Finance (No. 2) Bill

Debate between Daisy Cooper and Lucy Rigby

Committee of the whole House
Tuesday 13th January 2026 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

This is a retrospective tax without transitional protection. It upends plans for those who have already made sacrifices to build up their pensions, undermines confidence in pensions planning, reduces long-term investment and causes people to rush to withdraw money from their pensions.

As has been mentioned, the chartered institute and the ATT have raised concerns about this group of clauses, which shoehorn pensions legislation into tax legislation. There are major worries about creating personal liability without control for personal representatives, whether executives or administrators. Personal representatives are legally obligated to gather all the assets, settle any liabilities, including inheritance tax, and distribute the remainder of the estate to the beneficiaries. They are personally liable if they do not set aside enough money to settle all financial liabilities, including IHT. Experts have warned that someone being personally liable for IHT on a pension fund that never comes into their hands leaves the door open to costly and protracted litigation and will understandably make personal representatives, such as professionals or friends of the deceased, much more cautious before they distribute all of the estate.

Even more concerning is the fact that if representatives discover a new pension fund after settling the initial IHT liability, this would have a knock-on effect on not only the estate but all other pension funds. It means that IHT will have to be recalculated for every part of the estate and every pension fund. It is far from uncommon for people to have had different jobs with separate pension plans, so the risk of miscalculation is obvious. If someone passes away before they have had the chance to consolidate their pension funds, tracking down the unused pots within six months of their death will be very difficult for executors and will mean that the initial IHT calculations could be wrong. The Government must recognise that and amend this measure. If they do not, and Ministers simply ask future executors to sign some sort of disclaimer form, they will soon find that nobody will want to take on that role.

Our new clauses 18 to 20 raise the clear need for significant reforms and are a means of pressing the Government to protect individuals from being liable for private pensions that they did not know about and could not reasonably know about either. Finally, there is widespread worry that family members might have to wait up to 15 months before they are able to access their inheritance, during what is bound to be a hugely straining period of loss and grief. The Liberal Democrats’ new clause 20 urges the Government to recognise that reality and take steps to address it.

[Lucy Rigby]

I thank hon. Members for their contributions to the debate on this group of clauses. Before I respond to the specific points that have been raised, I will reflect briefly on the core purpose of the Bill.

The Bill contains fair and necessary reforms to the tax system, which unfortunately have been ducked for far too long. They will help to strengthen our economy for the long term, ensuring that we can cut the cost of living and inflation, and restore our public services and the public finances to health. The Tories and Reform—who are increasingly indistinguishable, it might be said—have already set out their choice: a return to the chaos and instability of the past. That approach failed before, and we are not going back.

The clauses in this group restore pensions to their core and intended purpose, which is funding retirement. We are not allowing them to function as a tax-free vehicle for the transfer of wealth. Generous tax relief for retirement saving is preserved. The clauses ensure that pension wealth is treated fairly and consistently for inheritance tax purposes. They protect ordinary families, with more than 90% of estates still paying no inheritance tax at all each year after the changes.

Let me turn to the non-Government amendments in this group. New clause 18 would require the Treasury to review the effects of the changes to pension tax policy, including their impacts on individuals, administrators and behaviour. A report would need to be laid in Parliament no later than six months from when the Act comes into force. This new clause is not necessary. The Government have published a tax information and impact note on the changes in the normal way. It sets out the impact on individuals, and accounts for the impact on personal representatives.

As hon. Members know, the Government keep all tax policies under review through the monitoring of returns and communication with representative bodies and taxpayer groups. A review within six months of the policy taking effect on 6 April 2027 is not practical, not least because the data relating to inheritance tax in 2027-28 will not be fully available until the summer of 2030. That is the normal timescale, and it operates because tax liabilities data is available only with a long lag, partly because the filing of the relevant inheritance tax accounts is due 12 months after a death. For those reasons, new clause 18 should be rejected.

--- Later in debate ---

[Lucy Rigby]

The hon. Member raises an important point. Before I commit to her that I will take that forward, I would like to check what discussions have already taken place. I hope she will accept that that is necessary from my point of view.

Both the proposed new clauses focus on the impacts of the changes to the gambling duty and ask for a commitment to update Parliament within six months of the Bill being passed. First, this Government did not announce, and are not proposing to make, any changes to the treatment of free plays or free bets through this Bill. Furthermore, the Bill does not make any changes to the duty charged on bets placed on horseracing in high street betting shops.

Secondly, on the illegal market, which has been raised a number of times, the Gambling Commission is already tackling that risk and is protecting consumers, but we recognise that modern technology makes it easier for illegal websites to target consumers. To strengthen enforcement and protect consumers from dangerous illegal sites, we are providing an additional £26 million to the Gambling Commission over the next three years. I hope I can assure my hon. Friend the Member for Stoke-on-Trent Central that the £100 million a year in the form of the statutory levy is ringfenced for prevention, treatment and research in this area.

The Government published a tax information and impact note for this measure at the Budget. As is set out in that note, consideration will be given to monitoring and evaluating the expected Exchequer impacts of the policy after at least two years of monitoring data has been collected and analysed. More broadly, the Government continually monitor the operation of all taxes and keep them under review to ensure that they deliver on their intended outcomes and, indeed, are fit for purpose. For those reasons, the proposed statement and the impact assessment are not necessary.

The measures in clauses 83 to 85 deliver fair reforms to our system of gambling taxation. They reflect how gambling has changed in our country, the harms that now exist and the need for the tax system to keep pace as those changes continue. The shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), raised levels of employment. He will know that right across the piece, the OBR expects that employment levels will rise in every year of the forecast. Costings were also raised, including by my hon. Friend the Member for Stoke-on-Trent Central. The OBR has taken account of behavioural impacts within its costing. Of course, those costings have been certified and scrutinised in the usual way.

The Liberal Democrat spokesperson, the hon. Member for St Albans (Daisy Cooper), asked about engagement with industry. I can confirm that the Government, as I hope she would expect, engaged with a number of stakeholders, including from the gambling industry, as part of the consultation process. My hon. Friend the Member for Stoke-on-Trent Central also raised Gibraltar. Of course we recognise that Gibraltar has a gambling industry that very much faces the UK. I can assure him that there has been engagement, not by me, but by some of my colleagues in the Treasury, with Gibraltar to that end.

[Daisy Cooper]

I am grateful to the Minister for confirming that she has consulted and that Ministers have had engagement with the industry. I was specifically wondering whether in the course of that consultation with the industry, there was discussion about using a different measure and choosing a different tax base for the calculation of this particular tax, because it seems as though the tax base could have been bigger if they had used the measure already in the Finance Act, rather than this new measure that seems to shrink the tax base. Did the Treasury have a particular reason for using a different measure for calculating this remote gaming duty?

[Lucy Rigby]

It was not me who had those engagements, but as I said, I confirm to the hon. Member that we are not proposing to make any changes to the treatment of free plays and free bets through the Bill, which I hope reassures her in that regard.

I urge the Committee to reject new clauses 21 and 25 and agree that clauses 83 to 85 and schedule 13 should stand part of the Bill.

Question put and agreed to.

Clause 83 accordingly ordered to stand part of the Bill.

Clauses 84 and 85 ordered to stand part of the Bill.

Schedule 13 agreed to.

New Clause 25

Statements on increasing remote gambling duty and introducing a new rate of General Betting Duty

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase in gambling duties made under sections 83 to 84 of this Act.

(2) The statement made under subsection (1) must include details of the impact on—

(a) sports and horseracing,

(b) the number of high street betting shops,

(c) the gambling black market,

(d) the employment rate, and

(e) the public finances.”—(James Wild.)

This new clause would require the Chancellor to make a statement about the effects of the increase in gambling duties.

Brought up, and read the First time.

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

--- Later in debate ---

[Lucy Rigby]

I am going to make a bit more progress.

New clauses 8, 9 and 26 would require the Government to publish reports on the impacts of alcohol duty. The shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild), invited me to refer to our tax information and impact note, and I will take him up on that invitation. As is usual practice, our note was published at the Budget. It outlined the anticipated impacts of this measure for alcohol producers and the hospitality sector. Because this uprating maintains the current real-terms value of the duty, the Government do not expect it to have significant macroeconomic impacts, including to the employment rate or hospitality businesses’ costs, where a duty on drinks will have comparable relative bearing as now.

[Daisy Cooper]

Will the Minister give way?

[Lucy Rigby]

I will make some progress.

On the impacts on the public finances, HMRC publishes data on alcohol duty receipts quarterly. That data is reviewed alongside other evidence by the OBR when it produces its forecasts of alcohol duty receipts, as it did most recently alongside the November Budget. The Government’s view, as is evident from OBR-certified policy costings in recent years, remains that freezing or cutting alcohol duty rates reduces duty receipts.

The hon. Member for Angus and Perthshire Glens raised the importance of producers of Scottish whisky, and I agree with him about that. This Government are supporting key Scottish industries, including whisky, such as through our free trade agreement with India, which will boost exports of whisky and add £190 million a year to the Scottish economy.