Carbon Price Support

Dan Tomlinson Excerpts

Thursday 16th April 2026 Written Statements

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

I am today confirming to the House that carbon price support will be removed from April 2028.

CPS is a tax on fossil fuels used in electricity generation, introduced in 2013 by a previous Government to strengthen the carbon price for electricity generation above the price provided by the emissions trading scheme.

CPS has done its job and is no longer fit for purpose. Coal has been driven off the grid and the ETS has matured, with a tighter cap to drive the signal for electricity generators to decarbonise, so now is the right time to simplify the tax and carbon pricing system.

With our clean power 2030 mission, we are already reducing our electricity system’s reliance on volatile fossil fuels and we no longer need this additional tax to provide incentives in the system to decarbonise our grid.

CPS removal will also help to offset costs to all bill payers of the British industrial competitiveness scheme, and this will reduce electricity bills for manufacturing sectors in the industrial strategy.

The Government will legislate for the removal of CPS in a future Finance Bill.

[HCWS1519]

Finance (No. 2) Bill

Dan Tomlinson Excerpts

Report stage
Wednesday 11th March 2026 Commons Chamber

[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.

--- Later in debate ---

[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?

--- Later in debate ---

[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.

[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.

Finance (No. 2) Bill: Ways and Means (Amendment of Power to Make Further Provision Relating to Abolition of Lifetime Allowance Charge)

Dan Tomlinson Excerpts

Ways and Means resolution
Wednesday 11th March 2026 Commons Chamber

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

I thank the hon. Member for Aberdeen North (Kirsty Blackman) for her remarks, as well as for her scrutiny of this process, which I appreciate no matter where it comes from.

The hon. Member is right to flag that this is not the typical process. For future Finance Bills, I will—if I am in my position—endeavour to ensure that Ways and Means motions are not brought at this late stage. She is also right to point out that this debate—although I do not believe that there are any other bobbers—and any debate on the subsequent motion could go on for 45 minutes, and that discussions may ensue. I would be happy to consider the process.

This technical amendment allows for the introduction of regulations required as part of the abolition of the lifetime allowance, in order to have a retrospective effect going back to the point when the lifetime allowance was originally abolished. That ensures that the changes we are making operate as intended. It is a small and technical measure, but I take the hon. Member’s point that it adds a new part to the Bill and means that a new resolution has been brought forward. I hope that—notwithstanding the valid points raised by the hon. Member—Members will understand that position, and I commend the motion to the House.

Question put and agreed to.

Finance (No.2) Bill: Ways and Means (Offshore income gains)

Motion made, and Question proposed (Standing Order No. 52(1)(b)),

That provision (including provision having effect for the tax year 2025-26) may be made revoking—

(a) paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009, and

(b) paragraphs (4) to (6) of regulation 21 of those Regulations.—(Dan Tomlinson.)

Question agreed to.

Oral Answers to Questions

Dan Tomlinson Excerpts

Tuesday 10th March 2026 Commons Chamber

[Dr Danny Chambers (Winchester) (LD)]

13. What assessment she has made of the potential impact of tax changes on high street businesses.

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

On business rates, the Government have announced a support package for all businesses worth £4.3 billion over the next three years. We have introduced permanently lower multipliers for eligible retail, hospitality and leisure businesses, including those on the high street. In addition, every pub and live music venue will get 15% off its new bill from April. The Government will also bring forward a high streets strategy later this year.

[Sir Ashley Fox]

Many retail, hospitality and tourism businesses in my constituency traditionally give young people their first job, but with the Chancellor’s jobs tax, the unemployment rights Act and now huge increases in rates, many of those businesses are struggling to survive, so they just cannot afford to take on those young people. Does the Minister accept that his Government are the reason that youth unemployment is now higher in the UK than in the EU for the first time since records began?

[Dan Tomlinson]

One reason we have a challenge with youth participation in the labour market is the broken welfare system and the broken support system that we inherited from the previous Government. The proportion of young adults who are not in education, employment or training is broadly unchanged since the general election. It is too high, and it has to come down. That is why we are reforming our system and providing more support through actions such as our jobs guarantee. That is the right approach, as is the approach we are taking on business rates.

[Wendy Chamberlain]

I recently hosted a hospitality roundtable in North East Fife. In an area that boasts such attractions as St Andrews and the East Neuk, one would expect to find an industry in rude health, but that was not the case. Indeed, one business could not attend because it was taking difficult decisions in relation to the business that day. The Minister has outlined a number of things that are in the purview of the devolved Government, and I will be taking those up with the Scottish Government. As a Scottish MP and a Scot representing Scottish businesses, however, I am looking for things that the Government can do on a UK level. The Liberal Democrats have been proposing an emergency VAT cut for hospitality businesses for some time, so why will the Government not consider that?

[Dan Tomlinson]

Business rates are a devolved matter. The changes that we have announced and the support that we have put in will have consequentials for funding for the Scottish Government. VAT is a broad-based tax that raises a significant amount of revenue for the Treasury. That is important in ensuring that we can manage our public finances and bring in the revenue to be able to get borrowing down, which this Government are doing and previous Governments failed to do. When the Liberal Democrats last had the chance, their choice was to put up VAT rather than cut it.

[Dr Chambers]

Many businesses in Winchester that I speak to on a regular basis talk about higher energy costs and national insurance rises, and many bring up the increased red tape that has resulted from the Conservatives’ failed Brexit project. Businesses in Winchester say that they want growth, not continued red tape. About two weeks ago, I spoke to one such business, RJM International, located just off the high street. For some reason, the Government refuse to even consider reducing trade barriers to the EU by having a bespoke customs union, but industry wants it and the public are increasingly supportive. Why will the Government not even assess the economic case for a customs union and why are they clinging to a failed ideology at the expense of growing our economy?

[Mr Speaker]

That was rather a long question.

[Dan Tomlinson]

This Government are fully committed to resetting our relationship with the European Union. As the hon. Gentleman highlighted, the previous Government did as much as they could to damage that relationship, damage our productivity and damage our working relationship with our nearest partners. We are seeking to change that: we are negotiating a sanitary and phytosanitary agreement; we are looking at electricity and energy; and we are looking at what more we can do to deepen our trading relationship, which will be good for productivity and jobs. People said that we could not make progress with both the EU and the United States, but we did not have to choose: instead, we are making progress with trading partners across the world.

[Rachael Maskell (York Central) (Lab/Co-op)]

Property valuations in York are particularly high, making it very difficult for businesses, not least this year and certainly over the next three years. Will the Minister say exactly when he will launch his consultations on pubs, on hotels, on business rates and on high streets? Would he be willing to come and meet businesses in York to hear why they are struggling with the decisions made by this Government?

[Dan Tomlinson]

We will be working across Government on the high streets strategy. Treasury Ministers will be working with colleagues in the Ministry of Housing, Communities and Local Government and the Department for Business and Trade. We will make progress on that in the coming weeks, with the strategy to report by the end of the year. We are in the process of working on the details of plans for the review of the pubs and hotels valuation methodology, and I will be happy to engage with my hon. Friend and Members from across the House to get that on a firmer footing for the future.

[Lauren Edwards (Rochester and Strood) (Lab)]

The Government’s business rate relief package for pubs has been hugely welcome, but other high street businesses in the retail, leisure and hospitality sectors are struggling. Will the Minister consider increasing the small business rate relief threshold to encourage growth and hiring? Over half the high street small businesses surveyed by the Federation of Small Businesses said that they would be in position to invest in or grow their businesses if the threshold were increased.

[Dan Tomlinson]

Around one in three businesses continue to benefit from the small business rates relief and do not pay any business rates at all, with an additional 85,000 benefiting from reduced relief as that is tapered away. At the Budget, we also announced changes to small business rates relief so that we can provide an additional two years of support for those businesses seeking to expand into a second property, to support those businesses to grow and to support their communities and jobs.

[Sonia Kumar (Dudley) (Lab)]

Traders like Sukibinder Singh, who owns Little Italy in Dudley, tell me how low footfall, empty shops and shoplifting are putting people off coming to the town centre. Will my hon. Friend set out what action he is taking on business rates and targeted reliefs to help bricks-and-mortar businesses to compete and prosper?

[Dan Tomlinson]

I thank my hon. Friend for her representation of Little Italy in her fantastic constituency. We are working on the high streets strategy. She is right to highlight that with long-term trends, whether the impact of the pandemic or of the shift to online retail, we need to look at this as a whole. On taxation and business rates in particular, we have for the first time provided a wedge in the tax system so that the rate that online giants pay for their warehouses is a third higher than the rate paid by the smallest businesses on the high street. There is a significantly higher multiplier for the larger businesses on my hon. Friend’s high street than for the smaller ones, but we will keep looking at the issue and at what more we can do to support businesses across the tax system.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Small businesses are the backbone of our economy, but the Federation of Small Businesses is warning that they will face a cost cliff edge in April because of the cumulative impact of all the new taxes and responsibilities put on them at the same time. During the course of the Finance Bill, we Liberal Democrats have repeatedly called for an assessment of the cumulative impact of taxes on hospitality and small businesses, including business rates. When the Government bring forward their high streets strategy, will it include an assessment of the cumulative impact of all tax changes—yes or no?

[Dan Tomlinson]

When we bring forward the high streets strategy, it will look in the round at what more we can do on regulation, licensing and the decisions that are made in the Treasury to continue to support small businesses and those on our high streets. That is incredibly important, and we will continue to look at that closely.

[Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)]

3. What fiscal steps she is taking to support the community ownership of assets.

--- Later in debate ---

[Claire Hanna (Belfast South and Mid Down) (SDLP)]

10. What recent assessment she has made of the potential merits of reducing VAT for the hospitality sector in Northern Ireland.

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

The Government recognise the important contribution that hospitality businesses make to communities across the UK, including in Northern Ireland. Reducing VAT rates, or applying different VAT rates within the UK, would add complexity and come at a significant cost to the Exchequer.

[Claire Hanna]

As well as the business pressures, a majority of households in Northern Ireland and many businesses use heating oil as their main heating source, so they are particularly exposed to shocks such as that which we are experiencing due to the wrong-headed conflict in the middle east, and they are not protected by the energy price cap. The Stormont Executive have failed to regulate in this area, or to make any meaningful progress towards a transition to sustainable and secure energy. What interventions against extreme price fluctuations can the Treasury make for those not on the grid?

[Dan Tomlinson]

I thank the hon. Member for her representation of her constituents. The Chancellor has already said today, as she said yesterday, that we understand that there are particular pressures facing households that use heating oil for their heating. A meeting has been arranged for tomorrow with the Financial Secretary to the Treasury, which I hope the hon. Member will be able attend to discuss this issue in more detail. We are also going to be in conversations with the Competition and Markets Authority to make sure that we have a fair market that provides a fair price for her constituents.

[Carla Lockhart (Upper Bann) (DUP)]

I support the call for a cut in VAT for the hospitality sector from the hon. Member for Belfast South and Mid Down (Claire Hanna). She is right to say that oil prices are rising sharply. The fuel price at the pumps is rocketing, and families are struggling with the cost of living. In Northern Ireland, 60% of homes rely on heating oil. What steps will the Treasury take to cut fuel duty and remove VAT on domestic heating oil? Will it finally recognise the damage being done by the Energy Secretary’s net zero zeal in blocking further oil and gas licensing in the North sea?

[Dan Tomlinson]

We have made sure to freeze fuel duty since we have been in office. That has saved the average driver 8p per litre at the pump, and it will rise to 11p when the increase does not go ahead in a few weeks’ time.

If heating oil is an issue that affects the hon. Lady’s constituents, I hope she will be able to attend tomorrow’s meeting. We are looking very closely at this issue, and at the changes that we can see in oil and gas prices at the moment. As the former Chancellor of the Exchequer, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), said yesterday, it is too early to tell how things will pan out. We have seen significant increases, and today we have seen decreases. We will keep looking closely at what we can do.

[Tracy Gilbert (Edinburgh North and Leith) (Lab)]

A number of hospitality businesses in my constituency have raised with me that the UK rate of VAT is much higher than it is in France and Germany. Will my hon. Friend ask the Office for Budget Responsibility to model the impact of VAT cuts, as studies have previously suggested that cuts—

[Sorcha Eastwood (Lagan Valley) (Alliance)]

I thank the Minister for his response. I have to declare an interest because I started a parliamentary petition exactly on a VAT cut for hospitality in Northern Ireland, the reason being that we have the Republic of Ireland with its very competitive VAT rate right up against us. Businesses saw the official Government response, because that petition got over 10,000 signatures, and they felt very despondent. I am sure that Treasury Ministers and the Chancellor will want to join me in trying to do everything we can to protect our hospitality sector. The Minister says this is complex to do, but would he agree with me that it is worth revisiting that idea?

[Dan Tomlinson]

This is a complex change to implement, but the Government’s position is that it is right to have the same rate of VAT across our country. During the pandemic, there was a cut—a temporary cut—to the rate of VAT and that came at the significant cost of £8 billion. We have to make sure that we can raise revenue from across the country in a fair and consistent way to support the public finances.

[Freddie van Mierlo (Henley and Thame) (LD)]

11. What assessment she has made of the potential impact of the autumn Budget 2025 on levels of youth unemployment.

--- Later in debate ---

[Mr Speaker]

Many Back Benchers did not get in earlier, so, please, it would help me if we could try to speed up.

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

I thank my hon. Friend for his representations on this matter here today and over many months, and in Westminster Hall just a few weeks ago. The rural fuel duty relief scheme does provide that 5p discount and it will benefit his constituents on the islands and in the communities he represents. We will of course keep all our taxes under review. I will be happy to meet him to talk about this one.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

[Emily Darlington (Milton Keynes Central) (Lab)]

The loan charge was a scandal that affected tens of thousands of people across this country, some of whom were on very low pay and not given a choice by their employers. At the last Budget, the Government put forward changes. What assessment has the Minister made of how those changes will impact people at the lowest end, including social care workers across the country?

[Dan Tomlinson]

I thank my hon. Friend for the question, and for the representation she has provided for her constituents and, through her work on the loan charge and taxpayer fairness all-party parliamentary group, for many across the country who have been affected by the loan charge. At the Budget, we made the decision to write off £5,000 from the liabilities of everyone who has been affected by the loan charge, so about a third of those affected will have their liabilities written off entirely. I look forward to continuing to engage with her and Members across the House on this important issue.

[Greg Smith (Mid Buckinghamshire) (Con)]

Following on from that last question, the loan charge and taxpayer fairness APPG, which I co-chair, wrote to Ministers on 1 July, 22 September and 25 November last year, with questions about the 2005 preferential deal with the large banks. Does the Minister feel that it is acceptable that we have not had a reply to those letters? When will we get one?

[Dan Tomlinson]

The letters that were sent will receive a reply very shortly. A decision was made that in the run-up to the announcement of the independent loan charge review, it would not be appropriate for the Government to set out in detail their views on a live issue that an independent reviewer was looking at. That review was published alongside the Budget. I apologise for the fact that the response has not come in the weeks since; it will be with the hon. Member and the APPG very shortly.

[Chris Webb (Blackpool South) (Lab)]

Two weeks ago, I held an emergency cost of living summit in Blackpool, after record numbers of families, particularly single mums, contacted us in food crisis. They could not access the council’s discretionary fund. Will the Minister outline how the new crisis and resilience fund will ensure that families in my constituency can get the support that they need, especially over the weekend?

[Claire Young (Thornbury and Yate) (LD)]

Heat batteries are the only clean heat technology certified by the microgeneration certification scheme that is excluded from VAT relief under the energy-saving materials framework. This penalises smaller homes and lower-income households that cannot accommodate a heat pump. Will the Chancellor commit to removing that anomaly, and meet me and representatives of the UK heat battery industry to discuss it?

[Dan Tomlinson]

The Government regularly assess whether to add energy-saving materials, including heat batteries, to the list of items covered by the current VAT relief, which is set to continue until March 2027. Any decisions would have to be announced by the Chancellor at a fiscal event, but I am happy to discuss the matter.

[Antonia Bance (Tipton and Wednesbury) (Lab)]

Given the global situation, what discussions has the Chancellor had with Cabinet colleagues on helping to keep industrial energy costs manageable? Will she work with colleagues to bring in the British industrial competitiveness scheme, which would cut manufacturing energy costs by 25%, as soon as possible?

--- Later in debate ---

[Caroline Voaden (South Devon) (LD)]

Every year, the UK loses £33.4 billion in tax revenue, as multinational corporations and the super-rich choose tax havens over tax payments. However, the UN tax convention has the potential to solve this problem, so will the Minister show leadership, not ambivalence, and commit to securing an ambitious UN tax convention in this Parliament?

[Dan Tomlinson]

I am always happy to show leadership, and this Government—and, I may say, previous Governments—have worked hard with international partners, both in the OECD and the UN, to do all we can to reduce tax avoidance and evasion by multinational companies. We continue to work with our partners in the UK and abroad to clamp down on tax dodging.

[Paul Waugh (Rochdale) (Lab/Co-op)]

My constituent in Rochdale, Louise Marshall, wrote to me this weekend because she is worried sick about the massive price rise she is facing for heating oil. Can the Chancellor assure me, notwithstanding the meeting we are all going to have with the Financial Secretary to the Treasury, that we can be absolutely crystal clear that under this Government, we will not tolerate price gouging or war profiteering from oil companies that try to rip off their customers?

Draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026

Dan Tomlinson Excerpts

Wednesday 4th March 2026 General Committees

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

I beg to move,

That the Committee has considered the draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026.

It is a pleasure to serve on the Committee with you in the Chair, Ms Vaz. The draft regulations exempt from the climate change levy electricity used in—this is a word I am going to struggle to say repeatedly—electrolysis to produce hydrogen and natural gas used as a source of carbon dioxide to produce sodium bicarbonate from soda ash. They do this by expanding the climate change levy non-fuel use exemption to include the relevant new processes.

The CCL was introduced in 2001 with the purpose of encouraging energy efficiency across our economy by taxing energy supplies such as electricity or gas. From the outset, the tax has included a non-fuel use exemption, the principle behind which is that when fuels that are liable to CCL are not used for energy, they should not be taxed as if they were. Today, that principle needs to be applied to two modern industry realities that are not currently included in the exemption.

First, when produced in a low-carbon way, hydrogen can help to power the UK’s clean energy transition and support our 2050 net zero ambitions. One key method of hydrogen production is electrolysis. In that process, the electricity is not used as a fuel, as it is the feedstock that enables the chemical reaction. Yet without the change in the draft regulations, electricity used in the process would be charged CCL in most cases.

Secondly, the chemical process that converts soda ash into sodium bicarbonate is a new production technology in which natural gas performs two roles: it provides heat and serves as an essential source of the carbon dioxide needed for the production process. Where a taxable commodity is used partly as fuel and partly for a non-fuel purpose, the non-fuel use exemption is intended to accommodate such mixed uses. Yet as things stand, the natural gas used will attract CCL, despite the partial non-fuel use that is fundamental to the chemistry involved.

Similar non-fuel use processes in soda ash production are already exempt from CCL. The Government are satisfied that it is appropriate to add this use of natural gas to the exemption, thereby helping to ensure alignment and consistency across industrial processes, as well as supporting the relevant part of the chemicals sector.

The changes in the draft regulations deliver on the Government’s commitment at the 2025 spring statement to remove CCL costs in respect of electricity used in electrolysis to produce hydrogen. I commend the draft regulations to the Committee.

--- Later in debate ---

[Dan Tomlinson]

I thank the shadow Minister for his questions. I always enjoy listening to him; one day, I am sure I will do so on a bumper car in his constituency. Those Members who did not serve on the Finance (No. 2) Bill Committee will not know that reference; I will have to update them afterwards.

We will conduct the wider review of the CCL as swiftly as possible. It is important that we keep all our taxation policies under review, not least given the changes that are taking place in the economy. It was right that the Government consulted on the changes in the draft regulations earlier in the year, and we will continue to listen to the various industries that are affected by the CCL.

We chose to proceed with the option that the shadow Minister outlined in large part because we wanted to make sure we could bring in the change as quickly as possible. Those in the industry have been asking for the change, which will support them in the move towards using low-carbon technologies and processes, and we wanted to implement it as swiftly as possible. It is my understanding that if the Committee agrees to the changes, they will come into effect immediately—as of tomorrow—which is good. Progress has been very swift now that we have finally got here.

There was one other question on which I will have to respond after the Committee, because it is has fallen out of my head.

Question put and agreed to.

UK-India Double Contributions Convention

Dan Tomlinson Excerpts

Wednesday 11th February 2026 Written Statements

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

Following the joint commitment made by the Governments of the UK and India in a side letter agreement to the comprehensive economic and trade agreement dated 24 July 2025, a double contributions convention between the UK and India was signed on 10 February 2026.

The text of the convention—as a Command Paper—and the relating explanatory memorandum have been laid before Parliament for scrutiny. Both will be available on gov.uk. The convention will enter into force at the same time as the UK-India trade agreement.

[HCWS1327]

Social Security

Dan Tomlinson Excerpts

Tuesday 10th February 2026 Commons Chamber

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

I beg to move,

That the draft Child Benefit and Guardian’s Allowance Up-rating Order 2026, which was laid before this House on 12 January, be approved.

[Madam Deputy Speaker (Judith Cummins)]

With this it will be convenient to discuss the following motion:

That the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026, which were laid before this House on 12 January, be approved.

[Dan Tomlinson]

The draft Child Benefit and Guardian’s Allowance Up-rating Order sets the rates for both child benefit and guardian’s allowance, and will ensure that those benefits, for which Treasury Ministers are responsible and which are delivered by His Majesty’s Revenue and Customs, are uprated by inflation in April 2026. The draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026 set the rates of certain national insurance contributions classes, and the level of certain thresholds, for the 2026-27 tax year. The regulations also make provision for a Treasury grant to be paid into the national insurance fund if required for the same tax year, through a transfer of wider Government funds to the NIF, and extend the veterans employer national insurance relief for two years, until April 2028.

[Jim Shannon (Strangford) (DUP)]

I welcome what the Minister is saying, which is positive. This is a good step for guardians, carers and veterans. Sometimes people come to me and ask me questions. They say that they cannot get any help with the changes that have come in and how they are affected. When they are given more money, sometimes they fall into a higher tax bracket. Is help available for those who receive an increase in their guardian’s allowance, carer’s allowance or veteran’s allowance? We need to make sure that somebody can help them through the process. It is almost like walking through a muddy field: they just do not know where to go next.

[Dan Tomlinson]

The hon. Member is right: a range of reliefs in the national insurance system help particular groups, including young people and those who have served in our military. It is right that those reliefs are there, and I am glad that the Government took the decision to extend them by two years. The Government publish guidance on the way that the reliefs can be used. We aim to ensure that the guidance supports those who seek to employ young people and people who have served in the military, so that they are able to make employment decisions. Through the tax system, we want to support particular groups to be able to be employed. I thank the hon. Member for his question.

I turn to the detail of the Child Benefit and Guardian’s Allowance Up-rating Order 2026. As hon. Members will know, the Government are committed to delivering a welfare system that is fair for taxpayers while providing support for those who need it. These regulations ensure that the benefits for which Treasury Ministers are responsible, and which HMRC delivers, are uprated by inflation in April 2026. Child benefit and guardian’s allowance will increase by 3.8%, in line with the consumer prices index in the year to September 2025. Tax credits awards ended on 5 April 2025, so no changes to rates will be required.

I turn to the second set of regulations before us today. As announced at the Budget, the primary threshold and the lower profits limit threshold will be maintained at their current levels until April 2031. These regulations set the level for the 2026-27 tax year. Employees’ entitlement to contributory benefits, such as the state pension, is determined by their earnings being at or above the lower earnings limit. Self-employed people’s entitlement is determined by their earnings being at or above the small profits threshold.

These regulations uprate the LEL and the SPT. This is the usual process and maintains the real level of income where someone gains entitlement to contributory benefits. The upper earnings limit for employee NICs and the upper profits limit for self-employed NICs—the points at which the main rate falls to 2%—are aligned with the higher rate threshold for income tax. The thresholds will be maintained at their current levels, and these regulations set the levels for the 2026-27 tax year. As announced at the Budget last year, employer national insurance thresholds, including the secondary threshold, will also be maintained at their current levels.

We have already had a brief discussion about the employer NICs reliefs, including for under-21s, under-25 apprentices, veterans, and new employees in freeport and investment zones. The regulations that we are debating today keep the thresholds for those reliefs at their current levels. The regulations also make provision for the NICs relief for employers of veterans to be extended for two years until April 2028, during which time the Government will continue to consider the most effective way to support veterans into employment as part of the next spending review settlement.

Without these regulations, child benefit and guardian’s allowance would fall in real terms, and HMRC would be unable to collect NICs receipts. I hope that colleagues will join me in supporting them today.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to debate these two statutory instruments with the Exchequer Secretary. As he stated, they are made each year, and the precedent is for them to be debated on the Floor of the House. I am glad to see that that practice continues, and I hope that the Government will keep this going for the remainder of the current premiership, however long that may last. I want to make it clear that we will not be voting against the measures before us when the debate concludes. However, I would like to comment on each SI and the wider political discourse around them.

First, the social security regulations set the rates of certain national insurance contribution classes and the level of certain thresholds for the 2026-27 tax year. Specifically, they uprate the lower earnings limit, the small profit threshold and the rates of class 2 and class 3 national insurance contributions. The increase will be 3.8%, which is the consumer prices index figure from September 2025. All other limits and thresholds that these regulations cover will remain frozen at their current level.

This highlights that the increase last year was 1.7% compared with 3.8% this year. Both these percentages represent the rate of inflation that our constituents are suffering, but the 1.7% is of course what we left the Government when they came to power, and 3.8% is the level of inflation they are now delivering for consumers. When we left office, inflation was at 2%. We had managed to get it down following a once-in-a-generation pandemic and Russia’s illegal invasion of Ukraine and the subsequent energy crisis.

Since Labour has come in, inflation has risen almost every month and is now stuck at about 3.6%. Why is that? It is because the Government are relentlessly pursuing policies instead of making practical solutions—for example, the drive towards net zero. We of course want net zero and to get to the point where we clean up our carbon footprints, but by going too far they have managed to put up energy bills by £300 since they were elected. Is it any wonder that inflation is so high and shows little sign of coming down any time soon? I do not want to press the Minister on too many questions, but could he in due course let us know when the Government expect inflation to return to the target rate of 2%, which everybody agrees is where it should be?

The other point that I want to make about the statutory instrument is that it extends the employer national insurance contributions relief for veterans to 2028, which means businesses will continue to pay no employer NICs on salaries up to the veterans upper secondary threshold of £50,000 or £270 for the first year of their employment, which is a very good thing, as I think the Minister will agree. We introduced this relief in 2022, as we wanted to encourage as many employers as possible to help our veterans. These people have done a huge amount to protect our country, and it is important that we show our gratitude to them.

[Dan Tomlinson]

indicated assent.

[Mark Garnier]

The Minister is nodding, and I am sure he agrees with us on this point. Therefore, we welcome the fact that the Government have committed to extending this relief for the next two years.

However, I point out that the Government said in the Budget document:

“The government will extend the employer NICs relief for employers hiring veterans in their first civilian role to April 2028, from which point support for veterans into employment will be covered through spending review settlements rather than through this tax relief.”

The Government have committed to consult on which way would be best to do that, which is positive, and I hope the Minister is open to considering continuing this relief as an option if a suitable alternative cannot be found. In due course, it would be great if he or the Government could let us know what is being planned and on what timeframe, so we may understand what will be happening for veterans.

The child benefit and guardian’s order will uprate the allowances in line with CPI for the 2026-27 tax year. Again, we welcome the increases as these benefits are an important part of our welfare system. Guardian’s allowance is designed to provide further support to people who care for someone else’s child—for example, if the child’s parents have died. When these people step as guardians, they are incredibly important in the upbringing of young children, and we have a duty to support them so that they can ensure that the children they care for have the best start in life.

Although these state benefits are important, the Government are abandoning their responsibilities to tackle the wider benefits bill. In this debate last year, the former Exchequer Secretary, who is now the Chief Secretary to the Treasury, said:

“the Government are committed to delivering a welfare system that is fair for taxpayers while providing support to those who need it.”—[Official Report, 4 February 2025; Vol. 761, c. 716.]

When it came down to it, however, this Government did not take the opportunity to make those savings. Instead, it appears that they caved in to their Back Benchers, and we are now in a position where the benefits bill continues to balloon. According to The Times, even the Prime Minister has vetoed plans to reform the welfare system, simply to avoid the embarrassment of yet another U-turn. That is not fair to taxpayers, or to those who need support the most. In due course, I hope the Minister will set out when the needed benefit reforms will be brought forward and what steps he is taking to ensure that taxpayers’ money goes to those who need it most.

The Conservatives will not stand in the way of any of the statutory instruments before us today, but we look forward to hearing what the Minister has to say—not necessarily this afternoon, I stress—on the points I have raised.

Finance (No. 2) Bill (Fifth sitting)

Dan Tomlinson Excerpts

Committee stage
Tuesday 3rd February 2026 Public Bill Committees

[Dan Tomlinson]

The shadow Exchequer Secretary invited the Economic Secretary to his constituency. Last week, he invited me to come on Valentine’s day to enjoy the bumper cars. I know the Economic Secretary is glad for the invite, but I am particularly glad for the one I received.

Turning to the matter at hand, clauses 139 to 147 and schedule 15 establish the core framework of the carbon border adjustment mechanism, otherwise known as the CBAM—[Interruption.]

[Oliver Ryan (Burnley) (Lab/Co-op)]

Will the Minister give way?

[Oliver Ryan]

If the Minister is not otherwise engaged on Valentine’s day, he is always welcome in Burnley for the bumper cars.

[Dan Tomlinson]

Thank you. Burnley is a fantastic place to visit, and I hope to come before too long.

These clauses create the charge to CBAM, define the goods and emissions in scope, identify who is liable, and set out how the tax rate is calculated and how the relief operates. Together they form the substantive charging provisions that will underpin the operation of CBAM from 1 January 2027.

Clause 139 introduces CBAM as a new tax and signposts the structure of part 5 of the Bill. Clause 140 establishes the charge to CBAM, which applies to the emissions embodied in specified CBAM goods when they are imported into the UK. Schedule 15 defines the goods in scope, initially covering the aluminium, cement, fertiliser, hydrogen, iron and steel sectors. Clauses 141 to 143 set out when goods are treated as imported for CBAM purposes, and who is liable for the charge. In line with established customs principles, liability rests with the importer, with detailed provisions to ensure that the correct person is identified across different importation scenarios, including goods entering via Northern Ireland or subject to special customs procedures.

Clause 144 provides relevant exemptions from the charge. Clause 145 defines “emissions embodied in a CBAM good” and provides powers for the Treasury to specify, in regulations, how those emissions are determined and evidenced. Clause 146 sets out how the CBAM rate is calculated, and clause 147 provides for carbon price relief, allowing the CBAM charge to be reduced where a relevant carbon price has been incurred overseas in relation to the same emissions. That avoids double taxation while maintaining the integrity of the mechanism. Amendment 15 will ensure that the CBAM rate functions as intended, and that CBAM goods face a carbon price comparable to what would apply if the goods were produced in the UK.

The clauses are central to mitigating carbon leakage, and supporting the UK’s path to net zero.

[James Wild]

I am not clear from the Minister’s comments whether he has accepted the Valentine’s invitation, but I am sure I am not alone in not expecting a member of the Committee to corpse on CBAM, which some might say is a rather dry topic.

While CBAM can play a role in ensuring a level playing field for UK manufacturers and producers, it also highlights the levies and taxes applied by the Government on energy, which means that our energy prices are much higher than our competitors. I think we all want to see that burden reduced.

At the 2024 Budget, the Government confirmed the UK will introduce this new CBAM from January 2027, covering broadly the same types of highly traded carbon-intensive basic materials, and putting a carbon price on emissions embodied in certain imported goods, so that they face a comparable cost to that paid by domestic producers. Different countries clearly regulate industrial emissions to very different standards.

UK manufacturers already have to follow obligations to measure, reduce and pay for their emissions, which are costs that we think need to be ameliorated. Extending that principle to imports should, in theory, help to prevent carbon leakage and ensure it results in real global emissions cuts, rather than simply offshoring production and pollution.

As the Minister said, the new charge will initially apply to five sectors: aluminium, cement, fertilisers, hydrogen, and iron and steel. Fertilisers, which are one of the sectors brought within the scope of CBAM, are clearly a critical input for British agricultural producers, particularly for arable farms, where fertilisers already account for around 40% of crop-specific spending and around 12% of total farm costs.

The National Farmers Union has warned about what it calls a fertiliser tax, and has said that using domestic production as the baseline for CBAM levies, despite the UK no longer producing ammonium nitrate at scale, risks a wholesale increase in fertiliser prices at a time when farm confidence, as we all know, is at rock bottom.

The direction of travel is clear. Over time, both the EU and UK will raise the cost of high-carbon fertilisers, making lower-carbon alternatives more competitive as carbon prices tighten. Applying higher taxes where the UK is not a significant producer increases input costs for our British farmers. There is a risk of downstream leakage where UK farmers pay more for fertiliser due to CBAM, while competing with imported food from non-CBAM regimes that are still benefiting from cheaper, higher-carbon inputs, again undermining British producers and our food security.

This all lands on top of the other provisions within the Bill, namely the family farm and family business tax, as well as the cuts and delays we have seen in the sustainable farming incentive and the land management payment schemes and, of course, the additional pressures that are coming through in the cost of employment.

Will the Minister set out what specific assessment the Treasury has made of the impact of CBAM on fertiliser prices, on different farm sectors and on UK food security? How does he intend to prevent downstream carbon leakage, which simply shifts emissions from factories to fields?

Some industry groups, as recently reported in the Financial Times, warn that they think the Government’s current design has flaws and could accelerate de-industrialisation rather than prevent it. A major concern is that the Government plan to apply a single sector-wide rate, based on average emissions, instead of differentiating by product type and country of origin, as I understand the EU scheme does. UK Steel, the Mineral Products Association and the Chemical Industries Association have warned that, without changes, the mechanism will leave domestic producers worse off than their overseas competitors and undermine planned investment and decarbonisation. Has the Minister modelled the impact of using a single sector-wide rate rather than a more granular approach, as well as the impact on investment, jobs and emissions in each of the covered industries?

The Chartered Institute of Taxation, which has provided considerable help and input on all the provisions of the Bill, has flagged that further uncertainty will be caused by questions about the UK and EU emissions trading schemes being linked before the implementation date. The Government and the EU announced last May that they intend to link their ETSs, with mutual exemption from CBAM as part of the package, but I understand that formal negotiations have yet to begin. Perhaps the Minister can give us an update. There are also ongoing political discussions with the EU on the interaction of the two schemes, and the EU’s CBAM is undergoing some delays. That impacts on certainty for some transactions involving Northern Ireland, so I would be grateful if the Minister provided some clarity on where those discussions have got to.

Clause 139 establishes CBAM as the new UK tax on emissions, where a broadly equivalent price has not already been paid overseas. That is the foundation of the new charge. Clause 140 defines CBAM as

“charged on the emissions embodied in a CBAM good”

when it

“is imported into the United Kingdom.”

Those goods are defined by reference to the detailed tariff codes set out in schedule 15.

Schedule 15 focuses on the initial regime for aluminium, cement, fertiliser, iron and steel products, and hydrogen, and it gives HMRC powers to keep the schedule updated in line with tariff changes. Could the Minister elaborate on why those five sectors were chosen for inclusion from 2027, and on when the Government will set out a clear timetable and test for extending CBAM to other sectors, such as glass or ceramics?

Will there be a competitive disadvantage for high-carbon sectors left outside the first tranche, as they will still be exposed to cheaper, higher-emissions imports without any corresponding border adjustment? That point has been made to me privately by some of the Minister’s colleagues who would like to see a wider scope. Has the Treasury modelled how many businesses fall just above the £50,000 annual import threshold, and is it confident that it is capturing those that have substantial business and not imposing a burden on others?

Clause 141 sets out when a good is treated as imported into the UK for CBAM. It covers standard imports and goods under special customs procedures, such as warehousing and movements between Great Britain, Northern Ireland and the Isle of Man. The clause intends to dovetail CBAM with existing customs laws. In Committee, I have repeatedly highlighted the importance of practical guidance: the hands-on support that HMRC will give to smaller and medium-sized importers —I suggest that the £50,000 limit is fairly low.

Clause 142 ensures that where

“a CBAM good has been declared for a special customs procedure,”

processed into a non-CBAM good and then imported, CBAM is still charged on those emissions. This anti-avoidance provision aims to prevent companies from avoiding CBAM by doing limited processing to move a good out of the product list before releasing it into free circulation. The provision is welcome, as it would prevent people from dodging the rules.

Clause 143 places the liability for CBAM on the importer, broadly mirroring customs law by tying liability to the person in whose name the customs declaration is made, or on whose behalf it is made. That is intended to provide certainty, which is important, by aligning CBAM with established customs concepts and practices. Will HMRC give simple template wording or clear guidance so that businesses know how to declare who is responsible for CBAM and for sharing information throughout the supply chain?

The Chartered Institute of Taxation has also raised an important question. As the Minister will know, some businesses operate within VAT groups. If they import goods, they hold an EORI—economic operators registration and identification—number, which anyone who lived through the Brexit negotiations and debates will be familiar with. Under HMRC guidance, one VAT group member with an EORI number can make a customs declaration on behalf of another member. However, this group of clauses does not appear to allow for the formation of a CBAM group similar to a VAT or plastic packaging tax group.

It is unclear how the measures affect those liable under the clause where one VAT group member uses another’s EORI number. If the current easement does not apply to CBAM goods, each member may need its own EORI number, which would add some complexity and administrative burden. Will the Minister clarify the position and understanding on that? If an issue needs to be addressed, will the Government introduce legislation to allow for CBAM grouping to maintain the existing simplifications, as I am sure is their intention?

--- Later in debate ---

We support the principle that British industry and farming should not be undercut by high-carbon imports, and we recognise that a well-designed CBAM can be a tool for economic growth and supporting jobs, but I have raised questions about the practical implementation of this scheme, which is a considerable step in the introduction of a new carbon mechanism charge. I hope the Minister was making notes, and I look forward to his response to my many questions.

[Dan Tomlinson]

I thank the shadow Minister for his questions and engagement. This is one of the largest parts of the Bill, and sets out a significant change to taxation and the treatment of imports in order, as he says, to support domestic businesses that may face higher prices than companies seeking to export to the UK that have cheaper prices and higher emissions.

To go through some of the questions that were asked, the criteria that were looked at internally—over many years and starting under the previous Government; it has taken five years of work to determine which sectors will be in scope—were whether sectors were already in scope of the UK emissions trading scheme, because it is important that those are aligned; whether there was real risk of carbon leakage; and whether it was feasible to implement in 2027. That is why these five sectors were chosen, after significant engagement across Government and with stakeholders. The sectoral scope will be kept under review, and there are some sectors that the Government will continue to have conversations with in the coming weeks to understand their concerns and the benefits that there may be to widening the scope in future. We will keep it under review because, at the moment, the focus is on making sure that we can implement this significant change. It is a long piece of legislation and there are lots of good questions, but we want to get this in as drafted first.

The shadow Minister made several points regarding the sectors that are already in and the extent to which, in his words, they might be made “worse off”. It is important to note that they will be better off than without a CBAM in terms of competition and fairness in imports. At the moment, there is no CBAM, so the imports that come to the UK in these five sectors are, in a sense, undercutting domestic production if we have higher costs. With the introduction of CBAM, that undercutting will be significantly reduced. The prices faced by importers will be brought into line with those faced by those companies in the UK. There is a valid point to make about the detail and specificity with which the carbon prices that are used within CBAM are set, and that is something that I certainly want to keep under review, but it is good and it is right that we make progress with CBAM as set out in the legislation.

[John Cooper (Dumfries and Galloway) (Con)]

The Minister talks about people being better off, but my farmers are very concerned about the fertiliser impact. Four or five years ago, fertiliser was around £180 a tonne; today it is about £400 a tonne, and the introduction of CBAM might put another £100 on top of that. Farmers’ margins are so narrow that they simply have to pass that on, which will have a direct effect on food prices in this country. The Minister says that there will be talks about that. Farmers should be front and centre of those talks, because this is really worrying.

[Dan Tomlinson]

We will engage, and have engaged, with the industries that are directly affected by this change, including the fertiliser industry, and those for whom there will be knock-on effects from higher import prices. With fertiliser in particular, it is worth noting that UK-based fertiliser manufacturers have received more free allowances in recent years than they needed to surrender to be able to cover their emissions. As such, they are not, in practice, paying a carbon price at the moment. The CBAM rate will therefore be set at a low level to reflect that. It is something that I have been looking at as Minster because of these issues, and we expect the initial impact of CBAM on the fertiliser sector to be very modest. None the less I take the point that the hon. Member raises, and the Government will continue to look at it.

On the point around groupings and EORI numbers, that is not a phrase that I have come across before, but I am glad that I have heard it. I will make sure to remind myself of the torturous Brexit process and will, I am sure, understand the context there in more detail. We engaged with businesses in advance of making the proposal and feedback indicated that group treatment would confer relatively minimal benefits, so we chose not to implement it at this time. We will, of course, keep that under review though.

CBAM is a significant change that has been welcomed by many of the industries in the UK and should go a long way to levelling the playing field for those firms that are producing in these five sectors.

[The Chair]

The Minister courteously indicated to me that he has another assignation in Westminster Hall. Exceptionally, I will allow him to leave now, although that is unusual in the middle of a series of decisions. The Minister may make his way out quietly.

While I am on my feet, the cold is getting to my brain, but we all know that the heating system is lamentable at the moment. I shall be in the Chair for the first part of this afternoon as well, so if hon. Members feel the need to wear something warmer, I regard personal comfort as more important than sartorial elegance. [Hon. Members: “Hear, hear!”] That is not an invitation to be outrageous—but please ensure that your personal comfort is given attention.

Question put and agreed to.

Clause 139 accordingly ordered to stand part of the Bill.

Clause 140 ordered to stand part of the Bill.

Schedule 15 agreed to.

Clauses 141 to 145 ordered to stand part of the Bill.

Clause 146

Rate

Amendment made: 15, in clause 146, page 154, line 17, at end insert—

“(4A) In determining the ‘baseline free allocation percentage’ in relation to a CBAM sector, ignore any scheme year in which there were no sectoral emissions.”—(Lucy Rigby.)

This amendment clarifies that scheme years in which there were no sectoral emissions should be ignored when determining the baseline free allocation percentage in relation to a CBAM sector.

Clause 146, as amended, ordered to stand part of the Bill.

Clause 147 ordered to stand part of the Bill.

Clause 148

Administration and enforcement

Question proposed, That the clause stand part of the Bill.

Taxation: Small and Medium-sized Enterprises

Dan Tomlinson Excerpts

Tuesday 3rd February 2026 Westminster Hall

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

It is a pleasure to serve under your chairship, Mr Dowd. I am grateful to the hon. Member for Farnham and Bordon (Gregory Stafford) for securing the debate. I believe it is the second debate of his that I have had the pleasure of responding to in Westminster Hall and I look forward to many more in my time as Exchequer Secretary. I am grateful for his contribution, and I am sure the businesses in his constituency will be grateful to him for representing them in this place; it sounds like he has a fantastic set of small and medium-sized enterprises in his constituency.

On the broader point of the impact of this Government on the economy, I believe the hon. Member was being too downbeat and gloomy. We have seen six interest rate cuts since this Government took office because of the stability that we have brought back. That is bringing down borrowing costs for businesses and improving the cost of living for families up and down the country. That means hundreds if not thousands of extra pounds in their bank account rather than going on their mortgage. Economic growth has increased—we outperformed the OBR forecast by 50% last year—and wages have increased across the economy faster in the first year of this Government than in the first 10 years under the Conservatives. Higher wages and better living standards for people in our communities, in his constituency and in mine, mean that there is more money to spend in the shops to support our high streets.

The hon. Member raised a range of policies. I would gently say that some of them were implemented by his Government. For example, the extended producer responsibility for packaging was, I believe, a Michael Gove initiative. The Labour party in opposition learned the lessons of rubbishing the record of a previous Labour Government, and once we stopped doing that we found ourselves re-elected because people put their trust in us. I gently suggest that the Conservatives be careful what they wish for when they criticise policies that the Conservative Government introduced.

The debate follows two Budgets in which the Government did have to ask businesses and individuals to contribute more to support our public services. But we did all we could, particularly in the last Budget, which I was closely involved with in the Treasury, to keep the contribution we were asking for as low as possible by pursuing fair reforms to our tax system that were long overdue. I am happy to go through them in detail, but I will not do so for the sake of time and because it is slightly off topic. Those changes allowed us to provide support for businesses, for example in the business rates system. The main ask of the public was keeping income tax thresholds frozen at the end of the decade for a further three years in addition to the seven years for which the Conservatives decided they would be frozen.

This Government do back and value small and medium-sized enterprises. They are at the heart of so many communities; I am sure they are at the heart of your constituency, Mr Dowd, and those of all Members in this room. We value such businesses, their contribution and the hard work and graft that the people who set them up do to grow them, to expand to multiple premises, and to hire more people. The work that they do is fantastic, really valued and vital to the culture, life and vibrancy of our high streets and communities. Sometimes these small businesses are the only business in a village or a rural community, whether it be a pub, post office or café. We know how important they are to rural and coastal communities.

[Mr Angus MacDonald]

I have spent a great deal of my life looking at small businesses. There are 4.1 million sole traders or self-employed people in the UK and that £90,000 VAT restriction is a block on building businesses. Were it increased to, say, £250,000 and 10% of those businesses employed people, that would mean 400,000 youngsters in work, and the modelling that I have done shows that His Majesty’s Revenue and Customs would get a lot more money. I would be delighted to go through it with the Minister. If we want real growth from UK micro-organisations, I would really appreciate a chance to meet him to discuss this.

[Dan Tomlinson]

We do have one of the highest VAT thresholds among large economies in Europe and of course the Government keep all tax policy thresholds, rates and so on under review. I would be interested in the analysis that the hon. Member has carried out, though my understanding is that significantly increasing the threshold would not be revenue generating but would cost revenue for the Exchequer.

This goes to a point that the hon. Member for Farnham and Bordon raised. He suggested that we should almost halve the rate of VAT for some businesses. The challenge and trade-offs that we must grapple with in government are not grappled with by those who want to see such significant cuts to VAT, because we have to make sure we maintain revenue to fund the NHS in the hon Member’s constituency, and fund local councils to fill in the potholes and provide the social care that constituents need.

[Mr MacDonald]

I met the Institute of Chartered Accountants in England and Wales this morning and am meeting the Federation of Small Businesses later. We have done all the modelling and I assure the Minister that our numbers are being checked out by all the experts. I think that the Government might be missing a trick on this one.

[Dan Tomlinson]

I am always happy to receive representations from Members on both sides of the House. I will look out for correspondence from the hon. Member in my very large weekend correspondence box, which I always enjoy on a Sunday evening.

[Rachael Maskell]

It might not have filtered through, but I have written to the Chancellor on behalf of many Labour MPs regarding concerns about small businesses and the fact that many of them will not receive the vital support that they need. They are very fearful of what is going to happen in just eight weeks’ time. Will the Minister look particularly at small businesses, which are not getting the relief and support that they need, and ensure that we are able to mitigate some of that? These businesses form a vital part of the whole economic ecosystem. If they are not growing and are instead shrinking then that will have an impact on our whole economy.

[Dan Tomlinson]

I thank my hon. Friend for her question and the representation that she provides in this place for the small businesses in her constituency—it is a wonderful part of the world. If my team have not been in touch already today, I am hoping that we can find time to meet next week for a conversation. I know that this issue is one that is really important to her. York is a fantastic, vibrant and growing part of our economy. I expect that some of what is happening here is that the businesses in her constituency have seen their values increase by more than others in parts of the country that have not been doing as well. That is why the Government have provided a range of support for businesses. I look forward to talking about that with her in the coming days.

We are fast running out of time, so let me turn to the topic of business rates, which Members have raised. It is worth noting that we are implementing significant reforms to the system. On the point around large online retailers, as far as I am aware, throughout the whole history of the business rates system—including the 14 years under the previous Government—the multiplier, otherwise known as the tax rate, for large online giants was exactly the same as that paid by a typical business on the high street. As part of fulfilling our manifesto commitment to reform the business rates system, we have introduced a really significant wedge into it: the multiplier for large online giants and their warehouses is now 33% higher than for a high street business.

I am aware, and we have had lots of discussions about it in this place, that that reform—the significant underlying reform to the business rates system—has happened at the same time as the revaluations since the pandemic have come into place, and at the same time as the Government have chosen to unwind, slowly and with significant transitional reliefs, the temporary pandemic support. That issue was raised by the hon. Member for Farnham and Bordon.

When the Conservatives stood for re-election, the OBR forecasts did not earmark any funding whatsoever for continued support within the business rates system for our high streets. The Conservatives say now that they would not have stuck with those plans, but had they done so—and they are the plans that they presented to the country before the election—the relief would have ended overnight in 2025.

[Gregory Stafford]

You are in charge now.

[Dan Tomlinson]

Yes, and we extended the relief by a year, at a lower rate, and now, rather than ending it overnight, we have introduced significant transitional relief, so many of the businesses in the hon. Member’s constituency will see their increases, if they experience increases, being capped at 15%.

Overall, across the system as a whole more than half of businesses are either seeing their bills flat-falling or staying at zero, and this tax change—this 33% wedge that has been introduced to the system—is, in effect, a transfer of almost £1 billion in business rate liabilities away from the high street and towards the largest businesses, which have properties worth £500,000 or more. This transfer will benefit 750,000 smaller properties on our high streets.

Pubs have also been mentioned. We saw 7,000 pubs close over the 14 years between 2010 and 2024. I am aware that pubs, and indeed all hospitality businesses, experienced challenges, particularly in 2022 when inflation surged to 11% as energy costs went up. To be clear, that was in large part a result of Putin’s illegal invasion of Ukraine and the impact it had on the global economy, but inflation did rise significantly, which impacted individuals and their bank balances. The Government understand that times are tough for businesses on the high street, in part because of that legacy.

The hon. Member for Farnham and Bordon mentioned some statistics about pubs that are now out of date because of the change that was introduced last year; the 76% increase is not going to happen any more. In fact, three quarters of pubs, live music venues and other businesses affected by the changes that were announced last week—

[Gregory Stafford]

It is delayed.

[Dan Tomlinson]

Three quarters will see their business rates fall or stay the same this year. Then, those rates will be frozen for two years. The crucial point, which relates to whether it is delayed or not, is that we are launching a review of the methodology that is used to assess pubs. I am sure that this issue will have come up in the roundtable on business rates organised by my hon. Friend the Member for York Central (Rachael Maskell) with businesses in her constituency, and in the engagement that other Members have with businesses in their constituencies.

Pubs are valued in a relatively distinct way: their takings are used to assess their value, rather than their floor space. That can be quite opaque for pubs. It can also mean that increases in their business rates can appear to be the result of higher takings but really just reflect underlying increases in higher costs, so they can feel like they are running to stand still. We will therefore look closely at the methodology used to value pubs, and hotels, and I hope that we can find a long-term—indeed, permanent—solution in time for the next revaluation, which will come in 2029, as planned.

I will respond briefly to the point that was made about the increase from £800 to £1,600. I urge the hon. Member to check with the particular pub that he mentioned, but I assume it will be the case—each business is different, and I should not comment on individual businesses precisely—that the 15% relief will probably apply there too now, so there should not be a further £800 increase. I note, of course, that there is an increase for that business, as he set out.

We are also publishing a high streets strategy. We will work on that in the coming months and it will be a cross-Government effort. Yes, the Treasury will be involved, but so will Departments such as the Home Office, so that we can support businesses that are struggling with shoplifting. We will also work with the Department for Business and Trade, and with the Ministry of Housing, Communities and Local Government.

I hope that I have responded to a range of points that were made in the debate, and I thank Members for their contributions to it. In the coming months, in my role as Exchequer Secretary I will of course continue to engage with businesses—small and large—on the important points that have been raised today, to see what more the Government can do to support them as they seek to grow, to support employment in their communities, and to support the life and vibrancy of our high streets and town centres.

[Peter Dowd (in the Chair)]

I assure the hon. Member for Farnham and Bordon that I read his parliamentary contributions assiduously, side by side with the Labour manifesto—so there.

Question put and agreed to.

Draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2026 Draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026

Dan Tomlinson Excerpts

Monday 2nd February 2026 General Committees

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

I beg to move,

That the Committee has considered the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.

[The Chair]

With this it will be convenient to consider the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.

[Dan Tomlinson]

The regulations prescribe the circumstances in which the new retail, hospitality and leisure and high value business rates multipliers will apply.

It is a pleasure to see you in the Chair, Dr Murrison—[Hon. Members: “No!”] No? Oh, that is totally wrong; who have we got in the Chair? [Hon. Members: “Mr Mundell.”] Mr Mundell—that’s right. Forgive me for my sins; I know not what I do. Members will be glad to know that I do not plan on speaking for 15 minutes today, as I did in the Chamber the other day.

The regulations give effect to the new business rates multipliers for qualifying retail, hospitality and leisure and high-value properties. This is the first step to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. At the Budget we announced a comprehensive set of reforms to business rates. We have created a new, fairer system with permanently lower multipliers for RHL properties with rateable values below £500,000. The scope of these new multipliers is broadly the same as that of the current RHL relief. These new multipliers will be 5p below their national equivalents, but when combined with the outcomes of the revaluation, the tax rate that RHL properties on the small business multiplier pay next year will fall by nearly 12p and the rate for RHL properties on the standards multiplier by 12.5p.

It is important that we make support for the high street sustainable, so we are funding these new multipliers through higher rates on the top 1% of properties—those with rateable values of £500,000 and above. The higher multiplier will be only 2.8% above the national standard multiplier, meaning that properties in its scope will pay a reasonable tax rate too. These new rates will be worth almost £1 billion a year and will benefit more than 750,000 RHL properties. They will mean that from April, the most valuable properties, such as large distribution warehouses occupied by online giants, will pay a tax rate 33% higher than that for small high street properties.

The new business rates multipliers being brought into force by these statutory instruments are the first step to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. I commend them to the Committee—and forgive me, Mr Mundell.

[The Chair]

Forgiven.

--- Later in debate ---

[Dan Tomlinson]

In response to the points raised by the shadow Minister, it is worth emphasising that the decision to introduce new tax rates to the system means that, for the first time, a typical high street business now has a lower multiplier—a lower tax rate—than the online giants and the larger properties. The tax rate on larger properties is 33% higher than the rate paid by a smaller property on the high street. That significant difference is the first step in the reforms that we have implemented to business rates.

I will not make the point that the previous Government would have removed the reliefs overnight, but I will say that if they were planning on keeping them, I do not understand why that information was not in the documents that the OBR published in advance of the general election. If the shadow Minister will not concede that his Government would have got rid of the reliefs overnight, he seems to be suggesting that there was a multibillion-pound unfunded tax cut that they did not tell us about before the election. I am not sure which he would prefer.

In advance of the Budget, we considered the inclusion of large retail stores within the high-value multiplier. It is really encouraging that Sainsbury’s, the Co-op, Iceland and other large retailers have welcomed our getting the balance right in the business rates system and setting the multiplier at a rate that has allowed some shops to reduce prices, or at least hold down price increases for consumers, because of the changes that we made and the proportionate way in which we went about making them.

We are committed to going further to reform the business rates system. At the Budget, we published a call for evidence on how to remove further barriers to investment. Transforming business rates is a multi-year process. The Government remain firmly committed to collaborating with stakeholders and with businesses small and large to achieve further meaningful change in the business rates system.

Question put and agreed to.

Draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026

Resolved,

That the Committee has considered the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.—(Dan Tomlinson.)