Asked by: Lord Kamall (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact of the changes to the tax thresholds for Financial Promotion exemption, especially the impact on female-led start-ups, including those who rely on small investments from female angel-investors.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The changes to the financial promotion exemptions that came into force on 31 January 2024 were subject to a public consultation which closed in March 2022.
However, the Government recognises the significant concerns that have been raised recently about these changes. The Economic Secretary met recently with the angel investing sector and listened carefully to the representations made, and the Government is working closely with the sector to address the concerns raised.
Asked by: Lord Kamall (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether His Majesty’s Treasury has done any economic modelling on the impact of the new alcohol duty bands on the consumption of alcohol; and if so, whether this modelling predicts that they would (1) incentivise alcohol drinkers to drink lower-alcohol drinks, and (2) reduce their overall consumption of alcohol.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The UK’s complex and archaic alcohol duty system has been widely criticised by independent commentators including the Institute of Fiscal Studies (IFS), the Institute of Alcohol Studies, and the World Health Organization, with many of them advocating for a strength-based system.
We are undertaking the biggest reform of alcohol duties for over 140 years and moving to a system where all alcohol will be taxed by strength. We are also introducing a new lower duty band for products between 1.3% and 3.4% ABV. As under the current duty system, products below 1.2% ABV will not incur alcohol duty. Higher ABV bands will have higher rates of duty, to reflect their greater potential for harm.
In October 2020, the Government launched a call for evidence which sought the views of stakeholders on how the system could be reformed. This closed in November 2020 with 106 responses. In parallel to the call for evidence, the Government also undertook a series of roundtables with groups of stakeholders, including public health groups, trade associations and economists. After analysing the responses to the call for evidence, the Government then launched a consultation on alcohol duty reform at Autumn Budget 2021. This consultation closed in January 2022 and received over 350 responses. Responses and evidence are published on the government website.
Similarly, the Government considered evidence which suggested that heavier drinkers consumed proportionately higher ABV drinks. For example, the Institute for Fiscal Studies published analysis that suggested that adults drinking 40 units per week consumed drinks at 18% ABV average, whereas those drinking 10 units per week consumed drinks at 14% ABV average. By failing to tax products consistently in line with their ABV, the duty system is not effectively targeted at the most harmful drinking.
The new alcohol duty system has been widely welcomed by public health stakeholders on this basis and is in line with WHO’s recommendation to base a duty system on alcoholic strength. Evidence suggests alcohol harm is linked to affordability, and the Government is addressing this through the alcohol duty reform.
These reforms have public health at its heart and the new strength-based duty system will incentivise consumption of low alcohol drinks, whilst reducing the consumption of stronger drinks more associated with alcohol harm. The Government has committed to evaluating the policy and its impacts after implementation.
Asked by: Lord Kamall (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have (1) to modernise, and (2) to automate, the gift aid system.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government recognises the important work the charity sector does in the UK, which is why we currently provide tax reliefs to charities and their donors worth over £5 billion per year, including over £1.3 billion in Gift Aid. The Government has received ideas from the sector on developing Gift Aid for the digital age and continues to keep all aspects of this important tax relief under review.
Last year 99% of Gift Aid claims were already made online by charities with only 1% submitted by paper, but HM Revenue and Customs has been engaging further with the charity sector to understand the remaining challenges. This work remains ongoing and is considering all aspects of the service including whether it meets the needs of its users, as well as the registration and claims process. One way this has taken place is through inviting charities to complete a short survey about the process.[1]
[1] https://zwgy80l7.optimalworkshop.com/questions/z6n2hh7v
Asked by: Lord Kamall (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they examined the case for (1) reducing VAT on domestic fuel, and (2) raising the personal allowance for taxpayers, as an alternative to the Energy Price Guarantee before they announced the Autumn Statement on 17 November; and if not, why not.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government made the difficult but necessary decision to maintain income tax thresholds until April 2028 to ensure the tax system supports strong public finances.
Maintaining these thresholds is universal, progressive and fair. The highest earners will contribute more of the revenue. Even with the decision to maintain thresholds the Personal Allowance (PA) has increased by over 40 per cent in real terms since 2010, ensuring some of the lowest earners do not pay income tax. Thanks to the PA, in 2021-22 around 30% of earners didn’t pay tax.
The UK’s PA is high by international standards – it is one of the most generous personal tax allowances in the OECD and highest in the G7.
The Government also recognises that families should not have to bear all of the VAT costs they incur to meet their needs, with domestic fuels such as gas, electricity and heating oil already subject to the reduced rate of VAT at 5 per cent of VAT.
The Government's package of support to help households with their energy bills is more generous than an additional VAT cut on domestic fuel and power, and there would be no guarantee that suppliers would pass on the discounts from this relief to all customers.
As with all aspects of the tax system, the Government will continue to keep income tax thresholds and VAT under review and any decisions on future changes will be taken by the Chancellor in the context of the wider public finances.