Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to remarks by Baroness Vere of Norbiton on 21 February (HL Deb col 666) with regard to the Trade and Cooperation Agreement in the context of engaging with the EU for approval for extending the enterprise investment scheme (EIS) and venture capital trust (VCT) scheme, whether the subsidy control provisions of the Trade and Cooperation Agreement apply to EIS and VCT relief, in particular the requirement under Article 363 of that agreement that a subsidy must be selective.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The government is extending the sunset clause for the Enterprise Investment Scheme (EIS) and the Venture Capital Trust (VCT) scheme to 2035.
The UK-EU Trade and Cooperation Agreement is now the primary framework governing subsidy control between the UK and EU. As such, EU State aid rules no longer apply to the UK, save for the limited circumstances covered by the Windsor Framework.
For the EIS and VCT schemes, the government is engaging with the EU, under the Windsor Framework, due to Northern Ireland’s unique access to the EU Single Market.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the potential (1) gain, or (2) loss, to the Treasury of equating capital gains and income tax votes.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Sums arising which meet the definition of carried interest are properly assessed as chargeable gains subject to capital gains tax (CGT) of 18 per cent or 28 per cent for higher rate taxpayers.
In some circumstances, it is possible for sums meeting the definition of carried interest to be subject to income tax and additionally, capital gains tax. Here, double taxation would be a disproportionate outcome so relief is provided from this higher rate CGT charge to reduce the effective taxation, but only down to the higher of the two rates.
No assessment has been made of the cost of relieving these instances of double taxation.
In 2020, the then Chancellor commissioned the Office of Tax Simplification (OTS) to carry out a review of Capital Gains Tax (CGT). The OTS provided a costing on aligning CGT rates with those of Income Tax. Please see Paragraph 2.19 of the attached publication.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the (1) cost, or (2) gain, to the Treasury of the removal of carried interest relief from capital gains tax.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
Sums arising which meet the definition of carried interest are properly assessed as chargeable gains subject to capital gains tax (CGT) of 18 per cent or 28 per cent for higher rate taxpayers.
In some circumstances, it is possible for sums meeting the definition of carried interest to be subject to income tax and additionally, capital gains tax. Here, double taxation would be a disproportionate outcome so relief is provided from this higher rate CGT charge to reduce the effective taxation, but only down to the higher of the two rates.
No assessment has been made of the cost of relieving these instances of double taxation.
In 2020, the then Chancellor commissioned the Office of Tax Simplification (OTS) to carry out a review of Capital Gains Tax (CGT). The OTS provided a costing on aligning CGT rates with those of Income Tax. Please see Paragraph 2.19 of the attached publication.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what estimate they have made of the net change in revenue to His Majesty's Revenue and Customs of abolishing the non-domiciled individual status in the UK.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
HMRC publishes annual statistics on information about individuals claiming non-domiciled status in the UK. The latest information shows that non-UK domiciled taxpayers are estimated to have been liable to pay over £7.9 billion in UK income tax, capital gains tax and National Insurance contributions in 2020-21 and have invested over £6 billion in the UK using the Business Investment Relief scheme introduced in 2012.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government whether they remain committed to the extension of the Enterprise Investment Scheme and Venture Capital Trusts Scheme beyond 2025 as announced on 23 September.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government remains supportive of the Enterprise Investment Scheme and Venture Capital Trusts. The Government will engage with businesses, investors, and others on any decisions made regarding the schemes.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the amount of national insurance contributions which would be raised if all partners of Limited Liability Partnerships were subject to employers' National Insurance contributions.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
No such assessment has been carried out as the Government has no current plans to subject members of a Limited Liability Partnerships (LLPs) to employer National Insurance contributions (NICs).
Individual members of LLPs are taxed in the same way as partners in a general partnership, paying Class 4 and Class 2 NICs like other partners and self-employed individuals. If members fall within the salaried member rules introduced by the Finance Act 2014, they are taxed as employees, paying Class 1 NICs.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government, further to their Growth Plan 2022 (CP 743), published on 23 September, whether the extensions to the Enterprise Investment Scheme and Venture Capital Trusts will make those schemes permanent.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
In the Growth Plan 2022 published on 23 September, the Government made clear its support for the Enterprise Investment/Venture Capital Trust schemes. The Government remains supportive of extending them in the future and will engage with stakeholders on the process of implementing this extension.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the potential increase in revenue should members of limited liability partnerships become subject to an increase in national insurance contributions from April 2022 at the same rate of increase as employees.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
No such assessment has been carried out. Employees, the self-employed and members of a Limited Liability Partnership who are subject to National Insurance contributions (NICs) will also be subject to the 1.25% NICs increase for the tax year 2022/23 and the Health and Social Care Levy from April 2023.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the loss of national insurance contributions in regards to exemptions enjoyed by Limited Liability Partnerships.
Answered by Lord Agnew of Oulton
No such assessment has been carried out as there are no specific National Insurance contributions (NICs) exemptions for members of a Limited Liability Partnership (LLP).
Individual members of LLPs are taxed in the same way as partners in a general partnership, paying Class 4 and Class 2 NICs like other partners and self-employed individuals. If members fall within the salaried member rules introduced by the Finance Act 2014 they are taxed as employees, paying Class 1 NICs.
Asked by: Lord Leigh of Hurley (Conservative - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the (1) cashflow difficulties, and (2) compliance costs, faced by (a) small, and (b) medium, sized UK businesses from recent changes to the VAT regime when trading with EU countries.
Answered by Lord Agnew of Oulton
Following the end of the transition period, sales from UK businesses to the EU are exports and are zero-rated for VAT purposes. This means that the UK business seller should not charge UK VAT on the sale and should retain evidence of export.
How goods sent to the EU are treated upon import into the EU is a matter for the EU. On 1 July 2021, the EU removed low value consignment relief for VAT on imported goods not exceeding €22 and introduced a new optional simplification scheme for the collection and payment of VAT on goods not exceeding €150, known as the Import One Stop Shop.
The UK does not provide an impact assessment of policy measures that are introduced outside of the UK by jurisdictions.
Nonetheless, the Government appreciates that small and medium sized businesses (SMEs) are more likely to find the changes to trading with the EU challenging. In response, following the end of the transition period, the Government introduced the SME Brexit Support Fund, which closed to new applications on 30 June 2021. The Recovery Loan Scheme has continued to provide support since then. This helps businesses of any size access loans and other kinds of finance so they can recover after the pandemic and the transition period. Loans are available through a network of accredited lenders which are listed on the British Business Bank's website.