Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government to ask His Majesty’s Government how many (1) desks, and (2) civil servants, are assigned to the HM Revenue and Customs office at 1 Horse Guards Road.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
HMRC does not have any desks or civil servants assigned to 1 Horse Guards Road.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the effectiveness of increasing the HMRC late-payment interest rate from Bank Rate plus 2.5% to Bank Rate plus 4% from 6 April 2025 in reducing the incidence of late payment of tax; and whether they will publish any analysis or evidence underpinning that assessment.
Answered by Lord Livermore
As announced at the Budget in 2024, HMRC amended legislation to increase the late payment interest rate by 1.5 percentage points (ppts). This changed interest rates from Bank of England base rate + 2.5 ppts to base rate + 4 ppts.
This change took effect as HMRC’s current interest was low when compared to commercially available short-term borrowing. This creates unfairness between those who pay on time and those who choose not to, using HMRC as a form of cheap lending.
The measure aimed to address this by bringing HMRC’s rates closer to those commercially available. The late payment interest rate increase was made to encourage taxpayers to pay on time, help raise vital revenue for public services, and ensure fairness for those who pay on time.
These changes took effect from 6 April 2025 and are applied where interest is charged to existing and new tax debts owed to HMRC.
This measure encourages people to pay the outstanding tax they owe, increasing incentives to engage with HMRC and make payment arrangements, as well as complying to avoid late payment penalties.
There is no proposal to publish any analysis or evidence as HMRC continues to keep its interest rates under review.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what revenue HMRC has received from late payment interest in each of the past five financial years, broken down by tax head; and, for each tax head, what proportion that revenue represented of total receipts in the corresponding year
Answered by Lord Livermore
HM Revenue and Customs does not hold a central dataset that identifies how many instances of Late Payment Interest (LPI) have been charged for all tax heads.
For some tax heads, such as Income Tax Self Assessment, it would be possible to produce such figures, but due to the disproportionate cost to the taxpayer, it is not possible to answer this question. This cost represents the time it would take an analyst to extract, combine, analyse and quality assure the data.
For other tax heads, even with additional time and resource, it would not be possible to isolate how many instances of LPI have been charged, due to the way that data is stored for those tax heads.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government how many instances of late payment interest were charged by HMRC in each of the past five financial years, broken down by tax head; and what the year-on-year change in the number of such instances was for each tax head.
Answered by Lord Livermore
HM Revenue and Customs does not hold a central dataset that identifies how many instances of Late Payment Interest (LPI) have been charged for all tax heads.
For some tax heads, such as Income Tax Self Assessment, it would be possible to produce such figures, but due to the disproportionate cost to the taxpayer, it is not possible to answer this question. This cost represents the time it would take an analyst to extract, combine, analyse and quality assure the data.
For other tax heads, even with additional time and resource, it would not be possible to isolate how many instances of LPI have been charged, due to the way that data is stored for those tax heads.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the extent to which late-payment interest on Corporation Tax arises (1) from differences between estimated and final tax liabilities, including in businesses with complex or evolving tax positions such as those undertaking significant investment or research and development activity, or (2) from late payment behaviour; and what steps they are taking to ensure that the application of such interest does not have disproportionate impacts on particular types of business.
Answered by Lord Livermore
HMRC does not routinely collect or publish data on the extent to which Corporation Tax late-payment interest arises from differences between estimated and final tax liabilities, as opposed to late payment behaviour. No specific assessment has therefore been made of the relative contribution of these factors.
Interest on tax paid late is not a penalty but rather designed to both compensate the Exchequer for late payment and to provide a measure of fairness to those taxpayers that pay what is due on time.
The Government recognises that some businesses may face greater uncertainty when estimating their final Corporation Tax liability. The Corporation Tax regime has nevertheless operated successfully for many years using broadly consistent interest rules.
HMRC keeps all aspects of the tax administration framework under review. In doing so, it is mindful of the need to avoid unnecessary complexity and to ensure that rules work effectively across the wide range of businesses that make up the Corporation Tax population. HMRC has not identified evidence that introducing different late-payment interest regimes for particular sectors, activities or business types would improve fairness or deliver better overall outcomes. The Government therefore continues to apply a broadly consistent approach across taxpayers while keeping the operation of the regime under review.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they will reconsider their inheritance tax reforms in order to protect the future of family farms.
Answered by Lord Livermore
The Government’s reforms to agricultural property relief and business property relief from 6 April 2026 achieve the right balance between supporting farms and fixing the public finances in a fair way. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.
These reforms are being introduced in a broader context of significant existing support for the farming industry in the wider tax system, which the Government is maintaining. The existing rules already provide considerable support for the agricultural sector beyond the general support for businesses. This includes the exemption from business rates for agricultural land and buildings, the ongoing entitlement for vehicles and machinery used in agriculture to use rebated diesel and biofuels, and the exemption from the plastic packaging tax for the plastic film used by farmers to produce silage bales. Furthermore, farmers are able to claim to add together their profits from farming for two years or five years and be taxable on the average of those profits.
The Government’s commitment to farmers and the vital role they play in feeding our nation remains steadfast. The Government’s decisions at Autumn Budget 2024 provide £5 billion over two years for farming and land management in England which will restore stability and confidence in the sector, strengthening food security alongside nature’s recovery. This is the largest ever budget directed at sustainable food production and nature’s recovery in our country’s history. Despite the difficult fiscal inheritance, funding has also been prioritised for the Farm Recovery Fund to support farmers with the impact of severe wet weather over the last year.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they have conducted any economic impact assessments on the regional impacts of their proposed changes to business property relief for inheritance tax.
Answered by Lord Livermore
The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent Office for Budget Responsibility (OBR) certified this costing at Autumn Budget 2024 and it does not expect the reforms to have a significant macroeconomic impact. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.
Information from claims is not recorded to enable regional breakdowns of the number of estates expected to be affected. However, the Government has set out that around 1,500 estates across the UK only claiming business property relief are expected to be affected in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they have conducted any economic impact assessments on the impact of their proposed changes to business property relief for inheritance tax.
Answered by Lord Livermore
The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent Office for Budget Responsibility (OBR) certified this costing at Autumn Budget 2024 and it does not expect the reforms to have a significant macroeconomic impact. In accordance with standard practice, a tax information and impact note will be published alongside the draft legislation before the relevant Finance Bill.
Information from claims is not recorded to enable regional breakdowns of the number of estates expected to be affected. However, the Government has set out that around 1,500 estates across the UK only claiming business property relief are expected to be affected in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they are reconsidering their changes to business property relief for inheritance tax following research from CBI Economics that suggests it may reduce, rather than increase, tax revenues.
Answered by Lord Livermore
The Government’s reforms to agricultural property relief and business property relief from 6 April 2026 achieve the right balance between supporting businesses, including farms, and fixing the public finances in a fair way. The Government is not removing either agricultural property relief or business property relief. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.
The Government has set out that the reforms are expected to result in up to 520 estates claiming agricultural property relief, including those that also claim business property relief, in 2026-27 paying more inheritance tax. This means almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay any more tax as a result of the changes in 2026-27, based on the latest available data.
The Government has also set out that around 1,500 estates only claiming business property relief are expected to be affected in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.
The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent Office for Budget Responsibility (OBR) certified this costing at Autumn Budget 2024. The OBR published information about the costing in the Economic and Fiscal Outlook on 30 October 2024. The OBR recently published more detail on the costings on 22 January 2025. This material is all available on the OBR’s website.
Asked by: Lord Houchen of High Leven (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they are reconsidering removing business property relief for inheritance tax following research from CBI Economics that suggests it will result in a net loss rather than gain to the economy.
Answered by Lord Livermore
The Government’s reforms to agricultural property relief and business property relief from 6 April 2026 achieve the right balance between supporting businesses, including farms, and fixing the public finances in a fair way. The Government is not removing either agricultural property relief or business property relief. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean those assets will be taxed at a much lower effective rate than most other assets. Despite a tough fiscal context, the Government will maintain very significant levels of relief from inheritance tax beyond what is available to others and compared to the position before 1992.
The Government has set out that the reforms are expected to result in up to 520 estates claiming agricultural property relief, including those that also claim business property relief, in 2026-27 paying more inheritance tax. This means almost three-quarters of estates claiming agricultural property relief, including those that also claim for business property relief, would not pay any more tax as a result of the changes in 2026-27, based on the latest available data.
The Government has also set out that around 1,500 estates only claiming business property relief are expected to be affected in 2026-27, with around 1,000 of these expected to only hold shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market. The remaining 500 estates will include business assets from sectors across the economy that are eligible for business property relief. These reforms mean that around three-quarters of estates claiming business property relief in 2026-27 (excluding those only relating to holding shares designated as “not listed”) will not pay any more inheritance tax in 2026-27.
The reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30. The independent Office for Budget Responsibility (OBR) certified this costing at Autumn Budget 2024. The OBR published information about the costing in the Economic and Fiscal Outlook on 30 October 2024. The OBR recently published more detail on the costings on 22 January 2025. This material is all available on the OBR’s website.