax. Does he agree that millions of those pensioners will want to be able to contact HMRC and ask it about those changes? Millions of people never manage to get through to HMRC and figures from a written question I put in recently show that HMRC has lost 2,000 customer service staff in the past few years. Does he agree that we need a red phone hotline to allow pensioners to get hold of HMRC for support and advice when they need it?

[Charlie Maynard]

I completely agree. The stress of that is horrific, so the more it can function effectively would be appreciated.

The Government have said that people whose only source of income is the state pension will not pay any income tax over this Parliament, but no details have been provided on how they will be protected. I ask the Government to put an end to the uncertainty and set out plans in full explaining exactly how they intend to shield pensioners from that unfair tax hit. We would love a timeline for when they will do that.

More broadly, extending the stealth tax by two more years will drag an estimated 1.3 million people into a higher tax band by 2029-30: just over 600,000 into the basic rate of tax and just under 700,000 into the higher rate. Those are big numbers. We would really appreciate it if the Government explained to each of the 1.3 million people who will be impacted what it will do to them, because I do not think they are aware of it right now. That disproportionately impacts those on low incomes who will be dragged into income tax for the first time. At the very least, please provide that information.

Next is the impact of the Government’s actions and inactions on youth unemployment, which is building to a real crisis point. Some 16% of all 16 to 24-year-olds are out of work, or almost 740,000 people, which is 100,000 up in the last year—I repeat, 100,000 up in the last year—so something is going wrong with the Government’s policies and we need to get to the bottom of that. The Liberal Democrats have tabled new clause 14, which requires the Chancellor to review and report on the impact of the Bill on unemployment, with particular regard to young people aged 16 to 24.

It is worth noting that this legislation, which dampens growth and hits jobs, comes at a time of broader disruption in the labour market. AI is already having a particular impact on entry level so-called white-collar jobs, but it is also having an impact in pubs. All our local pubs are hiring fewer young people because there is no incentive to do so any more. The creation of a new employers’ national insurance contribution band between £5,000 and £9,100, with a lower rate to incentivise employers to hire often younger, part-time workers, would really help.

In new clause 13, we highlight the complexity of the tax system and the cost of administering it. There is a green brick sitting here masquerading as a Bill. With such a big majority in this Parliament, the Government have a real opportunity to do some serious thinking about how to simplify, root and branch, our tax code. It is disappointing that we see no sign of that actually happening. With this size of legislation being added each time, the tax system is getting bigger and more complex, and that puts a real burden on business. The Treasury Committee, the Public Accounts Committee and the Business and Trade Committee have all spoken out about how much damage our over-complex tax system is doing to our businesses. We would really appreciate anything that the Government can do and if they could get more serious about that.

16:19

Finally, on agricultural and business property relief, we welcome the Government’s U-turn, although we wish that it had not taken a year of stress and fear. Farmers and business owners in my constituency have lived that; it has been hell for them and their families. We are grateful for the U-turn, though, and appreciate it. However, the Government have now picked static thresholds, which do not rise with either land values or the cost of living, meaning that the benefits to farmers and business owners will be eroded year after year.

[Rachel Gilmour (Tiverton and Minehead) (LD)]

We welcome the Government’s changes on APR—a new £2.5 million threshold was announced just before Christmas—but does my hon. Friend share my concern that genuinely active, long-held family farms and long-standing tenant farming arrangements will still be penalised by the Government? Does he therefore agree that Members should back the Liberal Democrat amendment, which would maintain relief at 100% where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a family member?

[Charlie Maynard]

I thank my hon. Friend for speaking up on this matter. I know that my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) feels very strongly about it as well.

We do not really understand why the Government have decided to go with those fixed static thresholds. Everybody recognises that agricultural land values go up and that the cost of living goes up. We would really appreciate it if the Government could explain why they have decided not to index that. We will therefore be pushing new clause 11 to a vote, because we really want to see that fixed.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

I will speak to the two new clauses that stand solely in my name, which relate to the impact of the changes to the remote gaming and remote betting duties. I do not intend to relitigate the rights and wrongs of those changes; we have had a number of debates on that subject in this Chamber and in Westminster Hall, and the determination has been settled by Treasury. However, I do think it is important that we consider what I believe are the genuinely unintended consequences of the changes that the Treasury will introduce and how best to mitigate them. To mitigate them, though, we need to understand them, so new clause 8 simply seeks to get an independent assessment of the changes to the remote betting and remote gaming duties on the black market.

I am sure that those of us who have participated in debates around gaming and gambling will accept that there are challenges that we need to address with problem gambling, but that requires people to participate in the regulated sector, where help and support is available for those who find themselves getting into trouble. The more people we push into the black market—where there is no support, no GamCare, no lock-out system—the more people are at risk of harmful activity and being preyed upon by predatory organisations and companies that are outside the UK, do not pay taxes here and are simply not worried about the participants.

The independent study done by EY for the Betting and Gaming Council found that there is a potential for £6 billion-worth of stakes to be diverted into the black market as a result of this change. That is £6 billion of stakes that were going to be made somewhere, but will now go into the black market and will therefore not be subject to any taxation, including any form of potential corporation tax if they are staked outside the UK with one of the companies headquartered elsewhere, or to the remote gaming duty. That is a 140% increase on the potential stakes going into the black market.

It also means thousands and thousands of people—our constituents—who will find themselves in an unregulated part of the gambling and gaming economy, where there is absolutely no help and support for them. The people who run those sites have no interest in the welfare of those individuals whatsoever; they simply want to try to maximise their profits. Every single one of us is no more than two clicks away from an unregulated gaming or gambling site, and we should be open and acknowledge the fact that that money often funds questionable activities overseas, including organised crime and, in some cases, terrorism.

I recognise that the Treasury has, as part of broader changes to the betting and gaming regulations, identified £26 million for the Gambling Commission to try to mitigate some of the worst aspects of those activities, but we simply do not know what impact that will have; the assessment has simply not been done by the Government to determine whether that £26 million is enough. Frankly, every penny that could be spent on helping people in this country to avoid damaging gaming and gambling, and to enjoy regulated gaming and gambling, should be spent.

[Kirsty Blackman (Aberdeen North) (SNP)]

Have the Government given the hon. Member any idea of when a post-implementation review of this legislation might be done, and therefore when the Treasury can say how much tax has been gathered and how much has been lost as a result of these changes?

[Gareth Snell]

That is an incredibly fair question. The Treasury has been unable to give me an answer, but I hope that the Minister will be able to when he sums up the debate. Regardless of one’s views on gambling, we must ensure that the implementation of new levies does not drive people into the black market, because that is where they are most exposed to risk. If people are to participate in gaming and betting, I would much rather they did so in UK-based, regulated services, where they can get help and support if needed, and where the taxes they pay can go towards funding our public services. It is a fair point, and one on which I hope the Minister will be able to provide an answer.

I wonder whether the Minister could also give some thought to the following point. This taxation has been hypothecated, in the narrative, as being directly to fund the Government’s welcome lifting of the two-child benefit cap, but in reality that is not how taxation works in this country—we do not hypothecate specific taxation lines to pay for specific social policies; instead, the money goes into the Treasury pot, and the Treasury, in its infinite wisdom and benevolence, hands it out to other Departments, which then make their spending commitments.

Now, the Government’s own OBR forecast suggests that, given the behavioural changes expected to take place as a result of the differential rates between the regulated and unregulated sectors, and given the people who will pay tax, the yield from this tax will potentially be down by a third by 2029-30—that means somewhere in the region of £300 million will be lost. If we are making this direct comparison, saying that the levy is needed to fund the welcome change in the two-child benefit cap, can the Minister set out where the additional funding will come from in 2029-30, if the reduction resulting from behavioural change takes place?

Even if the Government are unable to support my new clause 8 tonight, a proper impact assessment would at least allow a better understanding of future challenges relating to the behaviour of consumers and the impact on tax yield.

My new clause 9 seeks a similar impact assessment, but in relation to our friends in Gibraltar. The Minister will be acutely aware that the gaming and gambling sector is a huge part of Gibraltar’s economy—30% of its GDP comes from the sector, and it employs some 3,500 people. The gambling and gaming companies that have a footprint in Gibraltar pay Gibraltar corporation tax as well as any levies paid in the UK. However, because it is a top-line tax, rather than a bottom-line tax, any impact on the profitability of companies based in Gibraltar, or any behavioural changes in the stakes put through those companies, will have an immediate and direct impact on Gibraltar’s revenues.

One third of Gibraltar’s tax receipts come from the sector, so anything we do in this place that has an impact on the sector there—I entirely accept that this is not an intended consequence of the decision—would leave a huge hole in its economy, and that will have to be filled. We are talking about potentially tens of millions of pounds, if not hundreds of millions. Gibraltar is, of course, one of the family of nations that make up Britain, and we have to ensure that, given its strategic importance because of our defence work, we do nothing that makes it less safe as a result of tax changes here.

Of course, the Government of Gibraltar are currently putting through their Parliament the changes to the EU-Gibraltar treaty, which will help with the flow of the gaming sector’s workforce, given the cross-border nature of the workforce. However, Nigel Feetham—the Member of the Gibraltar Parliament who holds the justice, trade and industry brief—has said that what Gibraltar really needs is stability, and not to have “avoidable” decisions from the UK. I know that the Government will resist my new clause, but I ask the Minister to lay out what communications and active engagement he and the Treasury have had with our friends in Gibraltar.

Gibraltar is of strategic importance to us and part of the family of nations that makes up who we are, and decisions that we take in this Finance Bill are having a huge impact on its economy and its ability to fund its public services, which contribute to our overall national defence. While Gibraltar is embedding the new treaty changes, it is important that it has some certainty about its revenue stream.

The media are reporting that the Gibraltarian Government are looking at rapid diversification of their economy to make up the difference, but realistically we do not know what the impact will be on our economy, and they certainly do not know what the impact will be on theirs. The Minister will be acutely aware that as Gibraltar is dependent for 30% of its tax intake from one sector, even a small change here in the UK could have a hugely detrimental impact over there. I hope that he will address the stability that the Gibraltar Parliament has been asking for, and for which Nigel Feetham has rightly been asking in his engagements with the Treasury.

Finally, I had not intended to do so, but I will touch on new clause 10 tabled by the Opposition about CBAM. I have often talked in this place about the importance of our manufacturing industries, and not least the ceramics industry, which falls outside the current proposals for CBAM but will be subject to the emissions trading scheme. There is a perversity about the emissions trading scheme and CBAM in that if we get it wrong, we will just drive up prices for consumers and for producers, while others are importing into our country ceramics produced using cheap Russian gas, which means that their price point is much below what we can produce them here. It also has the distorting effect that our exports become more expensive when they hit the CBAM—particularly for Europe.

Therefore, while we are at a point of global turmoil and gas prices are increasing hugely overnight—the price per therm was 74p last week; it is now somewhere around 160p—there is some work to be done by the Treasury. I asked the Chancellor about that in her statement on Monday; unfortunately, she missed the point about gas-intensive industry and went straight to electric-intensive industry, which is different. When the Government look at how we do CBAM and where we will have free allowances for the ETS, will the Minister bear in mind those small sectors such as ceramics that are crucial to our foundational manufacturing? I am talking not about the tiles, tableware and giftware that I talk about so often, but about the advanced ceramics that we need in this country, which are dependent on a gas price that works and being able to trade across the European border without huge external tariffs being placed on them because of carbon leakage.

Nuclear submarine air filtration systems are ceramic, and the rotor blades that go on small modular reactors made in Derby will require a ceramic powder coating for them to be utilised that will have to cross many borders. There is the potential that we price out British manufacturers as a result of the CBAM and the ETS if we do not have some of those lifelong allowances and we do not think about the interplay of components that travel over borders. Therefore, while I had not intended to speak about the Opposition’s new clause 10, the hon. Member for North West Norfolk (James Wild) made a valid point in terms of ceramics. Even if the Minister will not take the new clause forward—obviously we will not support it, because it is not a Government amendment—the hon. Gentleman’s point is worthy of consideration in a different form.

[Katie Lam (Weald of Kent) (Con)]

Since the Government announced their tax raid on family farms, they have made numerous false claims about the policy and what it will mean for farmers. Raising the threshold, as the Government propose today, does not fix the fundamental wrongs at the heart of this awful policy. I will speak in favour of amendment 6, tabled in the name of my hon. Friend the Member for North West Norfolk (James Wild), which would remove those problems altogether by doing away with this pernicious tax.

What are the claims? The Government have claimed that farmers are rich and so can afford to bear the cost of tax increases. To the surprise of nobody who actually works on a farm, that myth is born of a fundamental misunderstanding of how agriculture works. A farm is not simply another asset like a share portfolio where we can sell a little today and buy a little tomorrow. The assets of a farm—primarily its land, its crops or livestock, and its equipment—are huge long-term investments, completely inseparable from the ability to produce whatever it makes. There is often little relationship between the value of the land held by a farmer and the profitability of that farm. That is particularly true at a time when, to sell their produce at all, farmers must abide by a seemingly endless list of regulations, all of which drive up costs and reduce profit margins. Farmers tolerate a rock-bottom level of return on investment that most businesses would never consider.

16:31

Ministers have also claimed that farmers can simply give their farms away seven years before they die and avoid paying the tax altogether, and that this is just a way for the Government to encourage a handover to the next generation. That is absurd: first, for the Government to introduce a tax while encouraging the victims of that tax to avoid it; secondly, to imply that people can predict when they are going to die; and thirdly, if this is really what they were trying to achieve, why was there not a delay of seven years to enact the policy?

Perhaps the most egregious falsehood of all, though, was the claim that the Government had no choice but to impose the tax on farmers. Ministers first argued that they desperately needed the £500 million they initially said it would raise. Since changing the threshold, they have claimed they must have the £300 million they now say it will provide. “For what?”, one might reasonably ask. After all, if farmers are being asked to tighten their belts and pay extra tax, surely the Government have been exceptionally careful in their spending habits.

In fact, this Government have spent £3.6 billion on lifting the two-child benefit cap, designed to give more money to those who do not work; they are planning to spend £3.4 billion for the privilege of handing over the Chagos islands to Mauritius, though we can yet hope this so-called deal may be cancelled; and they are spending £1 billion on yet more failed energy policies, which will drive up costs for consumers. Did the Government really need to punish farmers to the tune of £300 million, or have they instead decided to carry out a cynical tax raid on the people who feed us in order to fund a series of ideological hobby horses? It is not as if this was an emergency tax hike to keep the lights on. In fact, the Government’s plans for more renewable energy could very well leave us facing blackouts.

Again and again, this Government punish those who are doing the right thing, as my hon. Friend the Member for Bridgwater (Sir Ashley Fox) said earlier, and take money from those who work hard to fund those who do not work at all, or to spend big on ideological projects that nobody has ever asked or voted for. The policy is not just nonsensical; it is deeply immoral. This is no way to treat the people, including those in the Weald of Kent, who go to work—doing some of the toughest work imaginable—every single day, often for long and unsociable hours, to keep our country fed. Amendment 6 would put a stop to this appalling tax, and I am delighted to support it.

[Henry Tufnell (Mid and South Pembrokeshire) (Lab)]

I welcome the introduction of the carbon border adjustment mechanism in the Bill. It shows a commitment from this Government to supporting British industry, which underpins the fabric of local economies and communities across the country, including Mid and South Pembrokeshire.

For British industries included in its scope, a CBAM means they can compete on a level playing field with industries in the global market. It works by applying a charge to the carbon emitted during the production of imported carbon-intensive goods. That ensures that our domestic producers do not face higher production costs compared with their foreign competitors operating in countries where the price of carbon is lower. That is critical, for without a CBAM, those industries will go elsewhere, moving production to low-regulation, high-emission countries. We would lose jobs, investment and our industrial base while simply offshoring our emissions. That is carbon leakage: decarbonisation at the cost of deindustrialisation. It would be devastating for industrial communities across the country, in my constituency of Mid and South Pembrokeshire. That is why I call on the Government to expand the scope of the CBAM to include the oil refining industry.

Refined petroleum products are highly exposed to carbon leakage, and without the protection of the CBAM, we risk losing this industry. There would be untold consequences for communities like mine in Pembrokeshire, which is the home of one of the UK’s four remaining oil refineries. Locally, the refining sector employs over 1,000 people. Nationally, it accounts for 15% of Welsh export GDP. Oil refinery continues to be foundational to the UK’s economy and energy security; oil products supply 47% of the UK’s final energy demand and support thousands of skilled jobs in industrial communities like Pembrokeshire.

The transition to net zero must be a just one. It cannot come at the cost of deindustrialisation and greater economic deprivation in communities like mine. As the party of working people, it is incumbent on this Labour Government to manage this energy transition by protecting the jobs and skills base of today while building the industries of tomorrow. Recent global events have shown once again how trade flows can change overnight, threatening our energy security and directly impacting the cost of living for our constituents. As a Government, we must be agile in responding, providing the support and certainty our communities and industries need to weather the storms.

A CBAM can provide targeted support to industry during turbulent times. However, the Bill in its current form requires the effectiveness of the CBAM to be reviewed only after five years. I hardly need to remind the House how dramatically the geopolitical landscape can change in that time. That is why I urge the Minister to consider making provision for yearly reviews of the CBAM during its first five years. This would allow the Treasury to respond to unforeseen events and ensure that the CBAM continued to achieve its objective, minimising the risk of carbon leakage for carbon-intensive industries in the UK, so that our decarbonisation efforts could lead to a true reduction in global emissions rather than simply displacing carbon emissions overseas.

We are at a critical juncture for British industry. Decisions made by this Government will shape the UK’s ability to safeguard industrial jobs and maintain global competitiveness while meeting net zero objectives and creating jobs for the future without simply offshoring our emissions. This Bill continues the Government’s work to build a stronger, fairer country by growing our economy, raising living standards and, crucially, investing in our public services. The introduction of the CBAM is a vital part of this broader package of measures, but I urge the Minister to consider expanding its scope and reviewing it annually to ensure that it delivers on its important objectives in a rapidly changing world.

[Robbie Moore (Keighley and Ilkley) (Con)]

I rise to speak about the changes that have been made in relation to inheritance tax, which is impacting many of our family farming businesses and also those family businesses that operate in many of our constituencies. I rise specifically to speak to amendments 89 and 90, which, if agreed, would remove the liability for inheritance tax on the share of a tenancy at arm’s length that transfers on death.

This Government’s ill-handling of the family farm tax has left our farmers in limbo and their confidence in tatters. Thanks to Labour’s disastrous family farm tax and family business tax, our farmers and many hard-working businesses have spent over a year navigating an already challenging time for the sector, with added anxiety and uncertainty hanging over their heads. Despite the warnings from the entire farming community, this Government pushed ahead with the tax, creating chaos, fear and real damage.

[Mr Lee Dillon (Newbury) (LD)]

Does the hon. Member agree that the way the Government have approached this has hurt their main aim of economic growth, because farmers have delayed ordering and, because of the new rules, there is now no incentive to grow their farms over that £2.5 million threshold?

[Robbie Moore]

The hon. Member makes an excellent point. Despite the minimal, partial Government U-turn by increasing that threshold from £1 million to £2.5 million, the changes are still impacting many of our farming businesses and therefore the wider supply chain. This not only has a negative impact on the level of investment that a family is willing to put into their family business, but has a hugely detrimental impact on the wider supply chain, including on investment in agricultural machinery and the willingness to purchase stock. This is therefore having a massive detrimental impact on the real rural economy right now.

[Carla Lockhart (Upper Bann) (DUP)]

The hon. Member is speaking very powerfully. The Department of Agriculture, Environment and Rural Affairs in Northern Ireland has estimated that 4,500 farms, mainly in the dairy industry, will still be impacted by the set changes. Does he agree that, given the need for food security, we need to protect our farms, not do away with them?

[Robbie Moore]

We absolutely do. The hon. Member makes an excellent point, because we all know that the value of farmland in Northern Ireland is proportionately higher than anywhere else in the United Kingdom, and therefore a huge proportion of Northern Ireland farmers—4,500 of them—who are working incredibly hard are still going to be impacted by the rate relief change that this Labour Government have implemented. They are going to be detrimentally impacted, and that has a wider negative impact on the rural economy.

Despite this partial U-turn, by increasing the level of the agricultural and business property relief thresholds from £1 million to £2.5 million for inheritance tax, the Government will risk once again showing their disregard for the farming community should they neglect to support amendments 89 and 90, which seek to address yet another measure seemingly designed to punish our farmers. The Tenant Farmers Association is a dedicated organisation that represents the interests of all those within our farming community who do not own land, and it is heavily involved in supporting the tenanted sector. I spoke with members of the TFA just this morning and the chief executive, George Dunn, who has excellent knowledge of, and commitment to, the tenanted sector and has provided many a briefing to many Members of this House.

It is deeply disappointing that Government Members do not seem to support amendments 89 and 90 to schedule 12. Should the House fail to agree to the changes in these amendments, tabled by my right hon. Friends the Members for Central Devon (Sir Mel Stride) and for Louth and Horncastle (Victoria Atkins) and me, those who inherit a share of a joint tenancy will have no means to capitalise on that share while also having no way to liquidate the asset in the context of continuing business to allow them to pay the tax liability.

To date, the value of any inherited portion of a business or agricultural tenancy held jointly following the death of one of the joint tenants has been fully relievable either through agricultural property relief or business property relief. Given that in most cases it will be impossible for the surviving joint tenant or tenants to realise the value of any inherited share of the tenancy on death, it is completely unfair that this tax, proposed by the Labour Government, should be levied. The unfairness is underlined by the fact that an input value for the share of the joint tenancy would have to be calculated on the profit rent basis, which is the best at theoretical value in any case, which just blows out of context the real damage that is being implemented by this Labour Government. Therefore, I urge the Government to learn from their previous mistake, listen to our farmers and protect the value of joint tenancies by supporting these amendments.

Amendment 88 seeks to delay the triggering of the instalments that are going to be brought forward by the payment of inheritance tax from the current period of six months by 12 months to a full 18-month period. This is so important—the Government fail to realise this—because of how complex it is to value the assets that are likely to be subjected to an IHT liability. When looking at farming businesses, we are not only valuing the farmland. There may be a farmhouse and a cottage or two, and the livestock, the machinery, the growing crops and the crops in store will all have a value associated with them. It is therefore complex to ascertain the value within the six-month period that the Government have outlined.

And it gets more complicated still. We find ourselves in the bizarre scenario where two assets on death with a value of £5 million could be subjected to different IHT liabilities depending on the ownership structure and whether the spousal allowance is being utilised—therefore exposing any tax liability on death to challenge, quite rightly, by those with whom the tax liability sits. To have a deadline of six months for that tax liability to be triggered, and for an instalment to be paid, will simply not be sustainable. I therefore urge the Government to support amendment 89 in my name and that of the official Opposition.

16:45

[John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)]

My hon. Friend is making an excellent speech. I am sure that, like me, he has received many emails and letters from farmers over the last few days, given that the price of red diesel, heating oil and fertiliser has gone up in the light of recent uncertain events. Does that not demonstrate and remind us all how fragile farming businesses are? The idea that farmers will have sufficient money sitting in the bank to pay this tax bill is for the birds.

[Robbie Moore]

It is absolutely for the birds. Not only are our farming businesses being attacked through the changes to inheritance tax, but they face complications and additional burdens through challenges with cashflow. We have already seen de-linked payments drop dramatically for many of our farming businesses. The sustainable farming incentive has been chopped, changed and moved around, and we are not sure what the fundamentals will be when the new SFI is rolled out in the summer. When that is coupled with additional costs, and with red diesel going up, the cashflow challenges increase, as many of my hon. Friend’s constituents, and constituents of Members from across the House, have realised. When the Government put an additional burden on a potential inheritance tax liability, it only increases the anxiety in our farming communities.

This morning, in addition to meeting the Tenant Farmers Association, I met the CLA and the presidential team there, including Gavin Lane. He put it across to me very clearly—he rightly continues to campaign on the matter—that the family farm tax must ultimately be abolished. That is why we Conservative Members reiterate our commitment that there will be 100% agricultural property relief and business property relief if we are lucky enough get back into government.

Finally, there is the issue of indexation. Setting the threshold at £2.5 million takes no account of the value of farmland increasing; our farming community and family businesses will be further impacted when the value of assets rises further down the line, while the threshold is maintained at £2.5 million.

We are at the final stages of the Finance Bill, yet we do not have any further clarity from the Government on the timings associated with extending the point at which payment is made from six months to the 18 months that we are requesting. We have no certainty that indexation will be linked to the threshold, which has been increased, though minimally, and no assurance that the Government actually get how our farming community operates.

I hope that the Government will consider amendments 88, 89 and 90 and the associated amendments in my name and the name of the Opposition Front Benchers, and that they will ultimately agree with amendment 6, which scraps the family farm and business tax in its entirety.

[Alex Ballinger (Halesowen) (Lab)]

Before I start, I should declare that I am co-chair of the all-party parliamentary group on gambling reform. I want to talk about new clauses 8 and 9, which my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) spoke to earlier. They are thoughtful, well-meaning new clauses that address real concerns. I want to add a bit of context, and set out what the evidence shows about the black market and the situation in Gibraltar.

Industries associated with harm often use the black market as an excuse to avoid regulation or additional taxation. When I was on the Finance Bill Committee last year, we received a lot of correspondence from the tobacco industry, in which it made the same sort of claim. We were seeking to increase taxes—the shadow Minister, the hon. Member for North West Norfolk (James Wild), might remember the debate—and the tobacco industry was using the black market as an excuse for why that should not happen. In the gambling sector, the threat of the black market is overblown. The regulated market is dominant, and in recent years there have been lots of taxation changes that have not increased the size of the black market. I will give two examples.

When we changed from taxing turnover to taxing profit in 2001, the black market was highlighted as a risk, but there were no real changes. Again, when we introduced the point-of-consumption tax in 2014, there was no surge in unregulated or black market gambling. Indeed, a 2021 Gambling Commission study found that only a very small proportion of UK gamblers ever used unlicensed sites, and they did so mostly by accident. As my hon. Friend the Member for Stoke-on-Trent Central accurately pointed out, people who are banned from regulated sites sometimes turn to the unregulated sector, and that truly is a problem.

Focusing on the black market risks diverting attention away from the significant and better-evidenced harms in the regulated sector. Those harms are most widespread in the areas in which we are seeking to increase taxes—we have discussed that, so I will not go into it too much. However, it is important that we tackle the black market, so I welcome the illegal gambling taskforce that has been introduced, as well as the additional £26 million for the Gambling Commission to address those issues. We should not buy into the narrative that risks from the black market should stop us making changes to keep people safe from the most harmful forms of gambling.

If the tax changes are as economically damaging for Gibraltar as has been claimed, we need to consider how they work in other jurisdictions. The same gambling organisations often operate in other countries with much higher tax rates than the UK, and they manage to survive profitably in those sectors. I think that we should take that into account when considering new clause 9 and the impact on Gibraltar.

[Kirsty Blackman]

You would not believe, Madam Deputy Speaker, how far beyond delighted I was when I discovered that I would be stepping in for a colleague on the Finance Bill. I am sure that the House is similarly ecstatic to hear me speak on the Bill. I did a significant number of Finance Bills in my first few years in this place, and I have missed it. I have also missed the former Member for Amber Valley, Nigel Mills, who used to make a speech from the Government Back Benches about something that nobody else had even considered or knew existed. The hon. Member for Stoke-on-Trent Central (Gareth Snell) is very kindly stepping into his shoes and raising issues relating to gambling tax, which, to be fair, are important. He is asking very important questions, as Nigel Mills used to, about a fairly niche subject. In the light of the hon. Member’s comments about gambling taxation and the black market, it would be great if the Treasury provided updates on how the tax has worked.

In fact, I think the Treasury should generally provide more updates on every tax measure that it implements. If the Treasury says that a tax measure will raise £30 million, it would be helpful for the MPs who sat on the Finance Bill to know whether it did in fact raise £30 million, or if it raised £50 million or £10 million. Then, we could make better decisions about future tax changes, because we would have a better idea of whether they would achieve the Government’s aims. Successive Governments have been particularly bad at undertaking post-implementation reviews, particularly of tax measures. It would be really handy to see that information more regularly, so that we can make better-informed decisions.

Let me touch on the transparency issues that have been mentioned. Earlier, I raised my concerns about the fact that additional Ways and Means motions were added at this point. I also raised the fact that we do not have oral evidence sessions during the passage of the Finance Bill. I continue to make the case that that could be done after Committee of the whole House. Usually the more technical aspects of Finance Bills are considered in a Public Bill Committee in a Committee Room, rather than in a Committee of the whole House in the Chamber.

The Minister said that some Government amendments had been tabled following stakeholder feedback—particularly through written evidence—to clarify the intention of the legislation. The Government had intended to do something, and stakeholders said, “We don’t really understand this; it’s not clear enough. Could you clarify it?”. If the Government had held oral evidence sessions, they may have been able to make those changes in Committee, rather than on Report. I urge them, and any future Government, to consider holding oral evidence sessions. Anyone who has been on a Bill Committee in which there are oral evidence sessions will understand their great value, and we refer back to them so many times throughout the course of a Committee. There is nothing quite like being able to ask an expert questions, rather than just looking at the written evidence, which is helpful, but it is not the same. We do not remember written evidence in the same way, and we do not have the same ability to probe it.

I want to touch on the four amendments that may be put to a vote. The SNP and I are happy to support new clause 4, tabled by the hon. Member for Walthamstow (Ms Creasy). I was thinking about the history of some “get rich quick” schemes. We had Ponzi schemes and pyramid schemes. The new thing—the Ponzi scheme of the day—is the scheme that says, “This is foolproof. This is failsafe. You are going to make loads of money doing this,” but it is actually unregulated. The new clause would be incredibly helpful. I would have preferred the new clause to say “user-to-user services” instead of “social media”, so that it would cover all the stuff in the Online Safety Act 2023. That covers things that we may not classically define as social media. For example, if somebody gave really terrible tax advice on a money-saving expert forum, would that be included in the definition of social media? Social media is not 100% defined, which is why I would have preferred a different term. However, the new clause is sufficient to cover the majority of people.

[Ms Creasy]

I feel the need to stand up for Martin Lewis, because he is one of the good guys when it comes to advice, and those forums are policed very well. The problem is people exploiting the fact that social media companies also have a vested interest in generating content that goes viral. They are the sole publishers of these videos—they make money from them—that tell people outlandish things that they can do with their taxes. I think we all agree that it is worth looking at the Money Saving Expert forum. I peruse it at length myself, much to the detriment of being able to make decisions.

[Kirsty Blackman]

It is absolutely worth looking at that forum, but as the hon. Member said in relation to the new clause, people who are promoting schemes with no expectation that they will actually work should not be doing it on money-saving expert forums, or anywhere else. I agree that Martin Lewis has been very clear that he does not give advice online, and that people who, for example, say, “This is a Martin Lewis tip” are lying. It is worth highlighting that the way in which he has chosen to put forward tax advice or information is totally different to the way chosen by the financial influencers referred to in new clause 4. As I said, I am more than happy to support it; I would have just liked it to be wider.

We are happy to support new clause 11 on the uprating of agricultural relief, tabled by the Liberal Democrats. If the new clause and the uprating is not to be implemented, it would be incredibly useful to see the Government’s rationale for why they have chosen not to do annual uprating in a way that would be standard for the majority of other reliefs. What is the logic for that? As I was not on the Bill Committee, I am not as across this part of the Bill as I perhaps should be, so I am not clear what mechanism is in place to uprate the relief. Is it done under the negative or affirmative statutory instrument procedure? Will the House actually see a statutory instrument, or is a delegated authority given to the Minister? It would be helpful to have an idea of what the mechanism is, and whether, if inflation continues at the current rate or goes up again, the Government are likely to put in place an increase to ensure that agricultural relief continues to wash its face—to provide the relief it is supposed to.

[Ben Maguire (North Cornwall) (LD)]

I wholeheartedly endorse what the hon. Member is saying in support of new clause 11 tabled by the Liberal Democrats. Lots of my farmers in North Cornwall are constantly telling me that they are pleased with the Government’s decision to change course on the family farm tax, but it is essential that they keep rising prices in mind, exactly as the hon. Member says.

[Kirsty Blackman]

I absolutely agree. With the uncertainty in the middle east just now, we are seeing an increase in fuel prices, which will heavily impact farmers, and fertiliser prices. Since Russia invaded Ukraine, fertiliser prices have gone through the roof and it has been difficult to get hold of at all, so farmers need support. We have always relied on growing food, but in this ever more uncertain world we really need to rely on growing our own food. This Government—and all Governments—need to consider whether we want to be self-sufficient, or anywhere near self-sufficient, in food, or we are happy to see our farms dismantled to create ever-larger, Australian-style sheep farms, with thousands of sheep on them and nothing else. We need to consider what future there is for our farmers and ensure that we are backing that future.

17:00

The SNP will not take part in decisions about amendment 5, put forward by the Conservatives, because it relates to income tax thresholds, which are a devolved matter, but we are happy to support the Conservatives’ amendment 6 on APR and BPR. I support a lot of the points that have been made about the changes to agricultural property relief. On business property relief, I am concerned as a result of conversations with family businesses in my constituency that we will see an increase in the number of fire sales. Family businesses will suddenly become liable for significant amounts of tax, but their assets are not liquid—they cannot just take out cash and give it to the tax man—and they will have to sell a significant part of the business within a tight timescale. Even if the Government were to be more flexible on the timescales, the situation would still be disastrous but there would not be a fire sale, such as those that businesses may have to have as it stands. Given that some family businesses are run by older people—they are the ones who have shares in the business and are responsible for it—we might see major issues very soon and businesses having to sell big chunks to pay tax bills.

[Robbie Moore]

I endorse what the hon. Member says. I cannot get my head around the fact that there are so many family businesses, beyond the agricultural sector, that will be impacted by the business property relief threshold at £2.5 million. They include manufacturing businesses and those in the hospitality sector, and many of them will be in the constituencies of Labour MPs. I cannot understand why, during the course of this Bill, many Labour MPs have been silent on the issue of business property relief, and why they are not standing up for family businesses. I endorse what the hon. Member says about fire sales happening as a result of an increased inheritance tax liability.

[Kirsty Blackman]

Given that we have a Labour Government who care about workers’ rights, the family businesses that I have visited have a strong worker involvement. The people who work there are cared for and looked after because it is a family business, and one would think that the Labour party would want to support more of those rather than encouraging people to get out of that place. I agree with the hon. Gentleman and I have big concerns on the matter.

As my hon. Friend the Member for Aberdeenshire North and Moray East (Seamus Logan) is currently leading a debate in Westminster Hall, he is unable to speak to his amendments himself, so I would like to talk about the reasons that he has tabled them. He has tabled a number of amendments in relation to APR and the anti-forestalling clauses. We are pleased that the threshold for APR was raised—that is welcome—but we are concerned about the backdating and the fact that the changes relate to things from 2024 onwards, rather than from April 2026 onwards. My hon. Friend’s amendments relate specifically to those anti-forestalling issues and ask for changes to be made, so that there is no backdating on the transactions. A number of agricultural organisations and farmers in his constituency have asked for those changes to be made, which is why he has put forward those amendments. The Government have raised the threshold, which is welcome, but if they continue to push forward with this measure, that will not be enough. Either cancelling it completely, as suggested by the Conservatives, or looking at the date would be incredibly helpful in ensuring that it is not backdated or retrospective, so that people do not lose relief on changes announced or made previous to the Budget.

My hon. Friend also tabled amendments in relation to whisky duty, which would take out clause 86. Over the last three years, we have seen an 18% hike in whisky duty. The figures show that there will be a £600 million downgrade in receipts as a result of continuing to increase this tax. Increasing the tax will reduce receipts, which will result in jobs in Scotland being put at risk, and the Government getting less money. I do not understand the logic of continuing to push ahead with raising whisky duty.

We really want the Government to think again. [Interruption.] To be fair, the 18% hike over three years was down to both Labour and the Conservatives, so I am afraid that the Conservatives do not have a huge amount of high ground. This issue has happened under both parties, but we will continue to fight on behalf of Scottish whisky producers. The tax on spirits needs to be looked at seriously, because this is an important part of the Scottish economy; it provides jobs in rural areas where depopulation is a big issue. We need these companies to continue, but if the Government continue to raise tax and hike the tax rates, we will see those jobs dropping off.

Amendment 140 has not been selected, but it is the only amendment put forward by our merry band of Reform colleagues, although they signed some other amendments. If anyone looks at that amendment, which we would presume is Reform’s key priority, given that that is the only amendment it has put forward, they will see that it would remove clause 88, which increases cigar duty. The main priority of Reform in the entire Finance Bill is that the Government should not be allowed to increase duty on cigars. That says a huge amount about the priorities of those who sit on the Reform Benches for the general people. To be fair, no Reform Members are here.

[Lincoln Jopp (Spelthorne) (Con)]

They’ve gone up in smoke! [Laughter.]

[Kirsty Blackman]

That was truly brilliant.

With all the craziness that we face in the world and all the issues faced by farmers, businesses and those who are badly advised by people making up tax advice on the internet, if the key priority of Reform is, “Let’s not increase the price of cigars”, it has got something wrong in the way that it deals with things.

I have laid out exactly how the SNP will deal with each of the votes that will take place, including our abstention on the income tax thresholds, because they do not apply in Scotland. I am very clear that we continue to have major concerns about APR and BPR.

I want the Government to think again about whisky duty and the level of transparency and scrutiny provided throughout the course of the Bill. This is not the first time I have asked for that, and Members are probably sick of me asking for oral evidence sessions to be included in the Bill, but I will keep asking until that happens. If the Government want to stop me having this conversation, just make it happen, and we will be completely grand.

[Phil Brickell (Bolton West) (Lab)]

I will speak to new clause 4 in particular, and to the wider issue of tax dodging and enforcement in this country. I make these remarks as chair of the all-party parliamentary group on anti-corruption and responsible tax.

I begin by congratulating the Government on the action they have already taken to tackle tax avoidance and evasion. The measures brought forward by the Chancellor and the Treasury team to strengthen HMRC’s powers, invest in enforcement and crack down on abusive tax schemes represent an important step in restoring fairness to the system. They have sent a clear signal that in Britain, the rules should be the same for everyone. The same rules should apply to the multinational company and the market trader, to the billionaire and the builder, and to those with the most expensive accountants and those who simply pay what they owe. More broadly, I also welcome the Government’s wider economic plan, which, despite global headwinds outside the Chancellor’s gift, is beginning to restore stability after years of uncertainty and drift. After 14 years in which economic instability and mortgage-spiking kamikaze Budgets became the norm, restoring stability is no small achievement. It is the foundation on which everything else must be built—investment, growth and confidence that the system is working in the interests of ordinary working people.

I turn to new clause 4. As a financial crime compliance officer in a previous life, in which role I spent many years dealing with the practical realities of financial crime controls, anti-money laundering systems and tax compliance, I recognise the principle that my hon. Friend the Member for Walthamstow (Ms Creasy) is pursuing—that of cracking down on the enablers of crackpot tax avoidance schemes. We have all seen the rise of so-called online finfluencers promoting dubious arrangements. These schemes are dressed up as clever financial advice, but in reality, they promise something that should always ring alarm bells: something for nothing. I make no judgment on the merits of my hon. Friend’s new clause, and I would welcome further discussion about it with her after today’s debate. My sincere hope is that HMRC is already fully alert to the risk posed by these schemes, and is monitoring the promotion of them closely. I hope the Minister will be able to comment on that when he winds up.

However, my hon. Friend the Member for Walthamstow has, on a fundamental issue in this country, hit the nail on the head. In many ways, aggressive tax avoidance and tax evasion have become decriminalised, not through any change in the law but through something far more corrosive—a lack of enforcement. Laws can exist on the statute book, offences can be created and powers can be granted, but if those powers are not used and those laws are not enforced—if those who break the rules rarely face consequences—the signal that is sent is unmistakeable.

I am afraid to say that much of this decline occurred on the watch of the Conservative party. For 14 long years, we saw enforcement weaken, complexity increase, and a culture emerge in which some individuals and firms appeared to believe that paying tax was optional so long as they could afford sufficiently inventive advice. At the same time, the Conservatives drove the tax burden to the highest level in 80 years while turning a blind eye to those who simply refused to pay it. In response to an intervention earlier from the hon. Member for Bridgwater (Sir Ashley Fox), who unfortunately is not in his place, it was the Conservative Government in 2023 who scrapped the Office of Tax Simplification. Now, the official Opposition have the audacity to talk about making £47 billion of cuts, which is the equivalent of firing every police officer in Britain twice over. It is simply not credible.

Members may recall my speech on 27 November last year, during the Budget debate. For those who do not, in my remarks I referenced one of the more surreal examples of tax avoidance that has surfaced in recent years, which is the elaborate mollusc-based wheezes used to avoid business rates. These are schemes so convoluted that they led one high-profile individual to acquire more knowledge than anyone should ever reasonably possess about snail fornication, snail gestation, snail feed and—rather disturbingly—snail cannibalism. You really could not make it up: slimy advisers, snail farms and shell companies, all deployed in the service of dodging a lawful tax bill. It sounds absurd, and in many ways it is, but it also illustrates something deeper and more troubling. The creativity deployed in designing these schemes—the ingenuity, complexity and sheer effort involved—is often directed not towards creating wealth or innovation, but towards avoiding a basic civic responsibility. That is why I welcome clause 156, which prohibits the promotion of tax avoidance arrangements, with civil penalties and criminal offences built into the Bill to tackle the unlawful promotion of such initiatives.

On enforcement, the Bureau of Investigative Journalism has highlighted just how far things have fallen in recent years. Prosecutions against enablers of tax evasion dropped by around 75% between 2018 and 2024, and HMRC has not fined a single enabler of offshore tax evasion or non-compliance in five years. That is a dramatic decline that sends the wrong signal. It also risks creating the impression that while most people must play by the rules, those with the right advisers can simply play around them. Since the introduction of a new corporate criminal offence of failure to prevent the facilitation of tax evasion in the Criminal Finances Act 2017, we have seen very little enforcement. When prosecutions are rare, deterrence weakens; when enforcement is inconsistent, compliance declines; and when those who break the rules see others doing so without consequences, the entire system begins to fray.

17:15

I welcome the steps that the Government have already taken to strengthen enforcement against dishonest tax advisers by introducing new penalties—some £1.7 billion has been committed to strengthening the work of His Majesty’s Revenue and Customs—but might I gently suggest to the Minister that he could be going yet a little further? As he begins to think about the next Budget, let me point him towards some literature that I hope he will find useful. The all-party parliamentary group on anti-corruption and responsible tax, which I chair, has produced a report entitled “Clean Foundations for Growth”. I have a copy here in case he has lost his own. There is plenty in there, but I will highlight just two asks that are relevant to new clause 4, which was discussed slightly earlier. First, tax advisers and accountants should also be signed up as members of a professional body. Secondly, professionals whose membership has been revoked for tax fraud should no longer be able to operate. Those who design or enable abuse of the system should not be able simply to reinvent themselves under a new letterhead, and continue as before.

Economic success cannot just be measured in national statistics. In the towns of Bolton, Blackrod, Horwich and Westhoughton, my constituents want to see fairness in the tax system and real change on their high streets. They want to know that hard work is rewarded, that playing by the rules is not a disadvantage, and that those who cheat the system will not prosper at the expense of those who comply. Many legitimate businesses in my constituency work incredibly hard and—quite rightly—pay their taxes properly, but are often systematically undercut by suspicious cash-intensive businesses that appear to ignore the rules. In some areas, residents see rows of shops that rarely seem busy, but somehow continue to operate year after year.

Illegality undermines legitimate traders and corrodes confidence, at a time when the UK’s tax gap remains at a stubbornly high £40 billion or so. That is tens of billions of pounds that should be collected each year, but simply is not. It is tens of billions of pounds that could fund schools, hospitals and policing. It is tens of billions of pounds that, when uncollected, shifts the burden on to those who do play by the rules. That is why I welcomed the Chancellor’s announcement of the high streets illegality taskforce in last year’s Budget.

There are several things that the taskforce needs to achieve. First, we must recognise high street tax evasion as a systemic issue, not just a series of isolated cases. Weaknesses in company identification and verification at Companies House, gaps in licensing frameworks and opaque property ownership structures allow non-compliant businesses to reappear repeatedly. Secondly, we should strengthen corporate accountability by increasing penalties for landlords and letting agents who knowingly enable tax abuse or repeated non-payment of business rates within their properties. Thirdly, the Government should consider stronger licensing regimes for certain cash-intensive sectors. Moving from voluntary to mandatory licensing in areas such as barbering and hairdressing would help to ensure that persistently non-compliant operators could be identified and, where necessary, shut down. We need only look at the Dutch Bibob Act to see how effective a proportionate but properly functioning licensing regime can be in driving out bad businesses and regenerating local economies.

Fourthly, we need greater transparency in relation to commercial property ownership, so that authorities can more easily identify repeat problem addresses and phoenix companies that reopen under new names. Fifthly, the taskforce should examine the role of landlords and managing agents, because properties are too often repeatedly let to businesses that fail to pay tax or business rates. Landlords must have both the responsibility and the tools to remove tenants who are engaged in illegal activity.

We have heard a little about Gibraltar today in the context of gambling taxation. It was mentioned by my hon. Friends the Members for Halesowen (Alex Ballinger) and for Stoke-on-Trent Central (Gareth Snell) in connection with new clause 9. The Minister knows how strongly I feel about tax avoidance and evasion involving the United Kingdom’s overseas territories. The UK has long been regarded as a global leader in corporate transparency. In 2016 it became the first G20 country to establish a public register of company ownership—which now includes Gibraltar, on whose economy there has not, in fact, been a noticeable impact.

However, a series of major leaks—the Panama papers, the Paradise papers and the Pandora papers—have revealed the shameful role played by parts of the UK’s offshore network in enabling the evasion of taxes and the laundering of ill-gotten gains. The British Virgin Islands alone accounts for more than half of the shell companies exposed in the Panama papers, and companies registered there have appeared in about 90% of the major corruption cases identified by Transparency International over the past two decades, with an estimated £250 billion diverted through rigged procurement, bribery, embezzlement and the unlawful seizure of state assets. High-profile examples of tax dodging illustrate that the system is simply not working as it should, and I would welcome any measures that the Government take to address this issue.

Against this backdrop, the Government distribute a significant amount in tax reliefs—£204 billion in 2022-23 alone. They can be important mechanisms to promote innovation and growth, but the 107 non-structural reliefs that we have ended up with have received relatively little scrutiny. I have previously mentioned that in the House, and in some cases the reliefs have not even been properly costed by HMRC. I would welcome any comments from the Minister on that point.

In summary, my constituents in Bolton West simply want to know that the rules apply to everyone. They want a tax system that is fair, they want high streets where legitimate businesses can thrive, and they want to be confident that those who cheat the system will not be allowed to prosper. If the high streets illegality taskforce focuses on enforcement and practical reforms, it has the potential to restore confidence, support honest traders and ensure that everyone pays their fair share. I look forward to doing all I can to support the Chancellor, the Treasury team and HMRC in this endeavour, and I trust that this Bill will work towards achieving that goal.

[Jim Allister (North Antrim) (TUV)]

I rise to speak to amendments 112 to 139, which stand in my name and those of other hon. Members. When the Chancellor introduced the Budget, she described it as a Budget for growth and a Budget to encourage business. The natural assumption was that we would have growth across the whole United Kingdom, that there would be no discrimination against any part of this United Kingdom, and that what was available to encourage growth in one part of the UK would be available in the others. That would be a natural expectation, given that we are a United Kingdom.

Sadly, this Bill does not live up to that expectation, because clauses 13 to 15 introduce scandalous discrimination against businesses in Northern Ireland. Clauses 13 to 15 are about updating the assistance to businesses in England, Scotland and Wales, but not to those in Northern Ireland. These are the very levers that enable businesses to grow. Clause 13 is about enterprise management incentives, which were introduced in 2000. Since then, thousands of companies have used them as a tool to attract, retain and reward their employees through options, enabling employees to acquire shares in a company without liability for income tax or national insurance contributions. Instead, any gain is usually subject to lower rates of tax under capital gains tax.

Under the enterprise management incentive, there have been caps on what is available. Under clause 13, the EMI limit on company options will be increased to £6 million for Scotland, England and Wales, but it will stay at £3 million for Northern Ireland. The EMI limit on gross assets will be increased to £120 million in England, Scotland and Wales, but limited to just £30 million in Northern Ireland. In England, Scotland and Wales, the number of employees a company can have will be lifted to 500, but Northern Ireland will retain the figure of 250. On that measure—one of a trio of measures capable of encouraging businesses to grow—we see an uplift for Great Britain, but a stagnation in the assistance for Northern Ireland.

We see the same in clause 14 on the enterprise investment scheme. That scheme, along with the venture capital trusts covered in clause 15, has been a very useful tool for companies attracting investment so that they can grow. It has been described by the British Business Bank as

“a government-driven initiative designed to stimulate investment in early-stage businesses through venture capital. It serves as a significant source of capital for these companies while also providing attractive tax reliefs to the investors who support them.”

What is happening to the enterprise investment scheme across this one United Kingdom? In England, Scotland and Wales, the gross asset requirement will be raised to £30 million, but in Northern Ireland it will stay at £15 million. There is an uplift for both standard companies and new growth companies in GB, but none in Northern Ireland. A knowledge-intensive company’s lifetime investment limit in Scotland, England and Wales will be raised to £40 million, but in Northern Ireland it is capped at £20 million. It is the same in clause 15 on venture capital trusts. Again, Northern Ireland is trapped at the level set in 2012, whereas the rest of the country is allowed to move into 2026.

When this Government talk about growth and pretend that it is growth for the whole United Kingdom, the fundamental question I have to ask is this: why does this Budget, in clauses 13 to 15, inhibit growth in my part of the United Kingdom while not giving a level playing field, not allowing equality across the United Kingdom and denying parity to Northern Ireland in this way? This amounts to systemic discrimination against business in my constituency. One is tempted to ask: are the Government trying to incentivise companies to locate in GB? Is that the motivation, because if someone about to set up a company realises that their venture capital thresholds and the incentives they could be given are higher in GB, why would they go to Northern Ireland?

That is the disparity this Government are creating, and it is certainly not because the private sector is doing too well in Northern Ireland. Alas, Northern Ireland still has 27% of its workforce in the public sector in comparison with the UK average of 18%. The answer, sadly, lies in the fact that this Government and this Parliament embrace that discrimination against Northern Ireland because they are wholly beholden to the European Union. Northern Ireland, under the iniquitous Windsor framework, has been left under the EU state aid rules. That is the effect of article 10 of the Windsor framework. It leaves us subject to the state aid rules of foreign institutions, not the state aid rules of this United Kingdom. That has caused the Government, in their beholden attitude to the EU when it comes to enterprise schemes, venture capital and all the things in clauses 13 to 15, to simply retain Northern Ireland at the levels of support that were permitted pre-Brexit. Why? Because they are not prepared to face down the EU on the imposition of their foreign laws on my part of the United Kingdom in respect of support for industry.

17:29

[Carla Lockhart]

Many small and medium-sized enterprises in my constituency are looking to expand, invest and grow beyond being an SME, but the Bill does not afford them that opportunity. You would forgive businesses in Northern Ireland for feeling deeply disadvantaged. That, on top of the practical daily problems they face as a result of the Windsor framework, is putting them at a disadvantage.

[Jim Allister]

There is absolutely no doubt about that, and the Government are putting it up in lights. They are saying to new businesses coming into the United Kingdom or starting in the United Kingdom, “If you place yourself in GB, you will have an uplift available to you in terms of the aid we can give and the venture capital you can draw in, but if you stay in Northern Ireland then you will be at the bottom of the pile, treated unequally.”

[Charlie Maynard]

Will the hon. and learned Gentleman please remind the House what last year’s growth rate was for Northern Ireland compared with for the whole UK? I think it might have been three times higher.

[Jim Allister]

That is a very insightful question, but the answer is even more insightful. The growth we have had in Northern Ireland is in the services sector—lo and behold, the sector that is outside the Windsor framework. The manufacturing sector, which is clobbered by the Windsor framework, has not grown. The growth we have had—and thank goodness for it—is in the services sector. Contrary to the hon. Gentleman’s mantra of believing that all things EU are precious and beneficial, that is an illustration and an indication that our liberation from the EU in terms of services has served us well, but our entrapment in the EU in respect of manufacturing has served us very ill. The Bill underwrites that disadvantage to Northern Ireland.

I say to the Minister: tell my constituents and my businesses why they are treated differently, why they are less deserving of the same capacity to be supported, why they cannot draw in the same level of venture capital or investment schemes, and why they are the second-class citizens of this United Kingdom. The answer, as I have said, is because this Government are wholly beholden to the EU. This is a Government with a reset policy. If they follow the trends of Northern Ireland, then very shortly under their reset policy, they are going to enslave themselves again to EU state aid rules; they are going to end up in the same predicament, where they will not be allowed to increase their state aid, such as they are doing here.

There is one final point that the House needs to understand. If there is a dispute over whether there has been state aid that might breach the rules of our foreign masters, it is not the courts of this land that would decide on such a matter, but the European Court of Justice. It is so obnoxious, so wrong and so offensive that, though I sit as a Member for a United Kingdom constituency and come to this Parliament of the United Kingdom, this Parliament cannot make laws governing these issues in Northern Ireland because of the surrender of sovereignty to the EU. If this Government had any backbone and cared about parity in the United Kingdom and about the businesses in my constituency, they would be setting about giving us an equal playing field and facing down those who insist that it is their laws, not ours, that must apply.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Minister to wind up.

[Dan Tomlinson]

I thank all Members for their contributions at this stage of the Bill’s passage—we are almost there. I will take some time to respond directly to the amendments that have been discussed today.

I will first address amendments 1 to 4, 5 and 7, which were spoken to by the shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild). Amendments 1 to 4 would remove the increase in dividend, savings and property income tax rates; amendment 5 would prevent income tax thresholds from staying at their current levels until 2030; and amendment 7 would remove reforms to the inheritance tax treatment of pensions. Based on costings that have been certified by the OBR, the direct impact of these amendments would cumulatively reduce forecast revenue raised in 2029-30—the year of relevance for our fiscal rules—by a whopping £12 billion. These amendments therefore pose a significant risk to the sustainability of our public finances and to our ability to fund the NHS and the public services that we all rely on. I therefore urge the House to reject them.

[Sir Ashley Fox]

Would the Minister concede that if that was offset by £12 billion less welfare spending, there would not be any threat to the sustainability of the finances?

[Dan Tomlinson]

If the Conservatives had credible plans and a credible history of reining in welfare spending, then I would, of course, be interested in taking them seriously. However, it was the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), who was the Work and Pensions Secretary when the welfare budget exploded. We are now trying to get on top of that.

I will not address new clauses 15 to 19 directly. The Government have set out our position on them at previous stages, although I do urge the House to reject them today.

I will now turn to the points raised by the hon. and learned Member for North Antrim (Jim Allister) around amendments 112 to 139, which would have the effect of removing the distinction between the options available in respect of “specified Northern Ireland companies” and other companies from clauses 13, 14 and 15. The hon. and learned Gentleman has made his views known very clearly both today and on Second Reading. I will make the same point that the Economic Secretary to the Treasury made on Second Reading: as he will be aware—although he did not, I believe, mention this in his speech —service companies are able to benefit from the increase in the threshold. It is the Government’s understanding that there are very few, if any, goods and electricity companies in Northern Ireland that are close to the current enterprise management incentive limits, and we therefore think there will be minimal impact from these companies being subject to the previous scheme limits.

[Jim Allister]

Is the Minister saying to the House that the criterion here is to look at each region and see who is near the thresholds, and then to magically increase those that are? Surely the truth is that the Minister is not increasing the threshold because he has handed the power to do so to a foreign jurisdiction.

[Dan Tomlinson]

I am just stating a fact, which is that there are few—if any—businesses near the relevant thresholds. The hon. and learned Member made the point that the Government’s decision may be hampering growth and investment; I do not think that is the case. I am proud to be a member of a Government who are seeking to deepen and strengthen our ties with the European Union so that we in this country can increase our productivity through better flowing trade, working together with our partners. I therefore urge the House to reject amendments 112 to 139.

Amendments 6 and 8 relate to the changes to business property relief and agricultural property relief as raised by the shadow Exchequer Secretary as well as the hon. Members for Weald of Kent (Katie Lam) and for Keighley and Ilkley (Robbie Moore). If we were to adopt those amendments, we would weaken the public purse by about £300 million a year. It would also leave a status quo that contributes to the very largest estates paying lower average effective inheritance tax rates than the smallest estates. I therefore urge the House to reject those amendments.

The hon. Member for Keighley and Ilkley asked for clarity on payment deadlines in the inheritance tax system. The Government’s position is that the six-month point is the right one. It has applied for a long time, and it is not our position to change that timeline when these changes come into force.

[Robbie Moore]

I note that that is the Government’s position, but what level of assessment have they done of the negative implications of having just a six-month period as opposed to extending that to 18 months? From the engagement that Opposition Members have had with many stakeholders, we have found that the consequences are huge. What assessments have the Government done in relation to this specific issue?

[Dan Tomlinson]

I am sure this issue was considered before the policy was announced, and I have considered it too since I have been in post. It is worth pointing out that HMRC already offers several payment options to help personal representatives pay inheritance tax. That allows banks, building societies or investment providers to pay some or all the inheritance tax due from the deceased person’s accounts before probate is granted. There are a range of ways available to people to enable them to pay IHT within six months. I therefore urge the House to reject amendment 88.

[Lincoln Jopp]

Could the Minister tell us when he last met a farmer?

[Dan Tomlinson]

The president of the National Farmers Union mentioned in his speech to the farmers’ conference just a few weeks ago that he was glad of my engagement with farmers—he personally called out that engagement. I took a trip to the constituency of my hon. Friend the Member for Hexham (Joe Morris), after being invited there by him, and I was glad to meet farmers there and learn about their experiences.

Amendments 89 to 94 seek to exclude the value of any joint interest in certain agricultural business tenancies from the £2.5 million allowance for 100% relief. It is worth pointing out that the drafting of the amendments risks those tenancies falling outside the allowance entirely so that, rather than providing 100% relief, the Government are concerned that the drafting would mean that the relief might well be capped at 50% for those with joint tenancies. That is certainly a reason to reject those amendments.

[Graham Stuart (Beverley and Holderness) (Con)]

Will the Minister give way?

[Dan Tomlinson]

If the right hon. Member will forgive me, I will make progress, having spoken for eight minutes already.

Amendments 102 to 107 would mean that unlimited 100% agricultural property relief would be available on agricultural land rented out for at least 10 years. The Government’s position is that the House should reject these amendments.

The hon. Member for Witney (Charlie Maynard) also spoke to new clause 11. The Government have decided on a range of thresholds that will continue to be frozen until the end of the decade. We have made the decision across the piece, as was mentioned earlier, to sustainably and fairly raise revenue to fund our public services and get borrowing down. I therefore urge the House to reject amendments 102 to 107. I will not address in detail new clause 12 or amendments 67 to 87, 95 to 100 and 108 to 111, as the Government have set out their position on those amendments at previous stages, and I urge the House to reject them.

My hon. Friends the Members for Stoke-on-Trent Central (Gareth Snell), and for Halesowen (Alex Ballinger), both made important contributions on the amendments relating to gambling duty. I have twice met the Minister from Gibraltar mentioned by my hon. Friend the Member for Stoke-on-Trent Central and have been in correspondence with him. I understand that there are significant impacts on the economy in Gibraltar, and I hope to keep engaging on and discussing that.

17:45

[Gareth Snell]

I am glad about the Minister’s meetings, but while he is at the Dispatch Box, will he give an assurance that there are no future surprises and no significant tax-change announcements planned that will disproportionately affect areas such as Gibraltar as a result of their dependence on certain industries?

[Dan Tomlinson]

We will, of course, continue to engage with Ministers in Gibraltar. It would not be appropriate for me to write future Budgets at this Dispatch Box today, but we have made a significant change when it comes to gambling taxation. Rather than make further changes, the Government will monitor the impact of that change. I also thank my hon. Friend the Member for Halesowen for his contributions and representations.

The hon. Member for Aberdeen North (Kirsty Blackman) made a helpful speech— with not much notice, I understand. She raised the matter of alcohol duty. It is worth pointing out that the uprating in alcohol duty just keeps the revenue in line with inflation. We have seen reductions in alcohol consumption, driven not by the tax staying in line with inflation, but changes in consumers’ consumption habits. I therefore urge the House to reject amendment 101 and new clause 20.

[Graham Stuart]

Will the Minister give way?

[Dan Tomlinson]

Okay.

[Graham Stuart]

The Minister has overcome his natural reluctance, and I am grateful to him. A lot of people get confused about the BPR tax changes. If there was £10 million in a company that someone inherited, and it was subject to those changes, the claim is that they would only have to pay £2 million in tax, but in fact the money to pay that tax has to be extracted from the company, so the person who inherits it, rather than the company, pays it. Will the Minister confirm that? In other words, if the money was taken out in the form of dividends, it would be £3.3 million, instead of £2 million, and that would have a very real impact on a small company. In fact, it could be existential.

[Dan Tomlinson]

I will not get into specific worked examples. The general point is that the Government have made changes both to business property relief and to agricultural property relief, in order to raise additional revenue from the very wealthiest estates. We have sought to do that because we want to put fairness into our tax system.

The CBAM was mentioned by the Opposition, and by my hon. Friend the Member for Mid and South Pembrokeshire (Henry Tufnell). I thank him for his strong advocacy for his constituency, and the thousand people who work in the refinery there. The Government said at the Budget that we recognise the important role that refineries play in our energy security, and we are now considering the feasibility and impact of including refined products in the CBAM in future. It is very complicated, and there would be knock-on impacts on other sectors if the Government were to proceed with that. I have met representatives from the sector recently, and I will continue to engage with them.

Finally, I turn to new clause 4, which requires the Chancellor to report on how the regulations in the prohibition address the harm to individuals and businesses from online tax avoidance promotion, and the steps that His Majesty’s Revenue and Customs should take to inform the public of the risk posed by online tax avoidance. I thank my hon. Friend the Member for Walthamstow (Ms Creasy) for raising the important issue of avoidance promotion. I agree with her that it is appalling that these individuals promote tax avoidance schemes and get away with it. It causes misery to those caught up in the schemes, and deprives our public services of vital revenue. The Government are taking action via this Finance Bill to crack down on them.

I confirm to the House that the measures introduced in clauses 156 to 162 apply equally to those promoting avoidance schemes online, including on social media, and to those promoting them through more traditional routes. I can also confirm that the promoter action notice in clauses 163 to 173 will also apply.

I would also like to reassure my hon. Friend that we are publishing guidance on these matters, and I will ensure that it is clear throughout that the Government’s intention is to capture anyone who is promoting tax avoidance. This includes social media influencers who are making a monetary gain through clicks, as highlighted by my hon. Friend, and I would welcome her engagement in developing the guidance.

[Ms Creasy]

I thank all the MPs across the House—except those in the obvious party—who understand the risks to our constituents from this advice. It is very welcome to see a Government respond so quickly to social media problems, unlike the last one; we remember payday lending and the “buy now, pay later” lenders. The Minister talks about issuing guidance. Does he have a rough timeline for when that guidance will be available? I guess what I am really asking, on behalf of the millions of people who have been ripped off, is when Samuel Leeds will get a knock on the door from the taxman.

[Dan Tomlinson]

I look forward to working with my hon. Friend, and other Members who are interested in this topic, to make sure that we move as quickly as we possibly can. Let me thank all Members for their contributions during this this debate.

Question put and agreed to.

New clause 5 accordingly read a Second time, and added to the Bill.

New Clause 6

Offshore income gains: savings

“(1) This section applies in relation to an offshore income gain arising to the trustees of a settlement in a case where Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) applies in relation to that gain for the tax year 2025-26 or any subsequent tax year because of the amendments made by section (Offshore income gains).

(2) If the offshore income gain arose in a tax year before the tax year 2025-26 and, by reason of that offshore income gain or a part of it, an offshore income gain was treated as arising in a tax year before the tax year 2025-26 to an individual under paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)—

(a) Chapter 2 of Part 13 of ITA 2007 is to be treated as not applying in relation to the offshore income gain arising to the trustees or that part of that gain, and

(b) references in section 734 of ITA 2007 to chargeable gains treated as accruing to an individual are to be treated as including the offshore income gain treated as arising to the individual.

(3) An individual is not chargeable to income tax under Chapter 2 of Part 13 of ITA 2007 on income treated as arising to the individual under section 732 of ITA 2007 by reason of the offshore income gain to the extent that the income, without the amendments made by section (Offshore income gains)(1) and (2)(b)—

(a) would have been treated as arising to that individual under paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), and

(b) would have been non-chargeable income (see subsections (4), (5) and (6)).

(4) The income would have been non-chargeable income if, without the amendments made by section (Offshore income gains)(1) and (2)(b)—

(a) the income would have been treated as arising by reason of—

(i) the matching of a capital payment received (or treated as received) by the individual before 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or

(ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising before 6 April 2008, and

(b) paragraph 100 of Schedule 7 to FA 2008 would have applied to the income.

(5) The income would have been non-chargeable income to the extent that, without the amendments made by section (Offshore income gains)(1) and (2)(b), it would have exceeded the relevant proportion of income—

(a) which would have been treated as arising to the individual by reason of—

(i) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or

(ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising on or after 6 April 2008, and

(b) to which paragraph 101 of Schedule 7 to FA 2008 would have applied,

and, for that purpose, “relevant proportion” has the meaning given by sub-paragraphs (9) to (18) of paragraph 126 of that Schedule as they would have been modified by sub-paragraph (3) of paragraph 101 of that Schedule.

(6) The income would have been non-chargeable income to the extent that, without the amendments made by section (Offshore income gains)(1) and (2)(b), it would have exceeded the relevant proportion of income—

(a) which would have been treated as arising to the individual by reason of—

(i) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or

(ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising on or after 6 April 2008,

(b) to which paragraph 102 of Schedule 7 to FA 2008 would have applied, and

(c) to which paragraph 101 of that Schedule would not have applied,

and, for that purpose, “relevant proportion” has the meaning given by sub-paragraphs (4) to (7) of paragraph 127 of that Schedule as they would have been modified by sub-paragraph (4) of paragraph 102 of that Schedule.

(7) Subsection (3) does not prevent Chapter 2 of Part 13 of ITA 2007 from having effect as though the income not chargeable to tax under that subsection had been charged to tax under section 731 of that Act.

(8) Accordingly—

(a) in the application of section 733(1) of ITA 2007 to the individual for subsequent tax years, the amount of that income will be deducted at Step 2 and at paragraph (a) of Step 5, and

(b) in the application of section 733(1) of ITA 2007 to any other individual for subsequent tax years, the amount of that income will be deducted at paragraph (b) of Step 5.

(9) In section 733 of ITA 2007, after subsection (2D) insert—

“(2E) See subsections (7) and (8) of section (Offshore income gains: savings) of FA 2026 (offshore income gains: savings relating to amendments made by section (Offshore income gains) of that Act) for special provision about income that is treated as arising under section 732 but that is not chargeable to income tax under subsection (3) of that section.”

(10) This section—

(a) is to be treated as having come into force on 6 April 2025;

(b) has effect for the tax year 2025-26 and subsequent tax years.” —(Dan Tomlinson.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 7

Pensions: abolition of the lifetime allowance charge

“(1) Paragraph 134 of Schedule 9 to FA 2024 (power to make further provision in connection with the abolition of the lifetime allowance charge) is amended as follows.

(2) In sub-paragraph (2)—

(a) for paragraph (b) substitute—

“(b) have effect for the tax years 2024-25 and 2025-26 (as well as subsequent tax years);”;

(b) in paragraph (d), at the end insert“(including any provision that could be made under paragraph 133)”.

(3) In sub-paragraph (3) omit “that increase any person’s liability to tax”.

(4) In sub-paragraph (4), for “5 April” substitute “30 June”.” —(Dan Tomlinson.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 11

Uprating of allowance amounts for agricultural property

“The Chancellor of the Exchequer must, within six months of the passing of this Act, undertake and publish an assessment of the potential merits of uprating annually the relief allowance amount for agricultural property by the change in the value of agricultural land.”—(Charles Maynard.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

17:53

Division 446

Question accordingly negatived.

Ayes: 174

---

Conservative: 96
Liberal Democrat: 50
Reform UK: 7
Scottish National Party: 7
Independent: 5
Plaid Cymru: 4
Democratic Unionist Party: 2
Traditional Unionist Voice: 1
Ulster Unionist Party: 1

Noes: 292

---

Labour: 286
Green Party: 3
Independent: 2
Your Party: 1

16:54

Proceedings interrupted (Programme Order, 16 December 2025).

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

Clause 10

Basic rate limit and personal allowance for tax years 2028-29 to 2030-31

Amendment proposed: 5, page 5, line 20, leave out clause 10.—(James Wild.)

This amendment removes the freeze in income tax thresholds from the Bill.

Question put, That the amendment be made.

18:07

Division 447

Question accordingly negatived.

Ayes: 172

---

Conservative: 94
Liberal Democrat: 51
Reform UK: 7
Independent: 5
Green Party: 4
Plaid Cymru: 4
Democratic Unionist Party: 2
Traditional Unionist Voice: 1
Your Party: 1
Ulster Unionist Party: 1

Noes: 283

---

Labour: 279
Independent: 2

Clause 23

Location of duties of employment where duties not performed

Amendments made: 12, page 22, line 34, after “are” insert

“, for the purposes of Chapter 4 or 5 of Part 2 of ITEPA 2003”.

This amendment is consequential on Amendment 13.

Amendment 13, page 22, line 36, leave out “paid” and insert “treated as received”—(Dan Tomlinson.)

This amendment ensures that the amendments made by clause 23 will only have effect in relation to general earnings treated as received on or after 6 April 2026.

Clause 24

Umbrella companies

Amendment made: 14, page 26, line 10, leave out from “of” to end of line 13 and insert

“services having been provided to the individual in connection with finding the client with a view to the individual personally providing services to the client—

(i) by the purported umbrella company, or

(ii) where the provision of services to the client is as a result of a series of contracts, by one or more of the parties to those contracts.”—(Dan Tomlinson.)

This amendment will prevent more complicated agency arrangements being deemed to include a purported umbrella company.

Clause 62

Agricultural property relief and business property relief etc

Amendment proposed: 6, page 78, line 4, leave out clause 62.—(James Wild.)

This amendment removes the changes to the thresholds for Agricultural Property Relief and Business Property Relief from the Bill.

Question put, That the amendment be made.

18:18

Division 448

Question accordingly negatived.

Ayes: 175

---

Conservative: 93
Liberal Democrat: 52
Reform UK: 8
Scottish National Party: 7
Independent: 5
Plaid Cymru: 4
Democratic Unionist Party: 2
Traditional Unionist Voice: 1
Ulster Unionist Party: 1

Noes: 292

---

Labour: 282
Green Party: 4
Independent: 2
Your Party: 1

Clause 63

Tax to be charged on certain pension interests

Amendments made: 15, page 79, line 25, at end insert—

“(4A) For the purposes of section 6 (excluded property), notional pension property in relation to a pension scheme is regarded as situated in the country or territory in which the scheme is established.”

This amendment ensures that the rules about excluded property apply to notional pension property. This will, in particular, exclude foreign pensions from the new charge to IHT where the deceased was, on death, not a long-term UK resident.

Amendment 16, page 79, line 42, leave out “is an active member of the scheme, and”.

This amendment broadens the circumstances in which a pension used to provide death-in-service benefits is excluded from the new IHT charge, by removing the requirement that the deceased member must, at the time of death, have been accruing benefits under the scheme.

Amendment 17, page 80, leave out line 19.—(Dan Tomlinson.)

This amendment is consequential on Amendment 16.

Clause 64

Liability for tax on pension interests

Amendments made: 18, page 81, line 8, after “benefit” insert “, or an exempt benefit,”.

This amendment ensures that inheritance tax payable on a deceased’s pension property cannot be recovered from the scheme administrator if it is required for benefits payable to spouses, civil partners, charities or other persons where transfers to them would be exempt from inheritance tax.

Amendment 19, page 81, line 10, leave out from “a benefit” to end of line 11 and insert

“on the deceased’s death, other than an excluded benefit or an exempt benefit.”

This amendment ensures that the inheritance tax payable on a deceased’s pension property cannot be recovered from spouses, civil partners, charities or other persons where transfers to them would be exempt from inheritance tax.

Amendment 20, page 81, line 37, at end insert—

“(7) In this Act “exempt benefit”, in relation to a pension scheme and a deceased member of the scheme, means a benefit paid under the scheme if and so far as the payment renders the transfer of value made on the deceased’s death an exempt transfer.

(8) For provision under which a payment of a benefit renders the transfer of value on death an exempt transfer to the extent of the payment, see—

section 18 (transfers between spouses or civil partners);

section 23 (gifts to charities or registered clubs);

section 24 (gifts to political parties);

section 24A (gifts to housing associations);

section 25 (gifts for national purposes etc);

section 27 (maintenance funds for historic buildings etc).”—(Dan Tomlinson.)

This amendment is consequential on Amendments 18 and 19.

Clause 65

Withholding of benefits and payment of tax by pension scheme administrator

Amendments made: 21, page 82, line 28, leave out

“under this section (a “withholding notice”)”.

This amendment is consequential on Amendment 22.

Amendment 22, page 82, line 31, at end insert—

“(1A) A prospective personal representative of a deceased person may give a notice to the scheme administrator of a registered pension scheme if they have reason to believe that, on becoming a personal representative, they would be, or might be, liable for tax attributable to notional pension property of the deceased in relation to the scheme.

(1B) In this section “withholding notice” means a notice under subsection (1) or (1A).”

This amendment ensures that a withholding notice can be given by a person who expects to be, but has not yet become, a personal representative of the deceased. This might occur, for example, where the deceased has died without a will but an application for a grant of letters of administration has not yet been made.

Amendment 23, page 82, line 33, leave out from “scheme” to end of line 35 and insert

“to a person (“P”) if—

(a) the total amount of benefits previously paid under the scheme to P on the deceased’s death exceeds 50% of P’s benefit entitlement, or

(b) the payment of the benefit would result in the total amount of benefits paid under the scheme to P on the deceased’s death exceeding 50% of P’s benefit entitlement.”

This amendment clarifies that a withholding notice freezes payments to a beneficiary where the benefits paid to them already exceed 50% of their entitlement.

Amendment 24, page 83, line 1, leave out from “benefit” to end of line 3 and insert “or an exempt benefit”.

This amendment ensures that a withholding notice does not prevent a scheme from paying benefits to spouses, civil partners, charities or other persons where transfers to them would be exempt from inheritance tax.

Amendment 25, page 83, line 6, leave out from “by” to end and insert “—

(i) the personal representatives, or

(ii) if the person who gave the notice was a prospective personal representative, that person;”.

This amendment relates to Amendment 22 and ensures that, where a withholding notice is given by a prospective personal representative, it can be withdrawn by that person.

Amendment 26, page 83, line 21, leave out “In subsection (4)(b)” and insert

“In this section—

“prospective personal representative” , in relation to a deceased person, means a person who has reason to believe that they will become a personal representative of that person;”.

This amendment is consequential on Amendment 22.

Amendment 27, page 84, line 25, at end insert—

“(3A) The references in subsection (3)(e) to benefits do not include excluded benefits or exempt benefits.”

This amendment ensures that the personal representatives can only require the scheme to pay inheritance tax so far as the unpaid death benefits under the scheme are not exempt from inheritance tax.

Amendment 28, page 84, line 38, leave out

“the benefits payable to that beneficiary”

and insert

“that beneficiary’s entitlement to benefits”.

This amendment makes it clear that the consequential adjustments that can be made by a scheme administrator under section 226B(5)(a) of the Inheritance Tax Act 1984 include any adjustments to the beneficiary’s entitlement to benefits (and not only adjustments to benefits that have become payable).

Amendment 29, page 84, line 41, leave out “benefit payable” and insert “person’s entitlement to benefits”.

This amendment ensures that the consequential adjustments that can be made by a scheme administrator under section 226B(5)(b) of the Inheritance Tax Act 1984 include any adjustments to a person’s entitlement to benefits under the scheme (and not only adjustments to benefits that have become payable).

Amendment 30, page 85, line 10, leave out “benefit payable” and insert “person’s entitlement to benefits”—(Dan Tomlinson.)

This amendment is consequential on Amendments 28 and 29.

Clause 66

Connected amendments to IHTA 1984

Amendments made: 31, page 86, line 15, at end insert—

“(4A) In section 24 (gifts to political parties), after subsection (4) insert—

“(5) To the extent that the value transferred by a transfer of value made on the death of a member of a pension scheme is attributable to the member’s notional pension property—

(a) the value transferred is treated for the purposes of this section as also attributable to any property that on the death of the member is given under the scheme to a political party qualifying for exemption under this section, and

(b) section 23(2) does not (despite subsection (3)) apply in relation to subsection (1).”

(4B) In section 24A (gifts to housing associations), after subsection (3) insert—

“(4) To the extent that the value transferred by a transfer of value made on the death of a member of a pension scheme is attributable to the member’s notional pension property—

(a) the value transferred is treated for the purposes of this section as also attributable to any land in the United Kingdom that on the death of the member is given under the scheme to a body falling within subsection (2), and

(b) section 23(2) does not (despite subsection (3)) apply in relation to subsection (1).”

(4C) In section 25 (gifts for national purposes etc), after subsection (3) insert—

“(4) To the extent that the value transferred by a transfer of value made on the death of a member of a pension scheme is attributable to the member’s notional pension property—

(a) the value transferred is treated for the purposes of this section as also attributable to any property that on the death of the member is given under the scheme—

(i) to a body within Schedule 3, or

(ii) in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to nation), and

(b) section 23(2) does not (despite subsection (2)) apply in relation to subsection (1).”

(4D) In section 27 (maintenance funds for historic buildings etc), after subsection (2) insert—

“(3) To the extent that the value transferred by a transfer of value made on the death of a member of a pension scheme is attributable to the member’s notional pension property—

(a) the value transferred is treated for the purposes of this section as also attributable to any property—

(i) that on the death of the member is given under the scheme to a person and becomes comprised in a settlement, and

(ii) in respect of which the condition in subsection (1)(a) or (b) is met, and

(b) section 23(2) does not (despite subsection (2)) apply in relation to subsection (1).””

This amendment ensures that, death benefits paid to a political party, a housing association, for national purposes, or for the maintenance of historic buildings, are exempt from inheritance tax (subject to the same conditions as would apply to a payment from the estate).

Amendment 32, page 86, line 26, at end insert—

“(6A) After section 218A insert—

“218B Pensions: information powers

(1) The powers conferred on the Board by section 251 of the Finance Act 2004 (powers relating to the provision and preservation of information in connection with pensions) are exercisable for the purposes of this Act.

(2) Subsection (1) is without prejudice to the generality of that section of that Act.””

This amendment clarifies that the powers enabling HMRC to require information to be provided or preserved in relation to pension schemes are available for the purposes of the new charge to inheritance tax.

Amendment 33, page 86, line 32, at end insert—

“““exempt benefit” , in relation to a pension scheme and a deceased member of the scheme, has the meaning given by section 210(7);””.—(Dan Tomlinson.)

This amendment is consequential on Amendments 18 and 19.

Clause 67

Connected amendments to income tax rules

Amendments made: 34, page 87, line 24, at end insert “, or

(iii) the scheme administrator pays (under section 226B of IHTA 1984) an amount of inheritance tax that is so attributable, and the payment meets the condition in subsection (1A).”

This amendment (which needs to be read with Amendments 35, 36 and 37) is designed to ensure that the way the scheme administrator chooses to exercise the discretion under section 226B(5) of the Inheritance Tax Act 1984 where a lump sum death benefit is paid to a beneficiary does not affect the amount of the beneficiary’s taxable pension income that reflects the payment of that lump sum death benefit.

Amendment 35, page 87, line 24, at end insert—

“(1A) A payment of an amount of inheritance tax meets the condition in this subsection if (and so far as)—

(a) in consequence of the payment, the scheme administrator makes an adjustment (under section 226B(5) of IHTA 1984) as a result of which the beneficiary’s entitlement to a benefit other than that mentioned in subsection (1) (“the other benefit”) is reduced, and

(b) disregarding that reduction, the other benefit would not give rise to taxable pension income for any tax year.”

This amendment needs to be read with Amendment 34 (see the explanatory statement for that amendment).

Amendment 36, page 87, leave out lines 25 to 35 and insert—

“(2) A deduction is allowed from amount TPI equal to the lesser of—

(a) the amount of inheritance tax paid as mentioned in subsection (1)(d)(i) or (ii), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and

(b) so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1).

(3) Where the deceased was under 75 on death, and the benefit mentioned in subsection (1) is a relevant lump sum death benefit, a deduction is allowed from amount TPI equal to the lesser of—

(a) the amount of inheritance tax paid as mentioned in subsection (1)(d)(iii) so far as it meets the condition in subsection (1A), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and

(b) so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1).

(4) Where a deduction is allowed under both of subsections (2) and (3), the deduction under subsection (3) is to be made first.”

This amendment clarifies the operation of subsections (2) and (3) of the inserted section 567B of ITEPA 2003 in consequence of Amendment 34 and is otherwise in consequence of Amendment 37 (see the explanatory statement for that amendment).

Amendment 37, page 88, line 2, at end insert—

“(6) In this section—

“IHTA 1984” means the Inheritance Tax Act 1984;

“inheritance tax” includes interest on inheritance tax;

“excluded benefit” has the same meaning as in IHTA 1984;

“notional pension property” has the same meaning as in IHTA 1984;

“relevant lump sum death benefit” has the same meaning as in section 637S.”

The new definition of inheritance tax ensures that the income tax deduction available for inheritance tax paid given by the new section 567B includes any accrued interest paid with the inheritance tax. The other definitions inserted by this amendment are defining terms used in Amendments 34 and 36 or are relocated from subsection (4), which is removed by Amendment 36.

Amendment 38, page 88, leave out lines 6 to 9 and insert—

“(a) an amount of inheritance tax that is attributable to the value of notional pension property of a deceased member of a registered pension scheme is paid,”.

This amendment (together with Amendments 39, 41, 42 and 43) ensures that, in all cases in which inheritance tax on a deceased member’s pension is overpaid, and the resulting repayment is received (directly or indirectly) by a beneficiary, and income tax has not previously been paid on income used to make the overpayment, the repayment is treated for income tax purposes as pension income in the hands of the beneficiary.

Amendment 39, page 88, line 10, leave out “by the scheme administrator”.

This amendment needs to be read with Amendment 38 (see the explanatory statement for that amendment).

Amendment 40, page 88, line 12, at end insert

“, other than a non-qualifying person,”.

This amendment ensures that the new section 579B of ITEPA 2003 (under which a refund of inheritance tax is in certain circumstances treated as pension income) does not apply where the refund is made to a person in their capacity as a non-qualifying person. In such a case the refund may instead be subject to a charge under the new section 206B of FA 2004 (inserted by Amendment 47).

Amendment 41, page 88, line 17, leave out “and” and insert—

“(ba) in a case in which the payment of inheritance tax mentioned in paragraph (a) was made by the beneficiary or by the deceased’s personal representatives, a deduction is allowed under section 567B in respect of the payment, and”.

This amendment needs to be read with Amendment 38 (see the explanatory statement for that amendment).

Amendment 42, page 88, leave out line 19 and insert “The relevant amount”.

This amendment needs to be read with Amendment 38 (see the explanatory statement for that amendment).

Amendment 43, page 88, line 22, at end insert—

“(3) In subsection (2) “the relevant amount” means—

(a) in a case in which the payment of inheritance tax mentioned in subsection (1)(a) is made by the scheme administrator, the amount of the payment made to the beneficiary mentioned in subsection (1)(b)(i) or (ii);

(b) in a case in which the payment of inheritance tax mentioned in subsection (1)(a) is made by a beneficiary or by the deceased’s personal representatives, the lesser of—

(i) the amount of the payment made to the beneficiary mentioned in subsection (1)(b)(i) or (ii), and

(ii) the deduction allowed under section 567B in respect of the payment of inheritance tax mentioned in subsection (1)(a).”

This amendment needs to be read with Amendment 38 (see the explanatory statement for that amendment).

Amendment 44, page 88, line 22, at end insert—

“(4) In this section—

“inheritance tax” includes interest on inheritance tax;

“non-qualifying person” has the same meaning as in section 206 of FA 2004 (special lump sum death benefit charge).”

The new definition of “inheritance tax” ensures that, where a beneficiary of a pension death benefit receives (directly or indirectly) a repayment of overpaid inheritance tax from HMRC, any accrued interest that was included in the overpayment and is repaid is treated as pension income for income tax purposes (in the same way as the repaid tax). The new definition of “non-qualifying person” is consequential on Amendment 40.

Amendment 45, page 88, line 22, at end insert—

“(4A) In section 637T (availability of individual’s lump sum and death benefit allowance where multiple lump sum death benefits paid), after subsection (4) insert—

“(5) Where any inheritance tax is attributable to the value of the individual’s notional pension property, references in subsection (4) to the amount of a lump sum death benefit are to its IHT-adjusted amount.

(6) The “IHT-adjusted amount” of a lump sum death benefit paid to a person under a registered pension scheme is (subject to subsection (7)) the amount determined as follows —

Step 1 Take the amount of the lump sum death benefit paid to the person.

Step 2 Add the amount (if any) by which the person’s entitlement to the lump sum death benefit was reduced in consequence of an adjustment under section 226B(5) of IHTA 1984.

Step 3 Deduct the amount (if any) of inheritance tax—

(a) that is attributable to the value of the individual’s notional pension property in relation to the scheme, and

(b) for which the person—

(i) is, or at any time was, liable under section 200(1)(c) of IHTA 1984, or

(ii) would at any time have been liable under that provision if the tax had not previously been paid by another person.

If the result is a negative amount, the IHT-adjusted amount of the lump sum death benefit is nil.

(7) Where more than one lump sum death benefit is paid to the person under the scheme, the amount to be deducted under Step 3 is the following proportion of the amount of inheritance tax identified in that Step—

C / D

where—

“C” is the amount resulting from Step 2;

“D” is the aggregate of the amounts resulting from Step 2 in respect of each lump sum death benefit paid to the person under the scheme.

(8) In this section—

(a) “IHTA 1984” means the Inheritance Tax Act 1984;

(b) “notional pension property” has the same meaning as in IHTA 1984.””

This amendment is designed to ensure that, in a case in which a deceased member’s pension is subject to inheritance tax, and multiple lump sum death benefits are paid, the person by whom the inheritance tax is paid does not affect the way in which the available lump sum and death benefit allowance is apportioned between the different lump sum death benefits.

Amendment 46, page 88, line 26, leave out “and” and insert “to”.

This amendment is consequential on Amendment 47.

Amendment 47, page 88, line 31, at end insert—

“(7A) After section 206 insert—

“206A Partial repayment of section 206 charge where IHT paid by recipient of benefit

(1) This section applies where—

(a) a registered pension scheme pays a lump sum death benefit in respect of a deceased member to a non-qualifying person,

(b) a liability to the lump sum death benefits charge arises in respect of the lump sum death benefit,

(c) at any time (whether before or after the payment of the lump sum death benefit)—

(i) the non-qualifying person pays an amount of inheritance tax that is attributable to the value of the deceased’s notional pension property, or

(ii) the deceased’s personal representatives pay an amount of inheritance tax that is so attributable and pass on the burden of that payment to the non-qualifying person, and

(d) the non-qualifying person makes an application under this section for a reduction in the lump sum death benefits charge.

(2) Section 206 applies in relation to the lump sum death benefit as if the amount of the benefit that was paid to the non-qualifying person were the amount in fact paid, reduced by the amount of inheritance tax paid as mentioned in subsection (1)(c).

(3) If and to the extent that the amount of the lump sum death benefits charge paid in respect of the lump sum death benefit exceeds the amount of the liability (as recalculated as a result of subsection (2)), the excess must be repaid to the non-qualifying person (and may not be repaid to the scheme administrator).

(4) An application under this section is of no effect unless it complies with such requirements as to timing, form and content as may be prescribed by the Commissioners.

(5) For the purposes of subsection (1)(c) the deceased’s personal representatives “pass on the burden” of a payment of inheritance tax to the non-qualifying person if—

(a) the personal representatives pay a sum to the non-qualifying person out of the deceased’s estate that has been reduced by the amount of inheritance tax, or

(b) the non-qualifying person reimburses the personal representatives that amount.

(6) In this section—

“the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs;

“inheritance tax” includes interest on inheritance tax;

“non-qualifying person” has the same meaning as in section 206.

206B Supplementary charge on refund of overpaid IHT

(1) This section applies where—

(a) a registered pension scheme pays a lump sum death benefit in respect of a deceased member to a non-qualifying person,

(b) a liability to the lump sum death benefits charge arises in respect of the lump sum death benefit,

(c) an amount of inheritance tax that is attributable to the value of notional pension property of the deceased member is paid,

(d) some or all of the inheritance tax paid as mentioned in paragraph (c) is subsequently—

(i) repaid under section 241(1) of that Act to the non-qualifying person, or

(ii) repaid under that section to the deceased’s personal representatives and passed on by the personal representatives to the non-qualifying person, and

(e) in a case in which the payment mentioned in paragraph (c) was made by the non-qualifying person or by the deceased’s personal representatives, the non-qualifying person has made an application under section 206A in relation to the lump sum death benefit.

(2) A charge to income tax arises in respect of the relevant amount.

(3) In subsection (2) “the relevant amount” means—

(a) in a case in which the payment of inheritance tax mentioned in subsection (1)(c) is made by the scheme administrator, the amount of the payment made to the non-qualifying person mentioned in subsection (1)(d)(i) or (ii);

(b) in a case in which the payment of inheritance tax mentioned in subsection (1)(c) is made by the non-qualifying person, or by the deceased’s personal representatives, the lesser of—

(i) the amount of the payment made to the non-qualifying person mentioned in subsection (1)(d)(i) or (ii), and

(ii) the repayment made under section 206A to the non-qualifying person in relation to the lump sum death benefit.

(4) The person liable to the charge is the non-qualifying person.

(5) The rate of the charge is the same as the rate of the special lump sum death benefits charge (see section 206(4)).

(6) In this section—

“inheritance tax” includes interest on inheritance tax;

“non-qualifying person” has the same meaning as in section 206.””—(Dan Tomlinson.)

This amendment relates to the interaction of the new charge to inheritance tax (“IHT”) on pensions created by the Bill, and the special lump sum death benefits charge (“the SLSDBC”) under section 206 of FA 2004. The new section 206A of FA 2004 is designed to ensure that the SLSDBC is not paid on that part of the lump sum death benefit that is used to pay IHT. The new section 206B of FA 2004 is designed to ensure that the SLSDBC is not reduced where an error is made and later corrected in calculating the IHT liability.

Schedule 3

Non-resident, and previously non-domiciled individuals

Amendments made: 48, page 268, line 7, leave out sub-paragraphs (1) to (4).

This amendment is consequential on NC5.

Amendment 49, page 270, line 22, after “87A” insert “of TCGA 1992”.

This amendment would clarify the reference to section 87A of the Taxation of Chargeable Gains Act 1992.

Amendment 50, page 270, line 29, leave out from “capital” to “.” in line 31.

This amendment is consequential on NC5.

Amendment 51, page 270, line 34, leave out sub-paragraphs (6) to (8)

This amendment is consequential on NC5.

Amendment 52, Schedule 3, page 273, line 6, leave out from “payments)” to end of line 8.—(Dan Tomlinson.)

This amendment is consequential on NC5.

Schedule 7

Permanent establishments

Amendment made: 53, page 352, line 4, after “company” insert “in the territory”.—(Dan Tomlinson.)

This amendment makes it explicit that a dependent agent of a company needs to act in a particular territory for there to be a permanent establishment of the company there.

Schedule 11

Tax treatment of carried interest

Amendments made: 56, page 400, line 28, after “individual” insert

“or a person who is connected with the individual”.

This amendment ensures that sums which arise to an individual that are co-investment repayments or returns are not treated as carried interest if the investment is made by a person who is connected with the individual.

Amendment 57, page 400, line 32, at end insert—

“(3) Section 993 of ITA 2007 (meaning of “connected”) applies for the purposes of this paragraph but as if—

(a) subsection (4) of that section were omitted, and

(b) partners in a partnership in which the individual is also a partner were not “associates” of the individual for the purposes of sections 450 and 451 of CTA 2010 (“control”).”

This amendment is consequential on Amendment 56.

Amendment 58, page 401, leave out lines 37 to 3 on page 402.

This amendment removes provision disapplying the rule that treats a sum as arising to a person (A) where it arises to a connected person (B), if it arises under arrangements under which B performs investment management services. That provision is unnecessary because such a sum would not arise under arrangements under which A performs investment management services, meaning that A would not be chargeable to income tax under section 23I in respect of the sum. It also removes provision in consequence of Amendment 56.

Amendment 59, page 440, line 25, at end insert—

“(za) in subsection (1)(a) after “individual” insert “or a person who is connected with the individual”;

(zb) in subsection (1)(b) after “individual” insert “or a person who is connected with the individual”;”.

This amendment is consequential on Amendment 56.

Amendment 60, page 440, line 35, at end insert—

“(e) after subsection (4) insert—

“(5) Section 993 (meaning of “connected”) applies for the purposes of this section, but as if—

(a) subsection (4) of that section were omitted, and

(b) partners in a partnership in which the individual is also a partner were not “associates” of the individual for the purposes of sections 450 and 451 of CTA 2010 (“control”).””

This amendment is consequential on Amendment 59.

Amendment 61, page 441, line 1, leave out paragraph (b). —(Dan Tomlinson.)

This amendment is consequential on Amendment 58 and Amendment 59.

Schedule 12

Reform of reliefs for business property and agricultural property

Amendments made: 54, page 457, line 29, after “securities” insert “of a company”.

This amendment is consequential on Amendment 55.

Amendment 55, page 457, line 30, at end insert—

“(aa) in paragraph (ab) (as inserted by this sub-paragraph)—

(i) the words from “that” to the end become sub-paragraph (i), and

(ii) after that sub-paragraph insert

“, and

(ii) which (either by themselves or together with any unquoted shares in, or other unquoted securities of, the company that are owned by the transferor) gave the transferor control of the company immediately before the transfer;””.

This amendment secures that the transfer of securities in a company traded on a recognised stock exchange will only benefit from 50% relief where the transferor had control of the company before the transfer.

Amendment 62, page 457, line 32, leave out “or securities”.

This amendment is consequential on Amendment 63.

Amendment 63, page 457, line 34, at end insert—

“(ad) any unquoted securities of a company—

(i) that are traded on an exchange outside the United Kingdom that is not a recognised stock exchange, and

(ii) which (either by themselves or together with any unquoted shares in, or other unquoted securities of, the company that are owned by the transferor) gave the transferor control of the company immediately before the transfer;”.

This amendment secures that the transfer of securities in a company traded on an overseas exchange that is not a recognised stock exchange will only benefit from 50% relief where the transferor had control of the company before the transfer.

Amendment 64, page 457, line 36, at end insert—

“(1A) In section 107, in subsection (4) for “105(1)(bb)” substitute “105(1)(aa) or (bb)”.

(1B) In that subsection (as amended by sub-paragraph (1A)) after “105(1)(aa)”, insert “, (ac)”.”

This amendment inserts some missing consequential changes.

Amendment 65, page 460, line 15, leave out “amendment” and insert “amendments”.

This amendment is consequential on Amendments 55 and 64.

Amendment 66, page 460, line 15, leave out “paragraph 12(1)(b) (shares traded on overseas exchanges)” and insert

“sub-paragraphs (1)(aa) and (b) and (1B) of paragraph 12”.—(Dan Tomlinson.)

This amendment is consequential on Amendments 55 and 64.

Third Reading

18:30

[The Economic Secretary to the Treasury (Lucy Rigby)]

I beg to move, That the Bill be now read the Third time.

The Budget in November was a Budget to build a stronger, more secure economy. It contained fair and necessary choices to deliver the public’s priorities by cutting the cost of living, cutting debt and borrowing, cutting child poverty, and cutting NHS waiting lists. At its heart were three deliberate pro-growth choices. First, by choosing to maintain economic stability and getting inflation and interest rates down, we gave businesses the confidence to invest and our economy the room to grow. Secondly, by choosing to reject austerity, we protected over £120 billion of additional investment in growth-driving infrastructure. Thirdly, by choosing to back the fast-growing British companies of the future, we supported the investment, the innovation and the economic dynamism that will increase growth, raise living standards, and boost the country’s prosperity in the next decade and beyond. The measures in the Bill deliver on those choices by introducing tax levers to unlock investment, back our wealth creators and attract talent by sticking to commitments in the corporate tax road map to provide certainty for businesses, and by doubling the limits for our enterprise tax incentives so that scale-ups can attract the capital and talent that they need in order to grow.

The Bill contains a series of other responsible decisions on tax, and that is because, at the time of the Budget, the Government faced choices. We could have made the reckless choice to abandon our fiscal rules and let borrowing and debt increase, but instead we made the pro-growth choice to get borrowing, debt and inflation down, more than doubling our headroom. We could have made the irresponsible choice and returned to austerity, cutting public services as the Conservative party did and undermining capital investment, but instead we made the pro-growth choice to protect the investment in Britain’s infrastructure and to build a better, stronger, more secure economy.

In line with our commitment to fiscal responsibility, the Bill maintains income tax thresholds for employees and the self-employed at the current levels for a further three years, from April 2028 until April 2031. It also contains measures to strengthen the integrity of the tax system by closing loopholes and removing barriers. That includes reforms to collect more unpaid taxes and to modernise the tax system to make it easier for taxpayers to get their tax right first time. We are introducing new powers to close in on promoters of marketed tax avoidance, and to challenge those who knowingly engage in fraudulent business in the construction industry. Alongside the measures announced in the 2024 Budget, the measures in the Bill to close the tax gap will bring the total revenue from tax gap measures announced in this Parliament to £10 billion in 2029-30.

I wholeheartedly thank all Members, on both sides of the House, for their contributions during the Bill’s passage. The Bill contains the right choices for the public finances, the right choices on investment, the right choices for businesses and for working people, the right choices for our public services, and the right choices for Britain. For those reasons, I commend it to the House.

[Madam Deputy Speaker (Caroline Nokes)]

I call the shadow Minister.

18:34

[James Wild]

I join the Minister in thanking hon. Members on both sides of the House who participated in the debate—there are rather more of them here than there have been throughout our proceedings. I also thank the parliamentary staff, and the hon. Members who chaired the Committee.

In this 534-page Bill, the Government have chosen to impose a raft of tax-raising measures that hit work, enterprise and investment, and which add significantly to the regulatory costs on UK businesses. They have extended the freeze on income tax thresholds, dragging hundreds of thousands more working people into higher tax bands; they have introduced a family farm and family business tax, targeting rural communities and family firms; and they have increased taxes on savings, property income and long-term investment. Taken together, these measures amount to billions of pounds-worth of extra taxation, pushing the overall tax burden to record levels. Ultimately, the Chancellor has chosen to make the UK a less attractive place for businesses and for the investors who we need to grow the economy.

Just last week, the Office for Budget Responsibility cut growth projects again. At a time of global uncertainty, the Government are taking the wrong course, and it shows. Unemployment is up, taxes are up, welfare spending is going up, and living standards will fall over the course of this Parliament. This Government have led the country into a high-tax, low-growth doom loop.

There is a long list of voices sounding the alarm over the economy, but the Chancellor is still not listening. Rather than change course, she is sticking to her failing plan of higher taxes, higher spending and borrowing. This Bill breaks the promises to the British people, and we will oppose it this evening.

[Madam Deputy Speaker]

I call the Liberal Democrat spokesperson.

18:36

[Charlie Maynard]

I speak on behalf of the Liberal Democrats, and the shadow Minister’s audacity in talking about a “high-tax, low-growth doom loop” is pretty high.

With regard to this Bill, I ask the Government to look again at four things. I will go through them quickly, and then I will sit down. I ask the Government to provide more detail, and quickly, on their plans to prevent pensioners from being dragged into paying income tax; to publish information on how the freezing of tax thresholds until 2030-31 impacts households at various income levels; to recognise the impact that the Government’s policies are having on youth unemployment, which is up by 100,000 in the last year, and to take steps to halt this rapid rise, which at a minimum would include reducing the national insurance contributions rate paid by employers on part-time employees earning between £5,000 and £9,100 per year; and, finally, as per new clause 11, which we just pushed to a vote, to look again at taking a fairer approach to farmers by allowing the thresholds on agricultural property relief to rise over time in line with agricultural land prices, rather than having those thresholds eroded over time.

Question put, That the Bill be now read the Third time.

The House proceeded to a Division.

[Madam Deputy Speaker (Caroline Nokes)]

Will the Serjeant at Arms investigate the delay in the Aye Lobby?

18:38

Division 449

Question accordingly agreed to.

Ayes: 292

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Labour: 282
Green Party: 4
Independent: 3

Noes: 161

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Conservative: 92
Liberal Democrat: 52
Reform UK: 7
Independent: 4
Democratic Unionist Party: 2
Traditional Unionist Voice: 1
Ulster Unionist Party: 1

Bill read the Third time and passed.

[Madam Deputy Speaker]

Order. Before we move on to the next business—unfortunately the Government Chief Whip has left the Chamber—may I emphasise to all Members the need to vote in a prompt manner? There can be no excuse for loitering in the Lobby.