Caroline Nokes
Main Page: Caroline Nokes (Conservative - Romsey and Southampton North)Department Debates - View all Caroline Nokes's debates with the HM Treasury
Finance (No. 2) Bill
Caroline Nokes ExcerptsTuesday 13th January 2026
(1 day, 13 hours ago)
Commons ChamberRead Full debate Finance (No. 2) Bill 2024-26 View all Finance (No. 2) Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 13 January 2026 - (13 Jan 2026)
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
I remind Members that in Committee, they should not address the Chair as Deputy Speaker. I ask them please to use our names when addressing the Chair. Madam Chair, Chair, and Madam Chairman are also acceptable.
Clause 63
Tax to be charged on certain pension interests
Question proposed, That the clause stand part of the Bill.
The Second Deputy Chairman
With this it will be convenient to consider the following:
Clauses 64 to 68 stand part.
New clause 18—Review of the effect of sections 63 to 68—
“(1) HM Treasury must carry out a review of the effect of sections 63 to 68 of this Act (Pension interests).
(2) The review under subsection (1) must include an assessment of—
(a) the impact of those sections on individuals’ pension savings and beneficiaries, including on estate values and inheritance tax liabilities,
(b) the administrative effects on personal representatives, pension scheme administrators, and HM Revenue and Customs, and
(c) any behavioural effects on how pensions are used during life and on death.
(3) HM Treasury must lay before the House of Commons a report setting out the findings of the review under subsection (1) no later than six months after the date on which sections 63 to 68 come into force.”
This new clause would require HM Treasury to review and report on the effects of Clauses 63 to 68 of the Bill, which introduce inheritance tax charges on unused pension funds and death benefits, including their impacts on individuals, administrators, and behaviour, and to publish the findings to Parliament.
New clause 19—Report on the impact of inheritance tax liability on personal representatives in relation to pension assets—
“(1) The Secretary of State must, within 12 months of the passing of this Act, lay before the House of Commons a report on the impact of the changes to inheritance tax treatment of pension assets on personal representatives of deceased persons made under this Act.
(2) The report must consider—
(a) the legal obligations of personal representatives to collect the assets of an estate, settle all liabilities (including inheritance tax), and distribute the estate to beneficiaries,
(b) the extent to which personal representatives may be personally liable for inheritance tax due on assets, including pension funds, which do not form part of the estate and do not come into their possession,
(c) any risk of increased litigation arising from the imposition of personal liability on personal representatives in respect of inheritance tax due on pension assets,
(d) the impact of any such liability on the willingness of personal representatives, particularly those who are not beneficiaries of the estate, to distribute estate assets promptly,
(e) any practical difficulties faced by personal representatives where pension assets, lifetime gifts, or other chargeable assets are discovered after initial inheritance tax calculations have been completed, including the requirement to recalculate inheritance tax liabilities and re-apportion the nil rate band,
(f) any administrative and timing challenges associated with identifying multiple pension arrangements, particularly where a deceased person held several pension funds arising from different employments, and
(g) whether the existing six-month timeframe for inheritance tax reporting and payment adequately reflects those practical difficulties.
(3) The report must assess whether the current framework operates fairly and proportionately for personal representatives and whether legislative or administrative changes are necessary to reduce uncertainty, delay, or unintended personal liability.”
This new clause requires the Government to report on the impact of inheritance tax rules on personal representatives, including personal liability for tax on pension assets outside the estate and the practical difficulties of identifying and valuing multiple pension arrangements within existing time limits.
New clause 20—Administration of inherited pension pots—
“(1) HM Revenue and Customs must review the tax administration arrangements relating to inherited pension pots.
(2) The purpose of the review under subsection (1) is to ensure that—
(a) inheritance tax and related tax checks do not cause unreasonable delays in the payment of pension death benefits to beneficiaries, and
(b) bereaved families are able to receive pension benefits within a reasonable period following a member’s death.
(3) In carrying out the review, HM Revenue and Customs must have regard to—
(a) the cumulative administrative burden placed on personal representatives, pension scheme administrators, and beneficiaries,
(b) the interaction between inheritance tax reporting, clearance processes, and pension scheme payment rules, and
(c) any evidence of prolonged delays in the payment of inherited pension benefits.
(4) HM Revenue and Customs must publish the outcome of the review, including any proposed changes to its processes or guidance, within 12 months of the passing of this Act.”
This new clause would require the Government to address delays in the payment of inherited pension pots by reviewing HMRC’s tax administration processes, with the aim of preventing prolonged waiting periods for bereaved families.
New clause 22—Statement on inheritance tax on pension interests—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the charging of inheritance tax on pension interests made under sections 63 to 68 of this Act.
(2) The statement made under subsection (1) must include analysis of the impact on—
(a) pension saving levels,
(b) household saving decisions, and
(d) personal representatives.”
This new clause would require the Chancellor to make a statement on the effects charging inheritance tax on pension interests on pension saving levels, household saving decisions and personal representatives.
New clause 23—Consultation on changes to inheritance tax on pensions interests—
“(1) The Chancellor of the Exchequer must, before 6 April 2027, undertake a consultation on the potential impacts of the changes made by sections 63 to 67.
(2) The consultation made under subsection (1) must consider the extent to which the changes to inheritance tax on pension interests deliver better outcomes for UK savers and pensioners.
(3) The Chancellor of the Exchequer must lay before the House of Commons a report summarising the responses to the consultation.”
This new clause would require the Chancellor to consult on the potential impacts of the changes made by sections 63 to 67. The consultation must consider the extent to which the changes to inheritance tax on pension interests deliver better outcomes for UK savers and pensioners. A report summarising the responses to the consultation must be laid before the House of Commons.
New clause 24—HMRC guidance on inheritance tax on pension interests—
“(1) HM Revenue and Customs must, within six months of this Act being passed, publish comprehensive guidance on the implementation of sections 63 to 68.
(2) HMRC must establish a dedicated helpline for enquiries relating to inheritance tax on pension interests.
(3) The guidance published under subsection (1) must be reviewed annually and published in accessible formats.”
This new clause would require HMRC to publish comprehensive guidance on the implementation of sections 63 to 68 and establish a dedicated helpline for enquiries relating to inheritance tax on pension interests. The guidance must be reviewed annually and published in accessible formats.
The Economic Secretary to the Treasury (Lucy Rigby)
It is a pleasure to open this second day of our Committee stage debate. Yesterday the Exchequer Secretary to the Treasury, my hon. Friend the Member for Chipping Barnet (Dan Tomlinson), explained how the Bill gives effect to a Budget that took fair and responsible decisions to stabilise and strengthen the public finances, address the cost of living and renew our public services. We are clear about the fact that we will not repeat the mistakes of the last Government. That means no return to austerity and no completely irresponsible unfunded spending commitments, both of which, unfortunately, were features of the Conservatives’ time in power. This Government wholeheartedly reject those failed approaches and choose a different path, one of fiscal responsibility and one that will strengthen our economy so that it delivers for people throughout the country. Today the Committee will consider a further set of important and targeted measures relating to pensions, gambling duties and alcohol duty, which reflect this Government’s commitment to a tax system that is fair, modern, and aligned with the realities of today’s economy.
Our approach to changes in gambling taxation is fair and proportionate, as the Committee will hear later this afternoon, and, as my right hon. Friend the Chancellor explained in her Budget statement, those reforms will contribute significantly to the Government’s efforts to lift an additional 450,000 children out of poverty. The pensions clauses will ensure that generous tax reliefs continue to support the core purpose of pensions, which is to help people to save for retirement. They address long-standing inconsistencies, and will ensure that pensions are not used primarily as a vehicle for passing on wealth free of inheritance tax, but instead continue to protect the vast majority of estates and maintain strong incentives to save.
I turn to clauses 63 to 68. Pensions enjoy significant tax benefits, with gross income tax and national insurance contributions relief costing £78.2 billion in 2023-24. It is therefore crucial to ensure that these reliefs are used for their intended purpose, which is to encourage saving for retirement and later life. Changes to pensions tax policy by the previous Government over the last decade led to pensions being used, and increasingly marketed, as tax planning vehicles to transfer wealth, rather than holding true to pensions’ primary purpose, which is of course to provide a way to fund retirement.
As hon. Members will know, there are also long-standing inconsistencies in the inheritance tax treatment of different types of pensions. Most UK-registered pension schemes are discretionary, meaning members can nominate whom they would like to receive death benefits, but the scheme trustees are not obliged to follow members’ wishes. Under existing rules, any unused pension funds and death benefits from discretionary schemes are not subject to inheritance tax. By contrast, some pension schemes are non-discretionary, and these are subject to inheritance tax under existing rules.
The changes made by clause 63 mean that most unused pension funds and death benefits payable from a pension will form part of a person’s estate for inheritance tax purposes from 6 April 2027. Clause 64 ensures that personal representatives are responsible for paying any inheritance tax due. Clause 65 means that personal representatives will be able to request that the pension scheme administrator withhold paying a proportion of benefits where certain conditions are met. It also allows both personal representatives and pension beneficiaries to make pension scheme administrators pay inheritance tax due on pensions directly to His Majesty’s Revenue and Customs—again, provided certain conditions are met.
Clause 66 makes some consequential amendments to the Inheritance Tax Act 1984 to ensure that the existing exemption for spouses and civil partners and the treatment of payments to charities continue to apply. Clause 67 changes the income tax rules for pensions to provide for the payment of inheritance tax, including in respect of direct payment by pension schemes. Clause 68 ensures that the changes take effect from 6 April 2027.
These clauses ensure that pensions are used, as I have said, for their core intended purpose, rather than as a vehicle for passing on wealth free of inheritance tax. They also remove long-standing inconsistencies and deliver on the Government’s promise to this country to build a stronger and fairer economy.
James Wild (North West Norfolk) (Con)
On behalf of His Majesty’s Opposition, I wish to speak to new clauses 22 to 24, tabled in my name and those of my hon. Friends. As the Minister set out, clauses 63 to 68 introduce measures to apply inheritance tax to unspent pension assets and other death benefits for deaths occurring after 6 April 2027.
This Labour Government have taken taxes to record levels, with £26 billion in additional taxes in this Budget and £66 billion since the election. These tax increases were not mentioned in Labour’s manifesto. Labour is increasing taxes on family businesses, farms, jobs, dividends, savings, motorists and now death. Removing the inheritance tax exemption for pensions could undermine efforts to encourage people to save at a time when people are not saving enough. And what do the Government do? They limit the salary sacrifice pension contributions scheme and introduce a new raid on people’s pensions pots.
The Minister did not refer to the impact assessment, but it is worth pointing out that it estimates that 10,500 estates will now become liable for inheritance tax, raising £1.5 billion by 2029, and 38,500 estates will pay more inheritance tax than was previously the case. That is why we oppose this extension of inheritance tax and the underlying principle, to which the Minister seemed to allude, that people’s money belongs not to them but to the state.
New clause 22 is straightforward. It would require the Chancellor to set out the impact of these measures on pension saving, household saving decisions and personal representatives. There is real concern—I am surprised the Minister did not address this—about the administrative burden being placed on personal representatives and the effect on the industry. Personal representatives will be required to identify every pension asset, calculate the inheritance tax due and ensure payment within six months, and they will be personally liable if they fail to settle all the liabilities due. In many cases, that deadline would be impossible to meet and must be extended. Furthermore, if a pension fund has to quickly sell illiquid assets, such as commercial property, it may not get the full market value, but the Bill does not introduce a relief where the underlying assets must be sold and the proceeds are less than the value of the assets at the time of death. Late payments will attract interest at 8%. By contrast, someone in self-assessment has 10 months to pay tax on the income they already understand.
Both the Association of Taxation Technicians and the Chartered Institute of Taxation have offered some practical solutions, the first of which is to extend the withholding periods. Personal representatives can ask pension administrators to withhold 50% of funds for up to 15 months, but that is simply not long enough for the complex cases I have referred to, particularly where business property valuations have to be agreed with HMRC. Will the Minister consider allowing HMRC to extend withholding in such complex cases?
Secondly, the Government should allow instalment payments for illiquid pension assets. Billions of pounds of pensions wealth are in illiquid assets. The Government allow inheritance tax to be paid over 10 years for illiquid estate assets. Why deny the same practical relief for pensions?
When this policy was announced, the Office for Budget Responsibility gave it a “very high” uncertainty rating and estimated that behavioural effects will cut the static yield by about 43%; the Government’s own forecasters accept that the changes may well significantly alter saving behaviour. The new clause would simply require the Chancellor to assess that impact and come to the House to make it clear.
New clause 23 would require the Chancellor to consult on the impact of clauses 63 to 67, and whether they deliver better outcomes for savers and pensioners. The truth is that the Government rushed the consultation out after the 2024 Budget and followed it with a very narrow technical consultation, which did not consider the principled question of whether this approach to pensions being brought within the inheritance tax framework was appropriate. As the Investing and Saving Alliance told the House of Lords Economic Affairs Committee in its inquiry to which the Exchequer Secretary also gave evidence:
“If we were consulted and listened to, we probably would not be having this discussion today, because I do not think pensions would be going into IHT.”
Both the chartered institute and the ATT have criticised the Government for consulting on pensions in isolation, rather than in the context of individuals’ wider inheritance tax position. Our new clause is explicit. Consultation must take place to assess whether these changes
“deliver better outcomes for savers and pensioners”
—wording that reflects the commitment the Labour party made in its manifesto.
New clause 24 is essential. It would require HMRC to publish comprehensive guidance on the new rules for pensions and to set up a dedicated helpline. Why does that matter? Because this measure will be incredibly complex in practice. The chartered institute has said that professional executors are already questioning whether they can continue to operate in the market at all. Some firms, we are told, are already leaving the market. If professionals step back, the burden falls on lay personal representatives: often grieving family members or friends, with more errors, delay and potentially a wider tax gap ensuing.
Professional indemnity insurers also need clarity, yet when is HMRC due to deliver detailed guidance? Not until spring 2027, just weeks before the changes take effect. That is completely outrageous and far too late. That is why the new clause requires guidance to be published within six months of the Bill being passed.
I want to touch on a broader concern that has been raised with me on the potential serious unintended consequences for unmarried couples. Today, couples can anticipate making financial provision for each other via pensions, but if this measure comes into force they will have to look at other options. If one member of an unmarried couple in their 50s or 60s dies with a pension at peak value, the survivor could lose up to 40% of that fund. Are Ministers talking to pension scheme administrators to mitigate the risks for such couples and to provide clear guidance?
These clauses increase taxes, add complexity, penalise saving and add stress for grieving families. Despite clause 67, we are also advised that there is still a risk of double taxation of inheritance tax and income tax, which could see beneficiaries paying an effective tax rate of 67%. Our amendments seek to mitigate their worst impacts. The Chancellor should assess the real impact on saving behaviour and personal representatives. She should consult properly on these provisions and she must provide clear guidance, backed by dedicated support. We should be incentivising saving and encouraging people to do the right thing. Extending inheritance tax does the opposite, and we will oppose the Government’s measures.
Daisy Cooper (St Albans) (LD)
This is a retrospective tax without transitional protection. It upends plans for those who have already made sacrifices to build up their pensions, undermines confidence in pensions planning, reduces long-term investment and causes people to rush to withdraw money from their pensions.
As has been mentioned, the chartered institute and the ATT have raised concerns about this group of clauses, which shoehorn pensions legislation into tax legislation. There are major worries about creating personal liability without control for personal representatives, whether executives or administrators. Personal representatives are legally obligated to gather all the assets, settle any liabilities, including inheritance tax, and distribute the remainder of the estate to the beneficiaries. They are personally liable if they do not set aside enough money to settle all financial liabilities, including IHT. Experts have warned that someone being personally liable for IHT on a pension fund that never comes into their hands leaves the door open to costly and protracted litigation and will understandably make personal representatives, such as professionals or friends of the deceased, much more cautious before they distribute all of the estate.
Even more concerning is the fact that if representatives discover a new pension fund after settling the initial IHT liability, this would have a knock-on effect on not only the estate but all other pension funds. It means that IHT will have to be recalculated for every part of the estate and every pension fund. It is far from uncommon for people to have had different jobs with separate pension plans, so the risk of miscalculation is obvious. If someone passes away before they have had the chance to consolidate their pension funds, tracking down the unused pots within six months of their death will be very difficult for executors and will mean that the initial IHT calculations could be wrong. The Government must recognise that and amend this measure. If they do not, and Ministers simply ask future executors to sign some sort of disclaimer form, they will soon find that nobody will want to take on that role.
Our new clauses 18 to 20 raise the clear need for significant reforms and are a means of pressing the Government to protect individuals from being liable for private pensions that they did not know about and could not reasonably know about either. Finally, there is widespread worry that family members might have to wait up to 15 months before they are able to access their inheritance, during what is bound to be a hugely straining period of loss and grief. The Liberal Democrats’ new clause 20 urges the Government to recognise that reality and take steps to address it.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
With this it will be convenient to consider the following:
Clauses 84 and 85 stand part.
Schedule 13.
New clause 21—Review of the impact of sections 83 and 84: free bets and freeplays—
“The Chancellor of the Exchequer must, within six months of the passing of this Act, undertake an assessment of the impact of implementation of sections 83 and 84 of this Act in respect of the treatment of free bets and freeplays for calculating general betting duty on remote bets.”
New clause 25—Statements on increasing remote gambling duty and introducing a new rate of General Betting Duty—
“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, make a statement to the House of Commons on the effects of the increase in gambling duties made under sections 83 to 84 of this Act.
(2) The statement made under subsection (1) must include details of the impact on—
(a) sports and horseracing,
(b) the number of high street betting shops,
(c) the gambling black market,
(d) the employment rate, and
(e) the public finances.”
This new clause would require the Chancellor to make a statement about the effects of the increase in gambling duties.
Lucy Rigby
Clauses 83 to 85 and schedule 13 make changes to the gambling duties regime, to better reflect the modern gambling market and to raise more than £1 billion a year to support the lifting of the two-child benefit cap. I will first speak briefly to the broader context of the package, and I will then turn to each clause.
Gambling is a significant part of the UK economy, generating an annual gross gambling yield of around £16.8 billion in 2025, according to figures from the Gambling Commission. The industry has changed markedly in recent years, while the duty system has not changed since 2019. Most notably, there has been a structural shift from in-person to online gambling. Between 2015 and 2025, remote gambling grew by 80%, while land-based gambling has declined by 10%. At the same time, evidence of gambling-related harms has become even clearer.
The estimated cost to the Government and society of gambling-related harms in England alone is between £1.05 billion and £1.77 billion a year. NHS figures show that over 40% of gamblers using online slots, bingo or casino games are considered to be at risk, compared with less than 15% of those betting in person on horseracing. Referrals for gambling addition have risen sharply—NHS England has doubled the number of clinics for problem gambling. I am grateful for representations from so many MPs and campaigners on this matter, alongside those with constituencies where horseracing plays an important role in the community and, indeed, the local economy.
In the Budget, the Chancellor made it clear that changes to gambling taxation are fair, proportionate and for a purpose, as they will directly contribute to lifting an additional 450,000 children out of poverty. This Government are very proud of that. Unfortunately, the Opposition showed little regard for child poverty when they were in government, and it is entirely in character, albeit no less shocking, that they oppose this Government’s changes and would increase child poverty as a result. Reform UK is even more brazen.
Lucy Rigby
As I said, employment is an important consideration that has been borne in mind for the purposes of this Bill, and there has been considerable engagement on all these issues. If the right hon. Member seeks further engagement, I am more than happy to have it.
I was just about to conclude.I commend clauses 83 to 85 and schedule 13 to the Committee.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
I call the shadow Minister.
James Wild
These changes were presented as some sort of simplification and modernisation, but clauses 83 and 84 nearly double remote gaming duty from 21% to 40% and increase general betting duty to 25%. We will have some of the highest rates of tax on gambling in the world. As we have heard from some Members, the industry has warned that that could have severe consequences for an internationally competitive sector that supports tens of thousands of jobs, underpins horseracing and other sports and already contributes significantly to the Treasury. It is questionable whether these measures will lead to stable, long-term revenue gains for the Exchequer, and there is a very real risk that they will result in job losses and greater use of unregulated operators in the black market. New clause 25 would require the Chancellor to come back to the House and explain what the consequences have been for revenue, sports and horseracing, high street betting shops, the black market, jobs and the public finances.
Of course, the origin of these changes owes much to Gordon Brown, who encouraged the Chancellor to hike taxes in order to increase welfare spending. Proponents of higher taxes often suggest that they will not have any consequences, but it is the role of us in this House to scrutinise potential changes and assess the impact after the event. Independent modelling from EY shared by the Betting and Gaming Council suggests that the impact of doubling remote gaming duty could be the loss of 15,000 jobs, and a further 1,700 jobs could be lost as a result of the increase in general betting duty. In total, 17,000 positions located in Stoke-on-Trent, Leeds, Sunderland, Manchester, Nottingham, Newcastle-under-Lyme, Norwich and other areas could be affected. Of course, those are simply projections—they could prove to be pessimistic, and we certainly hope that will be the case—but when unemployment has risen consistently under this Government due to the jobs tax and other costs, such warnings should not just be dismissed. That is why the Chancellor must account for the impact of her choices, as new clause 25 requires.
There has been some mention of horseracing. I was pleased to join colleagues across the House in support of the “Axe the Racing Tax” campaign. That is another tax that the Chancellor wanted to introduce, but she was forced into one of her all-too-regular U-turns.
The Second Deputy Chairman of Ways and Means (Caroline Nokes)
I call the Liberal Democrat spokesperson.
Daisy Cooper
We Liberal Democrats have long campaigned for the doubling of remote gaming duty, and we are grateful to the Government, who have finally listened and taken that on board. This measure will raise vital revenue in a fair way, while addressing the eye-watering profits of the big online gambling companies and standing up for the thousands affected by problem gambling. According to the latest figures from the Gambling Commission, the online gambling giants saw revenues reach an eye-watering £7.8 billion in 2024-25. Meanwhile, Public Health England has estimated that gambling costs the UK economy about £1.4 billion a year through a combination of financial harms and the impact on physical and mental health, employment, education and crime. About 300,000 adults in Britain experience problem gambling, as well as roughly 40,000 children. Those figures are stark. This measure finally takes action that should have been taken a long time ago, and it will raise about £1.8 billion a year by 2029-30 to fund our public services fairly.
Buried in the fine print, however, is a detail that makes it seem as if the Government are giving the big online gambling firms a get-out, and I should be grateful to the Minister for some clarification. According to the “Budget 2025 Policy Costings” document,
“The tax base for this measure is the Gross Gambling Yield”,
which is the revenue retained by gambling operators after they have paid out winnings to customers. The tax base for remote gaming duty as defined in the Finance Act 2014 is a larger tax base. It is known as the gross gambling revenue, and includes the notional stake value of free bets and free plays. Can the Minister explain why today’s tax measure will apply to a narrower tax base than the one currently targeted by remote gaming duty? How much tax revenue has been forgone by this narrowing of the tax base? Was it unintended, or was it a result of influence from the sector? Did any of the big online gaming companies meet any Ministers and discuss these measures while they were being considered?
New clause 21, tabled in my name, seeks to clarify this situation by requiring the Chancellor, within six months of the passing of the Act, to undertake an assessment of the impact of the implementation of sections 83 and 84 in respect of the treatment of free bets and free plays for calculating general betting duty on remote bets, so we can clearly see the impact of this difference.
Alex Ballinger
I want to speak in support of clauses 83 and 84 on gambling taxation. I of course strongly welcome these steps on remote gaming duty, which cover online slots, online casino games and other high-risk remote gambling products.
Ahead of the Budget last year, I was one of more than 100 Labour MPs, alongside Gordon Brown, who wrote to the Chancellor calling for a different approach to gambling taxation and one that recognises the reality of the modern gaming industry. We highlighted how taxing the social ills caused by online gambling could pay for the abolition of the two-child benefit cap, and I strongly welcome the action the Chancellor has taken to lift hundreds of thousands of children out of poverty on the back of these changes. For us, fairness was not just about asking those with the broadest shoulders to contribute more, but about ensuring those whose business models generate the most harm make a proper contribution to the cost of that harm. That is why clause 83 is so important, as it targets the most addictive and dangerous forms of gambling: online slots and casinos.
As a country, we are experiencing record levels of harm caused by gambling. The Gambling Commission’s figures tell us that 2.5% of adults, which is more than 1 million people, are suffering from serious gambling harm. There are many types of gambling harm—debt, family break-up, crime and, at the most severe end, suicide—so it is extremely worrying that the Royal College of Psychiatrists has seen a threefold increase in the number of those referred for gambling treatment since gambling moved online during the pandemic.
In my own area, the Dudley-based Gordon Moody charity, which provides gambling treatment centres all over the west midlands, has seen a large increase in referrals, most worryingly among younger people involved in online gambling. This is not a coincidence, because online slots and casinos are designed to be high speed, continuous, psychologically manipulative and, for many, overwhelmingly addictive. So the Chancellor’s decision to increase remote gaming duty targeted at these most harmful forms of gambling is absolutely the right thing to do. It sends a clear message that the tax system must reflect the level of harm caused.
There is another reason why this change—as well as clause 84, which increases general betting duty—is the right thing to do: many online gambling operators, particularly large global operators, have spent years offshoring their profits, booking revenues overseas, minimising their UK tax liabilities and contributing very little in meaningful employment or investment in our communities. In one example, at the end of last year the online operator Sky Bet moved its headquarters to Malta specifically to avoid UK corporation tax, cutting its contribution to the Treasury by tens of millions of pounds. In another example, an unnamed online bookmaker was investigated by the Gambling Commission for illegally directing customers to offshore-based platforms —indeed, to the black market itself—to avoid paying UK tax and to avoid UK regulations. Increasing these online duties means that it will be harder for unscrupulous operators to avoid tax by moving operations offshore. Online gambling in the UK will be taxed fairly in the UK.
Raising remote gambling duty to 40% and general betting duty to 25% for remote bets also puts us on a footing much closer to that of other European jurisdictions and many states in the United States. Until the Budget, the UK was behind the curve in taxing these highly harmful online products. For us, the Chancellor’s move is a matter not just of revenue, but of fairness, responsibility and aligning our tax system with the reality of modern online gambling.
However, taxation is only one element of harm reduction. Raising duty alone will not of course prevent gambling addiction, stop children being exposed to online gambling advertising and ensure that families receive the support they need when a loved one falls into crisis. If we are to tackle these harms, we need a public health approach. That means proper funding for treatment, and I welcome the steps already taken under the statutory levy. However, it also means serious investment in prevention, community education and early intervention, and a modern regulatory framework that puts people, not profits, first and is fully independent of the gambling industry.
I want to highlight another pressing issue for the Minister, which is the continued prevalence of the B3 gaming machines on physical premises. These high-intensity machines, so often located in areas with higher deprivation, continue to cause significant harm, yet they remain under-regulated and undertaxed relative to the risks they pose. If we are to take harm seriously, B3 machines should be included in the next phase of gambling tax reform.
Finally, the most recent gambling Act was introduced more than 20 years ago, in a completely different era: before the smartphone, before the explosion of data-driven behavioural targeting, and before 24/7 online casinos in your pocket. A new Act is clearly needed. Our laws have not kept pace with technology, they have not kept pace with the scale or sophistication of online gambling operators, and they have not kept pace with the reality of the harm we now see every day in communities across the country. I welcome the measures in the Bill, but I urge the Government to move quickly to update advertising rules, strengthen affordability checks, protect children and vulnerable people, and ensure that tax policy, regulation and public health strategy on gambling are all aligned.
The measures on remote gaming duty and general betting duty are excellent steps in the right direction. They acknowledge the reality of harm, strengthen fairness in our tax system and take us closer to a modern framework that puts the wellbeing of the public first.
The Second Deputy Chairman
I call the Chair of the Culture, Media and Sport Committee.
Dame Caroline Dinenage (Gosport) (Con)
I would like to speak in support of new clause 25, which would require the Government to assess the effects of an increase in gambling duty, because just as I believe individuals have a right to spend their hard-earned money as they like, I believe it is important that they do so in a sensible, regulated and safe environment.
Whatever we may think about gambling companies, gambling is already a very heavily regulated sector. Since the gambling White Paper was published in 2023 by the previous Government, the industry has already absorbed over 62 policy changes. Those changes include a limit on slot stakes, financial risk checks on transactions, tightened market rules and the statutory levy. The sector is so well regulated that the Culture, Media and Sport Committee warned the previous Government that the finance risk checks should be as minimally intrusive as possible. The Committee concluded that the Government must strike a careful balance: preventing harm for all, while allowing those who gamble safely the freedom to continue to do so. I have concerns that this vast increase in taxation on online betting and gaming does not strike that balance.
The combination of an existing regime of strong regulation and a sudden jump in the levels of remote gaming duty from 21% to 40% is the kind of environment that I believe risks pushing people into the black market. As a floor, 40% is very high for remote gaming tax by international standards. It has been suggested that such high taxes could double the size of the online black market. Does the Minister recognise research from the Netherlands, highlighted by the shadow Minister, which found that after steep tax rises were introduced on remote slots, visits to black market domains increased fivefold over a three-year period? That is what we have to worry about if we are concerned about the oversight of those making bets and playing slots. That is why I am supportive of new clause 25, tabled by the Opposition. It requires the Chancellor to assess and report back on the effects of the increase in gambling duties on the number of high street betting shops, the black market, the employment rate, the public finances, and sports and horseracing.
On sports and horseracing, I was glad to see a carve-out from general betting duty for UK horseracing. I was among many Members calling for that in recognition of the unique place horseracing occupies in British cultural life, as well as the 85,000 jobs and £4 billion contribution to the economy that horseracing offers.
The Government have slightly dressed up their raid on gambling companies as being driven by concerns around gambling harms. In November 2024, I spoke to the Bacta convention about the then recently announced statutory levy and my concerns about how it would be distributed to organisations that conduct harms research. The Committee recommended the year before that the Government ensure that service providers, which were operating via the voluntary funding system, were adequately supported to make the transition to the statutory levy. However, we have now received very concerning reports that voluntary organisations in particular are facing a funding cliff edge, with delays and a lack of information about the transition to levy payments from the NHS.
I am not entirely sure the Minister is listening to what I am saying, but I am hoping she will be able to address that point. She has not looked at me once while I have been speaking, but hopefully she is furiously writing notes about what I am talking about and will be able to address those concerns. Hopefully, she will tell me that she will discuss them with colleagues and act to ensure that no charitable organisation currently operating within the gambling harm prevention sector will have to fold due to delays with levy funding.
The Chancellor is looking around for money and believes that she can raise it from gambling companies, but, as with many of her other measures, such as national insurance rises, she will be a victim of the law of unintended consequences if she is not careful. On this occasion, the consequence will be that more people are dragged into the black market, where they will quite simply find better offers than those offered by gambling companies.