Corporate Profits: Inflation
Debate between Lord Palmer of Childs Hill and Baroness Penn(10 months ago)
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Baroness Penn (Con)
My noble friend is right that, when we think about tackling inflation, the number one area is remaining steadfast in our support of the independent Bank of England as it takes action to return inflation to the target of 2% through monetary policy. However, government does have a role to play. We must make difficult but responsible decisions on tax and spending so that we are not adding fuel to the fire. We also need to take longer-term action to bring down prices, whether that is investing in our future energy security or looking at the tightness of our labour market and taking action to get people back to work—for example, through our ground-breaking reforms to childcare.
Lord Palmer of Childs Hill (LD)
My Lords, I hear what the Minister says, but a new word has appeared: “greedflation”. Everyone knows that the idea of a business is to make a profit; no one is saying that they should not make a profit. However, there is now greedflation, which is the padding of profits. We see people struggling while companies are making surplus profits above what is reasonable. Have the Government any real answer to this?
Baroness Penn (Con)
My Lords, the answer is twofold. We are looking closely at the data and will continue to do so, but we do not see the pattern that the noble Lord refers to so far. We will also work with the regulators in the main areas—the FCA when it comes to the banking sector and the passing on of higher interest rates to savers, as well as mortgage holders—and look at the work of the supermarkets to ensure that their profits are fair and reasonable and driven by fair competition in the sector. We will keep all of that under review. We have agreed a series of steps with the regulators to make sure that action is taken if competition is not working as it should.
Inheritance Tax: Cohabiting Siblings
Debate between Lord Palmer of Childs Hill and Baroness Penn(10 months, 1 week ago)
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Baroness Penn (Con)
My Lords, the Government have attempted to draw up a system that is fair but recognises the unique status of marriage and civil partnerships. As I pointed out to your Lordships’ House, very few estates fall subject to inheritance tax, and we have put in place processes to ensure that those who live in the same house, for example, are able to meet their obligations over time, to lessen the impact of inheritance tax.
Lord Palmer of Childs Hill (LD)
My Lords, one can leave all above £325,000 to your spouse, your civil partner, a charity or a community amateur sports club. Can the Minister explain how siblings are less important than a community amateur sports club?
Baroness Penn (Con)
My Lords, I do not think that is the rationale behind the approach. The rationale in distinguishing between marriage and civil partnership and other relationships is the unique legal status and the unique legal and financial obligations that people enter into in that regard. As the noble Lord, Lord Pannick, referred to, this question was also referred to the courts, which found in the Government’s favour.
Farmers and Landowners: Tax Consequences
Debate between Lord Palmer of Childs Hill and Baroness Penn(1 year, 5 months ago)
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Baroness Penn (Con)
I am afraid that I cannot give the noble Lord the Answer he desires. I can confirm that HMRC is discussing the issues he has raised with Defra both to clarify how existing law applies, for example, to the production, sale and use of carbon units in different environmental schemes, and to look at the inheritance tax question he raised. The Government have shown that we will act to clarify the tax rules where appropriate for the farming programme. For example, legislation is being introduced to clarify that payments under the lump sum exit scheme for farmers are treated as capital receipts and, therefore, charged to capital gains tax or, for companies, to corporation tax as chargeable gains.
Lord Palmer of Childs Hill (LD)
My Lords, I hear what the Minister says but the government paper of October 2021 said that the Government would
“review guidance on the tax treatment of trees and woodlands, to provide greater clarity to landowners on how new and existing trees on their land affect tax liabilities.”
Nothing has been forthcoming. Can the Minister update the House on the progress of the review? She mentioned HMRC but most people do not know what the guidance is.
Baroness Penn (Con)
My Lords, we are iterating our approach as we develop these schemes. Quite a lot of them are new, and many different aspects are being piloted or developed. It is important that, as development happens, we take into account the tax considerations and implications of the new schemes. I can reassure noble Lords that we are aware of some of these questions and issues. We are looking at them very closely and, as the policies are developed, we are taking that into account in the Treasury’s input into Defra schemes.
Covid-19: Death Duties and Inheritance Tax
Debate between Lord Palmer of Childs Hill and Baroness Penn
Baroness Penn (Con)
My Lords, as I have set out, the Government’s approach to inheritance tax at the most recent Budget was to freeze those thresholds, which will raise additional funding. The Government’s plans for social care will be set out later this year.
Lord Palmer of Childs Hill (LD)
My Lords, I feel the Minister’s reply and arithmetic are rather optimistic. The Office for Budget Responsibility repeatedly reported that the public finances were unsustainable, even before the pandemic resulted in a 24% increase in public sector net debt in the past two years. How do the Government intend to put the public finances on to a long-term sustainable path? What will that mean for taxes and public spending in the short, medium and long term? The Minister’s reply and the arithmetic used are not believed by the Office for Budget Responsibility.
Baroness Penn (Con)
My Lords, I am glad to hear the noble Lord’s support for fiscal responsibility and repairing the public finances. As I set out, a number of measures were taken at the Budget to do this. These included freezing the income tax personal allowance until April 2026; increasing the rate of corporation tax to 25% from April 2023; freezing the pensions lifetime allowance and annual exempt allowance; and measures to tackle tax avoidance, evasion and non-compliance, which will raise an additional £2.2 billion by 2025-26.
Inheritance Tax: Cohabiting Siblings
Debate between Lord Palmer of Childs Hill and Baroness Penn(3 years, 2 months ago)
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Baroness Penn (Con)
My Lords, to add to my previous answer, for those in certain circumstances, joint ownership would also mean that a house had to exceed £650,000—more than the average house price, including in London—to be liable for inheritance tax. As I say, there are arrangements in place whereby you can have up to 10 years to pay off inheritance tax in instalments if the estate contains an unsold house.
Lord Palmer of Childs Hill (LD) [V]
My Lords, in support of the noble Lord, Lord Lexden, without a change in the law, it pushes siblings who can afford it to employ expensive lawyers to incorporate a discretionary trust in their wills, which on a joint estate of £800,000 will save tax of £130,000, not as the Minister has just said. Does she agree that there is an urgent need to change the law to make such imaginative tax avoidance unnecessary?
Baroness Penn (Con)
My Lords, I am afraid the Government do not agree that this is an urgent issue. It is an issue that we have debated a number of times in this House, and, while we have sympathy with those who may be affected, we emphasise that it is a minority of people. Having looked very carefully at this issue, we believe that the current status is the right one.
New Businesses: Capital Gains Tax
Debate between Lord Palmer of Childs Hill and Baroness Penn(3 years, 3 months ago)
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Baroness Penn (Con)
My Lords, the Government always consider the need to balance raising revenue with the principles of fairness and market efficiency when we take tax decisions. All tax decisions also take into account the impacts of behavioural change for those affected. At any fiscal event, the Government produce and publish policy costings which are scrutinised by the OBR, and these include relevant behavioural impacts on revenue.
Lord Palmer of Childs Hill (LD) [V]
My Lords, business asset disposal relief is mistargeted if its aim is to stimulate investment. Does the Minister agree that it has become a form of retirement relief for successful and wealthy entrepreneurs?
Health Protection (Coronavirus, Wearing of Face Coverings in a Relevant Place and on Public Transport) (England) (Amendment) (No. 2) Regulations 2020
Debate between Lord Palmer of Childs Hill and Baroness Penn(3 years, 6 months ago)
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The Deputy Speaker (Lord Palmer of Childs Hill) (LD)
I call the noble Baroness, Lady Uddin.
Baroness Penn (Con)
The noble Baroness might be on mute, so she could try unmuting herself.
The Deputy Speaker (Lord Palmer of Childs Hill) (LD)
I think we will go to the noble Baroness, Lady Wheatcroft.
Inheritance Tax
Debate between Lord Palmer of Childs Hill and Baroness Penn
Baroness Penn (Con)
My Lords, from our latest estimates, inheritance tax receipts for 2019-20 totalled £5.1 billion. HMRC has a duty to collect the correct taxes as laid down by Parliament, and it carries out compliance checks into inheritance tax returns to ensure that customers pay the right amount. Inheritance tax is payable within six months of the date of death and must be paid before probate is granted and the assets in the deceased’s estate are distributed.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for her reply. She refers to the UK’s total annual £5 billion inheritance tax, which is paid only by the wealthy and the middle-class, who have less ability and wealth to avoid death duties by imaginative and creative tax plans. Virtually no IHT is paid by the very wealthy in the UK. Tax planning is sensible, tax evasion is illegal, but creative tax avoidance is also unacceptable. The Office of Tax Simplification was asked to review the tax. Can the Minister tell us about its recommendations and the Government’s response to them, in particular on how to curb the creative tax industry and those who use it?
Baroness Penn
My Lords, the Government thank the Office of Tax Simplification for the work it has done; they are looking at the results of its two reports very carefully. I reassure the noble Lord that since 2011, inheritance tax and trusts have been brought into the disclosure of tax avoidance schemes—DOTAS—regime, which means that any new and innovative inheritance tax avoidance scheme involving transfers into trust must be disclosed to HMRC, and gives the Government powers to take any enforcement actions necessary.