Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to regularise the treatment of training expenses against profits subject to Schedule D income tax and profits subject to corporation tax.
Answered by Baroness Vere of Norbiton
In calculating taxable business profits, expenditure on training to update existing skills would be a deductible business expense when the expenditure is incurred wholly and exclusively for the purposes of the business and is not capital in nature. The treatment of these training expenses is the same irrespective of whether the taxpayer pays income tax or corporation tax.
Any changes to tax policy are a matter for future Budgets and it would not be appropriate to comment on tax measures at this stage of the policy development cycle.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of The Mortgage Crunch report, published by the Resolution Foundation on 17 June; and what plans they have, if any, to assist mortgage holders affected by rising mortgage costs.
Answered by Baroness Penn
The Government does not set mortgage or interest rates. The Bank Rate - which is one factor that lenders use to set mortgage and retail interest rates - is set by the Monetary Policy Committee (MPC) of the Bank of England, which is independent of Government. Commercial Banks and Building Societies also make other commercial judgements that influence the degree of pass‐through from changes in Bank Rate into mortgage and retail interest rates. The Government does not seek to intervene in these commercial decisions.
However, we recognise this will be a concerning time for mortgage holders, particularly those who are due to come to the end of their existing deal in the immediate future. The Prime Minister has been clear, the best and most important way that we can keep costs and interest rates down for people is to halve inflation, and then return it to the 2% target.
On Friday 23 June the Chancellor met with mortgage lenders, UK Finance and the FCA to discuss a new package of support for those who encounter problems keeping up with their mortgage payments. These commitments include an agreement permitting customers to switch to an interest only mortgage, or extend their mortgage term, for 6 months, after which they can switch back without a new affordability check or it affecting their credit score. Lenders also agreed borrowers won’t have their home repossessed within 12 months from a first missed payment without their consent or unless in exceptional circumstances.
If mortgage holders are concerned about making their mortgage repayment, they must speak to their lender as soon as possible. Contacting them will not affect their credit score.
The Government has also already taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans for those in receipt of an income-related benefit, and protection in the courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the reasons behind UK citizens borrowing from loan sharks; and what steps they will take to reduce the number of UK citizens borrowing from loan sharks.
Answered by Baroness Penn
HM Treasury regularly monitors developments in the consumer credit market, including those regarding illegal money lending, as part of its normal process of policy development.
However, it does not conduct its own research as to the scale of illegal money lending in England. Instead, HMT draws on the research of various stakeholders, including the Illegal Money Lending Teams (IMLTs), consumer groups and thinktanks, to inform policy development.
HM Treasury recognises the risks posed by illegal lenders and the harmful impacts they cause to their victims and communities
That is why, in financial year 2022/23, the Government will provide over £6.7 million of funding to IMLTs across the UK, an increase of over 5% compared to 2021/22. This funding enables IMLTs to investigate and prosecute loan sharks and use their legal powers to tackle the wider criminality they inflict on communities, such as violence and blackmail.
Consumers use illegal lenders for a variety of reasons. However, the Government is overseeing many innovative affordable credit initiatives which will expand the provision of affordable credit to those who may otherwise use an illegal lender. This includes by:
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of (1) the number of UK citizens who are indebted to loan sharks, and (2) the total value of loans that are currently outstanding; and what steps they plan to take as a result.
Answered by Baroness Penn
HM Treasury regularly monitors developments in the consumer credit market, including those regarding illegal money lending, as part of its normal process of policy development.
However, it does not conduct its own research as to the scale of illegal money lending in England. Instead, HMT draws on the research of various stakeholders, including the Illegal Money Lending Teams (IMLTs), consumer groups and thinktanks, to inform policy development.
HM Treasury recognises the risks posed by illegal lenders and the harmful impacts they cause to their victims and communities
That is why, in financial year 2022/23, the Government will provide over £6.7 million of funding to IMLTs across the UK, an increase of over 5% compared to 2021/22. This funding enables IMLTs to investigate and prosecute loan sharks and use their legal powers to tackle the wider criminality they inflict on communities, such as violence and blackmail.
Consumers use illegal lenders for a variety of reasons. However, the Government is overseeing many innovative affordable credit initiatives which will expand the provision of affordable credit to those who may otherwise use an illegal lender. This includes by:
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact on high street retail businesses of the Chancellor of the Exchequer's decision to withdraw the VAT-free shopping scheme for non-resident visitors announced on 23 September.
Answered by Baroness Penn
On 23 September, as part of the Growth Plan 2022, the previous Chancellor announced that HM Treasury, in partnership with HMRC, would introduce a modern, digital, VAT-free shopping scheme, with the aim of providing a boost to the high street and creating jobs in the retail and tourism sectors. Due to the changing economic picture, on 17 October, the current Chancellor announced that the Government would no longer be proceeding with the introduction of such a scheme. This decision was included as part of the reversal of almost all of the tax measures set out in the Growth Plan on 23 September which have not been legislated for in Parliament. The purpose is to ensure the UK’s economic stability and to provide confidence in the Government’s commitment to fiscal discipline. The Chancellor made clear in his statement that the UK’s public finances must be on a sustainable path into the medium term.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the potential benefit of zero-rating VAT on fuel oil to assist households that are reliant on fuel oil to heat their homes; and what plans they have to reduce VAT on fuel oil.
Answered by Baroness Penn
This year the Government is providing over £37 billion in cost of living support, including helping people cope with the impact of higher energy bills, with £400 off their bills from October through the expansion of the Energy Bills Support Scheme (EBSS) and with millions of the most vulnerable households due to receive at least £1,200 in total.
Domestic fuels such as gas, electricity and heating oil are not subject to the standard rate of VAT at 20 per cent but to a reduced rate of VAT at only 5 per cent.
The Government keeps all taxes under review.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the RAC Fuel Watch data which show that the average UK petrol and diesel prices was around 191 pence per litre of petrol and 199 pence per litre of diesel as of June, what steps they are taking to reduce (1) fuel duty, and (2) VAT on fuel, to assist families and businesses with the increased cost of living.
Answered by Baroness Penn
The temporary 5p cut to duty on petrol and diesel represents a £2.4 billion tax cut in 2022-23, to help consumers with high fuel prices.
VAT is a broad-based tax on consumption and the 20% standard rate applies to most goods and services. It would cost over £6 billion to cut VAT on road fuel from 20% to 5%.
The Government keeps all taxes under review.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government when they plan to begin the review of the apprenticeship programme announced in the Spring Statement; and when they expect to publish a call for evidence.
Answered by Baroness Penn
The government’s ambition is to encourage greater levels of private sector investment in employee training, both for apprentices and for employees more generally.
At the Spring Statement, the Chancellor announced that he would consider whether further intervention is needed to encourage employers to offer the high-quality training the UK needs. This will include examining whether the current tax system – including the operation of the Apprenticeship Levy – is doing enough to incentivise businesses to invest in the right kinds of training.
The Chancellor will update the House further in the Autumn.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the impact on jobs of the 1.25 per cent rise in employers' national insurance contributions; and what support beyond the increase in Employment Allowance they will provide to avoid small businesses making staff redundant.
Answered by Baroness Penn
The Government has made several assessments of the impact of the introduction of the Health and Social Care Levy, which were published alongside the announcement. These include the distributional analysis of the impact of the combined tax and spending announcements, a technical annex in our plan for health and social care and a Tax Information and Impact Note.
Further, the Office for Budget Responsibility set out their assessment of the economic effects of the Levy, including the impact on labour supply and wages, in the Economic and Fiscal Outlook published at Autumn Budget 2021.
It is worth noting that the Government is increasing the Employment Allowance (EA) for the third time since its introduction in 2014, demonstrating an enduring commitment to supporting small businesses. Around 495,000 businesses will benefit from the increase to the EA announced at Spring Statement 2022, including around 50,000 businesses which will be taken out of paying National Insurance contributions (NICs) and the Health and Social Care Levy entirely. In total, this means that from April 2022, 670,000 businesses will not pay NICs and the Levy due to the EA.
In addition, the Government has prioritised support for Small and Medium-sized Enterprises (SMEs) by cutting business rates by 50 per cent for retail, hospitality, and leisure businesses, providing a 90 per cent subsidy for world class management training and 90 per cent for apprenticeships, and supporting SMEs to invest and grow by increasing the Annual Investment Allowance to £1 million and subsidising the cost of new software up to £5,000.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the improvement in energy efficiency of homes that could be achieved if the current rate of VAT on retrofit building work were to be reduced to (1) a five per cent rate, and (2) a zero rate; and what plans they have, if any, to do so.
Answered by Baroness Penn
A reduced rate of VAT at 5 per cent is already maintained for some residential renovations, including those that increase the number of dwellings or renovating properties that have been empty for two years or more, subject to certain conditions.
Expanding the reliefs that are already available would come at a cost to the Exchequer. Expanding this reduced rate to include all renovations and repairs is estimated to cost the Exchequer at least £3.75 billion a year.
While all taxes are kept under review, the Government has no current plans to review the VAT treatment of retrofit building work.