Inheritance Tax: Family-owned Businesses

Richard Baker Excerpts

Tuesday 3rd June 2025 Westminster Hall

[James Murray]

I believe that the hon. Lady is asking about the taxation of large multinational firms operating in the digital space. I am sure that she is aware of the digital services tax, which is currently in operation. The Government are committed to maintaining that until the pillar 1 international solution is implemented, and I am sure that she is familiar with pillar 2 of the OECD deal on a global minimum corporate tax rate. Large multinational firms are well dealt with on the international level, which is why, in opposition and in government, we have supported the OECD’s two-pillar solution.

I do not want to be distracted from the design of the reforms that we are talking about today. Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual interest-free instalments. That benefit is not seen anywhere else in the inheritance tax system.

There has been a lot of discussion of the impact of this policy, so let me set out the numbers, based on HMRC claims data. It is expected that, under these reforms, about 1,500 estates claiming only business property relief will pay more inheritance tax in 2026-27. Two thirds of those estates—about 1,000—are expected to only hold shares designated as not listed on the markets of recognised stock exchanges, such as the alternative investment market. Under these reforms, about three quarters of estates claiming business property relief in 2026-27, excluding estates only holding shares designated as not listed, will not pay any more inheritance tax in 2026-27.

The reforms to relief have generated a lot of commentary about the wider impacts, but hon. Members should take care when relying on analysis based on self-selecting surveys from members of representative groups campaigning against the reforms. Indeed, the independent Office for Budget Responsibility is clear that it does not expect this measure to have any significant macroeconomic impacts, and it certified the costing at autumn Budget 2024. It said that the reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30.

[Richard Baker (Glenrothes and Mid Fife) (Lab)]

I recognise the need for the Government to raise funds, given the economic context that they inherited, but, as my hon. Friend the Member for Dunfermline and Dollar (Graeme Downie) said, a number of family businesses have come forward with alternative proposals that would raise the funds in a different way. Would the Minister and his team be prepared to meet and consult with family businesses to ensure that they have input into the plans? That would enable those businesses to inform them of their experiences and raise alternative proposals that might raise funds differently.

[James Murray]

I reassure my hon. Friend that I, and the wider team of officials, have had a number of meetings with representatives of family businesses and the agricultural and farming sector. We have listened to ideas raised by a number of people we have met, as well as ideas raised in debates in the Commons and in meetings in the Treasury and elsewhere. We have listened, but we remain confident that our approach is a fair way to balance supporting farms and businesses with fixing the public finances, so we stand by our reforms.

I should probably conclude. I thank all hon. Members, particularly the hon. Member for Mid Dunbartonshire, for their contributions to the debate.

Question put and agreed to.

Oral Answers to Questions

Richard Baker Excerpts

Tuesday 21st January 2025 Commons Chamber

[Emma Reynolds]

We take this issue very seriously. The Treasury owns the money laundering regulations, but the FCA has a key role as a major supervisor, and we work very closely with the criminal enforcement agencies. Of course, those agencies are independent, but we are absolutely committed to clamping down on money laundering.

[Richard Baker (Glenrothes and Mid Fife) (Lab)]

10. What steps she is taking with Cabinet colleagues to uplift former mineworkers’ pensions.

[Nick Smith (Blaenau Gwent and Rhymney) (Lab)]

20. What steps she has taken with Cabinet colleagues to uplift former mineworkers’ pensions.

[The Chief Secretary to the Treasury (Darren Jones)]

This Government recognise the contributions that miners made to the prosperity of the nation and the challenging circumstances in which they worked. That is why the Government agreed to transfer the investment reserve fund to members of the mineworkers’ pension scheme, so that the mineworkers who powered our country receive a fairer pension.

[Richard Baker]

Does my right hon. Friend agree that ending the injustice of the mineworkers’ pension scheme is great news not only for the 849 former mineworkers in my constituency who will benefit, but for the economies of the local communities where they live, which were left behind by the previous Government? Will he and his colleagues in government continue to engage with the trustees of the British Coal staff superannuation scheme to ensure that, in the same way, the funds built up in that scheme are used for the benefit of its members?

[Darren Jones]

I thank my hon. Friend for his question and his work on behalf of his constituents. He may know that, in the previous Parliament, I and colleagues worked on the mineworkers’ pension scheme through the Business and Trade Committee to lay the ground for the initiatives that this Government were quickly able to implement on coming into government. Unfortunately, that work had not yet been done for the British Coal staff superannuation scheme, which is why Ministers are meeting the scheme’s trustees to consider the options.

Fiscal Rules

Richard Baker Excerpts

Monday 28th October 2024 Commons Chamber

[Darren Jones]

With my hon. Friend’s reference to payday loans, she points to the behaviour of the previous Government. As I have told the House this afternoon, this Government, with their first fiscal rule, will take us to a place where we are not borrowing to pay the bills each month, as had happened for years under the Conservatives. Anyone managing their family finances at home knows that that is the right thing to do, and they will welcome the fact that this Government are bringing that sense of discipline back to the national economy, too.

[Richard Baker (Glenrothes and Mid Fife) (Lab)]

Will my right hon. Friend confirm that as part of their fiscal strategy and within the fiscal rules, the Government will utilise the national wealth fund to lever in private investment, along with public investment from the taxpayer, for key areas of growth in our economy, including, for example, renewables infrastructure, which is of such importance in Scotland?

[Darren Jones]

My hon. Friend knows that the test of a good Government is whether they can secure private sector investment to come alongside them—something that declined under the last Government. That is why the national wealth fund, which the Chancellor has announced, will secure billions of pounds of private sector investment, alongside public sector investment, in the industries of the future.