Oral Answers to Questions

Debate between James Wild and Emma Reynolds

Thursday 13th November 2025 Commons Chamber

[Emma Reynolds]

I thank the hon. Member for his question, and I look forward to working with him on this issue. We will look at pre-pipe solutions in the forthcoming White Paper, which I look forward to discussing with him when we publish it.

[James Wild (North West Norfolk) (Con)]

7. Whether she has made an assessment of the potential impact of solar farms on food security.

Finance Bill (Fourth sitting)

Debate between James Wild and Emma Reynolds

Committee stage
Thursday 30th January 2025 Public Bill Committees

[Emma Reynolds]

Clause 78 legislates for the new rates of the soft drinks industry levy, to apply from 1 April 2025. The levy came into effect in April 2018—it was introduced by the previous Government, with cross-party support—and is considered a successful mechanism for changing behaviour and encouraging reformulation of packaged soft drinks, resulting in reduced sugar content. That is seen through the levy’s significant success in reducing the sugar content in UK soft drinks by 46%.

The levy applies to packaged soft drinks containing added sugar. It has a lower rate, which applies to drinks with a total sugar content of 5 grams to 7.9 grams per 100 ml, and a higher rate for drinks with 8 grams or more per 100 ml. Producers, manufacturers and importers of liable soft drinks must register, report, and pay the levy on the volume of liable soft drinks packaged in and imported into the UK.

The levy rates have not been increased since their introduction many years ago, in 2018, and so have gradually reduced in value against inflation. In 2018, SDIL made up approximately 11% of the price of a 330 ml can of full-sugar Coca-Cola; in January 2025, it makes up only 6%. Uprating the levy in line with inflation will ensure that it remains effective and continues to encourage reformulation, by protecting its value in real terms.

Clause 78 amends section 36(1) of the Finance Act 2017 to reflect the new rates of the levy to apply from 1 April 2025. Those are £1.94 and £2.59, per 10 litres of prepared drink, for the lower and higher bands respectively. The new rates reflect forecasted changes in the consumer prices index in the year to 1 April 2025, as well as an additional increment to help to catch up for previous inflation. The catch-up reflects the 27% CPI change between 2018 and 2024 and will be spread evenly over the five rate increases from 2025 to 2029. That is to support soft drink manufacturers to adjust to the higher rates. The rates have also been adjusted to apply per 10 litres rather than per litre, so that rate changes can be made in smaller increments to reflect changes in CPI inflation more precisely. To illustrate using the current lower rate, 18p per litre becomes £1.80 per 10 litres—I think people could have probably worked that one out.

We do not accept new clause 9, which would require the Chancellor to make an additional statement about the impacts of the measure. The Government do not consider that necessary, as a tax information and impact note detailing the anticipated effects of the measure was published at autumn Budget. I would also highlight that the Government are taking a gradual approach to restoring the original real-terms value of the soft drinks industry levy. From 1 April, the levy will still be worth significantly less, compared with general prices, than it was in 2018.

Clause 78 will protect the real-terms value of the levy and build on its significant success, by increasing both the lower and higher rates in line with inflation.

[James Wild (North West Norfolk) (Con)]

As we heard from the Minister, clause 78 amends the Finance Act 2017 to uprate the soft drinks industry levy, to reflect the change in the CPI from April 2018 to April 2024. The uprating represents an increase of 27%. We support the soft drinks industry levy, but we have strong concerns about the backdating of the tax rate.

As we all know, the consumption of too many high-sugar drinks can lead to weight gain and the risk of medical conditions. It also leads to tooth decay, which is a particular concern for younger people. As the Minister pointed out, this levy was introduced by a Conservative Government with cross-party support to tackle those issues, and it has been a successful, highly effective policy, delivering against the stated objective of encouraging reformulation. The British Soft Drinks Association has said that the levy

“has achieved its intended goal of promoting significant sugar reduction and 89% of soft drinks are now non-SDIL liable. Reformulation has clearly not lost pace with the volume of soft drinks with less than 5g sugar per 100ml increasing by 17.5%> between April 2023 and March 2024.”

Our main concern is about the unprecedented backdating of this tax increase. New clause 9 would require a review of its impact. The decision to backdate inflation over an extended period, creating a 27% retrospective increase, appears to have no parallel in recent tax policy. The backdating is a fundamental departure from the predictability that should be at the heart of tax policy.

Given that the levy has been so effective, why do the Government see a need for such a large increase? As the British Soft Drinks Association points out, it appears that their rationale is primarily focused on revenue raising, rather than public health outcomes. The introduction of such retrospective elements requires close examination of both precedent and consequences, as demonstrated by examples of duty freezes and restarts in recent years.

Comparative excise goods such as alcohol, fuel and tobacco are reviewed annually. Where rates have been frozen across several years, they have not subsequently been subject to those missing years’ inflation rates being applied in this way. Figures from the House of Commons Library calculate what impact a similar backdated increase would have on fuel duty. Following the approach used for the soft drinks levy, if inflation since 2011 was added to fuel duty, using the RPI measure, the duty on a litre of petrol or diesel would increase from 57.95p per litre to 95.18p per litre—a rise of 64%. I am not sure about the Minister’s constituents, but I am pretty sure that mine would be very alarmed at the potential for such a backdated increase to be applied.

Are the Government establishing such backdated increases as a new norm within their tax policies? Companies making long-term investment choices need certainty—the Exchequer Secretary has used that word many times in Committee—to be able to plan and invest in the country. Can the Minister give us an assurance that the Government will not pull off similar tax raids in other sectors, particularly with regard to fuel duty?

We have also heard concerns about the impact assessment, which had limited engagement. The measure is expected to generate £95 million in revenue by 2029-30, yet the assessment does not model how established price elasticity in soft drinks will affect those projections. The assessment acknowledges that both reformulation and reduction in demand will occur, but provides no quantification of the effects. I would be interested to hear the Minister’s comments on that point.

The assessment also does not examine how changes to tax policy without consultation could affect future investment decisions, nor does it explore the market distortions of applying different principles to soft drinks as opposed to other categories of drinks. Will the Minister confirm that these issues have been considered? If they have not, will they be?

--- Later in debate ---

[Emma Reynolds]

I thank the shadow Minister for reiterating that there was indeed cross-party support in 2018 when the previous Government introduced the soft drinks industry levy. I say gently to him that if the previous Government had kept the levy in line with CPI, we would not be in this situation.

The shadow Minister asked what considerations have been made about the impact of the measure. As I said in my opening speech about the clause, the catch-up reflects the 27% CPI change between 2018 and 2024. Because we have considered the impact on soft drinks manufacturers, it will be spread evenly over the five rate increases from 2025 to 2029. The shadow Minister should consider the fact that we are gradually spreading the increase.

It is worth considering the views of those who have supported the Government’s change. For example, Barbara Crowther, the children’s food campaign manager at Sustain, has said:

“It’s absolutely right that after six years, the government should now increase the penalties for all the companies who have not done enough to reduce the sugar levels in drinks, and we urge them to ensure all money raised by the levy is reinvested in children’s health.”

The levy has been globally recognised as a transformative health tax intervention. Modelling studies have associated it with up to 5,000 fewer cases of obesity in girls aged 10 to 11 and a 28.6% reduction in hospital admissions for tooth extractions for children under the age of five. Our Government take children’s health very seriously, particularly given the worrying levels of obesity in our society and the issues with children’s dental health. That is why we are bringing forward the change.

[James Wild]

Will the Minister address directly the point about backdating and say whether it represents a change in approach to taxation policy by this Government? They have introduced a 27% increase from the date when the levy was frozen. As I said, if that approach had applied to fuel duty, it would result in a 64% increase. People will be concerned; will the Minister give reassurance about the Government’s approach to taxation?

[Emma Reynolds]

It is a bit of an exaggeration to read into this change, which we have introduced because the previous Government failed to keep the levy in line with inflation, and somehow infer from that—

[James Wild]

What about fuel duty?

[Emma Reynolds]

I am coming to that. It is an exaggeration to infer from that that it becomes a new norm. It does not. I am certainly not going to write next year’s Budget or the year after’s Budget—that would be way above my pay grade in any case—but we are introducing this clause precisely because the former Government failed to keep the levy in line with inflation.

Question put and agreed to.

Clause 78 accordingly ordered to stand part of the Bill.

Clause 79

Limited liability partnerships

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

--- Later in debate ---

[Emma Reynolds]

In my view, a cryptocurrency is a type of cryptoasset, but I will check that.

Question put and agreed to.

Clause 81 accordingly ordered to stand part of the Bill.

Clause 82

Duty on vaping products

[James Wild]

I beg to move amendment 67, in clause 82, page 95, line 14, at end insert—

“(2) In doing so His Majesty’s Revenue and Customs must have regard to the desirability of requiring a digital tax stamp to be applied to e-cigarette liquids.”

This amendment requires HMRC to have regard for requiring a digital tax stamp to be applied to e-cigarette liquids.

--- Later in debate ---

[James Wild]

After that intervention, I hope the hon. Member will support my amendment when I press it to a vote. The Government are moving in this direction, so let us get this in the legislation and get HMRC working at full throttle to make sure that it happens. I hope that he will feel able to support that.

As with any new tax, there are risks associated with the duty. The illicit market could be boosted, increasing the enforcement burden on HMRC and other Departments. Juul, one of the largest operators, believes that the Government should give HMRC sufficient enforcement powers. At the very least, they should mirror those in relation to tobacco duty. What steps are the Government taking to boost compliance powers and protect against illicit activity in this market?

Amendment 67 would require HMRC to have regard to the desirability of introducing a digital tax stamp. I am pleased that the Government intend to implement a vaping duty stamp scheme to help enforcement bodies and the industry to identify products that are non-duty paid. I note that in the Government’s further consultation on compliance measures to complement HMRC’s traditional compliance activity, the Government stated their intention, to which the hon. Member for Chatham and Aylesford referred, to incorporate a degree of digital tracing and authentication into the final stamp design.

Digital stamps are harder to counterfeit. They are less prone to damage and less likely to fall off products, and they allow for more information to be held and tracked by both the industry and HMRC. Juul points out that its experience in Canada, where it is required to apply physical duty stamps, has led it to believe that digital versions are far better for business and tax authorities alike.

Industry needs certainty. Given the Government’s digital by default approach to taxation, I hope that the Minister will be able to give a commitment today that the Government intend to require a fully digital tax stamp. Under an earlier clause, we spoke about removing a physical stamp from alcohol and spirits, for example, so I do not see why the Government would not be able to support my amendment 67.

We will not oppose clause 82, but I look forward to the Minister’s response to my specific points, and I intend to press my amendment to a vote.

[Emma Reynolds]

I thank the shadow Minister for his comments. If he will bear with me, I will speak generally about clause 82 before I address his amendment.

Clause 82 will make changes to ensure that HMRC can secure the resource it needs to implement the vaping products duty. The duty will be legislated for in this Bill and will come into force on 1 October 2026. It will be accompanied by a one-off increase in all tobacco duties to maintain the financial incentive to give up tobacco.

The chief medical officer is clear that those who do not smoke should not vape. Introducing a vaping products duty is part of the wider Government strategy to tackle vaping among young people—as the shadow Minister stated, there are worrying developments in the number of young people taking up vaping—and indeed among those who do not smoke, including via the Tobacco and Vapes Bill and the ban on disposable vapes. The vaping products duty is forecast to raise £525 million in revenue a year by the end of the scorecard, to fund vital public services such as the NHS, defence, education and stop smoking initiatives supporting a smoke-free UK.

In 2023, 12% of the UK’s adult population used e-cigarettes, the highest rate ever recorded. One million people in England now vape despite never having been regular smokers: a sevenfold increase in just three years, which is pretty shocking. As the shadow Minister said, vaping rates are highest among 16 to 24-year-olds, with 15.8% vaping daily or occasionally. Reducing affordability is part of the Government’s wider strategy to influence behaviour, especially given the addictive nature of these products.

Several countries have already introduced a tax on vaping. Approximately 50 countries have a national tax on vaping products, with most targeting liquid as the tax base. The majority target both nicotine-free liquids and liquids containing nicotine. The changes made by clause 82 will enable HMRC to prepare for the introduction of the new excise duty before it is formally provided for in primary legislation next year. It will allow for spending on IT systems and staff recruitment.

On the shadow Minister’s amendment 67, I thank him for his speech, and I agree that it is crucial to get the implementation of the Bill right. His amendment would require HMRC to

“have regard to the desirability of requiring a digital tax stamp to be applied to e-cigarette liquids.”

The Government deem the amendment unnecessary at this time, as HMRC is already giving due consideration to vaping duty stamps. The decision to introduce vaping duty stamps was supported by respondents to the vaping products duty consultation, who pointed to their use on vaping products in other jurisdictions.

The shadow Minister asked about the illicit vaping market. HMRC intends to exploit modern technology and digitalisation to ensure that the vaping duty stamps scheme targets the specific risks of the illicit vaping market. A technical public consultation on the design of the scheme ran from 30 October 2024 to 11 December 2024, and respondents submitted their views on digital duty stamps, physical duty stamps or a combined approach. We are currently analysing the responses to that consultation; no policy decision has yet been made. We will communicate in due course a policy decision to balance enforcement decisions and business operations. We will take on board the views of the shadow Minister; I thank him again for his amendment. The Government remain committed to working with industry to ensure that the scheme only creates burdens that are essential to tackle non-compliance, avoidance and evasion.

Let me try to answer the shadow Minister’s questions. He asked whether there is a risk that increasing tobacco duty and introducing a vaping duty will drive up illicit trade. The threat from illicit tobacco needs to be addressed by reducing its availability, rather than allowing it to dictate our public health and tax policies. We are consulting on additional robust compliance tools for tackling the illicit trade in vapes and will collaborate with Border Force to target the illicit trade when the duty goes live. HMRC and Border Force already have a strategy in place to tackle illicit tobacco. I hope that that reassures the shadow Minister.

The shadow Minister also asked about digital versus physical vaping duty stamps. Vaping duty stamps will support both enforcement and industry by identifying products that are non-duty paid and therefore illicit. They will also help HMRC to manage the revenue risk from the initial sell-through period and to limit the duty avoidance practice known as forestalling, which is clearing large quantities of excise goods from duty suspense immediately prior to a rate increase to avoid paying the new tax.

In regard to the shadow Minister’s amendment, the Government will not commit to fully digital stamps, as we are analysing consultation responses. A policy decision will be taken in due course, but I reassure him that we will take his views on board.

[James Wild]

I am grateful for the Minister’s response. However, the amendment would help set a clear direction. It is in line with the Government’s digital by default approach to taxation and reflects what was in the consultation document and what industry is calling for. It does not say that HMRC must introduce such a system; it simply says that HMRC

“must have regard to the desirability of requiring a digital tax stamp”.

I specifically worded the amendment to allow for precisely the point that the Minister has outlined. HMRC may decide that, contrary to the Government’s digital by default tax approach, a digital tax stamp is not necessary. In that case, all that has been required is for HMRC to have a proper look at introducing it. I will press amendment 67 to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[James Wild]

As we heard from the Minister, the clause will enable commissioners for HMRC to prepare for the introduction of the CBAM, which will be charged on specific emissions-intensive imports into the UK from 1 January 2027. We will not oppose the measure, but I do want to raise a couple of points.

As the Minister said, the CBAM is a tax on emissions embodied in certain goods imported into the UK for which a carbon price has not been incurred overseas at a rate at least equivalent to the UK. While I appreciate that this is an enabling power, the Chartered Institute of Taxation, which I do not think has yet had a mention today, as opposed to Tuesday—I will get that on the record—has expressed some surprise at how basic the detail of the clause is, as it simply grants authority to introduce a CBAM and to request information from the UK Emissions Trading Scheme Authority or other national authorities. Will she give us a bit more of a flavour of when more detail about the CBAM’s operation will be forthcoming?

As well as queries about the CBAM’s implementation, I have heard concerns about the impact that it may have on businesses and consumers. The National Farmers Union has raised concerns about the impact that it may have on vital sectors. In particular, it may push up the cost of fertilisers, as my hon. Friend the Member for Gordon and Buchan said. That is a particular concern for the arable sector, where fertiliser makes up 12% of total farm costs. Higher costs could not come at a worse time when they also face the impact of the family farm tax.

The NFU has also raised concerns that such a tax could create an unlevel playing field for British farmers and growers. Consequently, a bit like for the changes to inheritance tax, the NFU will be developing its own impact assessment to fully understand the impact of this tax policy on the industry. I hope that the Minister will keep this measure under close scrutiny in the coming months. We will not oppose the clause, but I look forward to her response.

[Emma Reynolds]

I thank the shadow Minister for his questions. I think from his comments that he knows this, but the clause is a paving measure for legislation that will be introduced. There will be further detail in draft legislation that will come in a future Finance Bill, so I cannot give him that detail today, but I take into account what he said. Draft legislation will be published so that affected industries can comment on it. I therefore reassure him that some of the issues he raised will be taken into account.

Question put and agreed to.

Clause 83 ordered to stand part of the Bill.

Clause 84

Correction of wrong cross-reference etc

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

Finance Bill (Second sitting)

Debate between James Wild and Emma Reynolds

Committee stage
Tuesday 28th January 2025 Public Bill Committees

[The Economic Secretary to the Treasury (Emma Reynolds)]

These clauses make changes to pension schemes established in, or administered by, persons resident in European economic area states and bring them in line the rest of the world.

Currently, individuals can transfer some or all of their UK pension savings to an overseas pension scheme, provided it is a qualifying recognised overseas pension scheme. Certain transfers to such schemes are subject to the overseas transfer charge, which is a 25% tax charge on the value of the transfer. However, provided they do not exceed the overseas transfer allowance, UK or EEA residents are excluded from this charge for transfers to qualifying overseas pension schemes in the EEA and Gibraltar. That exclusion was introduced to comply with EU fundamental freedoms that were in place at the time. As a result, some pension scheme members can benefit from double tax-free allowances by taking tax-free entitlements from both their UK scheme and their qualifying overseas pension schemes.

The changes made by clause 32 remove that exclusion from the overseas transfer charge for transfers from 30 October 2024. As a result, transfers will be subject to the overseas transfer charge unless another exclusion applies—for example, if the transfer is to a scheme established in a country where the member is a resident. That will reduce the number of tax-free transfers made and help to keep up to £1 billion of pension savings in the UK over the next five years.

Clause 33 concerns the requirements for schemes to be considered as overseas pension schemes and recognised overseas pension schemes. When the UK was a member of the EU, the requirements for schemes based in the EEA were different from those for schemes based in the rest of the world.

The changes made by clause 33 mean that a non-occupational pension scheme established in the EEA must be regulated by a pension schemes regulator in that country—provided there is such a regulator—to be considered an overseas pension scheme. If there is no such regulator, the scheme provider must be regulated for the establishment and provision of the scheme.

Furthermore, to be considered a recognised overseas pension scheme, a scheme based in the EEA must be established in a country with which the UK has either a double tax agreement that allows for exchange of information or a tax information exchange agreement.

The changes will take effect from 6 April 2025. They will align the requirements for schemes in the EEA with those for the rest of the world, and bring the requirements for non-occupational schemes in line with those for occupational ones.

Clause 34 concerns the requirements on administrators of UK registered pension schemes. Under the existing rules for such schemes, the scheme administrator can be a resident in the EEA, which can make enforcement of tax debts from the scheme difficult and costly for HMRC. The changes made by clause 34 would mean that, from 6 April 2026, all scheme administrators of UK registered pension schemes will need to be UK residents. That requirement will support HMRC’s enforcement activities, as there will be a UK resident for it to engage with.

In conclusion, the changes made by these clauses will bring the tax treatment of transfers to EEA and Gibraltar pension schemes, the conditions that EEA overseas schemes need to meet, and the requirements for EEA administrators of UK schemes in line with the rest of the world. I commend the clauses to the Committee.

[James Wild (North West Norfolk) (Con)]

As we have heard from the Minister, clause 32 reduces tax-free transfers from UK tax-relieved pensions by removing the exclusion from the overseas tax charge. The Government have also announced linked tax maintenance measures in the other clauses. Clause 33 makes changes to the conditions for overseas pension schemes and recognised overseas pension schemes established in the EEA, so that from 6 April this year, they must meet the same conditions as schemes established in the rest of the world.

Clause 34 makes changes to the requirements for pension scheme administrators for registered pension schemes so that they must be UK resident. The OTC was introduced in 2017 to prevent individuals reducing the UK tax due on their pensions by transferring them overseas, particularly to low-tax income jurisdictions, while still benefiting from UK pension tax relief. The 25% charge applies on transfers overseas, unless there is an exclusion from that charge at the point of transfer.

At the Budget in the autumn, the Government announced that they would remove the exclusion from OTC of transfers to qualified pension schemes established in the EEA and Gibraltar where the member is resident in the UK or an EEA state. Aligning the treatment to transfer made with those to the rest of the world will deal with the risk of a double tax-free benefit. The tax information and impact note states:

“Aligning the treatment of transfers to QROPS established in the EEA and Gibraltar with that of transfers to QROPS established in the rest of the world... reduces the risk of around £1 billion of UK tax-relieved pension savings being transferred overseas across the scorecard.”

Could the Minister confirm how many individuals use the current exclusion and at what cost? It would also be useful to know how much has been raised by the OTC since it was introduced in 2017.

Clause 32 brings to an end the exclusion that can currently be used to transfer to schemes in the EEA. According to the Society of Pension Professionals, in doing so, individuals can benefit from a double tax-free allowance of more than £2 million. The tax note acknowledges:

“There will be operational impacts on HMRC caused by removal of the exclusion… HMRC will need to make some changes to forms, guidance and processes to support this.”

Would the Minister provide an update on how far HMRC has got in preparing for those updates and changes?

As the Minister said, clause 34 provides that the scheme administrator must be resident in the UK. That means that, ahead of 6 April 2026, schemes will need to check whether their current scheme administrator will remain valid from this date. Again, the tax information and impact note confirms:

“Changing the rules on who can be a scheme administrator for a registered pension scheme, could mean that some individuals might not be able to pay further funds into a scheme if the pension scheme does not appoint a UK resident pension scheme administrator and is deregistered.”

How many individuals does the Minister estimate this will impact, and what guidance will HMRC provide to prevent individuals from falling foul of the rule change? Again, the Society of Pension Professionals has pointed out that it would be useful if the memorandum indicated how this could impact on schemes where all of its trustees act as the scheme administrator but some are EEA based and some are UK resident. I would be grateful if the Minister could provide some clarity on that point. As I have set out, we support this change, and I look forward to the Minister’s response to the technical questions I have raised.

[Emma Reynolds]

I thank the shadow Minister for his questions. I hope to answer all of them and, if I do not, I promise to write to him with clarification. He asked some questions about the number of individuals. I can tell him that in 2023-24, there were 7,100 transfers to qualifying recognised overseas pension schemes, and the value of those transfers was £1.14 billion. There is an increasing risk that these transfers were being made tax free and that some of these individuals would have been benefiting from the double tax-free allowances. I note the hon. Gentleman’s support for eliminating the risk of that and not allowing people to benefit from double tax-free allowances, which is obviously the main intention of these clauses. He asked about HMRC being prepared and the operational challenges that it might face as a result of the changes. Treasury Ministers and officials work very closely with HMRC—we are in the same building—and these changes have been drafted and consulted on with HMRC, so I suspect that I can reassure him that everything is in order.

--- Later in debate ---

[Emma Reynolds]

Clause 56 introduces a power enabling changes to be made to stamp duty and stamp duty reserve tax in relation to financial market infrastructure sandboxes. The Government are committed to developing the UK’s capital markets and, as part of that, have announced that they will take forward the private intermittent securities and capital exchange system, known as PISCES. That power will be used to provide an exemption from stamp duty and stamp duty reserve tax for PISCES transactions. This will be a carefully targeted exemption, representing a cost-effective approach to boosting growing private companies and supporting our capital markets.

PISCES is a new type of trading platform that will allow private companies to have their shares traded intermittently, supporting private companies to scale and grow, and boosting the pipeline of future initial public offerings in the UK. Using powers from the Financial Services and Markets Act 2023, which was introduced by the previous Government, this Government will establish the regulatory framework for PISCES in a financial market infrastructure sandbox. That will allow the Treasury to temporarily modify or disapply certain pieces of legislation, to support market operators to trial new or developing technologies or practices, while still achieving appropriate regulatory outcomes. The Government published a response to the PISCES consultation paper at Mansion House on 14 November 2024. As part of this, the Government will lay a statutory instrument to establish the PISCES sandbox by May this year.

Clause 56 will allow the Treasury to make stamp duty and stamp duty reserve tax changes by statutory instrument, in connection with any exercise of the time-limited FMI sandbox power in the Financial Services and Markets Act 2023. The power will be used to introduce an exemption from stamp duty and stamp duty reserve tax for PISCES transactions, as announced at the autumn Budget. That exemption will boost the attractiveness of PISCES, incentivising investors and private companies to participate, and it demonstrates the Government’s commitment to the success of PISCES as part of our wider ambitions to reinvigorate UK capital markets and to deliver growth. The Government will introduce this exemption ahead of the first PISCES trading events. The effect of the exemption will be time-limited, in line with the duration of the PISCES sandbox.

Clause 56 introduces a stamp duty and stamp duty reserve tax power in relation to financial market infra-structure sandboxes that will be used to provide an exemption for PISCES transactions. This will increase the attractiveness of PISCES and demonstrates the Government’s commitment to ensuring its success. The announcement of the exemption has been welcomed by stakeholders.

[James Wild]

As we heard from the Minister, clause 56 introduces a power enabling the Treasury to make stamp duty and stamp duty reserve tax changes in connection with any exercise of the time-limited financial market infrastructure sandbox power. This power will be used to provide an exemption from stamp duty for PISCES transactions, and we warmly welcome these measures.

Like many other aspects of the Bill that we have discussed today, the PISCES trading platform was the previous Government’s idea, as part of our commitment to trial new or developing technologies and practices to help companies to scale and grow. While in government, we introduced significant reforms to the UK listings regime, supporting public markets and companies choosing to list in the UK. That included implementing Lord Hill’s listing review reforms. The PISCES consultation noted:

“A key challenge for private companies is that, at early stages in their growth, there are no standardised ways for shareholders to realise their gains…or to allow companies to rationalise their shareholder base by providing their early investors an exit route. Similarly, it is harder for investors to access companies that are not yet operating on public markets.”

PISCES provides a regulatory framework for the intermittent trading of private company shares on a multilateral system. I welcome the Government’s support for PISCES, which will form an important part of the UK’s offer to companies seeking to grow and list in the UK.

I would be grateful if the Minister provided an update on the impact that PISCES is expected to have by incentivising current and potential investors to buy shares on the system, bringing greater transparency and efficiency. I note that PISCES will run for an initial period of five years. Will the Minister commit to regularly updating the House on progress?

There will not be a public market-style market abuse regime; instead, the Financial Conduct Authority will be given rule-making powers over a disclosure regime. I am sure the answer will be yes, but can the Minister confirm that it is her expectation that the FCA will be properly focused on growth as it devises those rules, and that it will ensure that any new rules are proportionate to the objective that we are seeking to achieve?

The provisions of clause 56 relate specifically to exempting PISCES share transfers from stamp duty and stamp duty reserve tax, a measure that, in their response to the consultation, UK Finance and the Association for Financial Markets in Europe said

“should be strongly considered by HMT in order to help incentivise use of the platform”.

They added that it is important

“to generally reduce frictions for companies and shareholders using the platform as far as…possible,”

and the FCA rules are important in that respect.

Stamp duty and SDRT both tax transactions that transfer securities between parties in exchange for payment. In 2023, the then Government held a consultation entitled “Stamp Taxes on Shares modernisation” and proposed a mandatory single tax on securities instead of separate taxes for electronic transfers and paper instruments. It was suggested that that approach would reduce complexity, and it was widely supported in the call for evidence responses and by the working group that was established. In considering the application of both taxes, I would be grateful if the Minister provided an update on this Government’s view on the previous Government’s proposals, and whether she plans to bring forward any changes in the future.

As I have set out, we support the measures, but I would be grateful for responses to the points I have raised.

[Emma Reynolds]

I thank the shadow Minister for the way he has approached this subject. He is correct, of course, that the previous Government consulted on PISCES in March last year. We responded to the consultation in November, alongside the Mansion House speech delivered by my right hon. Friend the Chancellor.

I am glad that there is cross-party agreement on these issues. When we were in opposition, we were very constructive in our feedback on such proposals. The shadow Minister is right that there are other reforms in this area, which came from the Lord Hill listings review and others—there were other reviews pertinent to capital markets when the Conservative party was in government.

The shadow Minister asked me a number of questions. On estimating the impact, it is really important to note that many stakeholders in the City and across financial services, not least the Investment Association, have welcomed this innovation. We know that investors and those in the market are interested in it, and I think there is great optimism about the demand for shares on PISCES. We still have to lay the statutory instrument, but the innovation is of interest to Members across the House, so I am very happy to update it on the development of PISCES.

On the shadow Minister’s questions about the FCA, we stress to the financial services regulators at every opportunity that any new rules should be proportionate, and I assure him that that is how I will approach my work with the FCA. On his final question, although I am quite new to this position, I am familiar with the demands for the simplification of stamp duty and stamp duty reserve tax—we might make it a little bit easier to say, let alone to pay. I will absolutely prioritise looking at simplification, because any kind of simplification is good for the market and helps to get things going. I am happy to look at that, but I cannot give the shadow Minister an exact answer now.

Question put and agreed to.

Clause 56 accordingly ordered to stand part of the Bill.

Clause 57

Rate bands etc for tax years 2028-29 and 2029-30

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

Social Security Advisory Committee: Winter Fuel Payment

Debate between James Wild and Emma Reynolds

Tuesday 12th November 2024 Commons Chamber

[Emma Reynolds]

The hon. Lady’s question allows me to focus on the communications around this change. It is not just about pension credit, but about people on working tax credit, child tax credit and other benefits. The committee was concerned about pensioners in receipt of child tax credit; pensioners should check whether they are eligible for other qualifying benefits for winter fuel payments, because it is quite a complicated system. It is not just about whether someone is already on pension credit.

[James Wild (North West Norfolk) (Con)]

The Government say that they want everyone who is eligible for pension credit to claim it and get it, but as the Social Security Advisory Committee points out, they expect only a 5% increase in uptake. Is the reality not that the Government need hundreds of thousands of pensioners not to claim this entitlement that they deserve, in order to make their figures add up and to cut £1.4 billion from winter fuel payments?

[Emma Reynolds]

I would be very pleased if all pensioners who are eligible for pension credit applied and received the help that they deserve.