Oral Answers to Questions

Debate between Catherine McKinnell and Sajid Javid

Tuesday 11th March 2014 Commons Chamber

[Sajid Javid]

This Government are proud that we have been able to cut taxes for the lowest paid in society. In fact, people working full time on the national minimum wage will have seen their income tax bill more than halved because of this Government, and I welcome my hon. Friend’s support for that policy.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Now we know that the Minister thinks there are no women in Britain good enough to be on the Monetary Policy Committee, let me ask him another question. The Chancellor’s Budgets and spending reviews have hit women, particularly those on low incomes, a staggering four times harder than they have hit men. Millions are struggling with the cost of living crisis, and people are on average £26 a week worse off since 2010, so why are the Chancellor’s top-rate tax cut and marriage tax break giving 80% of the benefit to men? Just take a look at the Government Benches. Are this Government completely out of touch with the women in this country?

[Sajid Javid]

Because of this Government’s economic plan to deal with the record budget deficit that the previous Government left behind, more women are employed in our economy than at any other time in history, and 1.4 million women have been taken out of income tax altogether because of our personal income tax allowance increases.

Oral Answers to Questions

Debate between Catherine McKinnell and Sajid Javid

Tuesday 10th September 2013 Commons Chamber

[Sajid Javid]

My hon. Friend is absolutely right. That is a big boost to family incomes. In fact, someone on a minimum wage who is working full time will find that their tax bill is more than halved as a result of this Government’s policies.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The reality is that, because of this Government’s warped priorities, women are paying three times more than men to bring the deficit down. Will this all-male Treasury team explain how that is helping families manage the cost-of-living crisis?

Finance Bill

Debate between Catherine McKinnell and Sajid Javid

Tuesday 2nd July 2013 Commons Chamber

[Catherine McKinnell]

These are technical amendments tabled in response to concerns about the operation of the share incentive plans in section 498 and schedule 2 to the Income Tax (Earnings and Pensions) Act 2003. The amendments will clarify save-as-you-earn option schemes. We support the clarification of the rules that apply when general offers take place.

Amendment 8 agreed to.

Amendments made: 9, page 144, line 45, after ‘“(7)’, insert—

‘For the purposes of sub-paragraph (5) it does not matter if the general offer is made to different shareholders by different means.

(8) ’.

Amendment 10, page 146, line 20, at end insert—

“(3DA) In subsection (3D)(a) the reference to the issued ordinary share capital of the relevant company does not include any capital already held by the person making the offer or a person connected with that person and in subsection (3D)(b) the reference to the shares in the relevant company does not include any shares already held by the person making the offer or a person connected with that person.

(3DB) For the purposes of subsection (3D)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.’.

Amendment 11, page 147, line 16, at end insert—

‘(1A) After sub-paragraph (3) insert—

(3A) In sub-paragraph (3)(a) the reference to the issued ordinary share capital of the company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (3)(b) the reference to the shares in the company does not include any shares already held by the person making the offer or a person connected with that person.

(3B) For the purposes of sub-paragraph (3)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.”

(1B) A SAYE option scheme approved before the day on which this Act is passed which contains provision under paragraph 37(1) of Schedule 3 to ITEPA 2003 by reference to paragraph 37(2) has effect with any modifications needed to reflect the amendment made by sub-paragraph (1A).’.

Amendment 12, page 147, line 37, leave out sub-paragraph (1) and insert—

‘(1) In Part 7 of Schedule 3 (exercise of share options) paragraph 38 (exchange of options on company reorganisation) is amended as follows.

(1A) In sub-paragraph (2)(c)—

(a) after “982” insert “or 983 to 985”, and

(b) after “shareholder” insert “etc”.

(1B) After sub-paragraph (2) insert—

“(2A) In sub-paragraph (2)(a)(i) the reference to the issued ordinary share capital of the scheme company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference to the shares in the scheme company does not include any shares already held by the person making the offer or a person connected with that person.

(2B) For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders by different means.”’

Amendment 13, page 149, line 34, at end insert—

“(2HA) In subsection (2H)(a) the reference to the issued ordinary share capital of the relevant company does not include any capital already held by the person making the offer or a person connected with that person and in subsection (2H)(b) the reference to the shares in the relevant company does not include any shares already held by the person making the offer or a person connected with that person.

(2HB) For the purposes of subsection (2H)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.’.

Amendment 14, page 150, line 31, at end insert—

“(3A) In sub-paragraph (3)(a) the reference to the issued ordinary share capital of the company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (3)(b) the reference to the shares in the company does not include any shares already held by the person making the offer or a person connected with that person.

(3B) For the purposes of sub-paragraph (3)(a) and (b) it does not matter if the general offer is made to different shareholders by different means.’.

Amendment 15, page 151, line 6, leave out sub-paragraph (1) and insert—

‘(1) In Part 6 of Schedule 4 (exercise of share options) paragraph 26 (exchange of options on company reorganisation) is amended as follows.

(1A) In sub-paragraph (2)(c)—

(a) after “982” insert “or 983 to 985”, and

(b) after “shareholder” insert “etc”.

(1B) After sub-paragraph (2) insert—

“(2A) In sub-paragraph (2)(a)(i) the reference to the issued ordinary share capital of the scheme company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference to the shares in the scheme company does not include any shares already held by the person making the offer or a person connected with that person.

(2B) For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders by different means.”’.

Amendment 16, page 151, line 13, at end insert—

‘Enterprise management incentives

30A (1) In Part 6 of Schedule 5 (company reorganisations) in paragraph 39 (introduction) after sub-paragraph (3) insert—

“(4) In sub-paragraph (2)(a)(i) the reference to the issued share capital of the company does not include any capital already held by the person making the offer or a person connected with that person and in sub-paragraph (2)(a)(ii) the reference to the shares in the company does not include any shares already held by the person making the offer or a person connected with that person.

(5) For the purposes of sub-paragraph (2)(a)(i) and (ii) it does not matter if the general offer is made to different shareholders by different means.”

(2) The amendment made by this paragraph comes into force on such day as the Treasury may by order appoint.’.—(Mr Gauke.)

Schedule 9

Qualifying Insurance Policies

[The Economic Secretary to the Treasury (Sajid Javid)]

I beg to move amendment 17, page 205, line 7, after ‘(g)’, insert ‘or (4A)’.

--- Later in debate ---

[Sajid Javid]

Allow me now to turn to amendments 52 and 53, in the name of my hon. Friend the Member for West Worcestershire (Harriett Baldwin). I recognise that she speaks from experience and in support of concerns raised by her constituents. I have listened very carefully to those points, and I welcome the opportunity to debate this issue. In providing some additional background to the annual premium limit, I hope that she will be reassured by the safeguards that we have introduced—and the reasons for introducing them—and will consider not pressing her amendments. Amendments 52 and 53 ask that the Government exclude assignments that make a policy non-qualifying where either the policy has an annual premium of £3,600 or less, or the policy is subject to capital gains tax.

Let me respond to some of the points raised by my hon. Friend. She commented that seven small businesses selling second-hand endowment policies could close as a result of the change to the tax treatment of qualifying policies. We recognise that these policies are likely to sell for less on the market where the purchaser is an individual who is a higher or additional rate taxpayer, due to the income tax charge when the policy matures. Let me reassure her that there is currently no bar to the sale of non-qualifying policies on the market and that research from the industry shows that non-qualifying policies are currently sold in the market. We envisage that this market might actually increase as a result of fewer QPs being available for sale.

Let me reassure the House that any adverse impact of the tax changes will be limited to those purchasers who are higher or additional rate taxpayers. Where a second-hand endowment policy is bought by a corporate investor or a basic rate taxpayer, there will be no impact on the tax position of the buyer when the policy matures. As a result, the loss of QP status will not make these policies any less attractive for those investors.

My hon. Friend made a point about capital gains. Previously, the purchaser of a traded endowment policy would have been liable to tax under the capital gains tax regime. That tax treatment was based on the maturity proceeds, less what the purchaser paid to acquire and maintain the policy. Capital gains tax treatment was more favourable, in that no additional tax would be payable unless the gains exceeded the annual exempt amount. In practice, it is likely that higher or additional rate taxpayers structured their affairs so as to ensure that little or no capital gains tax would be payable by using their full annual exempt allowance for a tax year. For 2013-14, that amount is £10,900. There is an additional safeguard for basic rate taxpayers who fall into the higher tax bracket as a result of the policy maturing. If that happens, the individual will get top-slicing relief, which reduces any additional tax payable. The relief is not available if the taxpayer is already a higher or additional rate taxpayer when the policy matures.

My hon. Friend has stated that her amendments would set the same annual premium limit for traded endowment policies as that set for new policies and existing policies. The annual premium limit of £3,600 applies to each individual rather than to a single policy. The effect of amendment 52 would be to exclude a policy from the limit if it had an annual premium payable of £3,600 or less. Purchasers of traded endowment policies will already have an annual premium limit of £3,600 applying to their own policies. As a result of that amendment, they would also be able to acquire as many traded endowment policies as they could afford, so long as each of those policies had premiums payable under the threshold. That would put an individual who had taken out a qualifying policy from the outset at a disadvantage to an individual who later acquired a policy. Amendment 52 would not result in a level and fair playing field. Rather, it would inadvertently create an unfair advantage for purchasers of these traded endowment policies.

My hon. Friend understandably referred to the restrictions on assignments for consideration, which are an essential part of the policy. The aim of our measure is to help to promote fairness in the tax system by limiting the tax relief available to higher rate and additional rate taxpayers. Without this restriction, individuals in a financial position to purchase traded endowment policies would be able to acquire qualifying policies without limit, while everyone else would be subject to the £3,600 annual premium limit. That would put an individual who had taken out a qualifying policy from the outset at a disadvantage to an individual who later acquired a policy, which would be unfair and inconsistent.

My hon. Friend considers that there is an element of retrospection about applying the annual premium limit to any QPs existing before 6 April 2013. Let me reassure her that there is no element of retrospection. The sale of a traded endowment policy on or after 6 April 2013 is treated no differently from an individual varying an existing policy after that date either to change the term or to vary the annual premiums payable. In all those cases, an individual will have made a conscious decision with regard to an existing product in full knowledge of the tax consequences resulting from that decision. The Government’s position is therefore that it would be unfair, inconsistent and disproportionate to allow all pre-6 April 2013 policies to remain qualifying following assignment to maintain the secondary traded endowment market.

The Government have listened to my hon. Friend’s concerns, however. As a result of the representations made, we would like to remind her that amendment 19 proposes giving HMRC a power to deal, in regulations, with any additional circumstances for which exclusion may be appropriate. I will ask officials to meet my hon. Friend’s constituents and to work with the industry to ensure that the annual premium limit remains proportionate as it beds in. I want to reassure her that if the evidence shows that the impact of the annual premium limit would prematurely bring to an end the traded endowment market, as she fears, the Government would consider using their power in amendment 19 to address the matter in a proportionate way, following discussions with interested parties. I hope that that provides her with a degree of reassurance that the Government are listening, and I respectfully ask her not to press her amendments to a vote.

These important technical changes enjoy the broad support of the life insurance industry. They will provide a more effective and more proportionate regime for the operation of the annual premium limit on QPs, and help to ensure that tax reliefs for QPs are appropriately given. I therefore commend Government amendments 17 to 29 to the House.

Amendment 17 agreed to.

Amendments made: 18, page 206, line 32, after ‘(g)’, insert ‘or (4A)’.

Amendment 19, page 213, line 25, at end insert—

“(4A) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that sub-paragraph (2) does not apply if prescribed conditions are met in relation to the assignment.

“Prescribed” means prescribed by the regulations.

(4B) Regulations under sub-paragraph (4A) may—

(a) make different provision for different cases or circumstances, and

(b) contain incidental, supplementary, consequential, transitional, transitory or saving provision.’.

Amendment 20, page 213, line 27, after ‘(3)’, insert ‘or (4A)’.

Amendment 21, page 213, line 48, after ‘(g)’, insert ‘or (4A)’.

Amendment 22, page 214, line 33, at end insert—

“(6A) The Commissioners for Her Majesty’s Revenue and Customs may by regulations provide that an individual is not required to comply with sub-paragraph (2) if prescribed conditions are met.

“Prescribed” means prescribed by the regulations.

(6B) Accordingly, if by virtue of regulations under sub-paragraph (6A) an individual is not required to comply with sub-paragraph (2), sub-paragraph (3) does not apply because that individual does not comply with sub-paragraph (2).’.

Amendment 23, page 214, line 42, leave out ‘Finance Act 2013 is passed’ and insert—

‘first regulations under paragraph (c) below come into force’.

Amendment 24, page 215, line 12, at end insert—

“(8A) Sub-paragraph (8B) applies in relation to a policy if the obligations under the policy of its issuer are at any time the obligations of another person (“the transferee”) to whom there has been a transfer of the whole or any part of a business previously carried on by the issuer.

(8B) In relation to that time, in sub-paragraph (2) the reference to the issuer of the policy is to be read as a reference to the transferee.’.

Amendment 25, page 215, line 13, after ‘sub-paragraph’ insert ‘(6A) or’.

Amendment 26, page 221, line 38, leave out from ‘regulations’ to end of line 9 on page 222 and insert ‘—

(a) requiring relevant persons—

(i) to provide prescribed information to persons who apply for the issue of qualifying policies or who are, or may be, required to make statements under paragraph B3(2) of Schedule 15;

(ii) to provide to an officer of Revenue and Customs prescribed information about qualifying policies which have been issued by them or in relation to which they are or have been a relevant transferee;

(b) making such provision (not falling within paragraph (a)) as the Commissioners think fit for securing that an officer of Revenue and Customs is able—

(i) to ascertain whether there has been or is likely to be any contravention of the requirements of the regulations or of paragraph B3(2) of Schedule 15;

(ii) to verify any information provided to an officer of Revenue and Customs as required by the regulations.’.

Amendment 27, page 222, line 10, leave out ‘(2)’ and insert ‘(1)(b)’.

Amendment 28, page 222, leave out lines 20 and 21.

Amendment 29, page 222, leave out lines 29 and 30 and insert—

‘“relevant person” means a person—

(a) who issues, or has issued, qualifying policies, or

(b) who is, or has been, a relevant transferee in relation to qualifying policies.

(6) For the purposes of this section a person (“X”) is at any time a “relevant transferee” in relation to a qualifying policy if the obligations under the policy of its issuer are at that time the obligations of X as a result of there having been a transfer to X of the whole or any part of a business previously carried on by the issuer.”’.—(Sajid Javid.)

Schedule 34

Treatment of liabilities for inheritance tax purposes

Amendments made: 35, page 424, line 36, leave out ‘subsection (2) or (3)’ and insert ‘subsections (2) to (3A)’.

Amendment 36, page 424, line 38, leave out ‘excluded property’ and insert ‘property mentioned in subsection (1)’.

Amendment 37, page 425, leave out lines 11 to 14 and insert—

‘(3) The liability may be taken into account up to an amount equal to the value of such of the property mentioned in subsection (1) as—

(a) has not been disposed of, and

(b) is no longer excluded property.

(3A) To the extent that any remaining liability is greater than the value of such of the property mentioned in subsection (1) as—

(a) has not been disposed of, and

(b) is still excluded property,

it may be taken into account, but only so far as the remaining liability is not greater than that value for any of the reasons mentioned in subsection (3D).

(3B) Subsection (3C) applies where—

(a) a liability or any part of a liability is attributable to financing (directly or indirectly)—

(i) the acquisition of property that was not excluded property, or

(ii) the maintenance, or an enhancement, of the value of such property, and

(b) the property or part of the property—

(i) has not been disposed of, and

(ii) has become excluded property.

(3C) The liability or (as the case may be) the part may only be taken into account to the extent that it exceeds the value of the property, or the part of the property, that has become excluded property, but only so far as it does not exceed that value for any of the reasons mentioned in subsection (3D).

(3D) The reasons are—’.

Amendment 38, page 425, line 19, leave out ‘excluded’.

Amendment 39, page 425, line 20, leave out ‘subsection (3)(a)’ and insert ‘this section’.

Amendment 40, page 425, line 23, at end insert—

‘“remaining liability” means the liability mentioned in subsection (1) so far as subsections (2) and (3) do not permit it to be taken into account;’.

Amendment 41, page 426, leave out lines 12 to 19.

Amendment 42, page 426, line 37, at end insert—

‘(7A) Subject to subsection (7B), to the extent that a liability is, in accordance with this section, taken to reduce value in determining the value transferred by a chargeable transfer, that liability is not then to be taken into account in determining the value transferred by any subsequent transfer of value by the same transferor.

(7B) Subsection (7A) does not prevent a liability from being taken into account by reason only that the liability has previously been taken into account in determining the amount on which tax is chargeable under section 64.

(7C) For the purposes of subsections (1) to (4) and (7A), references to a transfer of value or chargeable transfer include references to an occasion on which tax is chargeable under Chapter 3 of Part 3 (apart from section 79) and—

(a) references to the value transferred by a transfer of value or chargeable transfer include references to the amount on which tax is then chargeable, and

(b) references to the transferor include references to the trustees of the settlement concerned.’.

Amendment 43, page 426, line 45, after ‘162A(1)’, insert ‘or (3B)’.

Amendment 44, page 427, line 13, after ‘162A(1)’, insert ‘or (3B)’.

Amendment 45, page 427, line 22, after ‘estate’, insert—

‘or from excluded property owned by the person immediately before death’.

Amendment 46, page 427, leave out lines 32 to 34 and insert—

‘(b) securing a tax advantage is not the main purpose, or one of the main purposes, of leaving the liability or part undischarged, and’.

Amendment 47, page 427, line 42, at end insert—

‘( ) Where, by virtue of this section, a liability is not taken into account in determining the value of a person’s estate immediately before death, the liability is also not to be taken into account in determining the extent to which the estate of any spouse or civil partner of the person is increased for the purposes of section 18.’.

Amendment 48, page 427, line 43, leave out from ‘(2)(b)’ to end of line 46.

Amendment 49, page 428, line 9, after ‘162A(1)’, insert ‘or (3B)’.

Amendment 50, page 428, line 19, leave out ‘The’ and insert—

‘(1) Subject to sub-paragraph (2), the’.

Amendment 51, page 428, line 21, at end insert—

‘(2) Section 162B of IHTA 1984 (inserted by paragraph 3) only has effect in relation to liabilities incurred on or after 6 April 2013.

(3) For the purposes of sub-paragraph (2), where a liability is incurred under an agreement—

(a) if the agreement was varied so that the liability could be incurred under it, the liability is to be treated as having been incurred on the date of the variation, and

(b) in any other case, the liability is to be treated as having been incurred on the date the agreement was made.’. —(Sajid Javid.)

New Clause 10

Impact of the Spending Round 2013 on tax revenue

‘The Chancellor shall publish, within six months of Royal Assent, a review of the impact on revenue from rates and measures in this Act, resulting from the Spending Round 2013. He shall place a copy of the Review in the House of Commons Library.’.—(Catherine McKinnell.)

Brought up, and read the First time.

[Catherine McKinnell]

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

The Opposition’s new clause 10 challenges the Chancellor to publish, within six months of Royal Assent, a review of the impact of last week’s spending review announcements on tax receipts. Should the Government agree to undertake such a review, as we hope they will, we suspect that its conclusions would be pretty short, given the Chancellor’s comprehensive failure to deliver the economic boost that this country so desperately needs. It was a dead duck of a spending review, and it was even more disappointing, given the context in which it was made. The Chancellor did not want to come to the House to announce a spending review last week, but he was forced to announce a further £11.5 billion of spending cuts in 2015-6. Why? Because his economic plan has utterly and categorically failed.

Oral Answers to Questions

Debate between Catherine McKinnell and Sajid Javid

Tuesday 6th November 2012 Commons Chamber

[Sajid Javid]

My hon. Friend is absolutely right. In the first two years of this Government, the private sector created 1 million new jobs whereas in the last 10 years of the previous Government the sector created about half of that figure.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

One way to tackle youth unemployment in Kettering and Northamptonshire and across the UK would be for the Government to commit now to repeating Labour’s tax on bank bonuses on top of the bank levy to fund much-needed new jobs for young people. Is the Minister aware that in some parts of Northamptonshire, such as Corby, the number of under-24s on the dole for more than 12 months has gone up by a shocking 233% in just the last year?

Oral Answers to Questions

Debate between Catherine McKinnell and Sajid Javid

Tuesday 11th September 2012 Commons Chamber

[Sajid Javid]

That is a central plank of the Government’s policy, and I am sure that my hon. Friend will agree that some of the changes we have already announced, such as those contained in the personal allowance, which I know he supports, are doing exactly that.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate the Minister on his appointment, but the Government’s tax and spending cuts have hit women and children the hardest, leaving families struggling and child poverty on the rise. The last time there was no woman in the Treasury was 17 years ago under the last Tory Government. Although I welcome him to his place, does he think that the Government’s record with women will get worse or better with no female voice at the table?

[Sajid Javid]

The Government have an excellent record on women in government—[Interruption.]