Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answers by Lord Livermore on 8 July (HL8787 and HL8788), what calculations support the statement that Making Tax Digital for Income Tax will generate an expected £1.95 billion of additional tax revenue by 2029–30.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
Making Tax Digital (MTD) for Income Tax is expected to generate £1.95 billion in additional tax revenue by 2029–30 by reducing taxpayer errors through digital record-keeping and quarterly updates using MTD-compatible software.
The estimate is the expected reduction in the tax gap due to error and failure to take reasonable care among Self Assessment taxpayers based on the number of taxpayers expected to participate in MTD, and on evidence from evaluation of MTD for VAT.
Additional revenue is also expected from digital prompts to encourage more accurate reporting, with effects estimated using controlled trials.
These calculations have been certified by the Office for Budget Responsibility (OBR).
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to the Written Answers by Lord Livermore on 8 July (HL8787 and HL8788), how introducing Making Tax Digital for smaller taxpayers will help reduce the tax gap.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
Making Tax Digital (MTD) helps reduce the estimated £22 billion tax gap across all taxes caused through error and failure to take reasonable care. It does this by requiring closer-to-real-time digital record keeping, underpinned by quarterly updates and submission of the end-of-year tax return using MTD compatible software. MTD for VAT is currently predicted to deliver cumulative additional revenue (ATR) of over £4 billion by 2029-30 by reducing taxpayer errors.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to extend the functionality of HMRC’s online personal tax accounts to include Making Tax Digital requirements from April 2026.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
Making Tax Digital (MTD) for Income Tax will be rolled out from 2026 to simplify the process by which self-employed individuals and landlords make their annual tax returns. It will also reduce error and help to ensure self-employed individuals and landlords pay the right amount of tax. This in turn will help tackle the tax gap and generate an expected £1.95 billion of additional tax revenue by 2029-30 to fund vital public services.
Businesses that currently use MTD for VAT have reported several benefits including time savings, increased tax confidence, greater accuracy, and improved business operations in comparison to manual processes. Extending MTD for Income Tax will extend these benefits to a further 2.75 million self-employed individuals and landlords
MTD for Income Tax will require users to keep electronic tax records, submit quarterly updates of income and expenditure and submit a Tax Return. Users will need to complete these steps using commercial software. The government is not building functionality to allow MTD users to complete these steps on their online Personal or Business Tax Accounts. However, MTD users will be able to see details of information submitted within software through their Personal or Business Tax Accounts. This includes information about their quarterly updates and estimated tax liability.
The government has worked with the software industry to ensure there are free and low-cost software options available, alongside a wider range of software choices to suit varying needs and budgets. The use of software offers more flexible and tailored ways for users to manage their tax affairs compared to HMRC’s online services.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government why they are extending the Making Tax Digital regime to individual taxpayers from April 2026.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
Making Tax Digital (MTD) for Income Tax will be rolled out from 2026 to simplify the process by which self-employed individuals and landlords make their annual tax returns. It will also reduce error and help to ensure self-employed individuals and landlords pay the right amount of tax. This in turn will help tackle the tax gap and generate an expected £1.95 billion of additional tax revenue by 2029-30 to fund vital public services.
Businesses that currently use MTD for VAT have reported several benefits including time savings, increased tax confidence, greater accuracy, and improved business operations in comparison to manual processes. Extending MTD for Income Tax will extend these benefits to a further 2.75 million self-employed individuals and landlords
MTD for Income Tax will require users to keep electronic tax records, submit quarterly updates of income and expenditure and submit a Tax Return. Users will need to complete these steps using commercial software. The government is not building functionality to allow MTD users to complete these steps on their online Personal or Business Tax Accounts. However, MTD users will be able to see details of information submitted within software through their Personal or Business Tax Accounts. This includes information about their quarterly updates and estimated tax liability.
The government has worked with the software industry to ensure there are free and low-cost software options available, alongside a wider range of software choices to suit varying needs and budgets. The use of software offers more flexible and tailored ways for users to manage their tax affairs compared to HMRC’s online services.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the effectiveness of VAT relief on new build properties on increasing house building, and what plans they have to extend VAT relief to the refurbishment of listed buildings.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
To support the construction of new homes, the Government maintains a zero rate of VAT on new-build residential buildings and a reduced rate of VAT of five per cent for residential renovations that meet certain conditions.
To preserve heritage, restorative work carried out on listed buildings previously benefited from a zero rate of VAT. However, this relief was abolished in 2012, as it was primarily used to carry out extension work unnecessary for heritage purposes. The Government has no current plans to reduce the VAT charged on work to maintain and repair listed properties, but keeps all taxes under review.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact of the proposed ban on issuing new licences to explore oil and gas fields on investment, jobs, tax revenue and the balance of payments.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
Forecasts for oil and gas tax revenues are published by the Office for Budget Responsibility (OBR), which take into account many factors including the sector’s expectations and the Government’s policy at the time. The most recent forecast was published at Autumn Budget 2024 in the Economic and Fiscal Outlook October 2024 [1] . This also includes other economic projections, including in relation to future investment in the oil and gas sector and the UK’s balance of payments.
Future OBR forecasts will consider any changes to policy that may have an impact on investment in the oil and gas sector, oil and gas production or tax revenues from the sector.
1. https://obr.uk/efo/economic-and-fiscal-outlook-october-2024/
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government how inheritance tax will apply to small self-administered pension schemes that hold pooled assets which qualify for agricultural property relief, but which are likely to have multiple beneficiaries.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
As announced at Autumn Budget 2024, from 6 April 2027 most unused pension funds and death benefits will be included within the value of a person’s estate for inheritance tax purposes.
The nature of the assets held by a pension scheme is not taken into account for inheritance tax purposes. This is the existing policy on the treatment of assets held by a pension scheme.
Comprehensive guidance will be published on these changes ahead of coming into effect.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government how inheritance tax will apply to self-invested personal pension schemes that include assets which qualify for agricultural property relief.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
As announced at Autumn Budget 2024, from 6 April 2027 most unused pension funds and death benefits will be included within the value of a person’s estate for inheritance tax purposes.
The nature of the assets held by a pension scheme is not taken into account for inheritance tax purposes. This is the existing policy on the treatment of assets held by a pension scheme.
Comprehensive guidance will be published on these changes ahead of coming into effect.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to reduce VAT on work to maintain and repair listed properties.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Government has no plans to reduce the VAT charged on work to maintain and repair listed properties.
VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax forecast to raise £171 billion in 2024/25. Taxation is a vital source of revenue that helps to fund vital public services.
Evidence suggests that businesses only partially pass on any savings from lower VAT rates. In some cases, reliefs do not represent good value for money, as there is no guarantee that savings will be passed on to consumers.
To preserve heritage, restorative work carried out on listed buildings previously benefited from a zero rate of VAT. However, this relief was abolished in 2012, as it was primarily used to carry out extension work unnecessary for heritage purposes. Withdrawing this relief simplified VAT rules and also removed the scope for error when categorising construction work as either alteration or repair.
The Department for Culture, Media and Sport administer the Listed Places of Worship Grant Scheme. This provides grants towards VAT paid on repairs and maintenance to the nation's listed places of worship.
The Government keeps all tax policy under review, and any decisions on tax policy will be announced at fiscal events in the context of the overall public finances.
Asked by: Lord Mackinlay of Richborough (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to investigate the openness, efficiency and functioning of the insurance market relating to listed properties.
Answered by Lord Livermore - Financial Secretary (HM Treasury)
The Government is committed to supporting the successful protection of our heritage for the benefit of present and future generations.
The UK’s home insurance market is competitive, with many providers offering a variety of insurance products. The Financial Conduct Authority (FCA), the independent regulator of financial services, has a statutory objective to promote competition in the interests of consumers. FCA rules also require firms to offer products that deliver fair value to consumers. The FCA monitors firms to ensure they comply with its rules and has powers to take action if necessary.
As standard home insurance may not offer adequate cover for all listed buildings, the Government encourages consumers to shop around for the most suitable cover at the best price. It may be helpful to consult an insurance broker, who will be able to help search the market for specialist providers.