Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential impact of lowering VAT on restaurant customers.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Government recognises the significant contribution made by hospitality businesses to economic growth and social life in the UK.
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK's second largest tax, forecast to raise £180 billion in 2025/26.
Where restaurants incur VAT in producing the food they sell, this can be claimed back in the normal way, provided that they are registered for VAT. Businesses with a turnover below the £90,000 per year threshold may choose not to register for VAT, in which case they do not charge VAT on their sales and cannot reclaim it on their input costs.
HMRC estimate that the cost of a 5 per cent reduced rate for accommodation, hospitality and tourist attractions would be around £13 billion this financial year. If the scope were also to include alcoholic beverages, the cost would be approximately £3 billion greater.
More broadly, as announced at Autumn Budget 2024, the Government will introduce permanently lower business rates multipliers for retail, hospitality, and leisure properties with rateable values below £500,000 from 2026/27. This permanent tax cut will ensure they benefit from much-needed certainty and support.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of introducing a VAT exemption for home renovations to improve energy efficiency.
Answered by James Murray - Chief Secretary to the Treasury
This Government is committed to improving the quality and sustainability of our housing stock, through improvements such as low carbon heating, insulation, solar panels, and batteries. This will be vital to making the UK more energy resilient and meeting our 2050 Net Zero commitment.
Installations of qualifying energy-saving materials (ESMs) in residential accommodation and buildings used solely for a charitable purpose benefit from a temporary VAT zero rate until March 2027, after which they will revert to the reduced rate of VAT at five per cent. This support – worth over £1 billion – will aid households and charities in improving the energy efficiency of their buildings, help to reduce carbon emissions, and ultimately help us to reach our ambitious Net Zero by 2050 target.
VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. This includes most construction works. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether existing (a) insurance and (b) reinsurance mechanisms cover (i) subsea cabled and (ii) other off-shore assets in the event of a terrorist attack.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
The owners or operators of subsea cables and other off-shore assets are responsible for the insurance of their assets.
There is a wide variety of insurance products available in the UK market, including from speciality insurers. The government would always recommend the companies shop around, or engage the services of a specialist broker, to ensure they can access the cover they need at the best price.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether her Department has made an assessment of the adequacy of the (a) insurance and (b) reinsurance market for businesses affected by cyber-attacks.
Answered by Emma Reynolds - Secretary of State for Environment, Food and Rural Affairs
The government recognises that cyber insurance is an important tool for businesses' economic resilience. HM Treasury works closely with industry, regulators, other government departments and relevant stakeholders to monitor insurance markets, including cyber. Cyber insurance is widely offered in the UK insurance market and the government would encourage businesses to shop around, or employ the services of a broker, to find the most appropriate cover, at the best price.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will make an estimate of the potential economic benefits of entering European Union customs union membership.
Answered by James Murray - Chief Secretary to the Treasury
No. The Government is working with the EU to identify areas where we can strengthen cooperation for mutual benefit, such as the economy, energy, security and resilience. There will be no return to the customs union. We are committed to finding constructive ways to work together and deliver for the British people.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will pause action related to the IR35 loan charge while the newly announced review is underway.
Answered by James Murray - Chief Secretary to the Treasury
IR35 rules are distinct from the Loan Charge.
The Government has now announced a further independent review of the Loan Charge to help bring the matter to a close for those affected whilst ensuring fairness for all taxpayers. The Government will provide further details on the review in due course.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of broadening the definition of research and development activities that qualify for tax relief to include research and development undertaken by creative industries.
Answered by James Murray - Chief Secretary to the Treasury
Qualifying R&D is defined as a project seeking to achieve an advance in science or technology through the resolution of uncertainty, which allows claims from creative sectors.
In the 2021 consultation on R&D tax reliefs, there was a strong consensus amongst respondents that the definition of “R&D” itself does not require amending given it is well understood, embedded and consistent with the OECD Frascati standard, including the core criteria within it. The government currently has no intention to change the definition, since this would add further complexity and uncertainty at a time when the government is prioritising stability and simplification.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of introducing a quality assurance process for status determination statements.
Answered by James Murray - Chief Secretary to the Treasury
The Government keeps all tax policy and legislation under review.
To help customers make an informed decision on a worker’s status for tax, HMRC provides comprehensive online guidance that explains the relevant factors and tests and how to apply them.
HMRC also provides the Check Employment Status for Tax tool (CEST) for free to help customers determine the employment status for tax of an engagement. CEST was developed alongside tax specialists and HMRC will stand by a determination from CEST if the tool was used in accordance with HMRC guidance.
HMRC regularly engages with stakeholders and reviews its guidance products. HMRC will amend or add to guidance in response to stakeholder feedback where this improves the content or customer experience.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if her Department will consult stakeholders on the adequacy of its guidance on the status determination statement process.
Answered by James Murray - Chief Secretary to the Treasury
The Government keeps all tax policy and legislation under review.
To help customers make an informed decision on a worker’s status for tax, HMRC provides comprehensive online guidance that explains the relevant factors and tests and how to apply them.
HMRC also provides the Check Employment Status for Tax tool (CEST) for free to help customers determine the employment status for tax of an engagement. CEST was developed alongside tax specialists and HMRC will stand by a determination from CEST if the tool was used in accordance with HMRC guidance.
HMRC regularly engages with stakeholders and reviews its guidance products. HMRC will amend or add to guidance in response to stakeholder feedback where this improves the content or customer experience.
Asked by: Neil Coyle (Labour - Bermondsey and Old Southwark)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she plans to review Section 684 activities with reference to the Loan Charge.
Answered by James Murray - Chief Secretary to the Treasury
Section 684 of the Income Tax (Earnings and Pensions) Act (ITEPA) 2003 provides for the Pay As You Earn (PAYE) regulations. In 2022, the Court of Appeal considered HMRC’s use of section 684(7A)(b) in relation to a disguised remuneration scheme.
The Chancellor and I know that the loan charge is a very important matter for many members and their constituents. We have been considering this matter since taking office and will provide an update in due course.