Finance Bill

Baroness Laing of Elderslie Excerpts

Tuesday 6th September 2016 Commons Chamber

[Jane Ellison]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With this it will be convenient to discuss the following:

New Clause 2

Review of the impact of the duty regime for high-strength cider

‘(1) The Chancellor of the Exchequer must carry out a review of the impact of the rate of duty charged on sparkling cider of a strength exceeding 5.5%, and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent.

(2) The review must address (though need not be limited to) the impact of the duty regime on tax revenues and on the consumption of alcohol.”



New Clause 3

Review of the operation of the transferable tax allowance for married couples and civil partners

‘(1) The Chancellor of the Exchequer must carry out a review of the operation of the transferable tax allowance for married couples and civil partners under Chapter 3A of Part 3 of the Income Tax Act 2007 and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent.

(2) The review must address (though need not be limited to)—

(a) levels of take-up of the allowance;

(b) the impact of the allowance on individuals with children aged five years or under;

(c) the impact of the allowance on low-income households; and

(d) ways in which the allowance could be changed to target low-income families with young children.”

New Clause 6

VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service

The Chancellor of the Exchequer must commission a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service, including but not limited to an analysis of the impact on the financial position of Police Scotland and the Scottish Fire and Rescue Service arising from their VAT treatment and an estimate of the change to their financial position were they eligible for a refund of VAT under section 33 of the VAT Act 1994, and must publish the report of the review within six months of the passing of this Act.”

New Clause 8

Review of changes to tax on dividend income

‘(1) The Chancellor of the Exchequer must commission a review of how the changes to the tax on dividend income implemented by this Act affect directors of micro-business companies, to include—

(a) the impacts across the distribution of such directors’ net income;

(b) the impact on company failure rates; and

(c) options for amending the law to minimise the impact on such directors who are on low incomes.

(2) The Chancellor must lay a report of the review before both Houses of Parliament within six months of the passing of this Act.”

New Clause 15

VAT on Installation of Energy Saving Materials

‘(1) No order shall be made under the Value Added Tax Act 1994 which would have the effect of raising the rate of VAT on installation of energy saving materials, or any individual category thereof.

(2) No order shall be made under the Value Added Tax Act 1994 to vary Schedule 7A of that Act by deleting or varying any description of supply within Group 2 (Installation of Energy Saving Materials).

(3) “Installation of energy saving materials” has the meaning given in Schedule 7A of the Value Added Tax Act 1994.””

New Clause 16

Review of impact of tax measures on intergenerational fairness

‘(1) Within six months of the passage of this Act the Secretary of State must lay before Parliament a report assessing the impact of —

(a) Sections 1 to 3,

(b) Sections 19 to 22,

(c) Section 82,

(d) Sections 92 to 96, and

(e) Section 140

on the burden of taxation by age demographic.

(2) A report under this section must include an analysis of the proportion of taxation paid by working age people under the age of 35.”

New Clause 18

Impact of section 24 of Finance (No 2) Act 2015 on availability of affordable housing

The Chancellor of the Exchequer must commission a review of the impact of changes relating to income tax made by Section 24 of the Finance Act 2015 on the availability of affordable housing, and lay the report of the review before both Houses of Parliament within six months of the passing of this Act.”

New Clause 19

Distributional analysis of the impact of taxation measures

‘(1) The Chancellor of the Exchequer must review the impact of the measures introduced by this Act on households at different levels of income, and lay before each House of Parliament the report of that review within six months of this Act coming into force.

(2) The Chancellor of the Exchequer must review the impact of government fiscal measures on households at different levels of income at least once in each calendar year, and lay before each House of Parliament a report on each review.”

Government amendments 132 to 134, 146 to 148 and 135.

Amendment 179, clause 99, page 185, line 20, at end insert—

“(c) “earning” do not include any amounts that constitute qualifying bonus payments within the meaning of section 312B of the Income Tax (Earnings and Pensions) Act 2003.”

Government amendment 138.

Amendment 141, schedule 3, page 337, line 1, at end insert—

“Provision for small amounts of partnership share money repayable to employees to be exempt from tax if instead applied charitably

10 In section 503 of ITEPA 2003 (charge on partnership share money paid over to employee), after “paragraph 55(3) (partnership share money paid over on withdrawal from partnership share agreement),” insert—

“paragraph 55(3A)(a) or (b)(i) (partnership share money paid over on withdrawal from partnership share agreement),”

11 (1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 6 (partnership shares) is amended as follows.

(2) In paragraph 55 (withdrawal from partnership share agreement)—

(a) in sub-paragraph (3) after “as soon as practicable” insert—

“, unless the plan includes provision authorised by sub-paragraph (3A)”

(b) after sub-paragraph (3) insert—

“(3A) The plan may provide that, where an employee withdraws from a partnership share agreement—

(a) if the employee does not agree to an arrangement in accordance with sub-paragraph (b), any partnership share money held on behalf of the employee is to be paid over to the employee as soon as practicable, and

(b) with the employee’s agreement—

(i) if the partnership share money held on behalf of the employee exceeds a threshold amount of not more than £ 10 specified in the plan, the full amount must be paid over to the employee as soon as practicable, and

(ii) if the partnership share money held on behalf of the employee is equal to or less than the threshold amount referred to in sub-paragraph (b)(i), as soon as reasonably practicable, the full amount must either—

(3B) Partnership share money paid over to a charity or accumulated for that purpose under sub-paragraph (3A)(b) shall not count as employment income by reason of section 503.

(3C) While the plan includes any provision authorised by sub-paragraph (3A), the company and trustees shall make available to participants and qualifying employees at least annually an account of the total amount of partnership share money that would have been returned to employees were it not for that provision and of the related charitable donations made.

(3D) The Treasury may by order amend sub-paragraph (3A)(b)(i) by substituting for any amount for the time being specified there an amount specified in the order.””

Government amendment 139.

Amendment 180, schedule 25, page 642, line 2, at end insert—

‘(4A) The Chancellor of the Exchequer may not appoint the Chair of the OTS without the consent of the Treasury Committee of the House of Commons.

(4B) The Chancellor of the Exchequer may not appoint the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.”

Amendment 181, page 642, line 40, at end insert—

‘(2A) The Chancellor of the Exchequer may not terminate the appointment of the Chair of the OTS without the consent of the Treasury Committee of the House of Commons.

(2B) The Chancellor of the Exchequer may not terminate the appointment of the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.”

Amendment 182, page 643, line 3, at end insert—

“References to Treasury Committee

5A (1) Any reference in this Schedule to the Treasury Committee of the House of Commons—

(a) if the name of that Committee is changed, is to be treated as a reference to that Committee by its new name, and

(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which those functions are exercisable.

(2) Any question arising under sub-paragraph (1) is to be determined by the Speaker of the House of Commons.”

[Jane Ellison]

In this final debate, there is an array of amendments and new clauses to consider across a wide range of subjects. I am sure that we will cover a great deal of ground.

Let me first outline briefly the Government amendments, starting with Government new clause 9. To ensure fairness in the tax system, new clause 9 allows for the exemption from income tax of supplementary benefit payments funded by the Northern Ireland Executive. Government amendments 132 to 134 deal with disguised remuneration and Government amendment 139 deals with aqua methanol. Amendments 132 to 134 change the date for withdrawing a relief on returns arising from disguised remuneration for those who have not settled tax due to 1 April 2017, while amendment 139 changes the date on which the new aqua methanol duty rate comes into force to 14 November.

Government amendments 135, 146 to 148 and 138 concern venture capital trusts, the lifetime allowance and dividends respectively. They make changes to ensure that these policies work as intended.

Let me deal with the new clauses and amendments tabled by the Opposition. New clause 15, tabled by the hon. Member for Salford and Eccles (Rebecca Long Bailey) and her colleagues is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials. Since 2001, the UK has applied the 5% reduced rate of VAT to the installation of 11 different types of energy-saving materials. That reduced rate remains in place and is unchanged. The European Court of Justice ruled last year that the UK had interpreted VAT law too broadly. Following that judgment, the Government published a consultation on this particularly complex issue, and we are considering the responses. While this new clause is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials, the tax lock legislated for by this Government already achieves the same effect. Indeed, it goes further.