Taxation (Energy and Vehicles)
Dan Tomlinson Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That provision may be made increasing the rate of the electricity generator levy to 55%.
Madam Deputy Speaker (Ms Nusrat Ghani)
With this it will be convenient to discuss the following:
Motion on income tax (mileage amounts)—
That—
(1) In the table in each of—
(a) section 230(2) of the Income Tax (Earnings and Pensions) Act 2003 (approved amount for mileage allowance payments), and
(b) section 94F(2) of the Income Tax (Trading and Other Income) Act 2005 (appropriate mileage amount),
for “45p” substitute “55p”.
(2) In consequence of paragraph (1), in section 94F(3) of the Income Tax (Trading and Other Income) Act 2005, for “45p” substitute “55p”.
(3) The amendments made by this Resolution have effect for the tax year 2026-27 and subsequent tax years.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
Motion on vehicle excise duty (temporary rates for good vehicles)—
That—
(1) The Vehicle Excise and Registration Act 1994 has effect in relation to vehicle licences, other than trade licences, taken out in the period beginning with 1 July 2026 and ending with 30 June 2027 as follows.
(2) Paragraph 9 of Schedule 1 to that Act (rates for rigid goods vehicles exceeding 3,500 kgs revenue weight) has effect in relation to goods vehicles to which sub-paragraph (1), (2)(b) or
(3) of that paragraph applies and which are used in the course of a trade as if—
(a) in sub-paragraph (1), for “shall be determined in accordance with” to the end there were substituted “and not exceeding 44,000 kgs is £1.”;
(b) where sub-paragraph (2) applies in relation to rigid goods vehicles mentioned in paragraph (b) of that sub-paragraph, in that sub-paragraph for “basic goods vehicle rate” there were substituted “£1”;
(c) in sub-paragraph (3), for “£1,703” there were substituted “£1”.
(3) Paragraph 10 of that Schedule (rates for certain rigid goods vehicles exceeding 11,999 kgs) has effect in relation to goods vehicles to which sub-paragraph (1) of that paragraph applies and which are used in the course of a trade as if—
(a) in sub-paragraph (3), for “to be determined in accordance with” to the end there were substituted “£1.”;
(b) in sub-paragraph (7), for “£654” there were substituted “£1”.
(4) Paragraph 11 of that Schedule (rates for tractive units exceeding 3,500 kgs) has effect in relation to goods vehicles to which sub-paragraph (1), (2)(b) or (3) of that paragraph applies and which are used in the course of a trade as if—
(a) in sub-paragraph (1), for “shall be determined in accordance with” to the end there were substituted “and not exceeding 44,000 kgs is £1.”;
(b) where sub-paragraph (2) applies in relation to tractive units mentioned in paragraph (b) of that sub-paragraph, in that sub-paragraph for “basic goods vehicle rate” there were substituted “£1”;
(c) in sub-paragraph (3), for “£1,703” there were substituted “£1”.
(5) Paragraph 11C of that Schedule (rate for certain tractive units exceeding 41,000 kgs but not exceeding 44,000 kgs) has effect in relation to goods vehicles to which that paragraph applies and which are used in the course of a trade as if for “£10” there were substituted “£1”.
(6) Where subsection (2) of section 3 of that Act (6 month licences) applies in relation to a vehicle for which any of paragraphs (2) to (4) has effect, that subsection has effect as if, in paragraph (a), for “£50” there were substituted “£0”.
(7) Article 3(1)(b) of the Vehicle Licences (Duration of First Licences and Rate of Duty) Order 1986 (S.I. 1986/1428) has effect in relation to vehicle licences, other than trade licences, taken out in the period beginning with 1 July 2026 and ending with 30 June 2027 for vehicles for which any of paragraphs (2) to (5) has effect as if for “£50” there were substituted “£0”
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
Dan Tomlinson
The Chancellor has committed to doing what she can to support families and businesses to be responsive in a changing world and responsible in the national interest. The measures before the House assist the Government in that objective.
The way that the current energy system works means that households and businesses pay more for their electricity when the gas price is high. The electricity generator levy already recoups some of the excess returns made by renewable generators when high gas prices push electricity prices over the current threshold of £82.61 per megawatt-hour. The Government have decided to increase the rate of the levy from 45% to 55% from 1 July. That will do two things: first, it will ensure that a large proportion of any exceptional revenues from high gas prices are passed back to the Government, providing a revenue stream so that money is available to support businesses and families with the impacts of the conflict in the middle east; and secondly, in the longer term it will support the new voluntary contracts for difference scheme, which was announced in April, by encouraging participation in the scheme.
In March, the Government announced a review of mileage rates for employees using their own vehicle for work and the self-employed who use the simplified expenses rates. In recognition of the pressures facing drivers as a result of the effects of the Iran war, the Chancellor announced in May the first uprating of mileage rates in 15 years, backdated to April, to provide immediate support to both groups. Mileage rates will increase for 2026-27 from 45p to 55p for the first 10,000 miles, and then 25p thereafter, with effect from 6 April. That represents the largest ever increase to these mileage rates, benefiting around 2 million employees and 1 million self-employed individuals, and saving over £120 a year for a worker doing 6,000 business miles.
It was a privilege recently to meet care workers and the Unison general secretary to hear directly about the difference that this uprating will make to those on the frontline. The general secretary said to me and the Chancellor that this measure is good news for people providing essential public services. It was an honour to meet those who work day in, day out looking after people across the country. I am glad that this measure will have a positive impact on those who do such vital work. Looking ahead, beyond 2026-27, the Government have already committed to a review of those rates and will set out further steps at the Budget.
The third measure recognises the key role that the road haulage sector plays in transporting goods across the UK and its disproportionate exposure to fuel costs. The Government are introducing a 12-month holiday from vehicle excise duty for the majority of heavy goods vehicles, which will save a typical HGV £600 on top of the savings from fuel duty. Fuel costs make up a substantial proportion of HGV operating costs, and this action will help to prevent cost pressures from the Iran conflict spreading across the economy.
The announcements on mileage rates and HGV VED were part of a wider package of measures announced in May, including on fuel duty. In total, the decisions taken since the 2024 general election to freeze fuel duty will save motorists 11p per litre, or £120 for the average car, £250 for the average van and over £2,000 for the average HGV, compared with the plans we inherited from the previous Government.
This Government are taking action to support the economy at a time of global economic uncertainty following the Iran conflict. Our approach of targeting support at those groups who are hardest hit by the conflict will ensure that the measures we take are effective, while protecting the economy from the effects of reckless borrowing that took place under the previous Government.
Dan Tomlinson
The hon. Gentleman says it was for covid, but he forgot to mention Liz Truss.
This Government’s record shows that despite that instability, our plan is working. UK GDP growth in the past two years was the second fastest in the G7. Real household disposable income per person has grown by more than 2% so far in this Parliament, compared with a fall of more than 2% in the last Parliament. Real wages have increased in every single month since this Government took office, with wages rising faster than inflation. These measures will continue that track record and demonstrate that this Government are committed to supporting working people.
Dan Tomlinson
I thank all those who have spoken, and I thank my hon. Friend the Member for Chesterfield (Mr Perkins) for his warm remarks. I will respond to the points made by the shadow spokespeople. I assume that this change will appear as a line item, although I would not want to prejudge any future decisions by the OBR on how it scores all these things and presents them in Budgets, as it is a specific tax head.
The Conservative and Liberal Democrat spokespeople asked how much this change will raise. It is difficult to know. As the Liberal Democrat spokesperson, the hon. Member for Witney (Charlie Maynard), highlighted, prices are coming down. They are at the moment slightly above the threshold in the system, but prices, as the shadow Energy Secretary will know, are volatile. In the usual way, the independent OBR will set out its estimate at the Budget for how much this change will raise and how much will be raised overall by the electricity generator levy. He is right to note that the levy does not raise billions and billions. It is a relatively targeted policy. We have increased the rate from 45% to 55%, but we have not changed the threshold and the routine uprating that takes place within it.
The Opposition spokesperson, the hon. Member for North Bedfordshire (Richard Fuller), asked whether there will be a review and whether this new higher rate is now the rate out into the future. That is something the Government are considering. He is right to highlight that we have not made a definitive announcement on whether that rate will last a short period or will go on into the future, but we will update in due course—it is not something that we want to leave hanging. I would expect that update will be at the Budget, if not before. However, that issue will be reviewed by the Chancellor and the Energy Secretary in the coming weeks.
Richard Fuller
I am grateful to the Minister for clarification that there is active consideration of an end date for that higher rate of 55%, but he will know that the 45% rate had an end date too. Will the review also consider announcing the end date for the levy overall, or has that not yet been considered?
Dan Tomlinson
As the shadow Minister will know, all tax rates, thresholds and the design of tax policy are considered in the round in the run-up to Budgets. With the key policy intention of the increase in the rate, and by extension the decision to continue the policy in any form, one of the things that the Government have been considering is the fact that having the rate in the system should change the incentives and encourage electricity generators to partake in the wholesale contracts for difference, which are being developed and which the Energy Secretary will bring forward in the coming months.
The shadow Minister asked about investment. It is always difficult to make changes in taxation, particularly outside of the Budget cycle. The Chancellor have been cautious about making changes in response to the conflict in Iran. We wanted to take a measured approach to ensure that we manage the public finances well, but also to ensure that we support businesses and households that have been particularly affected by the impact of the conflict washing up on our shores. It is worth highlighting that new investment is excluded from the electricity generator levy, so a business owner thinking of investing in renewables or nuclear in the UK should note that their new investments will not be affected by the increase in the rate.
Turning to the second measure, the Liberal Democrat spokesperson and my hon. Friend the Member for Chesterfield were right to point out that the mileage rates have not been changed since 2011. It is very disappointing that, although we saw plenty of inflation spikes, the previous Government did not take the chance to uprate them.
Barry Gardiner (Brent West) (Lab)
Could the Minister just remind us to which party the Chief Secretary to the Treasury between 2010 and 2015 belonged?
Dan Tomlinson
I am not sure. I have been in the Chief Secretary’s office in the Treasury, and there are many pictures on the wall of the countless Chief Secretaries who served under the last Government—especially towards the end, what with all the chopping and changing. However, both the Liberal Democrats and the Conservatives had ample time to make more than the one change that was made in 2011.
The hon. Member for North Bedfordshire asked why no change was made in the “above 10,000 miles” rate. We did of course consider that when developing the policy. A very significant proportion of those who drive for work drive less than 10,000 miles. As the hon. Gentleman pointed out, some will drive more, especially if they have long distances to drive or live in rural communities, but we thought that this approach—providing a significant 10p increase in the rate up to 10,000 miles while leaving the 25p rate unchanged—got the balance right between supporting people who need help right now and being fiscally responsible. The hon. Gentleman will know, and drivers will know, that the marginal cost of each extra mile driven will decline over time, because the up-front costs can be spread over more mileage. As for annual indexation, it is not the Government’s policy. I welcome the representation, but, again, that is not a policy that was pursued before. As he rightly observed, it would be a complicated process, given the volatility in petrol prices.
I should, of course, mention to the Liberal Democrat spokesperson that I am from Witney, and Chris Hayter Transport, the haulage company, is based just behind the housing estate on which I grew up. It is a very good local business, and I am glad to know that it will benefit from this measure. I take the points raised about the challenges facing the haulage sector, but I hope that our temporary and targeted change will benefit that business and businesses across the country.
Question put and agreed to.
Income Tax (Mileage Amounts)
Resolved,
That—
(1) In the table in each of—
(a) section 230(2) of the Income Tax (Earnings and Pensions) Act 2003 (approved amount for mileage allowance payments), and
(b) section 94F(2) of the Income Tax (Trading and Other Income) Act 2005 (appropriate mileage amount),
for “45p” substitute “55p”.
(2) In consequence of paragraph (1), in section 94F(3) of the Income Tax (Trading and Other Income) Act 2005, for “45p” substitute “55p”.
(3) The amendments made by this Resolution have effect for the tax year 2026-27 and subsequent tax years.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—(Dan Tomlinson.)
Vehicle Excise Duty (Temporary Rates for Goods Vehicles)
Resolved,
That—
(1) The Vehicle Excise and Registration Act 1994 has effect in relation to vehicle licences, other than trade licences, taken out in the period beginning with 1 July 2026 and ending with 30 June 2027 as follows.
(2) Paragraph 9 of Schedule 1 to that Act (rates for rigid goods vehicles exceeding 3,500 kgs revenue weight) has effect in relation to goods vehicles to which sub-paragraph (1), (2)(b) or
(3) of that paragraph applies and which are used in the course of a trade as if—
(a) in sub-paragraph (1), for “shall be determined in accordance with” to the end there were substituted “and not exceeding 44,000 kgs is £1.”;
(b) where sub-paragraph (2) applies in relation to rigid goods vehicles mentioned in paragraph (b) of that sub-paragraph, in that sub-paragraph for “basic goods vehicle rate” there were substituted “£1”;
(c) in sub-paragraph (3), for “£1,703” there were substituted “£1”.
(3) Paragraph 10 of that Schedule (rates for certain rigid goods vehicles exceeding 11,999 kgs) has effect in relation to goods vehicles to which sub-paragraph (1) of that paragraph applies and which are used in the course of a trade as if—
(a) in sub-paragraph (3), for “to be determined in accordance with” to the end there were substituted “£1.”;
(b) in sub-paragraph (7), for “£654” there were substituted “£1”.
(4) Paragraph 11 of that Schedule (rates for tractive units exceeding 3,500 kgs) has effect in relation to goods vehicles to which sub-paragraph (1), (2)(b) or (3) of that paragraph applies and which are used in the course of a trade as if—
(a) in sub-paragraph (1), for “shall be determined in accordance with” to the end there were substituted “and not exceeding 44,000 kgs is £1.”;
(b) where sub-paragraph (2) applies in relation to tractive units mentioned in paragraph (b) of that sub-paragraph, in that sub-paragraph for “basic goods vehicle rate” there were substituted “£1”;
(c) in sub-paragraph (3), for “£1,703” there were substituted “£1”.
(5) Paragraph 11C of that Schedule (rate for certain tractive units exceeding 41,000 kgs but not exceeding 44,000 kgs) has effect in relation to goods vehicles to which that paragraph applies and which are used in the course of a trade as if for “£10” there were substituted “£1”.
(6) Where subsection (2) of section 3 of that Act (6 month licences) applies in relation to a vehicle for which any of paragraphs (2) to (4) has effect, that subsection has effect as if, in paragraph (a), for “£50” there were substituted “£0”.
(7) Article 3(1)(b) of the Vehicle Licences (Duration of First Licences and Rate of Duty) Order 1986 (S.I. 1986/1428) has effect in relation to vehicle licences, other than trade licences, taken out in the period beginning with 1 July 2026 and ending with 30 June 2027 for vehicles for which any of paragraphs (2) to (5) has effect as if for “£50” there were substituted “£0”
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—(Dan Tomlinson.)
Ordered,
That a Bill be brought in upon the foregoing resolutions;
That the Chairman of Ways and Means, the Prime Minister, the Chancellor of the Exchequer, Lucy Rigby, Rachel Blake, Dan Tomlinson and Torsten Bell do prepare and bring in the Bill.
Taxation (Energy and Vehicles) Bill
Presentation and First Reading
Dan Tomlinson accordingly presented a Bill to increase the rate of electricity generator levy and mileage amounts relating to income tax and to provide for temporary rates of vehicle excise duty for goods vehicles.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 103) with explanatory notes (Bill 103-EN).
Draft Climate Change Agreements (Administration, Energy-intensive Installations and Eligible Facilities) (Amendment and Revocation) Regulations 2026
Dan Tomlinson Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the draft Climate Change Agreements (Administration, Energy-intensive Installations and Eligible Facilities) (Amendment and Revocation) Regulations 2026.
It is a pleasure to serve with you in the Chair, Mr Wishart. The draft regulations expand the eligibility for the climate change agreements scheme to include three new processes—the mechanical recycling of plastic, the packaging of spirits and the production of automotive-grade battery cells—as well as clarifying the existing eligibility and administrative requirements for the scheme and updating the carbon emissions factor figure used in the buy-out fee for the scheme.
The climate change levy was introduced in 2001 for 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 the CCA scheme, a voluntary scheme that provides eligible energy-intensive businesses access to significant discounts on their CCL bill in exchange for meeting negotiated energy-efficiency or carbon-reduction targets.
As a tax designed to drive efficiency, the CCL should accommodate the changing energy landscape. We therefore propose to extend the eligible processes within the CCA scheme to include the three I have already mentioned. Those processes meet the scheme’s established eligibility tests, thereby demonstrating that they are sufficiently energy intensive and, where applicable, subject to competition from imports. Their inclusion is consistent with existing policy and continues to support the Government’s objectives of delivering affordable and secure energy and decarbonisation, while also helping to drive growth.
In summary, the regulations give effect to the Government’s decision to extend the eligible processes within the CCA scheme to include the production of automotive-grade battery cells, the packaging of spirits and the mechanical recycling of plastics. I commend the regulations to the Committee.
Dan Tomlinson
As ever, I thank the shadow Exchequer Secretary and the Liberal Democrat spokesperson for their contributions and questions.
I agree with the shadow Exchequer Secretary that lengthy consultations can be a frustration—they are the bane of my life too. Of course, we need to make sure that we engage and listen, but it is always good to be as quick as we possibly can be. There is a gap between now and when the changes will come into effect because the Environment Agency requires numerous administrative processes to be completed before facilities from newly eligible sectors can join a scheme. We of course always look to make sure that we can speed up such administrative processes.
I will follow up in writing with details as to why the non-successful processes were not successful; I do not have that information at my fingertips today, but I look forward to reading the letter and sending it to the shadow Exchequer Secretary. I can confirm that the four processes that applied but were not successful were two relating to tire retreading, one relating to the roll turning of plastics and one relating to water. I will write to the hon. Gentleman on those points in due course.
The shadow Exchequer Secretary is right that there is a very minor change in a complicated formula from 0.0497 to 0.0498. I am assured that that is about helping to make sure the Government do these things properly, and that the resultant changes will not be significant.
The shadow Exchequer Secretary is right to point out that we have high energy costs in this country. We need to bring them down. We are not going to take the approach of the previous Government of saying no to new nuclear power stations over and over again, and we are not going to take the approach of the previous Government of not investing in our energy security. Instead, we are going to get a range of different energy sources into our energy mix so that we can get prices down. The Chancellor proactively made the decision at the last Budget to take £150 off energy bills for families across the country, which was very welcome indeed.
The Liberal Democrat spokesperson mentioned how she would like to see the carbon price support removed. I have good news for her: just a few short weeks ago we announced that we are removing it. I am disappointed that she did not hear that exciting news. It is a very niche tax, but it is important that we are removing a tax that had become outdated and was not fit for purpose given the current structure of our energy market. I do like to make sure that we get rid of taxes.
I agree with the hon. Lady that we need action and ambition on decarbonising our electricity network. We must take the steps we need to take to get clean power and to make sure that we meet our net zero obligations, not just for ourselves but for future generations and for the world. We owe it to all of humanity to make sure that, in a reasonable and careful way, we make progress towards decarbonising our economy. I commend the regulations to the Committee.
Question put and agreed to.
Tax Update 2026: Simplification, Modernisation and Fairness
Dan Tomlinson Excerpts(1 month, 2 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
Today the Government set out further reforms to simplify and modernise the tax and customs system, building on the commitment first made in His Majesty’s Revenue and Customs transformation road map, published in July 2025 and confirmed at Budget 2025.
The measures announced today simplify rules, improve taxpayer guidance, and ensure more taxpayers can benefit from high-quality digital services. The changes, consultations and proposals announced today will help people and businesses to get their tax and customs right first time, while reducing burdens and improving certainty.
The Government are acting to collect more revenue from those who do not play by the rules. This will help ensure that taxpayers and legitimate high-street businesses can compete on a level playing field. The Government are consulting on reforms to online marketplace VAT liability; further extending this liability to more effectively tackle non-compliance; bringing forward reforms to low-value imports, as first announced at Budget 2025; and taking targeted steps to tackle fraud from “sales suppression” systems, through consulting on new software standards.
Simplifying and modernising the tax system
The measures announced today support the Government’s long-term ambition for a simpler tax system, in which rules are straightforward and easy to understand, and meeting tax obligations fits into how people run their lives and businesses. Together, these measures will improve how employer payroll and expenses operate, cut down on paper processes, and improve the overall experience for small businesses.
Key measures include:
VAT treatment of land intended for social housing: The Government are today launching a consultation on the introduction of a new zero rate of VAT for the sale of land intended for the construction of social housing. It is seeking views on how the current VAT rules work and how a new zero rate would support the delivery of social housing, helping reduce barriers to building new homes and supporting more households into safe and decent homes. The consultation will also help ensure any new tax relief remains fair and affordable.
Review and uprating of benchmark scale rates and overseas scale rates: BSR and OSR are optional flat rates that employers can use to reimburse employees for the cost of meals and other travel expenses when they travel for work in the UK (BSR), and for accommodation and meals when they travel overseas (OSR), without having to check every receipt. In response to stakeholder feedback, and following engagement with industry, the Government will review HMRC’s BSR and OSR. BSR will be reviewed, with consideration given to the current costs of travel. In addition, the review will look to understand if there is scope to simplify OSR, with more alignment between BSR and OSR.
More Timely Payment for Income Tax Self-Assessment: As announced at Budget 2025, the Government are today launching a consultation on implementing more timely payments in ITSA, including reforms for ITSA customers with pay-as-you-earn income, who will be required to pay more of their forecasted self-assessment liabilities in-year through PAYE from April 2029. We are also consulting on the potential for more timely payments for other self-assessment taxpayers by reforming payments on account. Spreading tax payments through the year into smaller, regular payments will help reduce tax debt and avoid taxpayers having to pay larger, infrequent and sometimes unexpected bills.
Call for evidence on PAYE Settlement Agreements: The Government are taking proactive steps to simplify and modernise PSAs. As part of this review, HMRC is today publishing a call for evidence. The call for evidence seeks to improve understanding of how PSAs operate in practice, including how employers interpret the rules and where there may be complexity or uncertainty. The evidence gathered will allow an informed view of whether any changes are needed, with the aim of addressing unclear boundaries and inconsistent use, and helping to reduce administrative burdens for employers and advisers.
Consultation on modernising the distributions framework: The Government are today launching a consultation to explore modernising the rules that determine whether a payment to a company’s non-corporate shareholders falls within the distributions regime. This is to ensure the rules operate as intended and minimise distortions, without undermining commercial practice. The Government are consulting because of the complexity of this area of the tax system, which in many cases has not been reformed since 1965, and the need to have a clear view of potential impacts before deciding whether to proceed.
Digitising the option to tax process: Option to tax allows businesses to reclaim and charge VAT on land and buildings, which are normally exempt from VAT. In response to feedback from the Confederation of British Industry and the Institute of Chartered Accountants of Scotland, and through work with the Land & Property Liaison Group—an HMRC-industry forum—the Government are improving the option to tax process by replacing paper-based routes with a new digital channel. This will incorporate industry requirements, including bulk uploads, for option to tax notifications, revocations and VAT registration cancellations.
Consultation on the tax treatment of members of US limited liability companies and other reverse hybrids: The Government launched a consultation on 10 June 2026 on new proposals to remove double taxation from investments in certain types of overseas entity—including US limited liability companies—where an unintended mismatch is resulting in high and unfair tax rates. This proposal is part of the wider work that the Government are doing to develop the UK’s offer for globally mobile talent and ensure that the UK is a great place to live and work.
First-time buyer individual savings account consultation: The Government are committed to making the aspiration of home ownership a reality for as many households as possible. To support that ambition, the Government are today launching a consultation on the implementation of a new, simpler ISA product to support first-time buyers to buy a home. Once available, this new product will be offered in place of the lifetime ISA.
Help to Save: The Government confirm that the reformed help to save scheme will be delivered through a multi-provider model. Following consultation and engagement with stakeholders, this approach will enable financial institutions to offer help to save accounts directly to eligible customers, with the aim of improving visibility and access by embedding the scheme within the mainstream savings market. The Government will continue to work with industry to support implementation of the reformed scheme.
HMRC is continuing to deliver on existing simplification commitments, including by making its guidance clearer and easier to use. To support this aim, HMRC delivered over 4,000 updates and improvements to guidance last year to help more customers digitally self-serve and minimise complexity.
HMRC has also developed interactive guidance, which has won several awards for simplifying complex areas of the system by providing customers with tailored, step-by-step journeys. Over the last four years, HMRC has built 118 of these journeys and in 2025-26, customer feedback shows that interactive guidance supports effective self-service, with nearly 80% of respondents saying they were able to complete their task. This is supported by HMRC’s data, which shows that over 96% of customers did not visit HMRC’s “Contact us” pages within five days of using interactive guidance.
HMRC is also continuing work through the Better Letters Together initiative, launched in July 2025, working with the Administrative Burdens Advisory Board to improve the clarity and quality of letters and emails sent to customers.
Simplifying and modernising the customs system
The Government are committed to building a resilient, facilitative and modern customs system that promotes trade while protecting the UK and our economy. A customs system that gets the fundamentals right and adapts to modern international trade is key to trading with ease, now and into the future.
The measures announced today support ongoing administrative improvements to the customs regime, while laying the groundwork for future innovation and change. These measures collectively simplify customs processes and systems, support digitalised trade and improve trader experience, while protecting the UK border and domestic market.
The Government remain committed to working with industry to deliver reforms and identify further opportunities to enhance the customs system.
Key measures include:
Call for evidence on customs modernisation: The Government have published a call for evidence to capture industry views on trade digitalisation, and potential opportunities and challenges for the UK customs regime. This will explore key elements of the UK customs regime in the context of technological and regulatory change, to ensure we understand evolving trader practices and needs and continue to drive international trade.
Digitalisation and artificial intelligence customs pilots: Building on successful pilots with trade and US Customs and Border Protection, the Government will test and scale innovations in the customs system. This includes design and delivery of services allowing HMRC to process electronic trade documents for customs applications, and participating in the next phase of the Department for Business and Trade’s Digital Trade Corridors programme. These initiatives will support businesses to adopt fully digitalised trade. HMRC will also test how AI can support customs caseworkers to complete real-time border documentary checks, improving border flow and strengthening compliance.
Improving the quality of our customs intermediaries: The Government are improving their support to good-quality intermediaries in the customs sector, through the launch of the previously announced standard for customs intermediaries, which was published on 3 June 2026, development of a voluntary certification scheme for the standard, and a new commitment to publish a consultation on mandating customs intermediary registration. This work will ensure the customs system is supported by a high standard of intermediary service.
Digital ATA Carnets: The Government have announced that the UK is one of the first countries to adopt digital ATA carnets, from 1 June 2026. Digitising this “passport for goods” makes it easier for businesses and touring artists to move goods between the UK and other countries temporarily without payment of import duties.
Changes to the duty reimbursement scheme for Northern Ireland goods: The Government have introduced legislative changes to make it easier for businesses to reclaim “at risk” duty paid on goods brought into Northern Ireland. The changes, which went live on 26 May 2026, are designed to enhance access to the scheme by directly addressing business concerns, and also ease the financial burden on businesses where evidence of the final destination of goods takes time to materialise.
Strengthening fairness in the tax system and helping customers get their tax and customs right.
Measures announced today also strengthen compliance and set out options to improve HMRC’s ability to collect tax that is owed. This ensures fairness for the vast majority of taxpayers who meet their obligations and supports fair competition on the high street.
Key measures include:
Reforming the customs treatment of low value imports: The Government have listened carefully to representations made by industry and decided to accelerate delivery of the reforms by six months to October 2028 at the latest. In doing this, the Government have sought to ensure all goods are adequately controlled, while balancing the need to promote fair competition between high street and online retailers, and giving businesses involved in the sales and movement of low-value goods time to prepare for the changes and avoid border disruption. To give businesses as much certainty as possible about the new customs arrangements, the Government will publish a consultation response shortly and start legislating for the reforms in this year’s Finance Bill.
Online marketplace liability: The Government want to tackle persistent VAT non-compliance among businesses selling on online marketplaces, both overseas and domestic. These businesses undermine honest businesses that pay what they owe, and it is estimated that they cost hundreds of millions in lost VAT each year. The Government are therefore consulting on how to clamp down on this non-compliance by making online marketplaces liable for VAT on both UK and overseas business sales of goods. This reform would make it harder for overseas businesses to masquerade as being UK-based to escape the current rules, and make sure UK businesses also pay what they owe. This consultation seeks views from online marketplaces, hot food delivery platforms and restaurants and sellers operating through those platforms.
Electronic sales suppression software standards: The Government are determined to tackle till fraud on the UK’s high streets, in which traders use payment systems to fraudulently under-report their income, which is unfair to legitimate high street businesses. The Government are launching a consultation on the introduction of software standards for electronic point of sale and mobile point of sale systems. This consultation seeks views from businesses, software developers and wider stakeholders on measures designed to prevent electronic sales suppression and support fair competition on the high street. The Government aim to ensure that any future approach minimises burdens on compliant businesses and delivers secure, reliable record-keeping that prevents till fraud.
Tackling lower value debts: The Government are today launching a consultation on proposals to extend existing powers to enable recovery of lower-value tax debts. This would apply to customers who can pay but have not responded to multiple contact attempts from HMRC. Each year, over 750,000 such debts, collectively worth more than £2 billion, remain uncollected after nine months, and more than 10 attempts to contact customers to pay what they owe. The proposals would enable HMRC to collect debts directly from customers’ accounts in regular instalments, supported by a comprehensive suite of safeguards to ensure the power is used fairly and proportionately. This measure will help ensure those who can pay their tax debt do so, while maintaining trust and fairness in the tax system.
The full list of publications and announcements can be found at: https://www.gov.uk/government/collections/taxupdate-2026-simplification-modernisation-and-fairness
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Oral Answers to Questions
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Andrew Rosindell (Romford) (Reform)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
The Government introduced legislation in the Finance Act 2026 to provide for a new settlement offer for those affected by the loan charge. The Government will write off the first £5,000 of liabilities, and that is in addition to the proposals put forward by the independent reviewer, Ray McCann.
Andrew Rosindell
The Minister will be aware that tens of thousands of people continue to suffer because of the loan charge scandal, and that successive Governments, both Labour and Conservative, have failed those people. They have dithered, delayed and ignored reviews, causing confusion, worsening the financial harm and anxiety for so many people. Surely the Minister must agree that the victims deserve resolution and closure, so that they can move on with their lives?
Dan Tomlinson
I do agree that those who have been affected by the loan charge need to be able to move on with their lives. That is why the Government put forward a generous settlement offer at the last Budget that went further than the proposals set out by the independent reviewer. I would just note that it was a Government that the hon. Gentleman supported for 14 years who introduced the loan charge and did not do enough to reform it for those who were affected by it.
Euan Stainbank (Falkirk) (Lab)
Alex Easton (North Down) (Ind)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
I thank the hon. Member for giving me another chance to talk about the great British summer savings scheme, which the Chancellor has just talked us through. It is fantastic that it is coming into place in just a couple of days’ time and will run until the end of the summer holidays. It extends across all four nations of the United Kingdon, benefiting businesses in Northern Ireland as well as in Great Britain.
Alex Easton
Given Northern Ireland’s unique position in the United Kingdom, sharing an open border with the Republic of Ireland where the VAT rate is 13.5% for the hospitality industry, will the Chancellor look to reduce the rate of VAT for the hospitality sector in Northern Ireland—at minimum for a trial, if not permanently—to maintain price competitiveness, safeguard UK jobs and businesses, and make us more competitive with the Republic of Ireland?
Dan Tomlinson
I understand that the VAT rate in Northern Ireland is different from the rate in Ireland—there are different rates of VAT across Europe. It is important to remember that VAT is a national tax in the UK, at 20% across the country. It is important to have consistency for businesses operating across the UK. Significant cuts to VAT come with significant fiscal costs. For example, halving the rate of VAT on hospitality would cost the Exchequer about £11 billion.
Claire Young (Thornbury and Yate) (LD)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
I am very busy today, Mr Speaker, as ever. I thank the hon. Member for asking about business rates. She will know that we have already started the work of reforming the business rates system so that we can put in permanently lower multipliers for high street businesses. As part of tax update day, we will be consulting on ways to collect more of the VAT that online sellers dodge by making online marketplaces liable for VAT on both UK and overseas business sales of goods. We will put every penny of the additional revenue raised into improving the business rates system for high street businesses.
Claire Young
When I met Chipping Sodbury chamber of commerce recently, business owners told me that the business rates system is broken and unfair, in part because it is based on turnover, not profit. In response to a letter, the Exchequer Secretary promised to bear in mind the points that I had raised ahead of future Budgets. Does he now accept that the business rates system is broken, and that rather than being reformed it should be abolished and replaced with a fairer system?
Dan Tomlinson
We have a tax on profits in the UK, which is corporation tax. In our corporate tax road map, we have committed to keeping that stable in this Parliament, rather than having it jump around as it did in the last one. It is important to have a broad tax base, so it is reasonable for business rates to continue to be—as they have been since the late 1980s—set in accordance with an estimate of the rents of properties. I do not think it would be right to change that.
Neil Duncan-Jordan (Poole) (Lab)
The Minister will know that coastal towns, such as Poole, which I represent, rely on small businesses. Poole would not be Poole without its restaurants or ice cream parlours. Polling this week shows strong public support for higher levies on big tech. Could this be a way to raise revenue to cut business rates and support the bricks-and-mortar shops that give life to our high streets?
Dan Tomlinson
I understand my hon. Friend’s point. There are many businesses in rural and coastal communities across the country that we want to see thrive and grow, which is why the Chancellor announced the great British summer savings scheme, which will run until 1 September. On the point about the online giants, we are looking at further ways to raise more revenue by going after those online giants dodging VAT. In the last Budget, the Chancellor changed the multipliers in the business rates system so that the tax rate paid by a small high street business would be 33% lower than that paid by large properties, such as those occupied by online giants.
Daisy Cooper (St Albans) (LD)
It was recently reported that the newly elected hon. Member for Makerfield had pledged that he would cut business rates for pubs, clubs and music venues by 20% if he became Prime Minister. Given that the hon. Member is facing the near certainty of becoming Prime Minister, I ask those on the Front Bench whether the Treasury has started modelling the numbers to deliver on that pledge, and if not, when that work will begin.
Dan Tomlinson
I have to correct the Liberal Democrat spokesperson—I do not think that this hon. Member has a near certainty of becoming Prime Minister any time soon. [Laughter.] It is good that my newly elected right hon. Friend the Member for Makerfield (Andy Burnham) has taken inspiration from the decision that we made in January to cut business rates for pubs, bars and live music venues by 15% so that we can back the great British pub and other hospitality venues.
Peter Lamb (Crawley) (Lab)
Euan Stainbank (Falkirk) (Lab)
The Exchequer Secretary to the Treasury (Dan Tomlinson)
I thank my hon. Friend for his strong representation on behalf of his constituency and the important refining industry. I have seen the letter to the Chancellor that has been sent by colleagues and I would be very happy to meet my hon. Friend and other interested Members.
Dr Luke Evans (Hinckley and Bosworth) (Con)
Dan Tomlinson
I regret to inform the hon. Gentleman that that policy was implemented by his Government—[Interruption.] It was in 2023 that HMRC wrote to businesses that were not paying the VAT, unlike some others that were, and began the enforcement action—it started under his Government. However, I recognise the challenges that these rules are causing, so today I confirm that the Government will soon bring forward a new approach, consisting of either changes to the VAT rules or a reimbursement scheme. The changes will be effective for donations of medicines made on or after today.
Robin Swann (South Antrim) (UUP)
In an earlier answer, the Minister ruled out a VAT reduction for hospitality businesses across the United Kingdom. Will he at least meet me, Hospitality Ulster and the Northern Ireland Food to Go Association to discuss the concept of a Northern Ireland-specific pilot?
Harriet Cross (Gordon and Buchan) (Con)
In my constituency, we have lost the Scotbeef abattoir and the famous Donald Russell butchers in recent months, both of which were crucial to the agricultural supply chain. Both blamed high energy costs and the increased costs of doing business, such as the huge rises in national insurance under this Government and big business rate rises under the SNP. What steps is the Treasury taking to support, not suffocate, the agricultural supply chain and other crucial elements of the farming sector?
Dan Tomlinson
I thank the hon. Member for the representations she makes on behalf of the businesses in her constituency. This Government are taking every step we can—within the tight fiscal constraints that we inherited from the previous Government—to reform, and invest in, our business rates system so that we can raise revenue in a fair and sustainable way. I am sure that the Chancellor and colleagues across Government will continue to listen to representations and consider what further changes we can make at the Budget to support businesses.
David Burton-Sampson (Southend West and Leigh) (Lab)
Customs (Tariff and Miscellaneous Amendments) (No. 4) Regulations 2026
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
I beg to move,
That the Committee has considered the Customs (Tariff and Miscellaneous Amendments) (No. 4) Regulations 2026 (S.I., 2026, No. 572).
It is a pleasure to serve under your chairship, Mrs Barker. This is not my home turf; the Minister for Trade, my hon. Friend the Member for Rhondda and Ogmore (Chris Bryant), has been leading on this legislation, but he is engaged on trade business in Turkey today, so—somewhat like a turkey voting for Christmas—I am here with this Committee, which is good. I am glad that the shadow Exchequer Secretary is joining us today.
The instrument updates the UK’s tariff schedule to implement certain elements of the Government’s steel strategy, as set out by the Secretary of State for Business and Trade in March 2026. Specifically, the instrument will increase to 50% the standard rate of import duty on certain steel products, and it includes provision to ensure that the standard 50% rate will apply in place of any preferential tariffs agreed in trade agreements with partner countries or applied unilaterally by the UK. However, as part of the UK’s commitment to support Ukraine in its fight against Russia’s illegal invasion, the preferential rates agreed with Ukraine will continue to apply. The instrument also includes provisions for goods that were already under contract when the new steel tariffs were made public, so that the new, increased rate will not be paid on those that are imported between 1 July and 30 September.
A strong steel sector is critical for our national security interests, but, as in many other countries, steel overcapacity is distorting markets, driving down prices and threatening the viability of our vital domestic steelmaking sector. That is a key reason why UK crude steel production has fallen by more than half in the past 10 years. Global steel overcapacity is rising; the OECD expects it to reach more than 700 million tonnes next year.
Without action, overcapacity will continue to endanger our ability to produce steel when we depend on it for secure and resilient domestic supply chains. That is why the Government believe that the instrument is necessary. It introduces part of a robust new steel trade measure so that the UK steel production industry has the long-term conditions it needs to continue to play its vital role in robust and secure domestic supply chains, including in relation to our growth-driving industrial strategy sectors, defence and other critical national infrastructure sectors.
The instrument will come into effect on 1 July, alongside an accompanying instrument made under the negative procedure. Together, the two instruments will legislate for the steel trade measure set out in the strategy. Taking account of the importance of steel production for the UK’s overall national security, we must ensure that the UK steel industry can survive and continue to produce the steel needed for national priorities, including defence and critical national infrastructure. I hope that colleagues will join me in supporting this instrument, which I commend to the Committee.
James Wild (North West Norfolk) (Con)
As the Minister rightly says, he has been landed in it by his colleagues.
James Wild
Let us be in no doubt that these regulations, if approved, would cause serious damage to our manufacturing sector and be likely to result in the loss of thousands of skilled jobs. They replace the expiring UK steel safeguard measure. Two weeks from today, manufacturing and engineering businesses will be hit with a 50% tariff on steel imports across 20 product categories. Bright bar, wire and stainless steel are captured for the first time. As the Minister says, preferential rates—aside from those for Ukraine—are also being taken away.
In justifying the policy, the Government have said that higher tariffs will apply only to steel that is, or could be, made in the UK, but the industry has said repeatedly to Ministers and to Opposition Members that that is not the case. Those firms are clear that UK mills cannot produce the grades and type of steel that their businesses require. I raised that issue with another of the Minister’s colleagues, the Industry Minister, during an urgent question at which a number of Labour Members spoke against the regulations; I look forward to contributions from members of this Committee along the same lines. When I raised the issue, the Minister said that there were three mills in the country that could, with investment and additional capacity, provide that—but let’s get real. If approved, these regulations come into effect in just two weeks. That is not enough time to stand up the investment and the production for the grades of steel, the specification and the volume that so many manufacturing businesses need.
I have met representatives of companies in my constituency and beyond, and their message is stark: the Government are jeopardising jobs in crucial sectors, in a flawed attempt to protect UK steelmaking. That approach fails to understand how supply chains in defence, aerospace and other sectors work and why these regulations will undermine our national security.
As the Minister says, the newly broadened commodity codes are set out in the tariff of the United Kingdom—the 18,053 pages of it—and the quotas that will accompany that rate will be in separate regulations. That means that the industry currently has no certainty. The regulations are a risk to manufacturing jobs. They have been rushed without an adequate evidence base. The codes are drawn so broadly that they catch manufacturers for whom no domestic alternative exists. The instrument simply will not achieve the Government’s aims, so the Opposition will not be supporting it today.
I acknowledge the Minister’s point about the global overcapacity of steel. The US, Canada and the EU have introduced similar tariffs, and domestic production is important to our national security. However, agreeing with the importance of steel production in the UK is not the same as agreeing with the approach that the Government are taking in the regulations. The downstream steel-using sector employs 300,000 workers; primary steelmaking employs 30,000. Any credible strategy must account for both sides of that equation. Let us be clear on what the regulations are: they are a 50% tax on steel that British manufacturers cannot always source domestically because it simply is not made here or is not produced in the necessary volumes. That is why industry is sounding the alarm at the scope.
The stated policy is to protect all steel products that could be made in the UK, covering 100% of domestic production, but the commodity codes are drawn so broadly that they are catching manufacturers for whom there is no viable domestic alternative. That will be felt by British manufacturers who rely on specialist steel to produce high-value components for aerospace, defence, Formula 1 motorsport, energy and precision engineering. Those impacted are the manufacturers, the fabricators, the engineers and the specialist processors who depend on steel inputs that are simply not available in the UK. Materials used in house building, rail, logistics centres, food warehouses, pharmaceutical facilities, roofing, cladding and other specialist building capability will be hit.
Another point that colleagues across the House raised in the urgent question is that the fabrication sector has warned that 30,000 jobs could be at risk from these regulations and the tariff they introduce, as overseas competitors simply ship in fabricated products tariff-free. Canada amended its tariffs to include fabricated steelworks. I look forward to the Minister explaining why the Government have chosen not to do the same.
Our defence sector was represented at a roundtable that I was at earlier this week with colleagues from the Liberal Democrats and other parties. Many of the specialist steels used by UK manufacturers are currently not produced, approved or supplied at scale in the UK in the required grades. That is particularly acute in categories 14 and 27, which are currently due to face 50% tariffs once significantly reduced quotas are exhausted. This is not simply a matter of flicking a switch and changing supplier: in many cases, the steels that are required, for example in aerospace, are subject to very strict technical approvals and to very lengthy certification requirements and customer specifications, with supplier approval often taking years.
As for the supply chain, these partnerships are decades in the making and UK producers are unable to say if they will be able to produce what is needed. Companies cannot work on the basis that something “could be produced in the UK”. They need the product now.
These regulations will come into effect, if approved by Members, in two weeks, so I have a clear ask to put to the Minister: will he at least remove categories 14 and 27 from the incoming tariff regime, where there is insufficient domestic production capability, ensuring that tariffs are not applied to specialist steels that the UK does not currently produce? If UK firms cannot access the material that they need at competitive prices because of the tariffs that these regulations introduce, its customers may cut UK production. They may well move sourcing overseas or relocate parts of the supply chain to avoid avoidable cost increases.
That is certainly something that Airbus was talking about in relation to the next generation of civil aerospace. Airbus is unlikely to come to the UK if the tariffs make us far less competitive than its three EU partners. The Confederation of British Metalforming reports that manufacturers are already reviewing offshoring options and moving abroad. The British Chambers of Commerce has warned that firms may need to halt production altogether or are considering relocating. Once manufacturing capability leaves the UK, it is very difficult to draw it back, particularly given the energy policy that this Government are following and the prices that flow as a result. As the CBM’s president has put it,
“you cannot protect upstream production at the expense of downstream survival.”
The Minister will doubtless be aware that Canada offers steel tariff relief through a remission framework, allowing Canadian businesses to request relief if they are unable to source specific steel imports domestically. What assessment have the Government made of such an approach? If companies can demonstrate that they cannot source the steel in the UK, the Government’s policy intent is that they should not be penalised. Such a relief scheme would achieve that aim.
If companies are effectively required to buy from UK producers, pricing will reflect the tariffs. Industry is already reporting that quotes for products are priced just below where the 50% tariff would fall. Who’d have thunk it? Vital inputs are made only by UK Steel, which is behind its planned levels of production and would of course then be a monopoly supplier. Firms have to risk either unpredictable supply or expensive imports.
Given the long-term fixed-price contracts that are common across the defence supply chain, involving tens of thousands of small and medium-sized enterprises, a 50% tariff imposed through these regulations cannot easily be passed on, to say it lightly. One SME at the roundtable told me that it would mean an extra £1.2 million on a turnover of around £30 million, which it would simply be unable to fund.
Companies will be incentivised to move production overseas. Ministers should be listening to these sirens and acting before it is too late and jobs are offshored. Even at this late stage, what engagement is the Minister having—perhaps with his ministerial colleagues who are leading on much of the policy, and with industry—to ensure that costs are contained and downstream manufacturing is protected?
If the tariffs are approved, they will come into force and quota rates will apply, but the Government have already said that those rates will be substantially lower than under the steel safeguard. Cutting quota volumes by an estimated 60% overall and by up to 97% in some categories will be achieved through the negative procedure. In discussions with hon. Members, including Labour Members, the Business Minister said that the Government were still negotiating those changes and where the tariffs would sit. I understand that, and I understand that discussions are going on with the EU, but that means that companies still lack certainty before these measures come into force in two weeks.
I implore the Minister to ensure that tariff quota levels are set at a sufficient volume to avoid the huge damage to our industrial base that companies have made very clear is likely if things proceed on this basis. Will the Minister commit to keeping the regulations under review? At the moment, it is proposed that they be reviewed only every 12 months. That is utterly inadequate, given the risk we are all being told about by companies in our constituencies, so I hope he will commit to reviewing them more regularly.
Lastly, I turn to a topic that I raise regularly when the Treasury brings measures forward: the absence of a substantive and costed impact assessment. It is frankly astonishing, with a change of this magnitude, that the downstream effects have not been properly looked at by the Treasury or the Department for Business and Trade. The explanatory memorandum, such as it is, admits that these measures will “raise steel prices”,
“increase…costs for user industries”,
harm downstream businesses and
“impact Small or Micro Businesses”.
I wonder why the Government have not done a fully costed assessment of what that will mean for our aerospace, defence, construction and other sectors that rely on steel. Perhaps the Minister can explain that.
National steel capacity matters for defence, for national security and for supply chain resilience, but these regulations simply fail to achieve the Government’s objective. Instead, they pose a threat to 300,000 jobs in downstream manufacturing. Ministers say that they are listening, but they have not put forward any changes or any solutions to the problems raised by companies. There is still time—just—for them to do so and avoid the enormous damage that we are being warned about.
If Ministers are determined to press ahead, we have two further requests: first, that they delay the implementation of these tariffs for at least six months, to give manufacturers as much time as possible to adjust, and secondly that they develop more forensic definitions and exclude grade sizes and specifications of specialist steel that is not produced in the UK.
The Opposition will vote against this measure. We ask the Government urgently to reconsider their plans, and instead to protect jobs and promote economic growth.
Dan Tomlinson
I thank Members for their contributions and questions in this debate on an important statutory instrument. It is right and proper that the Opposition have the chance to question and interrogate the Government’s decision making on the significant change that we are bringing forward.
It is worth understanding that the Government have been engaging in detail with industry on this since the announcement in March. My understanding is that a number of codes—nine, I think—have been changed since that announcement. That is as a result of engagement and meetings with industry—with those downstream sectors—by the Minister for Trade, my hon. Friend the Member for Rhondda and Ogmore (Chris Bryant), and others on whether or not it is possible for them to access UK-produced steel.
The shadow Exchequer Secretary, the hon. Member for North West Norfolk, asked me about codes 14 and 27, which are of particular relevance to the aerospace and defence industries. The Under-Secretary of State for Business and Trade, my hon. Friend the Member for Stockton North (Chris McDonald), was asked about that earlier today. He has been meeting with that sector today, I believe, to talk about the impact on them and to consider what the Government can do.
The shadow Exchequer Secretary also asked about a review. It is the Government’s intention to keep this under review, with a formal review point after 12 months, as he noted. On the quota levels, I take the point that there is uncertainty at the moment, given that we are approaching 1 July. I hope that, in line with good policymaking principles, we will be able to set out that detail as soon as possible for the businesses affected.
The hon. Member for Keighley and Ilkley is always good at representing the businesses in his constituency and making his points clearly and forcefully. I commend him for his remarks today.
Robbie Moore
Could the Minister explain, not only to me but to the businesses in my constituency of Keighley and Ilkley, why, if the explanatory memorandum accompanying the legislation clearly states that these regulations are
“expected to have negative impacts on downstream businesses that use steel”,
he and his Labour party are comfortable introducing it?
Dan Tomlinson
I was just coming to that point. As the hon. Gentleman and the shadow Exchequer Secretary have pointed out, the Government are not hiding from the impacts of the measures on some downstream sectors and businesses. He has just read out the explanatory memorandum that the Government themselves produced. The Government have taken a strategic view: in the end, we need a tariff and quota system that protects domestic steel so that, if the worst happens and we need to ensure that we have domestic supply in times of crisis for vital production here in the UK, we have it. Hon. Members know that we have seen a significant reduction in steel production in the UK—I believe a reduction of 50% over the past 10 years—and the representations that the hon. Member for Keighley and Ilkley, and individual businesses and business groups have made to Ministers over recent months have of course been taken into account and considered, but on balance the Government’s view on this strategic assessment is that, in the end, strong production and a strong downstream sector go hand in hand.
James Wild
This is the kernel of the issue. The Minister is talking about protecting UK steel production, but as I and other colleagues have outlined, and as industry is furiously telling all MPs across the House, at the moment no UK production meets the demand that industry has, whether that is in the precision, the grading or the volume necessary. In two weeks’ time, however, a 50% tax is going to be slapped on businesses buying such steel, which they cannot get in the UK and for which they are forced to go overseas. How can that possibly be the right approach? Does he not recognise that that will lead to job losses and to businesses failing?
Dan Tomlinson
As I said, the Government have set out in the explanatory memorandum the fact that there will be an impact from the tariffs, from the 50% rate, but the Government’s view overall is that it is important to ensure that we have a strong and thriving domestic steel sector, which can help businesses here in the UK to weather, and to minimise their exposure to, global shocks, so that we can have a reliable and secure domestic supply. That is very important, and if we had continued on the path that we were on for the long term, we would have seen a continued decline in our domestic supply and in our ability to ensure resilience and security at times when we as a country might need them most.
Carla Lockhart (Upper Bann) (DUP)
The reality on the ground is very different. The demand required is 9.1 million tonnes per year, with 5.6 million tonnes being produced in the United Kingdom. We all want to see domestic production increase, but until we see that and allow it to happen, we cannot slap a 50% tariff on what we need to import to keep our manufacturing, our construction and our infrastructure sectors functioning, and to avoid supply chain complications, potential shortages and increased building costs. To my mind, this is a farming inheritance tax moment for the Government. If they do not pull back from it, they will see industry crippled across this United Kingdom—industries such as our manufacturing, our construction and our infrastructure. I encourage every Member in Committee to think long and hard before destroying our home-grown industries.
Dan Tomlinson
The existing framework falls away at the end of June. Opposition Members have suggested that where the Government wish to proceed, we should instead delay, but our concern is that that would leave the steel sector as a whole totally undefended and exposed to the significant oversupply of steel production across the world. We do not want to see continued degradation and reduction in our domestic steel production. In the end, that would be bad for our whole country—for businesses large and small, and not only those involved in steel production and manufacturing, but other businesses and our broader economy. That is the strategic assessment that the Government have made.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
The Minister is being very generous with accepting interventions. I understand the point he is making about global oversupply; for example, in the housing sector there is an abundance of rebar, which is essentially very cheap, low-grade steel, as it is used in the construction industry, and demand is falling because of a general slowdown in construction. However, that product is completely different from the high-grade 409L steel used in specialist watch-making and medical instruments.
Harefield hospital in my constituency relies on that steel for highly specialised medical instruments that are made in the UK, including small parts such as stents, which keep people’s hearts pumping. Simply saying that there is a generalised global oversupply does not remotely help the individual businesses in the UK that depend on the supply of highly specialised products. Given that the Minister said that the Government have a strategy and want to take a strategic approach, how will they ensure that supplies are present in the United Kingdom before adding 50% to the cost of British manufacturers, upon which our NHS, as well as the other sectors we have heard about, depends?
Dan Tomlinson
I thank the hon. Member for his question; he makes an important and valid point. Of course, if the different types of steel, products and manufacturing are not and cannot be produced in the UK, the 50% tariff that we are debating will not apply. Also, this House has not yet passed the quota levels, and Ministers are continuing to engage with businesses and industry. In preparation for today’s debate, I spoke to the Ministers who have led the work on this legislation, so I know that engagement has taken place in great depth over recent months to make sure that the Government account for concerns and get this difficult but important decision right.
On the complexities and challenges around the operation of the Windsor framework in Northern Ireland, and goods being “at risk” or “not at risk”, it is, of course, a difficult and sensitive issue. Broadly, the Government’s approach is to continue to find ways to reduce friction and to deepen our relationship with the European Union. Just yesterday, the Prime Minister confirmed that on 22 July, there will be a summit, during which we can hopefully make progress on a sanitary and phytosanitary agreement and other areas. I am afraid I will have to disappoint the hon. and learned Member for North Antrim, as I cannot give more detail than was given in the House this morning by the Ministers leading on the policy, but the EU and the UK are committed to working together on seeking a solution, and are engaging constructively.
Of course, this issue is important for businesses and communities in Northern Ireland. As a Minister for His Majesty’s Revenue and Customs, I have responsibility, in part, for the operation of the Windsor framework, and I have been looking with my officials at what more we can do to help.
James Wild
I sense that the Minister is either giving way or looking for a note with the answer to a couple more of my questions; I thought I would give him the opportunity to find a note.
I referred to the Canadian example. Canada provides relief to companies that are unable to source steel in Canada that is part of the tariff regime. The Minister keeps saying that if it cannot be produced in the UK, it will not be covered by tariffs, so that should be a simple thing to do. These codes will inevitably include products that are not able to be manufactured in the UK, so why can companies not get relief if that proves to be the case?
Dan Tomlinson
Of course the Government will continue to engage with industry and we will listen to any representations made. I am interested in the example from Canada, and I will personally make sure that it is passed on to the Minister with lead responsibility.
Even if Members are not fully satisfied with my responses, I hope they feel that I have endeavoured to take a range of interventions and respond as well as I can to the points raised. I hope Members can see that the goal of the instrument is to implement policy in line with the steel strategy to support the UK steel sector as a whole. For those reasons, I commend the legislation to the Committee.
Question put.
Rural Pubs: Fiscal Support
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Saqib Bhatti
The hon. Member makes an interesting point. When publicans speak to me about taxes, they talk about their turnover either increasing or staying stable but the costs going up. The Government have to set out what they will do to improve the fiscal landscape for pubs, and for the hospitality industry more broadly.
A lot has been made of Lord Milburn’s report on NEETs—those not in education, employment or training—and the rise in the number of 16 to 24-year-olds in that category. Has the Minister considered the impact of these tax rises on pub-specific jobs? Some 51% of people working in pubs are under the age of 24, meaning that many are likely to be balancing working in the pub with other part-time commitments such as school or university. These new employment costs mean that publicans will think again about hiring staff on a part-time basis, driving many people into worklessness. The national insurance rise has had the single most damaging effect on the Saturday job.
In addition to the crippling jobs tax, pubs are also suffering because of stifling increases in business rates. These policies threaten to be a huge—maybe even the final—nail in the coffin of many pubs that are really struggling. Analysis from UKHospitality has found that, by 2027-28, the average pub’s business rates will be £4,500 higher than they are today, rising to an astonishing £12,900 within three years, even with the reduced multiplier and transitional relief. I asked one of my staff members how much they paid for a pint of beer in one of the pubs in my constituency, and they said a pint of lager came to £7.50. That pub would have to sell an extra 1,720 pints just to offset the cost of those shocking tax increases.
The Conservatives recognise the value of our pubs. We have pledged to scrap business rates for 250,000 retail, hospitality and leisure businesses because we recognise the importance of ensuring that businesses keep more of what they earn, allowing them to invest in the community rather than sending it back to central Government. I say to the Minister that Governments do not create growth or jobs; our businesses do. This announcement formed part of our larger campaign to get Britain working again, freeing up money for businesses to hire new people, often younger and always local. It would drive new jobs and economic growth across rural areas of the UK.
Building on that, The Telegraph revealed last month that landlords will be hit with a “nice pub tax” under new guidelines. It found that HMRC has ordered officials to levy higher business rates on pubs that are in attractive locations or based in character properties. That is a complete disaster, and could mean that many pubs are forced—
The Exchequer Secretary to the Treasury (Dan Tomlinson)
It is important to note that the article in The Telegraph on the changes for rural pubs was about the fact that we published, with full transparency, the guidance used to value pubs that was signed off under the previous Government. This Government are cutting pubs’ business rates by 15% this year, freezing them for the next two years and reviewing that very guidance. We respect the press, but that article was fake news, and I do not think it should be repeated in this place.
Saqib Bhatti
I love the Minister’s passion, but I have not finished yet, and I encourage him—[Interruption.]
Charlie Maynard (Witney) (LD)
It is a pleasure to serve under your chairship, Mrs Hobhouse.
I thank the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this important debate and I thank all my colleagues who gave such excellent speeches, which set out not only how much they love their pubs, but the struggles that they face. That is the important thing. I do not want to talk about how much those pubs matter to our communities or how much fun I have had in pubs over the years, because the thing that we must focus on is the big screaming problem. We need to take it seriously. Warm words go only so far right now. We have a huge problem that is hitting pubs every day, and we have to do something about it.
I will set out how big the problem is. In the first half of last year, more than 200 pubs closed in six months. That is eight a week. A year on, things are even worse. The British Beer and Pub Association said that 161 pubs closed in the first three months of this year alone in England, Scotland and Wales. That is about 2,400 jobs. Those in rural and coastal constituencies have been among the hardest hit, and according to UKHospitality, running costs for pubs have risen by an estimated 43% since 2019. One third of hospitality businesses are operating at a loss, six in 10 have cut jobs and 63% have reduced staff hours. That is bad.
Anyone knows that pubs are much more expensive than they used to be. That is hurting customers, as fewer people can afford an evening out. When a plate of fish and chips costs 15 quid, that is hardly surprising. It is obviously not because pubs are raking it in. Sadly, quite the opposite is true. Pubs are facing many of the same pressures that are hammering small local businesses across the board: spiralling food prices, high rents, sharp business rate increases, soaring energy bills, increased employer national insurance contributions and rising wages. As an entrepreneur who spent 24 years building a business, the overall situation scares the daylights out of me. I am not envious of them in that position.
I am grateful to Nick at the Old Crown in Faringdon and Tommy and Mike at the Three Horseshoes in Witney, who sat me down and talked through just how tough it is to run these businesses. The Minister is smiling at me because he is a Witney boy, so he understands.
Charlie Maynard
Well, there you are. It is a wonderful pub, and we need to keep it open.
This is all doubly tough for rural pubs. City pubs have a much larger catchment of potential customers who are within walking distance and not car-dependent, which matters with drink driving. Rural pubs are likely to rely on oil, liquefied petroleum gas or electric heating rather than the gas grid, and they have a small labour pool from which to hire. On top of all those hurdles, pubs in the countryside are much more significant to their communities, as they are typically the only pub in the village and a key hub in village life, as so many Members have pointed out.
In west Oxfordshire and the Vale of White Horse, we have fought really hard to enforce making pubs assets of community value, so that everyone understands that they cannot make a quick buck from buying a pub, turning it into a house and selling it—the cost to the community is far too great. But being a community asset alone does not pay the bills. We have to make those pubs into survivable businesses.
The changes announced in last year’s autumn Budget—the business rates revaluation and the removal of reductions that dated from the covid pandemic—led to extreme distress for publicans. While I recognise that the Government have subsequently acknowledged the crisis facing Britain’s pubs, the package of support that they announced at the start of the year, including the 15% cut to pubs’ business rates bills from April and a two-year real-terms freeze, was only a partial U-turn, and it will still leave many pubs facing a business rates increase on top of the other cost pressures that I have listed.
The Exchequer Secretary to the Treasury (Dan Tomlinson)
It is a pleasure to speak under your chairship, Mrs Hobhouse. It is some of the most impressive I have seen in Westminster Hall, as you managed to keep this unruly lot to time. I am grateful to the hon. Member for Meriden and Solihull East (Saqib Bhatti) for securing this debate and for his contribution on the importance of rural pubs.
I represent an urban seat here in London—it is at about midday on the clock from central London—but it has a plentiful supply of green belt, and I have 12 farms in my constituency, even though it is within Greater London. So I have some understanding of the situation for rural communities. I also grew up in the constituency of the hon. Member for Witney (Charlie Maynard), as was mentioned earlier. I spend every Christmas eve doing carols at the Three Horseshoes, so the owners have to look out for me this year. It is a fantastic pub. We want to make sure that pubs like that, and pubs in all the constituencies mentioned today, have the support they need.
I thank my hon. Friend the Member for Redditch (Chris Bloore) for mentioning the pubs in his constituency, including the Golden Cross—I hope that England can get a golden cross in this evening and that we can score some goals. [Interruption.] Thank you, one and all. I thank all Members for their contributions and for sharing the stories of the businesses in their constituencies. Pubs are so important to so many communities, particularly rural communities. The Government have rural rates relief for pubs that are the only pub in villages with populations of 3,000 or less. There are a couple of thousand businesses across the country that make use of the rural rate relief scheme, which covers shops as well. I encourage all Members to make sure that local businesses are aware of that scheme, which was also in place under the previous Government. I know that it is welcomed by those businesses that use it.
I will deal with the topics that were raised in turn. We are reforming the business rates system and have implemented permanently lower multipliers for eligible retail, hospitality and leisure properties, such as pubs. That is funded by a high-value multiplier on the 1% of the most expensive properties, which includes large distribution warehouses used by online giants. That change will mean that the tax rate paid by the smallest businesses on the high street will have a wedge of a third compared with the tax rate paid by the online giants. That is a permanent change, not a temporary relief that will jump up and down. Those changes are worth nearly £1 billion a year for the 750,000 retail, hospitality and leisure businesses that are the lifeblood of our high streets.
Members, particularly Liberal Democrats, talked about the need for a significant change to the way that pubs are valued. As I mentioned, this Government are the first in a very long time to commission an independent review of how pubs and hotels are valued for business rates purposes. In the weeks after the Budget, we heard very clearly from businesses that they had concerns about the opaqueness of the methodology. Some who spoke about business rates for pubs mentioned the feeling of running to stand still, which Members mentioned: their turnover goes up, but then their business rates bill goes up, too. We have been clear that, as was set out in law in the 1980s, it is right for business rates to reflect rents, and we will not separate out pubs entirely. The question is: how can we best value pubs and communicate their value through the Valuation Office Agency to individual ratepayers?
Mike Wood
I am sure that one of the messages the Minister will have heard from pub owners is that the unique way that pubs are valued for business rates—through an assessment of their fair maintainable trade—means that if they invest in their own business, one of the first things that happens is they face a higher bill, long before they have started to repay the money that they invested. Will the Minister consider addressing that with a business rates holiday to provide space for businesses to recoup some of their investment before it is taken off them in business rates?
Dan Tomlinson
I love an intervention like that one. We are looking at exactly that. Last year, in a call for evidence on how we can improve the business rate system to support investment, we set out that we would look at improvement relief. At the moment, it does give a relief if a business invests, but only for a short time. That is under active review as a result of the call for evidence, where we heard that businesses were interested in the extent to which changes to improvement relief could support them and their investment decisions. I would happily receive further representations on that from Members.
Calum Miller
Further to the comments from the hon. Member for Kingswinford and South Staffordshire (Mike Wood), the Minister will be aware of the way in which the pub industry is dominated by major pub companies, which often own tied pubs. That has a major bearing on the leasable value of many of these properties. Many publicans in my area tell me that that drives up their rates, even though they do not have full control over that, just as they do not have full control over their purchasing. Is the Minister working with the Department for Business and Trade to review that, and is he talking to the Competition and Markets Authority to review whether the pubco structure in our country is fit for purpose?
Dan Tomlinson
I thank the hon. Member for raising that issue; it is one that publicans in my constituency have raised with me as their MP. Of course, there are benefits to having a link with a major supplier, and I understand why many publicans choose that route, but it is clear that there are significant challenges, too. DBT has looked at this, and I am sure that conversations are ongoing with the Under-Secretary of State for Business and Trade, my hon. Friend the Member for Halifax (Kate Dearden), about what reforms could be made. This is not my policy brief, so I do not want to speak too far out of turn, but I totally understand the issue. I will raise it personally with my hon. Friend. I have done so in the past, after being asked to by my constituents.
On a related point, guest beers and access to the bar for guest beers in tied pubs was mentioned. DBT has met the parties involved in the beer market access review to hear their evidence directly, and it is giving due consideration to all the evidence, along with input from competition policy experts. This is under active review by the Government, and we are committed to making sure that we can have a diverse and competitive beer market. On a personal level, I hope that the Government can look really closely at this so that we can improve competition and choice, but it is being led by my hon. Friend the Member for Halifax.
As has been mentioned, in January this year we went further to support pubs, with a further 15% off their business rates bills and a real-terms freeze in business rates for pubs in the next two years of this revaluation period. That support is worth £1,650 for the average pub this year. It means that three quarters of pubs are seeing their bills either fall or stay flat this year and, as a sector, pubs will pay 8% less in business rates in 2029 than before the revaluation took effect.
Moving on from business rates, the Government recognise that pubs often serve as crucial community assets, particularly in rural communities, as the hon. Member for Meriden and Solihull East and many others have mentioned. They support local economies and communities, provide spaces for gatherings, support those in need and foster a great sense of local pride.
Jim Shannon
The circumstances around VAT in Northern Ireland, and reduced VAT across the border, are peculiar and particular to us compared with other parts of the United Kingdom. Has the Minister had chance to speak to Colin Neill, the chief executive of Hospitality Ulster, to ascertain some of the things that he feels might be a way forward? If so, have there been discussions not only with him but with the relevant Minister in the Northern Ireland Executive?
Dan Tomlinson
I have not managed to have that conversation, but the hon. Member is very welcome to write to me, and I am happy to consider those representations. Of course, I have heard calls from Members to cut VAT for hospitality, and I am aware that there is a campaign on that matter. I just say that cutting VAT for hospitality from 20% to 10% would cost £11 billion. A range of policy ideas have been raised, all of which involve cutting tax. The right hon. Member for Salisbury (John Glen) was right to acknowledge that there are important fiscal considerations for the Government. It is important that we manage the public finances and bring down Government borrowing, and we are forecast to have the fastest reduction in Government borrowing of any G7 economy, with our deficit falling below the G7 average for the first time in a very long time. Of course, I will listen to the representations made and the asks from campaigners, but I caution that we have to ensure that we have sufficient revenue to fund our public services in a sustainable way.
John Glen
The Minister will acknowledge the distinct combined effect of a whole range of Government decisions on the rural pubs sector. While I acknowledge the need for fiscal responsibility, what work has he done to look at the net effect of all Government decisions, and at why a distinct solution is needed for this particular sector?
Dan Tomlinson
We consider our policies in the round, on a sector-by-sector basis, as well as looking at measures tax by tax. The right hon. Gentleman is right that, as politicians in the Treasury, it is important for us to push the civil servants to make sure that we look not just at individual measures in silos, but at them in the round.
There are some cross-cutting measures that particularly help hospitality. For example, if a hospitality business wishes to employ a young person, aged 21 or younger, as long as their wage is less than around £50,000, the business is relieved from NI. That is up to 25 years if it hires a young apprentice. Of course, the Government are always considering the impacts of their policies on sectors as a whole.
Ben Lake (Ceredigion Preseli) (PC)
Building on what the Minister said about employment costs, we have heard about the pressures that many hospitality businesses, particularly pubs, are feeling following the reduction to the threshold on the increase of the rates. As part of the work that the Minister is undertaking to review things in the round, could he focus on the possibility of increasing the employment allowance for smaller businesses in the sector? That could be a very welcome relief for them.
Dan Tomlinson
Thank you, Mrs Hobhouse. We continue to look at the impact of tax policies across sectors. The Chancellor and I will keep tax policy under review in the run-up to the Budget later this year. Let me make a couple more points before wrapping up in sufficient time for the hon. Member for Meriden and Solihull East to conclude.
We want to make sure that we cut the stifling red tape that is holding our pubs back across the country. At the Budget, we announced the first iteration of the national licensing policy framework. That does not sound very exciting, but it is very interesting. I have been pushing colleagues across Government on it, so that we can provide more clarity in our licensing framework to give pubs that want to open in certain ways or do certain things the flexibility to do so, to support their growth and wider economic growth.
There is the world cup game tonight, and pubs across England and Wales can soon benefit from extensions to licensing hours, as we are letting pubs stay open later for home nation games in the knockout stages. It is encouraging that Scotland did well the other day; hopefully, both teams will make it through to the knockout stages.
We are also backing pavement pints, with a commitment to make it easier for pubs to serve food and drink outside by cutting unnecessary bureaucracy. At present, many businesses are forced to reapply repeatedly for pavement licences to continue serving customers outdoors. That process can cost up to £350 each time, creating an avoidable and costly burden for businesses. I hope that the reforms we have announced will bring that to an end. Finally, in January, the Chancellor announced a £10 million package of funding for hospitality support over three years, up from £1.5 million for one year announced last April.
We understand the need to make sure that we do all we can to support pubs and our hospitality sector, particularly in vital rural communities. I thank Members for their contributions, which I will take back with me to the Treasury in the weeks and, I should hope, months to come.
Wera Hobhouse (in the Chair)
After this debate, we all feel very thirsty for an ice-cold lemonade.
Transport Taxation
Dan Tomlinson Excerpts(2 months, 3 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
In March, the Government announced a review of mileage rates for employees using their own vehicle for work and the self-employed who use the simplified expenses rates.
In recognition of the pressures facing drivers as a result of the effects of the Iran war, the Government are today announcing the first uprating of mileage rates in 15 years, backdated to April, to provide immediate support to both groups.
Mileage rates will increase for 2026-27 from 45p to 55p for the first 10,000 miles, and 25p thereafter, with effect from 6 April 2026.
This will represent the largest ever increase to these mileage rates, benefiting around 2 million employees and 1 million self-employed individuals, saving over £120 a year for a worker doing 6,000 business miles.
The Government will legislate retrospectively for this change at the earliest opportunity. In the interim, HMRC will exercise its discretion and will not seek to collect any income tax or national insurance contributions that may otherwise arise on payments made before the legislation takes effect.
Looking ahead beyond 2026-27, the Government have already committed to a review of these rates and will set this out at the Budget.
This announcement is one part of a package of support for households and businesses announced today.
[HCWS62]
Transport Taxation
Dan Tomlinson Excerpts(2 months, 3 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
The Government are confirming action to support households and businesses with their fuel costs, in response to the conflict in the middle east.
Middle east context and existing Government action
A rapid de-escalation in the middle east remains the best way to bring down fuel prices, where the most impactful step is to reopen the strait of Hormuz. The UK Government are playing a leading role in the international effort to get shipping flowing freely.
Alongside this key step, the Government’s priorities will continue to be helping families with the cost of living, including through protecting the public finances to support the Bank of England with its role in keeping inflation as low as possible.
The Government have already taken action to bear down on prices at the pump. In November, the Government extended the 5p per litre cut in fuel duty for a further five months and ensured that fuel duty will not increase in line with inflation this year. The Government’s fuel finder scheme is delivering real benefits at the pump, with a growing number of apps and websites making near-live fuel prices available to drivers right across the UK. The CMA has stepped up its monitoring of petrol and diesel prices, recently publishing its first enhanced monitoring report on the impact of the conflict, with plans to report further in the coming week.
Petrol and diesel are currently 11p per litre cheaper than under plans inherited from the previous Government, and fuel duty has not been lower than it is now at any point in over 16 years. However, some fuels have been more impacted than others by this conflict, with jet fuel, diesel and heating oil prices increasing more than petrol. The Government also recognise the pressures being faced by drivers and other fuel users.
Going further to support motorists and other fuel users
Today, the Government are announcing a package worth over £400 million, which combines broad support for motorists with targeted support for sectors most exposed to and affected by higher fuel prices.
Fuel duty: 5p cut extension until end of 2026 to support motorists
The Government will not add to the cost of fuel while this war goes on, so there will be no rise this year. The temporary 5p per litre cut, which was introduced in 2022 and remains in place now, will be extended until the end of the year, providing certainty to motorists. This will save the average motorist over £120 compared to plans inherited from the previous Government, with hauliers and van drivers seeing greater savings. The proportionate percentage cut for rebated fuels, which includes red diesel, will also be extended.
This support for motorists builds on help for more families to get off the fossil fuel rollercoaster for good, through the over 110,000 electric car grants the Government have made in the last year to help people to switch to EVs. The Government have also worked to bring the cost down and convenience up to make electric driving work for more people, enabling motorists to save with every mile they drive, irrespective of the Iran conflict’s uncertain path. This change to fuel duty will ease the pressure on those not yet ready or able to make the switch.
Fuel duty: additional support for red diesel users
To support farmers, who face substantially increased costs on fertiliser and fuel, the Government will cut the duty rate on red diesel by over a third per litre from 10.18p to 6.48p, the lowest rate in over 20 years.
This lower rate will take effect from 15 June and remain in place until the end of the year, supporting the agricultural sector in the fuel-intensive harvest period through to the end of the year, and will also help other users of red diesel too, such as maritime, commercial fishing and rail freight.
HGV VED holiday: support for haulage
In recognising the key role the road haulage sector plays in transporting goods across the UK and their disproportionate exposure to fuel costs, the Government are introducing a 12-month holiday from vehicle excise duty for the majority of heavy goods vehicles, which will save a typical HGV £600 on top of savings from fuel duty. Fuel costs make up a substantial proportion of HGV operating costs, and this action will help prevent cost pressures from the Iran conflict spreading across the economy.
The Government will bring forward legislation to enact these changes.
Today’s announcement is one part of support for households and businesses. The Government will consider further action if price levels increase significantly. More broadly, the Government will continue to monitor the situation and make the necessary decisions to help protect consumers from price increases from the Iran war.
[HCWS49]
High Value Council Tax Surcharge: Consultation
Dan Tomlinson Excerpts(2 months, 3 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
In the 2025 Budget, the Government announced the introduction of a new high-value council tax surcharge—HVCTS—on owners of the most valuable 1% of residential properties in England. Today, together with the Secretary of State for Housing, Communities and Local Government, I am launching a consultation on the detailed design of this new surcharge.
Households living in lower value homes often pay more council tax, relative to the value of their property, than those in the most expensive homes. For example, a Band D home in parts of the north can face a higher annual council tax bill than a property worth many millions of pounds in parts of central London. The HVCTS will change that, implementing a significant reform to improve fairness within England’s property tax system, ensuring that those with the most valuable properties pay their fair share.
From April 2028, owners of residential properties valued at £2 million and above will be liable to pay the HVCTS, in addition to their existing council tax bill. Fewer than 1% of homes in England are expected to be affected. Properties will be valued for the purpose of the HVCTS and placed into one of four value bands, with fixed annual charges uprated in line with inflation. Council tax bands will remain separate to this new tax.
The consultation seeks views on the design of the tax including scope, support for those who cannot pay, how the tax will be administered and how owners can challenge and appeal their bill. The consultation also includes detailed information for local authorities, who will collect the tax on behalf of central Government. The revenue will be used to support funding for local government services. Local authorities will be fully compensated for any additional administrative burdens.
We welcome feedback on the detailed design set out in this consultation from local government, homeowners, tax experts, legal professionals and those in the property industry about the technical design and impact of the tax. The consultation will close on 14 July.
The consultation is available at:
https://www.gov.uk/government/consultations/high-value-council-tax-surcharge
[HCWS35]
UK-Isle of Man Social Security Agreement
Dan Tomlinson Excerpts(2 months, 3 weeks ago)
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The Exchequer Secretary to the Treasury (Dan Tomlinson)
A new social security agreement relating to national insurance contributions with the Isle of Man was agreed on 18 May 2026. It modernises the provisions in the 1977 agreement which determine where workers and employers pay their national insurance contributions, so that they operate in line with the social security agreement the UK has with Jersey and Guernsey, as well as those with other countries. The text of the agreement has been deposited in the Library in both Houses and will be made available on gov.uk.
The agreement will come into effect on the first day of the month after the UK and the Isle of Man have exchanged written confirmation that they have complied with their domestic requirements. The agreement will have effect in relation to the tax year beginning on or after 6 April next, following the date on which the agreement comes into effect.
[HCWS38]