Finance (No. 2) Bill

Dan Tomlinson Excerpts

Report stage & 3rd reading
Wednesday 11th March 2026 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Judith Cummins)]

With this it will be convenient to discuss the following:

Government new clause 6—Offshore income gains: savings.

Government new clause 7—Pensions: abolition of the lifetime allowance charge.

New clause 1—Report on fairness and scope of the loan charge settlement opportunity—

“(1) HM Revenue and Customs must, within 12 months of the passing of this Act, lay before the House of Commons a report on the operation and impact of any loan charge settlement opportunity established under section 25 of this Act.

(2) The report under subsection (1) must in particular consider—

(a) whether the terms of the settlement opportunity are available to individuals who have previously settled or fully paid liabilities arising from disguised remuneration loan arrangements,

(b) whether the terms of the settlement opportunity are available to individuals with disguised remuneration loan arrangements falling outside the loan charge years specified in Part 7A of the Income Tax (Earnings and Pensions) Act 2003,

(c) the extent to which any differences in treatment between these groups and those eligible for the settlement opportunity affect perceptions of fairness, and

(d) the potential impact of such perceptions on future tax compliance and trust in the tax system.

(3) The report must include—

(a) an assessment of whether extending more favourable settlement terms to the groups described in subsection (2)(a) and (b) would improve fairness and consistency, and

(b) any recommendations HMRC consider appropriate in light of that assessment.”

This new clause would require HMRC to report on the operation and fairness of the new loan charge settlement opportunity. It would consider whether more favourable terms are, or should be, available to those who have a already settled or fully paid liabilities, and to those with arrangements outside the loan charge years.

New clause 2—Report on implementation customer service standards in relation to sections 253 to 258—

“(1) The Commissioners must, within six months of the commencement of sections 253 to 258, lay before the House of Commons a report setting out—

(a) customer service standards for persons granted exemptions under regulations made under paragraph 14 or 15 of Schedule A1 to the Taxes Management Act 1970, including—

(i) maximum waiting times for telephone helpline calls,

(ii) minimum call answering rates,

(iii) maximum response times for written correspondence, and

(iv) availability of in-person support;

(b) measures taken to ensure adequate staffing and resources to meet those standards;

(c) data on actual performance against those standards in each quarter; and

(d) remedial action to be taken where standards are not met.

(2) The customer service standards published under subsection (1) must ensure that persons granted exemptions under regulations made under paragraph 14 or 15 of Schedule A1 to the Taxes Management Act 1970 can access support through non-digital channels with service levels comparable to those historically provided before the introduction of Making Tax Digital.

(3) The Commissioners must publish an annual report on compliance with the customer service standards established under subsection (1), and lay a copy of the report before the House of Commons.”

This new clause would require HMRC to establish and publish customer service standards for tax payers exempted from Making Tax Digital requirements due to digital exclusion.

New clause 3—Report on winter fuel payment charge and related compliance and collection measures—

“(1) The Commissioners for HM Revenue and Customs must lay before the House of Commons a report on the operation and effects of the charge applied to winter fuel payments where an individual’s income exceeds the relevant threshold, including the compliance and collection arrangements introduced under section 55 and Schedule 10 in relation to that charge.

(2) The report under subsection (1) must in particular consider—

(a) the effect of the charge on people whose income exceeds the threshold by a small amount, and any resulting behavioural impacts,

(b) the administrative complexity and proportionality of introducing a tapered abatement for winter fuel payments,

(c) the potential effect of updating section 7 of the Taxes Management Act 1970 so that a winter fuel payment charge becomes a notifiable liability for tax assessment purposes, including the operation of penalties for failure to notify, and the interaction with existing exceptions for liabilities reflected in PAYE tax coding adjustments or where a taxpayer has already been issued a notice to file a self-assessment return, and

(d) the operation and effectiveness of any new PAYE regulation provisions that allow winter fuel payment charges to be collected via tax code adjustments in year, and which allow HMRC to repay any overpaid income tax related to the charge via the tax code within the same year.”

This new clause would require HMRC to report to Parliament on the operation of the winter fuel payment charge, including its effect on people whose income exceeds the threshold by a small amount. The report would also cover the implications of updating section 7 of the Taxes Management Act 1970 to make winter fuel payment charge liabilities notifiable for tax assessment purposes.

New clause 4—Implementing the prohibition of the promotion of certain tax avoidance arrangements—

“(1) The Treasury must, within six months of the passing of this Act, consult and report on—

(a) how to ensure the regulations specified under section 156(2) of this Act can address the potential for harm to individuals and small businesses from the promotion online and via social media of tax avoidance arrangements by professionals and by social media tax influencers,

(b) the potential for detriment to individuals who are liable for tax arising from such promotions, and

(c) what steps HMRC should take to inform the public of the risks posed by online tax avoidance arrangements.

(2) The Chancellor of the Exchequer must lay before Parliament a report on the outcome of the consultation under subsection (1), including the steps they plan to take to address any issues identified.

(3) In this section, “tax influencer” means an individual who—

(a) is not a tax professional,

(b) promotes, markets or otherwise encourages participation in a tax avoidance arrangement, and

(c) does so by means of a social media service, where that promotion is carried out—

(i) in the course of a business or trade, or

(ii) in consideration of, or in expectation of, any payment or other benefit, whether from a promoter of the arrangement or from the social media service, or

(iii) with the intention of increasing engagement with, or the monetisation of, content relating to the arrangement.”

New clause 8—Impact of section 84 (General betting duty charge on remote bets)—

“The Chancellor of the Exchequer must, before 1 April 2027, lay before the House of Commons an impact assessment on the potential effects of the implementation of section 84 of this Act on the size of the illegal betting market.”

This new clause would require the Chancellor of the Exchequer to undertake an impact assessment on the potential effects of implementation of section 84 on the illegal betting market.

New clause 9—Impact of changes to gambling duties on the economy of Gibraltar—

“The Chancellor of the Exchequer must, before 1 April 2027, lay before the House of Commons an impact assessment on the potential effects of the implementation of sections 83 and 84 of this Act on the economy of Gibraltar.”

This new clause would require the Chancellor of the Exchequer to undertake an impact assessment on the potential effects of implementation of sections 83 and 84 on the economy of Gibraltar.

New clause 10—Review of operation of the carbon border adjustment mechanism—

“(1) The Treasury must, each calendar year for five years following the passing of this Act, undertake a review of the operation of—

(a) Part 5, and

(b) Schedules 16 to 19.

(2) A review undertaken under subsection (1) must be conducted in accordance with sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015.

(3) A review undertaken under subsection (1) must be completed as soon as reasonably practicable after the calendar year to which it relates.

(4) The Treasury must lay before Parliament a copy of each review carried out under this section as soon as reasonably practicable following the completion of the review.”

This new clause would place a duty on the Chancellor to conduct a post-implementation review of the operation of the carbon border adjustment mechanism one year after the implementation of the UK CBAM and every subsequent year.

New clause 11—Uprating of allowance amounts for agricultural property—

“The Chancellor of the Exchequer must, within six months of the passing of this Act, undertake and publish an assessment of the potential merits of uprating annually the relief allowance amount for agricultural property by the change in the value of agricultural land.”

New clause 12—Review of anti-forestalling provisions relating to Agricultural Property Relief—

“(1) The Treasury must conduct a review of the effects of the anti-forestalling provisions relating to Agricultural Property Relief.

(2) The review must, in particular, consider the effects of those provisions on—

(a) succession planning and intergenerational transfer of agricultural land and businesses,

(b) the viability and continuity of family-run farms,

(c) food security and domestic agricultural production,

(d) land management, environmental stewardship, and the condition of the countryside, and

(e) the availability of agricultural land for active farming.

(3) In conducting the review, the Treasury must consult such persons as it considers appropriate, including representatives of the agricultural sector.

(4) The Treasury must lay before the House of Commons a copy of the report within 12 months of the coming into force of the anti-forestalling provisions under this Act.”

New clause 13—Review of impact of Act on complexity of the tax system and administrative burdens—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a report setting out the impact of the measures contained within this Act on the complexity of the tax system and the costs of tax administration.

(2) The report under subsection (1) must identify the measures in this Act which—

(a) add to the complexity of the tax system;

(b) reduce the complexity of the tax system;

(c) increase the number of individuals, businesses or other organisations liable for tax or for tax reporting;

(d) reduce the number of individuals, businesses or other organisations liable for tax or for tax reporting;

(e) increase the resources required for HM Revenue and Customs to administer the tax system and ensure compliance; and

(f) reduce the resources required for HM Revenue and Customs to administer the tax system and ensure compliance.

(3) The report must include an assessment of the impact of this Act on the complexity of the tax system, and on the time and cost of tax administration and compliance, for each of the following groups—

(a) pensioners;

(b) taxpayers on low incomes;

(c) personal taxpayers as a whole;

(d) self-employed people;

(e) microbusinesses;

(f) small and medium-sized businesses;

(g) large businesses;

(h) personal representatives who administer a person’s estate after their death;

(i) professional tax advisers; and

(j) HM Revenue and Customs.”

This new clause would require the Chancellor to conduct an assessment of the impact of the Act on the complexity of the tax system and on the time and cost of tax administration for taxpayers and their representatives, and for HMRC.

New clause 14—Review of impact on unemployment and youth employment—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a report reviewing the impact of the provisions of this Act on levels of unemployment in the UK.

(2) The report under subsection (1) must, in particular, assess—

(a) the impact of the provisions of this Act on overall unemployment levels;

(b) the impact on employment levels for persons aged 16 to 24;

(c) the impact on rates of economic inactivity among young people;

(d) the effect on youth participation in apprenticeships, training, and entry-level employment;

(e) regional variations in youth unemployment arising from the provisions of this Act; and

(f) the impact on sectors with high levels of youth employment, including hospitality, retail, and the creative industries.

(3) The report must include an assessment of—

(a) the extent to which changes made by this Act have affected hiring decisions by small and medium-sized enterprises;

(b) any disproportionate impact on disadvantaged young people, including those from low-income households or with disabilities; and

(c) projected impacts over a three-year period following the passing of this Act.

(4) The Chancellor of the Exchequer must, following publication of the report under subsection (1), make a statement setting out what steps, if any, the Government proposes to take in response to its findings.”

This new clause requires the Chancellor to review and report on the impact of the Act on unemployment, with particular regard to young people aged 16 to 24.

New clause 15—Notification of taxpayers affected by frozen thresholds—

“(1) HM Revenue and Customs must take reasonable steps to identify individuals who, as a result of—

(a) the freezing of the starting rate limit for savings under section 9 of this Act, or

(b) the freezing of the personal allowance or the basic rate limit under section 10 of this Act, will—

(i) become liable to income tax for the first time, or

(ii) become liable to income tax at a higher rate than in the previous tax year.

(2) HM Revenue and Customs must ensure that each individual identified under subsection (1) is provided with a written notification before the start of the relevant tax year.

(3) A notification under subsection (2) must—

(a) explain that the individual’s tax liability is affected by the freezing of income tax thresholds,

(b) state whether the individual will pay income tax for the first time or move into a higher tax band, and

(c) provide information on where the individual can obtain further guidance about their tax position.

(4) HM Revenue and Customs must publish, no later than six months after the end of each affected tax year, a report setting out—

(a) the number of individuals notified under this section,

(b) the number of individuals who became income taxpayers for the first time as a result of sections 9 and 10, and

(c) the number of individuals who moved into a higher tax band as a result of those sections.

(5) In this section “written notification” includes electronic communication.”

This new clause would require HM Revenue and Customs to notify individuals who, as a result of the freezing of income tax thresholds in the Act, will pay income tax for the first time or move into a higher tax band.

New clause 16—Review of the impact of tax changes on household finances—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of changes introduced by sections 9,10 and 69 on household finances.

(2) The assessment must evaluate how households across different income levels are affected by these changes.”

This new clause requires the Chancellor of the Exchequer to assess and publish a report on how the freezing of tax thresholds to 2030-31 impacts households at various income levels.

New clause 17—Report on impact of sections 9, 10 and 69—

“Within three months of this Act being passed, the Chancellor of the Exchequer must lay before the House of Commons a report setting out—

(a) the number of taxpayers who will pay income tax at each rate during each tax year between 2026-27 and 2030-31 under sections 9, 10 and 69,

(b) the number of those taxpayers who are pensioners or are of State Pension Age,

(c) comparative figures for each tax year since 2020-21,

(d) comparative projected figures for each tax year to 2034-35, and

(e) comparative figures with a scenario under which normal uprating policy had been implemented for financial years 2020-21 through 2030-31.”

This new clause requires the Chancellor of the Exchequer to assess how many people will be in each income tax bracket from 2026-27 through to 2030-31, together with comparative figures before and after that period.

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—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 20—Review of cumulative impact on the hospitality sector—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before the House of Commons a report assessing the cumulative impact on the hospitality sector of—

(a) the measures contained in section 86 of this Act, and

(b) changes to taxation and business costs affecting that sector introduced outside this Act since 2020.

(2) For the purposes of subsection (1)(b), changes to taxation and business costs include, but are not limited to—

(a) changes to employer National Insurance contribution rates or thresholds,

(b) changes to business rates, including reliefs and revaluations, and

(c) any other fiscal measures which materially affect operating costs for hospitality businesses.

(3) A report under subsection (1) must include an assessment of the impact of the matters listed in that subsection on—

(a) levels of employment across the United Kingdom within the hospitality sector,

(b) the number of hospitality businesses ceasing to trade,

(c) the number of new hospitality businesses established, and

(d) the financial sustainability of hospitality businesses.

(4) In this section, “the hospitality sector” means persons or businesses operating in the provision of food, drink, accommodation, or related services.”

This new clause would require the Chancellor of the Exchequer to assess and report on the cumulative impact on the hospitality sector of alcohol duty measures in the Act alongside wider fiscal changes, including employer National Insurance contributions and business rates.

Amendment 1, page 2, line 7, leave out clause 4.

This amendment removes the increase in dividend rates from the Bill.

Amendment 2, page 2, line 16, leave out clause 5.

This amendment removes the new savings rates of income tax from the Bill.

Amendment 3, page 2, line 21, leave out clause 6.

This amendment removes the new rates of income tax on property income from the Bill.

Amendment 4, page 4, line 31, leave out clause 7.

This amendment removes the property rates of income tax for 2027-28 from the Bill.

Amendment 5, page 5, line 20, leave out clause 10.

This amendment removes the freeze in income tax thresholds from the Bill.

Amendment 112, in clause 13, page 6, line 13, leave out from “means—” to “fifteenth” on line 16.

Amendment 113, page 6, line 20, leave out from “(1)” to end of line 23 and insert

“for “£3 million” substitute “£6 million””.

Amendment 114, page 6, line 27, leave out subsection (3)(d).

Amendment 115, page 7, line 1, leave out from “(1)” to end of line 4 and insert

“for “£30 million” substitute “£120 million””.

Amendment 116, page 7, line 5, leave out from “(2)” to end of line 13 and insert

“for “£30 million” substitute “£120 million””.

Amendment 117, page 7, line 10, leave out from “(1)” to end of line 13 and insert “for “250” substitute “500””.

Amendment 118, page 7, line 14, leave out from “(2)” to end of line 15 and insert “for “250” substitute “500””.

Amendment 119, page 7, line 25, leave out from “15 years” to end of line 27.

Amendment 120, page 7, line 28, leave out subsection (7).

Amendment 121, page 8, line 28, leave out sub-paragraph (4).

Amendment 122, in clause 14, page 8, line 36, leave out from “(5A))” to “, and” in line 38 and insert “, £20 million”.

Amendment 123, page 8, line 40, leave out from “company” to end of line 1 on page 9, and insert “, £10 million.”

Amendment 124, page 9, line 5, leave out from “section 252A)” to “, and” in line 7, and insert “, £40 million”.

Amendment 125, page 9, line 10, leave out from “company” to end of line 11 and insert “, £24 million.”

Amendment 126, page 9, line 15, leave out from “section 252A)” to “, and” in line 17 and insert “, £40 million”.

Amendment 127, page 9, line 19, leave out from “company” to end of line 21 and insert “, £24 million.”

Amendment 128, page 9, line 24, leave out sub-paragraph (b).

Amendment 129, page 9, line 38, leave out “that is not a specified Northern Ireland company”.

Amendment 130, page 10, line 4, leave out “that is not a specified Northern Ireland company”.

Amendment 131, page 10, line 10, leave out leave out subsections (6) and (7) and insert—

“(6) In section 186 (the gross assets requirement)—

(a) in subsection (1)(a) for “£15 million” substitute “£30 million”

(b) in subsection (1)(b) for “£16 million” substitute “£35 million”

(c) in subsection (2)(a) for “£15 million” substitute “£30 million”

(d) in subsection (2)(b) for “£16 million” substitute “£35 million””

Amendment 132, in clause 15, page 10, line 30, leave out from “(6A))” to “, and” in line 32 and insert “, £20 million”.

Amendment 133, page 10, line 34, leave out from “company” to end of line 36 and insert “, £10 million.”

Amendment 134, page 11, line 4, leave out from “section 331A)” to “, and” in line 6 and insert “, £40 million”.

Amendment 135, page 11, line 8, leave out from “company” to end of line 10 and insert “, £24 million.”

Amendment 136, page 11, line 14, leave out from “section 331A)” to “, and” in line 16 and insert “, £40 million;”.

Amendment 137, page 11, line 18, leave out from “company” to end of line 20 and insert “, £24 million.”

Amendment 138, page 11, line 23, leave out subsection (6)(b).

Amendment 139, page 11, line 34, leave out leave out subsections (7) and (8) and insert—

“(6) In section 297 (the gross assets requirement)—

(a) in subsection (1)(a) for “£15 million” substitute “£30 million”

(b) in subsection (1)(b) for “£16 million” substitute “£35 million”

(c) in subsection (2)(a) for “£15 million” substitute “£30 million”

(d) in subsection (2)(b) for “£16 million” substitute “£35 million””.

Government amendments 12 to 14.

Amendment 6, page 78, line 4, leave out clause 62.

This amendment removes the changes to the thresholds for Agricultural Property Relief and Business Property Relief from the Bill.

Amendment 7, page 78, line 11, leave out clause 63.

This amendment removes the imposition of inheritance tax on pension interest.

Government amendments 15 to 47.

Amendment 9, in clause 74, page 91, line 25, at end insert—

“(7) The Treasury must make regulations under subsection (1) within 60 days of the passing of this Act.

(8) Before making regulations under subsection (1), the Treasury must consult—

(a) organisations representing infected and affected individuals,

(b) the Infected Blood Compensation Authority, and

(c) bereaved families of victims who have died awaiting compensation.

(9) The regulations made under subsection (1) must make provision for identifying and assisting the estates of deceased victims in claiming inheritance tax relief, including—

(a) outreach to known affected families,

(b) assistance with evidence gathering where medical records have been destroyed,

(c) clear and accessible guidance in plain language, and

(d) a dedicated helpline staffed by trained caseworkers familiar with the infected blood scandal.

(10) The Treasury must, within 6 months of regulations under this section coming into force, and every 6 months thereafter, lay before Parliament a report on—

(a) the number of victims who have died since the previous report while awaiting compensation,

(b) the number of estates that have received inheritance tax relief,

(c) the average time taken to process claims for relief,

(d) any identified barriers preventing families from accessing their entitlement, and

(e) steps taken to expedite outstanding infected blood compensation claims.”

This amendment requires the Chancellor of Exchequer to make regulations under this section within 60 days of Royal Assent. It requires mandatory consultation with those directly affected, and a support service to help bereaved families navigate the system. It also places a six-monthly reporting requirement on the Government.

Amendment 10, page 94, line 4, leave out clause 77.

This amendment would maintain the existing zero-rating for the purposes of VAT on the full value of the lease of a vehicle to a disabled person supplied through the Motability Scheme.

Amendment 11, page 96, line 6, leave out clause 78.

This amendment would maintain insurance premium tax relief for all vehicles let to a disabled person and supplied through the Motability Scheme.

Amendment 101, page 103, line 29, leave out clause 86.

Government amendments 48 to 53.

Government amendments 56 to 61.

Amendment 8, page 442, line 2, leave out schedule 12.

This amendment would remove the changes to Agricultural Property Relief and Business Property Relief from the Bill.

Amendment 109, in schedule 12, page 442, line 20, leave out from “and” to end of line 23 and insert—

“(c) either—

(i) is attributable to property that has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family, or

(ii) if the value does not fall within (i), does not exceed the amount of the 100% relief allowance available in relation to that chargeable transfer (see section 124D),”.

This amendment would maintain 100% business relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 110, page 442, line 29, leave out from “and” to end of line 32 and insert—

“(c) either—

(i) is attributable to property that has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family, or

(ii) if the value does not fall within (i), does not exceed the amount of the 100% trust relief allowance available in relation to that occasion (see sections 124G to 124K),”.

This amendment would maintain 100% business relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 111, page 443, line 9, leave out from “and” to end of line 12 and insert—

“(b) either—

(i) is attributable to property that has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family, or

(ii) if the value does not fall within (i), does not exceed the amount of the 100% relief allowance available in relation to that chargeable transfer (see section 124D),”.

This amendment would apply 100% agricultural property trust relief where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 89, page 444, line 16, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 102, page 444, line 16, after “£2.5 million” insert

“plus

(aa) the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

This amendment, and Amendments 103 to 107, would allow landlords to access 100% relief from inheritance tax where they have let land or farms to tenant farmers on secure agreements under the Agricultural Holdings Act 1986 or on agreements under the Agricultural Tenancies Act 1995 for 10 years or more.

Amendment 90, page 449, line 36, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 103, page 449, line 36, after “£2.5 million” insert

“plus

(aa) the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

See Amendment 102.

Amendment 91, page 450, line 25, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 104, page 450, line 25, after “£2.5 million” insert

“plus the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995”.

See Amendment 102.

Amendment 67, page 450, line 27, leave out “30 October 2024” and insert “1 March 2027”.

This amendment, along with Amendments 68 to 87 would remove the transition period in respect of the changes to agricultural property and business property relief and delay the implementation date so that the changes would take effect for transfers made after 1 March 2027.

Amendment 95, page 450, line 27, leave out “30 October 2024” and insert “6 April 2026”.

This amendment, with Amendments 96 to 100, would remove the transition period in respect of the changes to agricultural property and business property relief so that the changes take effect for transfers made from 6 April 2026.

Amendment 68, page 451, line 6, leave out “30 October 2024” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 96, page 451, line 6, leave out “30 October 2024” and insert “6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 92, page 451, line 22, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 105, page 451, line 22, after “£2.5 million” insert

“plus

(aa) the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

See Amendment 102.

Amendment 93, page 453, line 15, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 106, page 453, line 15, after “£2.5 million” insert

“plus the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995”.

See Amendment 102.

Amendment 94, page 453, line 17, after “£2.5 million” insert

“excluding the value of any joint interest in an agricultural or business tenancy that was made in a transaction at arm’s length between persons not connected with each other or that it was such as might be expected to be made in a transaction at arm’s length between persons not connected with each other.”

Amendment 107, page 453, line 17, after “£2.5 million” insert

“plus the value of any agricultural property subject to a tenancy under the Agricultural Holdings Act 1986, or a tenancy with a fixed term of 10 years or more without unconditional break clauses available to the landlord under the Agricultural Tenancies Act 1995,”.

See Amendment 102.

Amendment 69, page 453, line 23, leave out “30 October 2024” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 97, page 453, line 23, leave out “30 October 2024” and insert “6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 108, page 454, line 40, at end insert

“(But see subsection (2A).)

(2A) If the Treasury estimates that the value of agricultural land has increased by more than the percentage increase in the consumer prices index during the same period, then it must instead make an order by statutory instrument amending each relief allowance amount relating to agricultural property by the percentage increase in the value of agricultural land.”

Government amendments 54 and 55.

Government amendments 62 to 64.

Amendment 88, page 458, line 31, at end insert—

“(1A) In Section 227, leave out subsection (3)(a) and insert—

“(a) if the chargeable transfer was made on death and to the extent that it qualified for relief under Chapters I or II of part V of this Act, eighteen months after the end of the month in which the death occurred, or

(b) if the chargeable transfer was made on death and to the extent that it did not qualify for relief under Chapters I or II of part V of this Act, six months after the end of the month in which the death occurred, and””

This amendment would defer the period for the payment of inheritance tax on assets qualifying for payment by instalments by 12 additional months.

Amendment 70, page 460, line 8, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 71, page 460, line 9, leave out sub-paragraphs (2) and (3).

See explanatory statement for Amendment 67.

Amendment 98, page 460, line 9, leave out sub-paragraphs (2) to (4).

See explanatory statement for Amendment 95.

Government amendments 65 and 66.

Amendment 72, page 460, line 23, leave out “sub-paragraph (3) will not apply” and insert

“the transfer will prove to be an exempt transfer”.

See explanatory statement for Amendment 67.

Amendment 73, page 460, line 27, leave out from “paragraph” to end of paragraph 17(5)(b) and insert

“comes into force on 1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 99, page 460, line 27, leave out from “paragraph” to end of paragraph 17(5)(b) and insert

“comes into force on 6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 74, page 460, line 34, leave out “30 October 2024” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 100, page 460, line 34, leave out “30 October 2024” and insert “6 April 2026”.

See explanatory statement for Amendment 95.

Amendment 75, page 460, line 37, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 76, page 460, line 39, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 77, page 460, line 41, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 78, page 461, line 2, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 79, page 461, line 9, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 80, page 461, line 14, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 81, page 461, line 22, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 82, page 461, line 26, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 83, page 461, line 37, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 84, page 461, line 42, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 85, page 463, line 19, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 86, page 463, line 26, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

Amendment 87, page 463, line 32, leave out “6 April 2026” and insert “1 March 2027”.

See explanatory statement for Amendment 67.

[Dan Tomlinson]

I am glad to return to the Commons to debate the Finance Bill on Report. Although I am sure that it would have been of interest to Members on both sides of the House, I am also glad that we have not just had a set of two 45-minute debates on the Ways and Means motions. The opportunity was there, but I am glad that Members did not take it in full. We now have ample time for this important Report stage.

I thank Members on both sides of the House for their contributions in Committee. I thank in particular the shadow Exchequer Secretary to the Treasury, the hon. Member for North West Norfolk (James Wild), for his scrutiny and challenge, and for the invitation to his wonderful constituency, which I hope to take up one day. As yet, no other Opposition Front Bencher has offered me such an enticing prospect as a visit to their constituency, but I look forward to those invitations.

Before I turn to individual amendments, I wish to reflect briefly on the Budget that was delivered in November by my right hon. Friend the Chancellor of the Exchequer. That Budget took fair and necessary decisions to deliver on the Government’s promise of change, to support cuts in the cost of living, to enable NHS waiting lists to continue falling, and to ensure that our national debt fell as a share of GDP and that borrowing falls over the course of this Parliament. As the Chancellor said in this place yesterday and on Monday, Government borrowing—public sector net borrowing—has fallen from 5.2% to 4.3% of GDP, which is a fall of 1 percentage point. That is very significant and means that our borrowing is coming down, as part of our plan to bring stability back to the public finances.

[Sir Ashley Fox (Bridgwater) (Con)]

Does the Minister acknowledge that debt reduction is taking place only because the Government have increased taxes by £66 billion? That contrasts with the tax rise of £7 billion that the Labour party promised in its manifesto. Could he explain the huge discrepancy between that manifesto promise and what the Government are imposing on our constituents?

[Dan Tomlinson]

I ask the hon. Member to consider whether his party wishes to identify £66 billion of expenditure cuts or borrow £66 billion more. I do not think that either option is what the British public want; they want us to bring borrowing down and get public finances under control, after they were spun out of control by Liz Truss and the previous Government. The public understand the need for fair and responsible increases in taxation to ensure that we can invest in our public services and in the future of our country.

[Chris Vince (Harlow) (Lab/Co-op)]

On taxation, does the Minister agree that this Labour Government’s decisions have meant increased spending on the NHS? A number of my Harlow constituents are self-employed, and the really long waits in A&E and for hospital operations were having a huge impact on their businesses and on their household finances.

[Dan Tomlinson]

I strongly agree with my hon. Friend. I thank him for making his representations again and for his ability to mention Harlow in his interventions. It is a fantastic part of the country, not too far from my constituency in north London, and I know just how strongly he seeks to represent it and to make sure that the public services in his patch—the local hospitals and schools—get the investment they need. That is why he and I are able to proudly support this Government’s decisions to bring the public finances back into good order, as well as to invest in our public services and to get borrowing down.

Of course, though, since the Budget, and particularly in recent days, the world has changed. As the Chancellor set out last week in responding to the Office for Budget Responsibility’s spring forecast, it is more important than ever that the Government continue to deliver on our economic plan. The choices that we have made at previous Budgets will fix long-standing issues in the taxation system, restore economic and fiscal stability, and lay the economic foundations that we need for higher growth and higher living standards across our fantastic country.

The Bill legislates to deliver on those choices, all while sticking to our commitment not to raise the main rates of income tax, employee national insurance contributions or VAT. We are also providing stability for businesses by keeping to important commitments in our corporate tax road map to keep our corporation tax rate at 25%—the lowest in the G7—rather than having it chop and change up and down, like it did during previous Administrations.

I thank all those who have submitted written evidence throughout the Bill’s passage. Following concerns raised by professional bodies and concerns discussed in the Public Bill Committee, I would like to take this opportunity to reiterate my reassurances to the sector that measures that directly impact tax advisers are intended to create a fairer tax advice market. I have heard concerns that tax advisers might be penalised if they file a client’s tax return late when their client has not provided their approval for filing the return on time. I want to clarify that these powers are not designed to penalise responsible tax advisers who act in good faith, and in that specific scenario, a tax adviser would not be penalised under His Majesty’s Revenue and Customs’ stronger powers. The Government are committed to ensuring that the tax system works effectively for everyone, which is why we are introducing a number of amendments on Report to ensure that the tax system is working effectively and as intended.

I turn to the first group of Government amendments. New clause 5 removes specific provisions that could prevent offshore income gains from being designated under the temporary repatriation facility, or TRF, to ensure that they can be designated as intended. The amendments also simplify the existing treatment of offshore non-reporting funds held by offshore structures for all taxpayers. New clause 6 introduces transitional provisions for offshore income gains arising before 6 April 2025.

Following the abolition of the lifetime allowance, new clause 7, as we were just discussing, ensures that multiple different regimes do not apply, providing clarity for pension schemes and members. It ensures that any necessary regulations can have a retrospective effect back to 6 April 2024, clarifies the scope of the original power, extends the power by a further three months and ensures that regulations are subject to the affirmative parliamentary procedure.

The Government are making a number of minor and technical amendments to help provide greater clarity and address important points that have been raised by stakeholders, particularly during the passage of the Bill. These amendments simply put the original legislative intent beyond doubt.

Amendments 12 and 13 ensure that clause 23 will apply only to general earnings for the tax year 2026-27 and subsequent tax years that are paid on or after 6 April 2026. Amendment 14 tightens the existing provisions under clause 24 to ensure that those rules do not catch legitimate agency structures.

Amendments 48 and 51 remove legislation that is not necessary under clause 43 and ensure that the TRF legislation works as intended, so that beneficiaries from overseas trusts are able to make designations in connection with offshore income gains.

Amendments 49, 50 and 52 are consequential amendments to schedule 3 and clause 43. They remove references to omitted legislation and insert wording to clarify reference to the Taxation of Chargeable Gains Act 1992.

Amendment 53 to clause 49 makes clear that a person concluding contracts on behalf of a non-resident company must be present in the UK when concluding those contracts in order to create a permanent establishment in the UK.

Amendments 56 to 61 to schedule 11 concern the rules preventing fund managers from circumventing the revised carried interest tax regime. These amendments ensure that the provision operates as intended, where two connected persons work in the same business, with each connected person only taxed on their own carried interest.

[Sir Ashley Fox]

It sounds as if the Minister is adding many, many extra pages to our tax code. What provisions will he be bringing forward to shorten and simplify the tax code?

[Dan Tomlinson]

The hon. Gentleman raises an important point. We need to do all that we can to ensure that we are simplifying our tax code in order to make it easier for tax advisers, individuals and businesses. I have also asked that question, but I am reassured by my officials—I am sure that the hon. Member could consult Hansard too—that this is a typical number of amendments to be made to a Finance Bill. This is a long Finance Bill, but there are a whole range of important changes that the Government wish to introduce and to make progress on. I am sure Members from all parties have enjoyed poring over the changes to the tax legislation. I do take his point about simplification, though; it is something that I wish to focus on. If hon. Members have good ideas in that space, they would genuinely be welcome to write to me.

[Mr Joshua Reynolds (Maidenhead) (LD)]

On the simplification of our tax system, I do not see in the Government amendments any changes to the loan charge system, as we proposed in Committee, meaning that people who have already settled their loan charge will be excluded from the changes being introduced. Does the Minister agree that one consequence of this might be that when something like this comes up in the future, people will not want to settle with the Government because they will think that a better deal will be coming up? Would it not be a simpler tax system to say that we could retrospectively apply some of these changes?

[Dan Tomlinson]

I thank the hon. Gentleman for his intervention and for his engagement in the Public Bill Committee. The loan charge is an important issue. I focused on it after receipt of Ray McCann’s independent review into the loan charge, which was commissioned by my predecessor. The scope of that review and the decisions made by the Government are such that only those who are directly affected by the loan charge will have the opportunity to take up the new settlement that was recommended by McCann, to which the Government have added a £5,000 further deduction. The Government’s position was that, because the loan charge was an exceptional decision made by the previous Government, it was right that the changes proposed by McCann would apply only to that group. There will be those who engaged in the use of disguised remuneration schemes from before 2010, and with them, as with all taxpayers, this Government are very clear that individuals do have a responsibility to pay their tax.

Amendments 54 and 55, and 62 to 66, are minor amendments to the definitions of business property qualifying for relief. They ensure that the replacement property provisions relating to reorganisation or amalgamation of unquoted shares reflect the new legislation, and that unquoted securities, such as loan notes, continue to qualify for relief only where they are part of a controlling interest in a company.

Amendments 15 to 47 to clauses 63 to 67 make a series of minor technical changes to ensure that the provisions on inheritance tax and pensions operate as intended. These ensure that excluded and exempt benefits are not subject to inheritance tax, nor to the new withholding and payment notices.

I am sure that Members from all parts of the House have enjoyed that run-through of those minor and technical amendments. I can provide them with the good news that that run-through has now concluded. I sincerely hope and expect that the proposed amendments will ensure that the legislation that was set out, and that has been discussed and scrutinised, works as intended, and that HMRC—the organisation that I am proud to be the Minister with responsibility for—has the powers to responsibly collect tax and revenue, which funds the vital public services on which our country relies.

I therefore commend new clauses 5, 6 and 7 and Government amendments 12 to 66 to the House, and I look forward to hon. Members’ contributions.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

--- Later in debate ---

[Madam Deputy Speaker (Caroline Nokes)]

I call the Minister to wind up.

[Dan Tomlinson]

I thank all Members for their contributions at this stage of the Bill’s passage—we are almost there. I will take some time to respond directly to the amendments that have been discussed today.

I will first address amendments 1 to 4, 5 and 7, which were spoken to by the shadow Exchequer Secretary, the hon. Member for North West Norfolk (James Wild). Amendments 1 to 4 would remove the increase in dividend, savings and property income tax rates; amendment 5 would prevent income tax thresholds from staying at their current levels until 2030; and amendment 7 would remove reforms to the inheritance tax treatment of pensions. Based on costings that have been certified by the OBR, the direct impact of these amendments would cumulatively reduce forecast revenue raised in 2029-30—the year of relevance for our fiscal rules—by a whopping £12 billion. These amendments therefore pose a significant risk to the sustainability of our public finances and to our ability to fund the NHS and the public services that we all rely on. I therefore urge the House to reject them.

[Sir Ashley Fox]

Would the Minister concede that if that was offset by £12 billion less welfare spending, there would not be any threat to the sustainability of the finances?

[Dan Tomlinson]

If the Conservatives had credible plans and a credible history of reining in welfare spending, then I would, of course, be interested in taking them seriously. However, it was the shadow Chancellor, the right hon. Member for Central Devon (Sir Mel Stride), who was the Work and Pensions Secretary when the welfare budget exploded. We are now trying to get on top of that.

I will not address new clauses 15 to 19 directly. The Government have set out our position on them at previous stages, although I do urge the House to reject them today.

I will now turn to the points raised by the hon. and learned Member for North Antrim (Jim Allister) around amendments 112 to 139, which would have the effect of removing the distinction between the options available in respect of “specified Northern Ireland companies” and other companies from clauses 13, 14 and 15. The hon. and learned Gentleman has made his views known very clearly both today and on Second Reading. I will make the same point that the Economic Secretary to the Treasury made on Second Reading: as he will be aware—although he did not, I believe, mention this in his speech —service companies are able to benefit from the increase in the threshold. It is the Government’s understanding that there are very few, if any, goods and electricity companies in Northern Ireland that are close to the current enterprise management incentive limits, and we therefore think there will be minimal impact from these companies being subject to the previous scheme limits.

[Jim Allister]

Is the Minister saying to the House that the criterion here is to look at each region and see who is near the thresholds, and then to magically increase those that are? Surely the truth is that the Minister is not increasing the threshold because he has handed the power to do so to a foreign jurisdiction.

[Dan Tomlinson]

I am just stating a fact, which is that there are few—if any—businesses near the relevant thresholds. The hon. and learned Member made the point that the Government’s decision may be hampering growth and investment; I do not think that is the case. I am proud to be a member of a Government who are seeking to deepen and strengthen our ties with the European Union so that we in this country can increase our productivity through better flowing trade, working together with our partners. I therefore urge the House to reject amendments 112 to 139.

Amendments 6 and 8 relate to the changes to business property relief and agricultural property relief as raised by the shadow Exchequer Secretary as well as the hon. Members for Weald of Kent (Katie Lam) and for Keighley and Ilkley (Robbie Moore). If we were to adopt those amendments, we would weaken the public purse by about £300 million a year. It would also leave a status quo that contributes to the very largest estates paying lower average effective inheritance tax rates than the smallest estates. I therefore urge the House to reject those amendments.

The hon. Member for Keighley and Ilkley asked for clarity on payment deadlines in the inheritance tax system. The Government’s position is that the six-month point is the right one. It has applied for a long time, and it is not our position to change that timeline when these changes come into force.

[Robbie Moore]

I note that that is the Government’s position, but what level of assessment have they done of the negative implications of having just a six-month period as opposed to extending that to 18 months? From the engagement that Opposition Members have had with many stakeholders, we have found that the consequences are huge. What assessments have the Government done in relation to this specific issue?

--- Later in debate ---

[Dan Tomlinson]

I am sure this issue was considered before the policy was announced, and I have considered it too since I have been in post. It is worth pointing out that HMRC already offers several payment options to help personal representatives pay inheritance tax. That allows banks, building societies or investment providers to pay some or all the inheritance tax due from the deceased person’s accounts before probate is granted. There are a range of ways available to people to enable them to pay IHT within six months. I therefore urge the House to reject amendment 88.

[Lincoln Jopp]

Could the Minister tell us when he last met a farmer?

[Dan Tomlinson]

The president of the National Farmers Union mentioned in his speech to the farmers’ conference just a few weeks ago that he was glad of my engagement with farmers—he personally called out that engagement. I took a trip to the constituency of my hon. Friend the Member for Hexham (Joe Morris), after being invited there by him, and I was glad to meet farmers there and learn about their experiences.

Amendments 89 to 94 seek to exclude the value of any joint interest in certain agricultural business tenancies from the £2.5 million allowance for 100% relief. It is worth pointing out that the drafting of the amendments risks those tenancies falling outside the allowance entirely so that, rather than providing 100% relief, the Government are concerned that the drafting would mean that the relief might well be capped at 50% for those with joint tenancies. That is certainly a reason to reject those amendments.

[Graham Stuart (Beverley and Holderness) (Con)]

Will the Minister give way?

[Dan Tomlinson]

If the right hon. Member will forgive me, I will make progress, having spoken for eight minutes already.

Amendments 102 to 107 would mean that unlimited 100% agricultural property relief would be available on agricultural land rented out for at least 10 years. The Government’s position is that the House should reject these amendments.

The hon. Member for Witney (Charlie Maynard) also spoke to new clause 11. The Government have decided on a range of thresholds that will continue to be frozen until the end of the decade. We have made the decision across the piece, as was mentioned earlier, to sustainably and fairly raise revenue to fund our public services and get borrowing down. I therefore urge the House to reject amendments 102 to 107. I will not address in detail new clause 12 or amendments 67 to 87, 95 to 100 and 108 to 111, as the Government have set out their position on those amendments at previous stages, and I urge the House to reject them.

My hon. Friends the Members for Stoke-on-Trent Central (Gareth Snell), and for Halesowen (Alex Ballinger), both made important contributions on the amendments relating to gambling duty. I have twice met the Minister from Gibraltar mentioned by my hon. Friend the Member for Stoke-on-Trent Central and have been in correspondence with him. I understand that there are significant impacts on the economy in Gibraltar, and I hope to keep engaging on and discussing that.

[Gareth Snell]

I am glad about the Minister’s meetings, but while he is at the Dispatch Box, will he give an assurance that there are no future surprises and no significant tax-change announcements planned that will disproportionately affect areas such as Gibraltar as a result of their dependence on certain industries?

[Dan Tomlinson]

We will, of course, continue to engage with Ministers in Gibraltar. It would not be appropriate for me to write future Budgets at this Dispatch Box today, but we have made a significant change when it comes to gambling taxation. Rather than make further changes, the Government will monitor the impact of that change. I also thank my hon. Friend the Member for Halesowen for his contributions and representations.

The hon. Member for Aberdeen North (Kirsty Blackman) made a helpful speech— with not much notice, I understand. She raised the matter of alcohol duty. It is worth pointing out that the uprating in alcohol duty just keeps the revenue in line with inflation. We have seen reductions in alcohol consumption, driven not by the tax staying in line with inflation, but changes in consumers’ consumption habits. I therefore urge the House to reject amendment 101 and new clause 20.

[Graham Stuart]

Will the Minister give way?

[Dan Tomlinson]

Okay.

[Graham Stuart]

The Minister has overcome his natural reluctance, and I am grateful to him. A lot of people get confused about the BPR tax changes. If there was £10 million in a company that someone inherited, and it was subject to those changes, the claim is that they would only have to pay £2 million in tax, but in fact the money to pay that tax has to be extracted from the company, so the person who inherits it, rather than the company, pays it. Will the Minister confirm that? In other words, if the money was taken out in the form of dividends, it would be £3.3 million, instead of £2 million, and that would have a very real impact on a small company. In fact, it could be existential.

[Dan Tomlinson]

I will not get into specific worked examples. The general point is that the Government have made changes both to business property relief and to agricultural property relief, in order to raise additional revenue from the very wealthiest estates. We have sought to do that because we want to put fairness into our tax system.

The CBAM was mentioned by the Opposition, and by my hon. Friend the Member for Mid and South Pembrokeshire (Henry Tufnell). I thank him for his strong advocacy for his constituency, and the thousand people who work in the refinery there. The Government said at the Budget that we recognise the important role that refineries play in our energy security, and we are now considering the feasibility and impact of including refined products in the CBAM in future. It is very complicated, and there would be knock-on impacts on other sectors if the Government were to proceed with that. I have met representatives from the sector recently, and I will continue to engage with them.

Finally, I turn to new clause 4, which requires the Chancellor to report on how the regulations in the prohibition address the harm to individuals and businesses from online tax avoidance promotion, and the steps that His Majesty’s Revenue and Customs should take to inform the public of the risk posed by online tax avoidance. I thank my hon. Friend the Member for Walthamstow (Ms Creasy) for raising the important issue of avoidance promotion. I agree with her that it is appalling that these individuals promote tax avoidance schemes and get away with it. It causes misery to those caught up in the schemes, and deprives our public services of vital revenue. The Government are taking action via this Finance Bill to crack down on them.

I confirm to the House that the measures introduced in clauses 156 to 162 apply equally to those promoting avoidance schemes online, including on social media, and to those promoting them through more traditional routes. I can also confirm that the promoter action notice in clauses 163 to 173 will also apply.

I would also like to reassure my hon. Friend that we are publishing guidance on these matters, and I will ensure that it is clear throughout that the Government’s intention is to capture anyone who is promoting tax avoidance. This includes social media influencers who are making a monetary gain through clicks, as highlighted by my hon. Friend, and I would welcome her engagement in developing the guidance.

[Ms Creasy]

I thank all the MPs across the House—except those in the obvious party—who understand the risks to our constituents from this advice. It is very welcome to see a Government respond so quickly to social media problems, unlike the last one; we remember payday lending and the “buy now, pay later” lenders. The Minister talks about issuing guidance. Does he have a rough timeline for when that guidance will be available? I guess what I am really asking, on behalf of the millions of people who have been ripped off, is when Samuel Leeds will get a knock on the door from the taxman.

[Dan Tomlinson]

I look forward to working with my hon. Friend, and other Members who are interested in this topic, to make sure that we move as quickly as we possibly can. Let me thank all Members for their contributions during this this debate.

Question put and agreed to.

New clause 5 accordingly read a Second time, and added to the Bill.

New Clause 6

Offshore income gains: savings

“(1) This section applies in relation to an offshore income gain arising to the trustees of a settlement in a case where Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) applies in relation to that gain for the tax year 2025-26 or any subsequent tax year because of the amendments made by section (Offshore income gains).

(2) If the offshore income gain arose in a tax year before the tax year 2025-26 and, by reason of that offshore income gain or a part of it, an offshore income gain was treated as arising in a tax year before the tax year 2025-26 to an individual under paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)—

(a) Chapter 2 of Part 13 of ITA 2007 is to be treated as not applying in relation to the offshore income gain arising to the trustees or that part of that gain, and

(b) references in section 734 of ITA 2007 to chargeable gains treated as accruing to an individual are to be treated as including the offshore income gain treated as arising to the individual.

(3) An individual is not chargeable to income tax under Chapter 2 of Part 13 of ITA 2007 on income treated as arising to the individual under section 732 of ITA 2007 by reason of the offshore income gain to the extent that the income, without the amendments made by section (Offshore income gains)(1) and (2)(b)—

(a) would have been treated as arising to that individual under paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), and

(b) would have been non-chargeable income (see subsections (4), (5) and (6)).

(4) The income would have been non-chargeable income if, without the amendments made by section (Offshore income gains)(1) and (2)(b)—

(a) the income would have been treated as arising by reason of—

(i) the matching of a capital payment received (or treated as received) by the individual before 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or

(ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising before 6 April 2008, and

(b) paragraph 100 of Schedule 7 to FA 2008 would have applied to the income.

(5) The income would have been non-chargeable income to the extent that, without the amendments made by section (Offshore income gains)(1) and (2)(b), it would have exceeded the relevant proportion of income—

(a) which would have been treated as arising to the individual by reason of—

(i) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or

(ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising on or after 6 April 2008, and

(b) to which paragraph 101 of Schedule 7 to FA 2008 would have applied,

and, for that purpose, “relevant proportion” has the meaning given by sub-paragraphs (9) to (18) of paragraph 126 of that Schedule as they would have been modified by sub-paragraph (3) of paragraph 101 of that Schedule.

(6) The income would have been non-chargeable income to the extent that, without the amendments made by section (Offshore income gains)(1) and (2)(b), it would have exceeded the relevant proportion of income—

(a) which would have been treated as arising to the individual by reason of—

(i) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or

(ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising on or after 6 April 2008,

(b) to which paragraph 102 of Schedule 7 to FA 2008 would have applied, and

(c) to which paragraph 101 of that Schedule would not have applied,

and, for that purpose, “relevant proportion” has the meaning given by sub-paragraphs (4) to (7) of paragraph 127 of that Schedule as they would have been modified by sub-paragraph (4) of paragraph 102 of that Schedule.

(7) Subsection (3) does not prevent Chapter 2 of Part 13 of ITA 2007 from having effect as though the income not chargeable to tax under that subsection had been charged to tax under section 731 of that Act.

(8) Accordingly—

(a) in the application of section 733(1) of ITA 2007 to the individual for subsequent tax years, the amount of that income will be deducted at Step 2 and at paragraph (a) of Step 5, and

(b) in the application of section 733(1) of ITA 2007 to any other individual for subsequent tax years, the amount of that income will be deducted at paragraph (b) of Step 5.

(9) In section 733 of ITA 2007, after subsection (2D) insert—

“(2E) See subsections (7) and (8) of section (Offshore income gains: savings) of FA 2026 (offshore income gains: savings relating to amendments made by section (Offshore income gains) of that Act) for special provision about income that is treated as arising under section 732 but that is not chargeable to income tax under subsection (3) of that section.”

(10) This section—

(a) is to be treated as having come into force on 6 April 2025;

(b) has effect for the tax year 2025-26 and subsequent tax years.” —(Dan Tomlinson.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 7

Pensions: abolition of the lifetime allowance charge

“(1) Paragraph 134 of Schedule 9 to FA 2024 (power to make further provision in connection with the abolition of the lifetime allowance charge) is amended as follows.

(2) In sub-paragraph (2)—

(a) for paragraph (b) substitute—

“(b) have effect for the tax years 2024-25 and 2025-26 (as well as subsequent tax years);”;

(b) in paragraph (d), at the end insert“(including any provision that could be made under paragraph 133)”.

(3) In sub-paragraph (3) omit “that increase any person’s liability to tax”.

(4) In sub-paragraph (4), for “5 April” substitute “30 June”.” —(Dan Tomlinson.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 11

Uprating of allowance amounts for agricultural property

“The Chancellor of the Exchequer must, within six months of the passing of this Act, undertake and publish an assessment of the potential merits of uprating annually the relief allowance amount for agricultural property by the change in the value of agricultural land.”—(Charles Maynard.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Finance (No. 2) Bill: Ways and Means (Amendment of Power to Make Further Provision Relating to Abolition of Lifetime Allowance Charge)

Dan Tomlinson Excerpts

Ways and Means resolution
Wednesday 11th March 2026 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank the hon. Member for Aberdeen North (Kirsty Blackman) for her remarks, as well as for her scrutiny of this process, which I appreciate no matter where it comes from.

The hon. Member is right to flag that this is not the typical process. For future Finance Bills, I will—if I am in my position—endeavour to ensure that Ways and Means motions are not brought at this late stage. She is also right to point out that this debate—although I do not believe that there are any other bobbers—and any debate on the subsequent motion could go on for 45 minutes, and that discussions may ensue. I would be happy to consider the process.

This technical amendment allows for the introduction of regulations required as part of the abolition of the lifetime allowance, in order to have a retrospective effect going back to the point when the lifetime allowance was originally abolished. That ensures that the changes we are making operate as intended. It is a small and technical measure, but I take the hon. Member’s point that it adds a new part to the Bill and means that a new resolution has been brought forward. I hope that—notwithstanding the valid points raised by the hon. Member—Members will understand that position, and I commend the motion to the House.

Question put and agreed to.

Finance (No.2) Bill: Ways and Means (Offshore income gains)

Motion made, and Question proposed (Standing Order No. 52(1)(b)),

That provision (including provision having effect for the tax year 2025-26) may be made revoking—

(a) paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009, and

(b) paragraphs (4) to (6) of regulation 21 of those Regulations.—(Dan Tomlinson.)

Question agreed to.

Oral Answers to Questions

Dan Tomlinson Excerpts

Tuesday 10th March 2026 Commons Chamber

[Dr Danny Chambers (Winchester) (LD)]

13. What assessment she has made of the potential impact of tax changes on high street businesses.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

On business rates, the Government have announced a support package for all businesses worth £4.3 billion over the next three years. We have introduced permanently lower multipliers for eligible retail, hospitality and leisure businesses, including those on the high street. In addition, every pub and live music venue will get 15% off its new bill from April. The Government will also bring forward a high streets strategy later this year.

[Sir Ashley Fox]

Many retail, hospitality and tourism businesses in my constituency traditionally give young people their first job, but with the Chancellor’s jobs tax, the unemployment rights Act and now huge increases in rates, many of those businesses are struggling to survive, so they just cannot afford to take on those young people. Does the Minister accept that his Government are the reason that youth unemployment is now higher in the UK than in the EU for the first time since records began?

[Dan Tomlinson]

One reason we have a challenge with youth participation in the labour market is the broken welfare system and the broken support system that we inherited from the previous Government. The proportion of young adults who are not in education, employment or training is broadly unchanged since the general election. It is too high, and it has to come down. That is why we are reforming our system and providing more support through actions such as our jobs guarantee. That is the right approach, as is the approach we are taking on business rates.

[Wendy Chamberlain]

I recently hosted a hospitality roundtable in North East Fife. In an area that boasts such attractions as St Andrews and the East Neuk, one would expect to find an industry in rude health, but that was not the case. Indeed, one business could not attend because it was taking difficult decisions in relation to the business that day. The Minister has outlined a number of things that are in the purview of the devolved Government, and I will be taking those up with the Scottish Government. As a Scottish MP and a Scot representing Scottish businesses, however, I am looking for things that the Government can do on a UK level. The Liberal Democrats have been proposing an emergency VAT cut for hospitality businesses for some time, so why will the Government not consider that?

[Dan Tomlinson]

Business rates are a devolved matter. The changes that we have announced and the support that we have put in will have consequentials for funding for the Scottish Government. VAT is a broad-based tax that raises a significant amount of revenue for the Treasury. That is important in ensuring that we can manage our public finances and bring in the revenue to be able to get borrowing down, which this Government are doing and previous Governments failed to do. When the Liberal Democrats last had the chance, their choice was to put up VAT rather than cut it.

[Dr Chambers]

Many businesses in Winchester that I speak to on a regular basis talk about higher energy costs and national insurance rises, and many bring up the increased red tape that has resulted from the Conservatives’ failed Brexit project. Businesses in Winchester say that they want growth, not continued red tape. About two weeks ago, I spoke to one such business, RJM International, located just off the high street. For some reason, the Government refuse to even consider reducing trade barriers to the EU by having a bespoke customs union, but industry wants it and the public are increasingly supportive. Why will the Government not even assess the economic case for a customs union and why are they clinging to a failed ideology at the expense of growing our economy?

[Mr Speaker]

That was rather a long question.

[Dan Tomlinson]

This Government are fully committed to resetting our relationship with the European Union. As the hon. Gentleman highlighted, the previous Government did as much as they could to damage that relationship, damage our productivity and damage our working relationship with our nearest partners. We are seeking to change that: we are negotiating a sanitary and phytosanitary agreement; we are looking at electricity and energy; and we are looking at what more we can do to deepen our trading relationship, which will be good for productivity and jobs. People said that we could not make progress with both the EU and the United States, but we did not have to choose: instead, we are making progress with trading partners across the world.

[Rachael Maskell (York Central) (Lab/Co-op)]

Property valuations in York are particularly high, making it very difficult for businesses, not least this year and certainly over the next three years. Will the Minister say exactly when he will launch his consultations on pubs, on hotels, on business rates and on high streets? Would he be willing to come and meet businesses in York to hear why they are struggling with the decisions made by this Government?

[Dan Tomlinson]

We will be working across Government on the high streets strategy. Treasury Ministers will be working with colleagues in the Ministry of Housing, Communities and Local Government and the Department for Business and Trade. We will make progress on that in the coming weeks, with the strategy to report by the end of the year. We are in the process of working on the details of plans for the review of the pubs and hotels valuation methodology, and I will be happy to engage with my hon. Friend and Members from across the House to get that on a firmer footing for the future.

[Lauren Edwards (Rochester and Strood) (Lab)]

The Government’s business rate relief package for pubs has been hugely welcome, but other high street businesses in the retail, leisure and hospitality sectors are struggling. Will the Minister consider increasing the small business rate relief threshold to encourage growth and hiring? Over half the high street small businesses surveyed by the Federation of Small Businesses said that they would be in position to invest in or grow their businesses if the threshold were increased.

[Dan Tomlinson]

Around one in three businesses continue to benefit from the small business rates relief and do not pay any business rates at all, with an additional 85,000 benefiting from reduced relief as that is tapered away. At the Budget, we also announced changes to small business rates relief so that we can provide an additional two years of support for those businesses seeking to expand into a second property, to support those businesses to grow and to support their communities and jobs.

[Sonia Kumar (Dudley) (Lab)]

Traders like Sukibinder Singh, who owns Little Italy in Dudley, tell me how low footfall, empty shops and shoplifting are putting people off coming to the town centre. Will my hon. Friend set out what action he is taking on business rates and targeted reliefs to help bricks-and-mortar businesses to compete and prosper?

[Dan Tomlinson]

I thank my hon. Friend for her representation of Little Italy in her fantastic constituency. We are working on the high streets strategy. She is right to highlight that with long-term trends, whether the impact of the pandemic or of the shift to online retail, we need to look at this as a whole. On taxation and business rates in particular, we have for the first time provided a wedge in the tax system so that the rate that online giants pay for their warehouses is a third higher than the rate paid by the smallest businesses on the high street. There is a significantly higher multiplier for the larger businesses on my hon. Friend’s high street than for the smaller ones, but we will keep looking at the issue and at what more we can do to support businesses across the tax system.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Daisy Cooper (St Albans) (LD)]

Small businesses are the backbone of our economy, but the Federation of Small Businesses is warning that they will face a cost cliff edge in April because of the cumulative impact of all the new taxes and responsibilities put on them at the same time. During the course of the Finance Bill, we Liberal Democrats have repeatedly called for an assessment of the cumulative impact of taxes on hospitality and small businesses, including business rates. When the Government bring forward their high streets strategy, will it include an assessment of the cumulative impact of all tax changes—yes or no?

[Dan Tomlinson]

When we bring forward the high streets strategy, it will look in the round at what more we can do on regulation, licensing and the decisions that are made in the Treasury to continue to support small businesses and those on our high streets. That is incredibly important, and we will continue to look at that closely.

[Preet Kaur Gill (Birmingham Edgbaston) (Lab/Co-op)]

3. What fiscal steps she is taking to support the community ownership of assets.

--- Later in debate ---

[Claire Hanna (Belfast South and Mid Down) (SDLP)]

10. What recent assessment she has made of the potential merits of reducing VAT for the hospitality sector in Northern Ireland.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

The Government recognise the important contribution that hospitality businesses make to communities across the UK, including in Northern Ireland. Reducing VAT rates, or applying different VAT rates within the UK, would add complexity and come at a significant cost to the Exchequer.

[Claire Hanna]

As well as the business pressures, a majority of households in Northern Ireland and many businesses use heating oil as their main heating source, so they are particularly exposed to shocks such as that which we are experiencing due to the wrong-headed conflict in the middle east, and they are not protected by the energy price cap. The Stormont Executive have failed to regulate in this area, or to make any meaningful progress towards a transition to sustainable and secure energy. What interventions against extreme price fluctuations can the Treasury make for those not on the grid?

[Dan Tomlinson]

I thank the hon. Member for her representation of her constituents. The Chancellor has already said today, as she said yesterday, that we understand that there are particular pressures facing households that use heating oil for their heating. A meeting has been arranged for tomorrow with the Financial Secretary to the Treasury, which I hope the hon. Member will be able attend to discuss this issue in more detail. We are also going to be in conversations with the Competition and Markets Authority to make sure that we have a fair market that provides a fair price for her constituents.

[Carla Lockhart (Upper Bann) (DUP)]

I support the call for a cut in VAT for the hospitality sector from the hon. Member for Belfast South and Mid Down (Claire Hanna). She is right to say that oil prices are rising sharply. The fuel price at the pumps is rocketing, and families are struggling with the cost of living. In Northern Ireland, 60% of homes rely on heating oil. What steps will the Treasury take to cut fuel duty and remove VAT on domestic heating oil? Will it finally recognise the damage being done by the Energy Secretary’s net zero zeal in blocking further oil and gas licensing in the North sea?

[Dan Tomlinson]

We have made sure to freeze fuel duty since we have been in office. That has saved the average driver 8p per litre at the pump, and it will rise to 11p when the increase does not go ahead in a few weeks’ time.

If heating oil is an issue that affects the hon. Lady’s constituents, I hope she will be able to attend tomorrow’s meeting. We are looking very closely at this issue, and at the changes that we can see in oil and gas prices at the moment. As the former Chancellor of the Exchequer, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), said yesterday, it is too early to tell how things will pan out. We have seen significant increases, and today we have seen decreases. We will keep looking closely at what we can do.

[Tracy Gilbert (Edinburgh North and Leith) (Lab)]

A number of hospitality businesses in my constituency have raised with me that the UK rate of VAT is much higher than it is in France and Germany. Will my hon. Friend ask the Office for Budget Responsibility to model the impact of VAT cuts, as studies have previously suggested that cuts—

[Sorcha Eastwood (Lagan Valley) (Alliance)]

I thank the Minister for his response. I have to declare an interest because I started a parliamentary petition exactly on a VAT cut for hospitality in Northern Ireland, the reason being that we have the Republic of Ireland with its very competitive VAT rate right up against us. Businesses saw the official Government response, because that petition got over 10,000 signatures, and they felt very despondent. I am sure that Treasury Ministers and the Chancellor will want to join me in trying to do everything we can to protect our hospitality sector. The Minister says this is complex to do, but would he agree with me that it is worth revisiting that idea?

[Dan Tomlinson]

This is a complex change to implement, but the Government’s position is that it is right to have the same rate of VAT across our country. During the pandemic, there was a cut—a temporary cut—to the rate of VAT and that came at the significant cost of £8 billion. We have to make sure that we can raise revenue from across the country in a fair and consistent way to support the public finances.

[Freddie van Mierlo (Henley and Thame) (LD)]

11. What assessment she has made of the potential impact of the autumn Budget 2025 on levels of youth unemployment.

--- Later in debate ---

[Mr Speaker]

Many Back Benchers did not get in earlier, so, please, it would help me if we could try to speed up.

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I thank my hon. Friend for his representations on this matter here today and over many months, and in Westminster Hall just a few weeks ago. The rural fuel duty relief scheme does provide that 5p discount and it will benefit his constituents on the islands and in the communities he represents. We will of course keep all our taxes under review. I will be happy to meet him to talk about this one.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

[Emily Darlington (Milton Keynes Central) (Lab)]

The loan charge was a scandal that affected tens of thousands of people across this country, some of whom were on very low pay and not given a choice by their employers. At the last Budget, the Government put forward changes. What assessment has the Minister made of how those changes will impact people at the lowest end, including social care workers across the country?

[Dan Tomlinson]

I thank my hon. Friend for the question, and for the representation she has provided for her constituents and, through her work on the loan charge and taxpayer fairness all-party parliamentary group, for many across the country who have been affected by the loan charge. At the Budget, we made the decision to write off £5,000 from the liabilities of everyone who has been affected by the loan charge, so about a third of those affected will have their liabilities written off entirely. I look forward to continuing to engage with her and Members across the House on this important issue.

[Greg Smith (Mid Buckinghamshire) (Con)]

Following on from that last question, the loan charge and taxpayer fairness APPG, which I co-chair, wrote to Ministers on 1 July, 22 September and 25 November last year, with questions about the 2005 preferential deal with the large banks. Does the Minister feel that it is acceptable that we have not had a reply to those letters? When will we get one?

[Dan Tomlinson]

The letters that were sent will receive a reply very shortly. A decision was made that in the run-up to the announcement of the independent loan charge review, it would not be appropriate for the Government to set out in detail their views on a live issue that an independent reviewer was looking at. That review was published alongside the Budget. I apologise for the fact that the response has not come in the weeks since; it will be with the hon. Member and the APPG very shortly.

[Chris Webb (Blackpool South) (Lab)]

Two weeks ago, I held an emergency cost of living summit in Blackpool, after record numbers of families, particularly single mums, contacted us in food crisis. They could not access the council’s discretionary fund. Will the Minister outline how the new crisis and resilience fund will ensure that families in my constituency can get the support that they need, especially over the weekend?

[Claire Young (Thornbury and Yate) (LD)]

Heat batteries are the only clean heat technology certified by the microgeneration certification scheme that is excluded from VAT relief under the energy-saving materials framework. This penalises smaller homes and lower-income households that cannot accommodate a heat pump. Will the Chancellor commit to removing that anomaly, and meet me and representatives of the UK heat battery industry to discuss it?

[Dan Tomlinson]

The Government regularly assess whether to add energy-saving materials, including heat batteries, to the list of items covered by the current VAT relief, which is set to continue until March 2027. Any decisions would have to be announced by the Chancellor at a fiscal event, but I am happy to discuss the matter.

[Antonia Bance (Tipton and Wednesbury) (Lab)]

Given the global situation, what discussions has the Chancellor had with Cabinet colleagues on helping to keep industrial energy costs manageable? Will she work with colleagues to bring in the British industrial competitiveness scheme, which would cut manufacturing energy costs by 25%, as soon as possible?

--- Later in debate ---

[Caroline Voaden (South Devon) (LD)]

Every year, the UK loses £33.4 billion in tax revenue, as multinational corporations and the super-rich choose tax havens over tax payments. However, the UN tax convention has the potential to solve this problem, so will the Minister show leadership, not ambivalence, and commit to securing an ambitious UN tax convention in this Parliament?

[Dan Tomlinson]

I am always happy to show leadership, and this Government—and, I may say, previous Governments—have worked hard with international partners, both in the OECD and the UN, to do all we can to reduce tax avoidance and evasion by multinational companies. We continue to work with our partners in the UK and abroad to clamp down on tax dodging.

[Paul Waugh (Rochdale) (Lab/Co-op)]

My constituent in Rochdale, Louise Marshall, wrote to me this weekend because she is worried sick about the massive price rise she is facing for heating oil. Can the Chancellor assure me, notwithstanding the meeting we are all going to have with the Financial Secretary to the Treasury, that we can be absolutely crystal clear that under this Government, we will not tolerate price gouging or war profiteering from oil companies that try to rip off their customers?

Draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026

Dan Tomlinson Excerpts

Wednesday 4th March 2026 General Committees

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the Committee has considered the draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026.

It is a pleasure to serve on the Committee with you in the Chair, Ms Vaz. The draft regulations exempt from the climate change levy electricity used in—this is a word I am going to struggle to say repeatedly—electrolysis to produce hydrogen and natural gas used as a source of carbon dioxide to produce sodium bicarbonate from soda ash. They do this by expanding the climate change levy non-fuel use exemption to include the relevant new processes.

The CCL was introduced in 2001 with the purpose of encouraging energy efficiency across our economy by taxing energy supplies such as electricity or gas. From the outset, the tax has included a non-fuel use exemption, the principle behind which is that when fuels that are liable to CCL are not used for energy, they should not be taxed as if they were. Today, that principle needs to be applied to two modern industry realities that are not currently included in the exemption.

First, when produced in a low-carbon way, hydrogen can help to power the UK’s clean energy transition and support our 2050 net zero ambitions. One key method of hydrogen production is electrolysis. In that process, the electricity is not used as a fuel, as it is the feedstock that enables the chemical reaction. Yet without the change in the draft regulations, electricity used in the process would be charged CCL in most cases.

Secondly, the chemical process that converts soda ash into sodium bicarbonate is a new production technology in which natural gas performs two roles: it provides heat and serves as an essential source of the carbon dioxide needed for the production process. Where a taxable commodity is used partly as fuel and partly for a non-fuel purpose, the non-fuel use exemption is intended to accommodate such mixed uses. Yet as things stand, the natural gas used will attract CCL, despite the partial non-fuel use that is fundamental to the chemistry involved.

Similar non-fuel use processes in soda ash production are already exempt from CCL. The Government are satisfied that it is appropriate to add this use of natural gas to the exemption, thereby helping to ensure alignment and consistency across industrial processes, as well as supporting the relevant part of the chemicals sector.

The changes in the draft regulations deliver on the Government’s commitment at the 2025 spring statement to remove CCL costs in respect of electricity used in electrolysis to produce hydrogen. I commend the draft regulations to the Committee.

--- Later in debate ---

[Dan Tomlinson]

I thank the shadow Minister for his questions. I always enjoy listening to him; one day, I am sure I will do so on a bumper car in his constituency. Those Members who did not serve on the Finance (No. 2) Bill Committee will not know that reference; I will have to update them afterwards.

We will conduct the wider review of the CCL as swiftly as possible. It is important that we keep all our taxation policies under review, not least given the changes that are taking place in the economy. It was right that the Government consulted on the changes in the draft regulations earlier in the year, and we will continue to listen to the various industries that are affected by the CCL.

We chose to proceed with the option that the shadow Minister outlined in large part because we wanted to make sure we could bring in the change as quickly as possible. Those in the industry have been asking for the change, which will support them in the move towards using low-carbon technologies and processes, and we wanted to implement it as swiftly as possible. It is my understanding that if the Committee agrees to the changes, they will come into effect immediately—as of tomorrow—which is good. Progress has been very swift now that we have finally got here.

There was one other question on which I will have to respond after the Committee, because it is has fallen out of my head.

Question put and agreed to.

UK-India Double Contributions Convention

Dan Tomlinson Excerpts

Wednesday 11th February 2026 Written Statements

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

Following the joint commitment made by the Governments of the UK and India in a side letter agreement to the comprehensive economic and trade agreement dated 24 July 2025, a double contributions convention between the UK and India was signed on 10 February 2026.

The text of the convention—as a Command Paper—and the relating explanatory memorandum have been laid before Parliament for scrutiny. Both will be available on gov.uk. The convention will enter into force at the same time as the UK-India trade agreement.

[HCWS1327]

Social Security

Dan Tomlinson Excerpts

Tuesday 10th February 2026 Commons Chamber

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the draft Child Benefit and Guardian’s Allowance Up-rating Order 2026, which was laid before this House on 12 January, be approved.

[Madam Deputy Speaker (Judith Cummins)]

With this it will be convenient to discuss the following motion:

That the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026, which were laid before this House on 12 January, be approved.

[Dan Tomlinson]

The draft Child Benefit and Guardian’s Allowance Up-rating Order sets the rates for both child benefit and guardian’s allowance, and will ensure that those benefits, for which Treasury Ministers are responsible and which are delivered by His Majesty’s Revenue and Customs, are uprated by inflation in April 2026. The draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026 set the rates of certain national insurance contributions classes, and the level of certain thresholds, for the 2026-27 tax year. The regulations also make provision for a Treasury grant to be paid into the national insurance fund if required for the same tax year, through a transfer of wider Government funds to the NIF, and extend the veterans employer national insurance relief for two years, until April 2028.

[Jim Shannon (Strangford) (DUP)]

I welcome what the Minister is saying, which is positive. This is a good step for guardians, carers and veterans. Sometimes people come to me and ask me questions. They say that they cannot get any help with the changes that have come in and how they are affected. When they are given more money, sometimes they fall into a higher tax bracket. Is help available for those who receive an increase in their guardian’s allowance, carer’s allowance or veteran’s allowance? We need to make sure that somebody can help them through the process. It is almost like walking through a muddy field: they just do not know where to go next.

[Dan Tomlinson]

The hon. Member is right: a range of reliefs in the national insurance system help particular groups, including young people and those who have served in our military. It is right that those reliefs are there, and I am glad that the Government took the decision to extend them by two years. The Government publish guidance on the way that the reliefs can be used. We aim to ensure that the guidance supports those who seek to employ young people and people who have served in the military, so that they are able to make employment decisions. Through the tax system, we want to support particular groups to be able to be employed. I thank the hon. Member for his question.

I turn to the detail of the Child Benefit and Guardian’s Allowance Up-rating Order 2026. As hon. Members will know, the Government are committed to delivering a welfare system that is fair for taxpayers while providing support for those who need it. These regulations ensure that the benefits for which Treasury Ministers are responsible, and which HMRC delivers, are uprated by inflation in April 2026. Child benefit and guardian’s allowance will increase by 3.8%, in line with the consumer prices index in the year to September 2025. Tax credits awards ended on 5 April 2025, so no changes to rates will be required.

I turn to the second set of regulations before us today. As announced at the Budget, the primary threshold and the lower profits limit threshold will be maintained at their current levels until April 2031. These regulations set the level for the 2026-27 tax year. Employees’ entitlement to contributory benefits, such as the state pension, is determined by their earnings being at or above the lower earnings limit. Self-employed people’s entitlement is determined by their earnings being at or above the small profits threshold.

These regulations uprate the LEL and the SPT. This is the usual process and maintains the real level of income where someone gains entitlement to contributory benefits. The upper earnings limit for employee NICs and the upper profits limit for self-employed NICs—the points at which the main rate falls to 2%—are aligned with the higher rate threshold for income tax. The thresholds will be maintained at their current levels, and these regulations set the levels for the 2026-27 tax year. As announced at the Budget last year, employer national insurance thresholds, including the secondary threshold, will also be maintained at their current levels.

We have already had a brief discussion about the employer NICs reliefs, including for under-21s, under-25 apprentices, veterans, and new employees in freeport and investment zones. The regulations that we are debating today keep the thresholds for those reliefs at their current levels. The regulations also make provision for the NICs relief for employers of veterans to be extended for two years until April 2028, during which time the Government will continue to consider the most effective way to support veterans into employment as part of the next spending review settlement.

Without these regulations, child benefit and guardian’s allowance would fall in real terms, and HMRC would be unable to collect NICs receipts. I hope that colleagues will join me in supporting them today.

[Madam Deputy Speaker (Judith Cummins)]

I call the shadow Minister.

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to debate these two statutory instruments with the Exchequer Secretary. As he stated, they are made each year, and the precedent is for them to be debated on the Floor of the House. I am glad to see that that practice continues, and I hope that the Government will keep this going for the remainder of the current premiership, however long that may last. I want to make it clear that we will not be voting against the measures before us when the debate concludes. However, I would like to comment on each SI and the wider political discourse around them.

First, the social security regulations set the rates of certain national insurance contribution classes and the level of certain thresholds for the 2026-27 tax year. Specifically, they uprate the lower earnings limit, the small profit threshold and the rates of class 2 and class 3 national insurance contributions. The increase will be 3.8%, which is the consumer prices index figure from September 2025. All other limits and thresholds that these regulations cover will remain frozen at their current level.

This highlights that the increase last year was 1.7% compared with 3.8% this year. Both these percentages represent the rate of inflation that our constituents are suffering, but the 1.7% is of course what we left the Government when they came to power, and 3.8% is the level of inflation they are now delivering for consumers. When we left office, inflation was at 2%. We had managed to get it down following a once-in-a-generation pandemic and Russia’s illegal invasion of Ukraine and the subsequent energy crisis.

Since Labour has come in, inflation has risen almost every month and is now stuck at about 3.6%. Why is that? It is because the Government are relentlessly pursuing policies instead of making practical solutions—for example, the drive towards net zero. We of course want net zero and to get to the point where we clean up our carbon footprints, but by going too far they have managed to put up energy bills by £300 since they were elected. Is it any wonder that inflation is so high and shows little sign of coming down any time soon? I do not want to press the Minister on too many questions, but could he in due course let us know when the Government expect inflation to return to the target rate of 2%, which everybody agrees is where it should be?

The other point that I want to make about the statutory instrument is that it extends the employer national insurance contributions relief for veterans to 2028, which means businesses will continue to pay no employer NICs on salaries up to the veterans upper secondary threshold of £50,000 or £270 for the first year of their employment, which is a very good thing, as I think the Minister will agree. We introduced this relief in 2022, as we wanted to encourage as many employers as possible to help our veterans. These people have done a huge amount to protect our country, and it is important that we show our gratitude to them.

[Dan Tomlinson]

indicated assent.

[Mark Garnier]

The Minister is nodding, and I am sure he agrees with us on this point. Therefore, we welcome the fact that the Government have committed to extending this relief for the next two years.

However, I point out that the Government said in the Budget document:

“The government will extend the employer NICs relief for employers hiring veterans in their first civilian role to April 2028, from which point support for veterans into employment will be covered through spending review settlements rather than through this tax relief.”

The Government have committed to consult on which way would be best to do that, which is positive, and I hope the Minister is open to considering continuing this relief as an option if a suitable alternative cannot be found. In due course, it would be great if he or the Government could let us know what is being planned and on what timeframe, so we may understand what will be happening for veterans.

The child benefit and guardian’s order will uprate the allowances in line with CPI for the 2026-27 tax year. Again, we welcome the increases as these benefits are an important part of our welfare system. Guardian’s allowance is designed to provide further support to people who care for someone else’s child—for example, if the child’s parents have died. When these people step as guardians, they are incredibly important in the upbringing of young children, and we have a duty to support them so that they can ensure that the children they care for have the best start in life.

Although these state benefits are important, the Government are abandoning their responsibilities to tackle the wider benefits bill. In this debate last year, the former Exchequer Secretary, who is now the Chief Secretary to the Treasury, said:

“the Government are committed to delivering a welfare system that is fair for taxpayers while providing support to those who need it.”—[Official Report, 4 February 2025; Vol. 761, c. 716.]

When it came down to it, however, this Government did not take the opportunity to make those savings. Instead, it appears that they caved in to their Back Benchers, and we are now in a position where the benefits bill continues to balloon. According to The Times, even the Prime Minister has vetoed plans to reform the welfare system, simply to avoid the embarrassment of yet another U-turn. That is not fair to taxpayers, or to those who need support the most. In due course, I hope the Minister will set out when the needed benefit reforms will be brought forward and what steps he is taking to ensure that taxpayers’ money goes to those who need it most.

The Conservatives will not stand in the way of any of the statutory instruments before us today, but we look forward to hearing what the Minister has to say—not necessarily this afternoon, I stress—on the points I have raised.

Finance (No. 2) Bill (Fifth sitting)

Dan Tomlinson Excerpts

Committee stage
Tuesday 3rd February 2026 Public Bill Committees

[Dan Tomlinson]

The shadow Exchequer Secretary invited the Economic Secretary to his constituency. Last week, he invited me to come on Valentine’s day to enjoy the bumper cars. I know the Economic Secretary is glad for the invite, but I am particularly glad for the one I received.

Turning to the matter at hand, clauses 139 to 147 and schedule 15 establish the core framework of the carbon border adjustment mechanism, otherwise known as the CBAM—[Interruption.]

[Oliver Ryan (Burnley) (Lab/Co-op)]

Will the Minister give way?

[Oliver Ryan]

If the Minister is not otherwise engaged on Valentine’s day, he is always welcome in Burnley for the bumper cars.

[Dan Tomlinson]

Thank you. Burnley is a fantastic place to visit, and I hope to come before too long.

These clauses create the charge to CBAM, define the goods and emissions in scope, identify who is liable, and set out how the tax rate is calculated and how the relief operates. Together they form the substantive charging provisions that will underpin the operation of CBAM from 1 January 2027.

Clause 139 introduces CBAM as a new tax and signposts the structure of part 5 of the Bill. Clause 140 establishes the charge to CBAM, which applies to the emissions embodied in specified CBAM goods when they are imported into the UK. Schedule 15 defines the goods in scope, initially covering the aluminium, cement, fertiliser, hydrogen, iron and steel sectors. Clauses 141 to 143 set out when goods are treated as imported for CBAM purposes, and who is liable for the charge. In line with established customs principles, liability rests with the importer, with detailed provisions to ensure that the correct person is identified across different importation scenarios, including goods entering via Northern Ireland or subject to special customs procedures.

Clause 144 provides relevant exemptions from the charge. Clause 145 defines “emissions embodied in a CBAM good” and provides powers for the Treasury to specify, in regulations, how those emissions are determined and evidenced. Clause 146 sets out how the CBAM rate is calculated, and clause 147 provides for carbon price relief, allowing the CBAM charge to be reduced where a relevant carbon price has been incurred overseas in relation to the same emissions. That avoids double taxation while maintaining the integrity of the mechanism. Amendment 15 will ensure that the CBAM rate functions as intended, and that CBAM goods face a carbon price comparable to what would apply if the goods were produced in the UK.

The clauses are central to mitigating carbon leakage, and supporting the UK’s path to net zero.

[James Wild]

I am not clear from the Minister’s comments whether he has accepted the Valentine’s invitation, but I am sure I am not alone in not expecting a member of the Committee to corpse on CBAM, which some might say is a rather dry topic.

While CBAM can play a role in ensuring a level playing field for UK manufacturers and producers, it also highlights the levies and taxes applied by the Government on energy, which means that our energy prices are much higher than our competitors. I think we all want to see that burden reduced.

At the 2024 Budget, the Government confirmed the UK will introduce this new CBAM from January 2027, covering broadly the same types of highly traded carbon-intensive basic materials, and putting a carbon price on emissions embodied in certain imported goods, so that they face a comparable cost to that paid by domestic producers. Different countries clearly regulate industrial emissions to very different standards.

UK manufacturers already have to follow obligations to measure, reduce and pay for their emissions, which are costs that we think need to be ameliorated. Extending that principle to imports should, in theory, help to prevent carbon leakage and ensure it results in real global emissions cuts, rather than simply offshoring production and pollution.

As the Minister said, the new charge will initially apply to five sectors: aluminium, cement, fertilisers, hydrogen, and iron and steel. Fertilisers, which are one of the sectors brought within the scope of CBAM, are clearly a critical input for British agricultural producers, particularly for arable farms, where fertilisers already account for around 40% of crop-specific spending and around 12% of total farm costs.

The National Farmers Union has warned about what it calls a fertiliser tax, and has said that using domestic production as the baseline for CBAM levies, despite the UK no longer producing ammonium nitrate at scale, risks a wholesale increase in fertiliser prices at a time when farm confidence, as we all know, is at rock bottom.

The direction of travel is clear. Over time, both the EU and UK will raise the cost of high-carbon fertilisers, making lower-carbon alternatives more competitive as carbon prices tighten. Applying higher taxes where the UK is not a significant producer increases input costs for our British farmers. There is a risk of downstream leakage where UK farmers pay more for fertiliser due to CBAM, while competing with imported food from non-CBAM regimes that are still benefiting from cheaper, higher-carbon inputs, again undermining British producers and our food security.

This all lands on top of the other provisions within the Bill, namely the family farm and family business tax, as well as the cuts and delays we have seen in the sustainable farming incentive and the land management payment schemes and, of course, the additional pressures that are coming through in the cost of employment.

Will the Minister set out what specific assessment the Treasury has made of the impact of CBAM on fertiliser prices, on different farm sectors and on UK food security? How does he intend to prevent downstream carbon leakage, which simply shifts emissions from factories to fields?

Some industry groups, as recently reported in the Financial Times, warn that they think the Government’s current design has flaws and could accelerate de-industrialisation rather than prevent it. A major concern is that the Government plan to apply a single sector-wide rate, based on average emissions, instead of differentiating by product type and country of origin, as I understand the EU scheme does. UK Steel, the Mineral Products Association and the Chemical Industries Association have warned that, without changes, the mechanism will leave domestic producers worse off than their overseas competitors and undermine planned investment and decarbonisation. Has the Minister modelled the impact of using a single sector-wide rate rather than a more granular approach, as well as the impact on investment, jobs and emissions in each of the covered industries?

The Chartered Institute of Taxation, which has provided considerable help and input on all the provisions of the Bill, has flagged that further uncertainty will be caused by questions about the UK and EU emissions trading schemes being linked before the implementation date. The Government and the EU announced last May that they intend to link their ETSs, with mutual exemption from CBAM as part of the package, but I understand that formal negotiations have yet to begin. Perhaps the Minister can give us an update. There are also ongoing political discussions with the EU on the interaction of the two schemes, and the EU’s CBAM is undergoing some delays. That impacts on certainty for some transactions involving Northern Ireland, so I would be grateful if the Minister provided some clarity on where those discussions have got to.

Clause 139 establishes CBAM as the new UK tax on emissions, where a broadly equivalent price has not already been paid overseas. That is the foundation of the new charge. Clause 140 defines CBAM as

“charged on the emissions embodied in a CBAM good”

when it

“is imported into the United Kingdom.”

Those goods are defined by reference to the detailed tariff codes set out in schedule 15.

Schedule 15 focuses on the initial regime for aluminium, cement, fertiliser, iron and steel products, and hydrogen, and it gives HMRC powers to keep the schedule updated in line with tariff changes. Could the Minister elaborate on why those five sectors were chosen for inclusion from 2027, and on when the Government will set out a clear timetable and test for extending CBAM to other sectors, such as glass or ceramics?

Will there be a competitive disadvantage for high-carbon sectors left outside the first tranche, as they will still be exposed to cheaper, higher-emissions imports without any corresponding border adjustment? That point has been made to me privately by some of the Minister’s colleagues who would like to see a wider scope. Has the Treasury modelled how many businesses fall just above the £50,000 annual import threshold, and is it confident that it is capturing those that have substantial business and not imposing a burden on others?

Clause 141 sets out when a good is treated as imported into the UK for CBAM. It covers standard imports and goods under special customs procedures, such as warehousing and movements between Great Britain, Northern Ireland and the Isle of Man. The clause intends to dovetail CBAM with existing customs laws. In Committee, I have repeatedly highlighted the importance of practical guidance: the hands-on support that HMRC will give to smaller and medium-sized importers —I suggest that the £50,000 limit is fairly low.

Clause 142 ensures that where

“a CBAM good has been declared for a special customs procedure,”

processed into a non-CBAM good and then imported, CBAM is still charged on those emissions. This anti-avoidance provision aims to prevent companies from avoiding CBAM by doing limited processing to move a good out of the product list before releasing it into free circulation. The provision is welcome, as it would prevent people from dodging the rules.

Clause 143 places the liability for CBAM on the importer, broadly mirroring customs law by tying liability to the person in whose name the customs declaration is made, or on whose behalf it is made. That is intended to provide certainty, which is important, by aligning CBAM with established customs concepts and practices. Will HMRC give simple template wording or clear guidance so that businesses know how to declare who is responsible for CBAM and for sharing information throughout the supply chain?

The Chartered Institute of Taxation has also raised an important question. As the Minister will know, some businesses operate within VAT groups. If they import goods, they hold an EORI—economic operators registration and identification—number, which anyone who lived through the Brexit negotiations and debates will be familiar with. Under HMRC guidance, one VAT group member with an EORI number can make a customs declaration on behalf of another member. However, this group of clauses does not appear to allow for the formation of a CBAM group similar to a VAT or plastic packaging tax group.

It is unclear how the measures affect those liable under the clause where one VAT group member uses another’s EORI number. If the current easement does not apply to CBAM goods, each member may need its own EORI number, which would add some complexity and administrative burden. Will the Minister clarify the position and understanding on that? If an issue needs to be addressed, will the Government introduce legislation to allow for CBAM grouping to maintain the existing simplifications, as I am sure is their intention?

--- Later in debate ---

We support the principle that British industry and farming should not be undercut by high-carbon imports, and we recognise that a well-designed CBAM can be a tool for economic growth and supporting jobs, but I have raised questions about the practical implementation of this scheme, which is a considerable step in the introduction of a new carbon mechanism charge. I hope the Minister was making notes, and I look forward to his response to my many questions.

[Dan Tomlinson]

I thank the shadow Minister for his questions and engagement. This is one of the largest parts of the Bill, and sets out a significant change to taxation and the treatment of imports in order, as he says, to support domestic businesses that may face higher prices than companies seeking to export to the UK that have cheaper prices and higher emissions.

To go through some of the questions that were asked, the criteria that were looked at internally—over many years and starting under the previous Government; it has taken five years of work to determine which sectors will be in scope—were whether sectors were already in scope of the UK emissions trading scheme, because it is important that those are aligned; whether there was real risk of carbon leakage; and whether it was feasible to implement in 2027. That is why these five sectors were chosen, after significant engagement across Government and with stakeholders. The sectoral scope will be kept under review, and there are some sectors that the Government will continue to have conversations with in the coming weeks to understand their concerns and the benefits that there may be to widening the scope in future. We will keep it under review because, at the moment, the focus is on making sure that we can implement this significant change. It is a long piece of legislation and there are lots of good questions, but we want to get this in as drafted first.

The shadow Minister made several points regarding the sectors that are already in and the extent to which, in his words, they might be made “worse off”. It is important to note that they will be better off than without a CBAM in terms of competition and fairness in imports. At the moment, there is no CBAM, so the imports that come to the UK in these five sectors are, in a sense, undercutting domestic production if we have higher costs. With the introduction of CBAM, that undercutting will be significantly reduced. The prices faced by importers will be brought into line with those faced by those companies in the UK. There is a valid point to make about the detail and specificity with which the carbon prices that are used within CBAM are set, and that is something that I certainly want to keep under review, but it is good and it is right that we make progress with CBAM as set out in the legislation.

[John Cooper (Dumfries and Galloway) (Con)]

The Minister talks about people being better off, but my farmers are very concerned about the fertiliser impact. Four or five years ago, fertiliser was around £180 a tonne; today it is about £400 a tonne, and the introduction of CBAM might put another £100 on top of that. Farmers’ margins are so narrow that they simply have to pass that on, which will have a direct effect on food prices in this country. The Minister says that there will be talks about that. Farmers should be front and centre of those talks, because this is really worrying.

[Dan Tomlinson]

We will engage, and have engaged, with the industries that are directly affected by this change, including the fertiliser industry, and those for whom there will be knock-on effects from higher import prices. With fertiliser in particular, it is worth noting that UK-based fertiliser manufacturers have received more free allowances in recent years than they needed to surrender to be able to cover their emissions. As such, they are not, in practice, paying a carbon price at the moment. The CBAM rate will therefore be set at a low level to reflect that. It is something that I have been looking at as Minster because of these issues, and we expect the initial impact of CBAM on the fertiliser sector to be very modest. None the less I take the point that the hon. Member raises, and the Government will continue to look at it.

On the point around groupings and EORI numbers, that is not a phrase that I have come across before, but I am glad that I have heard it. I will make sure to remind myself of the torturous Brexit process and will, I am sure, understand the context there in more detail. We engaged with businesses in advance of making the proposal and feedback indicated that group treatment would confer relatively minimal benefits, so we chose not to implement it at this time. We will, of course, keep that under review though.

CBAM is a significant change that has been welcomed by many of the industries in the UK and should go a long way to levelling the playing field for those firms that are producing in these five sectors.

[The Chair]

The Minister courteously indicated to me that he has another assignation in Westminster Hall. Exceptionally, I will allow him to leave now, although that is unusual in the middle of a series of decisions. The Minister may make his way out quietly.

While I am on my feet, the cold is getting to my brain, but we all know that the heating system is lamentable at the moment. I shall be in the Chair for the first part of this afternoon as well, so if hon. Members feel the need to wear something warmer, I regard personal comfort as more important than sartorial elegance. [Hon. Members: “Hear, hear!”] That is not an invitation to be outrageous—but please ensure that your personal comfort is given attention.

Question put and agreed to.

Clause 139 accordingly ordered to stand part of the Bill.

Clause 140 ordered to stand part of the Bill.

Schedule 15 agreed to.

Clauses 141 to 145 ordered to stand part of the Bill.

Clause 146

Rate

Amendment made: 15, in clause 146, page 154, line 17, at end insert—

“(4A) In determining the ‘baseline free allocation percentage’ in relation to a CBAM sector, ignore any scheme year in which there were no sectoral emissions.”—(Lucy Rigby.)

This amendment clarifies that scheme years in which there were no sectoral emissions should be ignored when determining the baseline free allocation percentage in relation to a CBAM sector.

Clause 146, as amended, ordered to stand part of the Bill.

Clause 147 ordered to stand part of the Bill.

Clause 148

Administration and enforcement

Question proposed, That the clause stand part of the Bill.

Taxation: Small and Medium-sized Enterprises

Dan Tomlinson Excerpts

Tuesday 3rd February 2026 Westminster Hall

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

It is a pleasure to serve under your chairship, Mr Dowd. I am grateful to the hon. Member for Farnham and Bordon (Gregory Stafford) for securing the debate. I believe it is the second debate of his that I have had the pleasure of responding to in Westminster Hall and I look forward to many more in my time as Exchequer Secretary. I am grateful for his contribution, and I am sure the businesses in his constituency will be grateful to him for representing them in this place; it sounds like he has a fantastic set of small and medium-sized enterprises in his constituency.

On the broader point of the impact of this Government on the economy, I believe the hon. Member was being too downbeat and gloomy. We have seen six interest rate cuts since this Government took office because of the stability that we have brought back. That is bringing down borrowing costs for businesses and improving the cost of living for families up and down the country. That means hundreds if not thousands of extra pounds in their bank account rather than going on their mortgage. Economic growth has increased—we outperformed the OBR forecast by 50% last year—and wages have increased across the economy faster in the first year of this Government than in the first 10 years under the Conservatives. Higher wages and better living standards for people in our communities, in his constituency and in mine, mean that there is more money to spend in the shops to support our high streets.

The hon. Member raised a range of policies. I would gently say that some of them were implemented by his Government. For example, the extended producer responsibility for packaging was, I believe, a Michael Gove initiative. The Labour party in opposition learned the lessons of rubbishing the record of a previous Labour Government, and once we stopped doing that we found ourselves re-elected because people put their trust in us. I gently suggest that the Conservatives be careful what they wish for when they criticise policies that the Conservative Government introduced.

The debate follows two Budgets in which the Government did have to ask businesses and individuals to contribute more to support our public services. But we did all we could, particularly in the last Budget, which I was closely involved with in the Treasury, to keep the contribution we were asking for as low as possible by pursuing fair reforms to our tax system that were long overdue. I am happy to go through them in detail, but I will not do so for the sake of time and because it is slightly off topic. Those changes allowed us to provide support for businesses, for example in the business rates system. The main ask of the public was keeping income tax thresholds frozen at the end of the decade for a further three years in addition to the seven years for which the Conservatives decided they would be frozen.

This Government do back and value small and medium-sized enterprises. They are at the heart of so many communities; I am sure they are at the heart of your constituency, Mr Dowd, and those of all Members in this room. We value such businesses, their contribution and the hard work and graft that the people who set them up do to grow them, to expand to multiple premises, and to hire more people. The work that they do is fantastic, really valued and vital to the culture, life and vibrancy of our high streets and communities. Sometimes these small businesses are the only business in a village or a rural community, whether it be a pub, post office or café. We know how important they are to rural and coastal communities.

[Mr Angus MacDonald]

I have spent a great deal of my life looking at small businesses. There are 4.1 million sole traders or self-employed people in the UK and that £90,000 VAT restriction is a block on building businesses. Were it increased to, say, £250,000 and 10% of those businesses employed people, that would mean 400,000 youngsters in work, and the modelling that I have done shows that His Majesty’s Revenue and Customs would get a lot more money. I would be delighted to go through it with the Minister. If we want real growth from UK micro-organisations, I would really appreciate a chance to meet him to discuss this.

[Dan Tomlinson]

We do have one of the highest VAT thresholds among large economies in Europe and of course the Government keep all tax policy thresholds, rates and so on under review. I would be interested in the analysis that the hon. Member has carried out, though my understanding is that significantly increasing the threshold would not be revenue generating but would cost revenue for the Exchequer.

This goes to a point that the hon. Member for Farnham and Bordon raised. He suggested that we should almost halve the rate of VAT for some businesses. The challenge and trade-offs that we must grapple with in government are not grappled with by those who want to see such significant cuts to VAT, because we have to make sure we maintain revenue to fund the NHS in the hon Member’s constituency, and fund local councils to fill in the potholes and provide the social care that constituents need.

[Mr MacDonald]

I met the Institute of Chartered Accountants in England and Wales this morning and am meeting the Federation of Small Businesses later. We have done all the modelling and I assure the Minister that our numbers are being checked out by all the experts. I think that the Government might be missing a trick on this one.

[Dan Tomlinson]

I am always happy to receive representations from Members on both sides of the House. I will look out for correspondence from the hon. Member in my very large weekend correspondence box, which I always enjoy on a Sunday evening.

[Rachael Maskell]

It might not have filtered through, but I have written to the Chancellor on behalf of many Labour MPs regarding concerns about small businesses and the fact that many of them will not receive the vital support that they need. They are very fearful of what is going to happen in just eight weeks’ time. Will the Minister look particularly at small businesses, which are not getting the relief and support that they need, and ensure that we are able to mitigate some of that? These businesses form a vital part of the whole economic ecosystem. If they are not growing and are instead shrinking then that will have an impact on our whole economy.

[Dan Tomlinson]

I thank my hon. Friend for her question and the representation that she provides in this place for the small businesses in her constituency—it is a wonderful part of the world. If my team have not been in touch already today, I am hoping that we can find time to meet next week for a conversation. I know that this issue is one that is really important to her. York is a fantastic, vibrant and growing part of our economy. I expect that some of what is happening here is that the businesses in her constituency have seen their values increase by more than others in parts of the country that have not been doing as well. That is why the Government have provided a range of support for businesses. I look forward to talking about that with her in the coming days.

We are fast running out of time, so let me turn to the topic of business rates, which Members have raised. It is worth noting that we are implementing significant reforms to the system. On the point around large online retailers, as far as I am aware, throughout the whole history of the business rates system—including the 14 years under the previous Government—the multiplier, otherwise known as the tax rate, for large online giants was exactly the same as that paid by a typical business on the high street. As part of fulfilling our manifesto commitment to reform the business rates system, we have introduced a really significant wedge into it: the multiplier for large online giants and their warehouses is now 33% higher than for a high street business.

I am aware, and we have had lots of discussions about it in this place, that that reform—the significant underlying reform to the business rates system—has happened at the same time as the revaluations since the pandemic have come into place, and at the same time as the Government have chosen to unwind, slowly and with significant transitional reliefs, the temporary pandemic support. That issue was raised by the hon. Member for Farnham and Bordon.

When the Conservatives stood for re-election, the OBR forecasts did not earmark any funding whatsoever for continued support within the business rates system for our high streets. The Conservatives say now that they would not have stuck with those plans, but had they done so—and they are the plans that they presented to the country before the election—the relief would have ended overnight in 2025.

[Gregory Stafford]

You are in charge now.

[Dan Tomlinson]

Yes, and we extended the relief by a year, at a lower rate, and now, rather than ending it overnight, we have introduced significant transitional relief, so many of the businesses in the hon. Member’s constituency will see their increases, if they experience increases, being capped at 15%.

Overall, across the system as a whole more than half of businesses are either seeing their bills flat-falling or staying at zero, and this tax change—this 33% wedge that has been introduced to the system—is, in effect, a transfer of almost £1 billion in business rate liabilities away from the high street and towards the largest businesses, which have properties worth £500,000 or more. This transfer will benefit 750,000 smaller properties on our high streets.

Pubs have also been mentioned. We saw 7,000 pubs close over the 14 years between 2010 and 2024. I am aware that pubs, and indeed all hospitality businesses, experienced challenges, particularly in 2022 when inflation surged to 11% as energy costs went up. To be clear, that was in large part a result of Putin’s illegal invasion of Ukraine and the impact it had on the global economy, but inflation did rise significantly, which impacted individuals and their bank balances. The Government understand that times are tough for businesses on the high street, in part because of that legacy.

The hon. Member for Farnham and Bordon mentioned some statistics about pubs that are now out of date because of the change that was introduced last year; the 76% increase is not going to happen any more. In fact, three quarters of pubs, live music venues and other businesses affected by the changes that were announced last week—

[Gregory Stafford]

It is delayed.

[Dan Tomlinson]

Three quarters will see their business rates fall or stay the same this year. Then, those rates will be frozen for two years. The crucial point, which relates to whether it is delayed or not, is that we are launching a review of the methodology that is used to assess pubs. I am sure that this issue will have come up in the roundtable on business rates organised by my hon. Friend the Member for York Central (Rachael Maskell) with businesses in her constituency, and in the engagement that other Members have with businesses in their constituencies.

Pubs are valued in a relatively distinct way: their takings are used to assess their value, rather than their floor space. That can be quite opaque for pubs. It can also mean that increases in their business rates can appear to be the result of higher takings but really just reflect underlying increases in higher costs, so they can feel like they are running to stand still. We will therefore look closely at the methodology used to value pubs, and hotels, and I hope that we can find a long-term—indeed, permanent—solution in time for the next revaluation, which will come in 2029, as planned.

I will respond briefly to the point that was made about the increase from £800 to £1,600. I urge the hon. Member to check with the particular pub that he mentioned, but I assume it will be the case—each business is different, and I should not comment on individual businesses precisely—that the 15% relief will probably apply there too now, so there should not be a further £800 increase. I note, of course, that there is an increase for that business, as he set out.

We are also publishing a high streets strategy. We will work on that in the coming months and it will be a cross-Government effort. Yes, the Treasury will be involved, but so will Departments such as the Home Office, so that we can support businesses that are struggling with shoplifting. We will also work with the Department for Business and Trade, and with the Ministry of Housing, Communities and Local Government.

I hope that I have responded to a range of points that were made in the debate, and I thank Members for their contributions to it. In the coming months, in my role as Exchequer Secretary I will of course continue to engage with businesses—small and large—on the important points that have been raised today, to see what more the Government can do to support them as they seek to grow, to support employment in their communities, and to support the life and vibrancy of our high streets and town centres.

[Peter Dowd (in the Chair)]

I assure the hon. Member for Farnham and Bordon that I read his parliamentary contributions assiduously, side by side with the Labour manifesto—so there.

Question put and agreed to.

Draft Local Government Finance Act 1988 (Prescription of Non-Domestic Rating Multipliers) (England) Regulations 2026 Draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026

Dan Tomlinson Excerpts

Monday 2nd February 2026 General Committees

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

I beg to move,

That the Committee has considered the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.

[The Chair]

With this it will be convenient to consider the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.

[Dan Tomlinson]

The regulations prescribe the circumstances in which the new retail, hospitality and leisure and high value business rates multipliers will apply.

It is a pleasure to see you in the Chair, Dr Murrison—[Hon. Members: “No!”] No? Oh, that is totally wrong; who have we got in the Chair? [Hon. Members: “Mr Mundell.”] Mr Mundell—that’s right. Forgive me for my sins; I know not what I do. Members will be glad to know that I do not plan on speaking for 15 minutes today, as I did in the Chamber the other day.

The regulations give effect to the new business rates multipliers for qualifying retail, hospitality and leisure and high-value properties. This is the first step to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. At the Budget we announced a comprehensive set of reforms to business rates. We have created a new, fairer system with permanently lower multipliers for RHL properties with rateable values below £500,000. The scope of these new multipliers is broadly the same as that of the current RHL relief. These new multipliers will be 5p below their national equivalents, but when combined with the outcomes of the revaluation, the tax rate that RHL properties on the small business multiplier pay next year will fall by nearly 12p and the rate for RHL properties on the standards multiplier by 12.5p.

It is important that we make support for the high street sustainable, so we are funding these new multipliers through higher rates on the top 1% of properties—those with rateable values of £500,000 and above. The higher multiplier will be only 2.8% above the national standard multiplier, meaning that properties in its scope will pay a reasonable tax rate too. These new rates will be worth almost £1 billion a year and will benefit more than 750,000 RHL properties. They will mean that from April, the most valuable properties, such as large distribution warehouses occupied by online giants, will pay a tax rate 33% higher than that for small high street properties.

The new business rates multipliers being brought into force by these statutory instruments are the first step to creating a fairer business rates system that protects the high street, supports investment and is fit for the 21st century. I commend them to the Committee—and forgive me, Mr Mundell.

[The Chair]

Forgiven.

--- Later in debate ---

[Dan Tomlinson]

In response to the points raised by the shadow Minister, it is worth emphasising that the decision to introduce new tax rates to the system means that, for the first time, a typical high street business now has a lower multiplier—a lower tax rate—than the online giants and the larger properties. The tax rate on larger properties is 33% higher than the rate paid by a smaller property on the high street. That significant difference is the first step in the reforms that we have implemented to business rates.

I will not make the point that the previous Government would have removed the reliefs overnight, but I will say that if they were planning on keeping them, I do not understand why that information was not in the documents that the OBR published in advance of the general election. If the shadow Minister will not concede that his Government would have got rid of the reliefs overnight, he seems to be suggesting that there was a multibillion-pound unfunded tax cut that they did not tell us about before the election. I am not sure which he would prefer.

In advance of the Budget, we considered the inclusion of large retail stores within the high-value multiplier. It is really encouraging that Sainsbury’s, the Co-op, Iceland and other large retailers have welcomed our getting the balance right in the business rates system and setting the multiplier at a rate that has allowed some shops to reduce prices, or at least hold down price increases for consumers, because of the changes that we made and the proportionate way in which we went about making them.

We are committed to going further to reform the business rates system. At the Budget, we published a call for evidence on how to remove further barriers to investment. Transforming business rates is a multi-year process. The Government remain firmly committed to collaborating with stakeholders and with businesses small and large to achieve further meaningful change in the business rates system.

Question put and agreed to.

Draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026

Resolved,

That the Committee has considered the draft Local Government Finance Act 1988 (Calculation of Non-Domestic Rating High-Value Multiplier) (England) Regulations 2026.—(Dan Tomlinson.)

Finance (No. 2) Bill (Fourth sitting)

Dan Tomlinson Excerpts

Committee stage
Thursday 29th January 2026 Public Bill Committees

[Martin Wrigley (Newton Abbot) (LD)]

On reading the clause, I too was concerned about the costs for SEND. Devon, which is a very rural county, spends something like—from memory—£50 million a year on taxis to move children across the county who require special schools in different areas. A 20% tax on that would equate to £10 million. Will the Minister clarify whether taxis used for SEND transport by councils are included? If so, will the Minister please negotiate the extra money that will be required, so that we do not have our SEND budget in Devon cut by £10 million?

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

It is a pleasure to speak under your chairship, Mrs Harris. I am very glad to see you in the Chair. Rather than running through these changes in detail, let me respond to some of the points that have been raised, because they are important and, in some cases, valid.

As a tax Minister, I am not going to comment on the affairs of individual taxpayers, by which I mean individual businesses, but I will say that the exclusion from TOMS applied to several large private hire vehicle operators. Crucially, it ensured that they were subject to the same tax rules as everyone else. That is what this change is trying to do.

Regarding any subsequent potential changes to the operation of business models that may or may not have taken place—hon. Members have mentioned some reports, but at this stage they are only reports—HM Revenue and Customs will always make an operationally independent assessment of whether a private hire vehicle operator is operating as an agent or, as it is sometimes called, a principal, and it will charge tax accordingly. If there are any implications—we do not know yet whether there will be—any costing update will flow into the forecast as usual.

--- Later in debate ---

[James Wild]

May I return to the point about the ancillary services? Proposed new subsection (3A) in section 53 of the 1994 Act requires only

“the provision of accommodation, or…the transport of passengers by bus, coach, train, ship or aircraft.”

Excursions or trips are not covered, which is why the ICAEW has suggested simply amending the wording to include the services of tour guides, trips and excursions to ensure that genuine day-trip packages, wholly within TOMS, continue to be protected. Under the clause as drafted, they will not be; a proportion of them will face an extra 20% charge. That is the case, is it not?

[Dan Tomlinson]

We are confident that the exclusion drafted in the Bill is carefully targeted and will not have unintended implications by limiting the activities of legitimate tour operators. It is right to make this change, which will raise £700 million of tax revenue that the Government believe should already be being paid. It will be a vital contribution to the public finances.

[Martin Wrigley]

Will the Minister address the SEND concerns, please?

[Dan Tomlinson]

The Government are, of course, aware of the pressures on local council finances as a result of the growing number of children with additional needs who require transportation or other support. It is important to note that the clause does not seek to apply additional VAT to those who are not already seeking to make use of the TOMS. The vast majority of taxi services across the country are not using the TOMS and will be unaffected by this change, but we think it right to ensure that this particular use of the TOMS cannot continue, in order that we can raise revenue.

[Mr Reynolds]

Will the Minister give way?

[Dan Tomlinson]

I have given way multiple times, but I am happy to do so again, because we are in Committee and it is good to have thorough scrutiny.

[Mr Reynolds]

I thank the Minister for his generosity. Will he confirm that if any local authority sees an increase in its spending on SEND transport because of the 20% VAT, the Treasury will work with the Ministry of Housing, Communities and Local Government to ensure that those authorities are paid back in full for that extra cost? That reassurance would help to put our minds at ease, along with council leaders and council chief executives across the country who are worried that they might have a hole in their budget come the next financial year.

[Dan Tomlinson]

Local authorities have usual and long-standing mechanisms for handling their VAT liabilities, including reclaiming the VAT where permissible.

I hope that I have responded with sufficient thoroughness to the points that have been raised. I commend the clause to the Committee and urge that amendment 42 be withdrawn and new clause 14 be rejected.

[James Wild]

I need to hammer the nail about day-trippers while we have the taxman on the Government Benches. Proposed new subsection (3A) in section 53 of the 1994 Act does not provide for day-trip excursions not to be in scope; it refers simply to accommodation and passenger transport not being captured. I hope that the Minister might look at that again, because certainly in tourist areas such as my own constituency, those day trips are part of the local economy and hospitality sector. He knows well from his portfolio that pressures are being placed on hospitality businesses more broadly, not just on pubs.

I am not sure whether we got the full guarantee on SEND. Perhaps the Minister will write to the Committee to set out the position on that, so we all have clarity and can go back to our local authorities to assure them that the £700 million that the Government are looking to raise in additional taxes will not be coming from our council tax payers.

I am not satisfied that the Minister has dealt with the rural issue or the impact on such areas. I appreciate that he does not come from a rural constituency, so he does not have that at his fingertips, but certainly in my area, people rely on private hire vehicles and taxis to get around. That is a big issue, so I will therefore be pressing the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Dan Tomlinson]

I thank the Opposition spokespeople for their questions. [Interruption.] Spokesmen—very good. Before the Budget, I attended a roundtable with businesses, charities and those who had been campaigning and advocating for the change we brought in at the Budget. In response to many of the questions asked by the Opposition spokesmen, I can reassure them that we worked through the limits and detail of the clause really closely with the charitable sector and with the businesses that would have a different VAT treatment or that may pass on their goods in this way.

On the specific question about guidance, it has already been shared with stakeholders and we continue to engage with them. I will see if my officials can send the Opposition spokesman, the hon. Member for North West Norfolk, the guidance if he would be interested to see it. The value of goods will be commensurate with a £10 million a year Exchequer cost.

On the threshold, the Government have decided not to uprate it in line with CPI, but we will continue to keep it under review. As I said, it was set after detailed and extensive conversations and engagement with the groups that will be involved with the different treatment through either receiving or donating the goods.

It is worth noting that, due to the wonders of modern capitalism, lots of the prices of consumer goods have actually been falling in real terms over time—for example, we might think about how expensive a traditional washing machine or a television is today compared with 20 or 30 years ago. It is not clear to me that it would be appropriate to continue to uprate the threshold as default in line with CPI. For that reason, I encourage that amendment 43 be rejected, and commend clause 80 to the Committee.

[James Wild]

The hon. Member for Maidenhead makes a reasonable point about the £200 limit. The Minister said that there had been a lot of discussion to arrive at that threshold, but I do not think he exposed the entire rationale underpinning it—he talked about washing machines and their prices, which was an interesting diversion. The point remains that if we have a £200 limit and we think that is the right limit now, why do we not just automatically uprate it? Then the Minister will not have to come back with regulations or put other clauses in future Finance Bills. It would save us all a lot of hassle and palaver, and would mean that people and charities know where they stand. Our amendment is a modest measure, which I am surprised that the Minister has not simply accepted, so I will test the will of the Committee.

Question put, That the amendment be made.

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[Dan Tomlinson]

My remarks on clause 81 will be very brief. The changes that the clause makes will add combined county authorities to the list of bodies eligible for refunds under section 33 of the Value Added Tax Act 1994. This will remove the need for individual Treasury orders each time a new combined county authority is established. I commend the clause to the Committee.

[James Wild]

I thank the Minister for that very succinct description of the clause. He will be pleased to hear that I have only a few points to make—[Interruption.] The hon. Member for Burnley says, “That’s good.”

The clause allows newly created combined county authorities to reclaim VAT incurred on non-business activities, such as statutory public functions. At present, established local authorities can recover VAT on such activities under section 33 of the Value Added Tax Act, but the definition does not explicitly include combined county authorities. We understand that that change took effect last year.

The explanatory notes make it clear that the clause is intended to ensure fiscal neutrality for the new governance arrangements. Combined county authorities should be no worse off than traditional counties because of their form, but of course the beneficiaries are the combined authorities that are being formed under the Government’s local government reorganisation plans.

My own county of Norfolk is set to be joined with Suffolk in one of these combined county authorities, with a mayor sitting across the two counties. People in Norfolk and Suffolk were looking forward to that mayor being elected in May, until the Government cancelled our election as a late Christmas present in December. As a result, we will not have a combined county authority mayor in place and we will lose out on the £40 million that the mayor was meant to have through the investment fund.

The county council elections for the authority that will make way for the combined county authority, which will then benefit from this VAT exemption, were also cancelled. So there is more delay and uncertainty, and a loss of funding, as people look at the creation of these combined county authorities, which are the subject of the clause, and the refund that they will be able to get. The clause is sensible, but the Government’s wider plans that sit behind it are somewhat chaotic, and cancelling elections is undemocratic.

[Mr Reynolds]

Balancing VAT refund rights to ensure fairness for CCAs is, of course, welcome, and we support it. We support the idea that VAT refund rights should be balanced across groups and institutions that are similar and have a similar purpose. That is why I hope you will allow me to share some surprise, Mrs Harris, that the Government have not gone further in balancing refund rights. For example, a school with a sixth form attached can claim its VAT back, but a sixth form college cannot. My hon. Friend the Member for Mid Sussex (Alison Bennett) has been campaigning on that for a significant time. In answer to a written question, the Minister confirmed that the Government are not planning to extend the VAT refund right to sixth form colleges, but they have done so for combined county authorities. Will the Minister explain the rationale for that? We all support the idea of balancing VAT refund rights, so we should surely be extending that to other situations.

[Dan Tomlinson]

I am glad that the hon. Member for Maidenhead is aware of the answer to the written parliamentary question. I have also responded in writing to Members who have written to me about this issue, and the rationale has been set out in that correspondence.

Question put and agreed to.

Clause 81 accordingly ordered to stand part of the Bill.

Clause 82

UK listing relief

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 15—Review of extension of three-year period for UK listing relief—

“(1) The Chancellor of the Exchequer must, within 12 months of this Act being passed, publish and lay before Parliament a report on the potential benefits of extending beyond three years the period for which UK listing relief applies under section 82.

(2) The report under subsection (1) must assess the—

(a) impact that extending the period could have on the attractiveness of UK markets for new listings,

(b) potential effects on capital raising and investment in the UK, and

(c) implications for Exchequer revenues.”

This new clause would require the Chancellor of the Exchequer to report on the potential benefits of extending beyond three years the period for which UK listing relief applies under section 82, including effects on the attractiveness of UK markets, capital raising and Exchequer revenues.

[Dan Tomlinson]

The Government are committed to ensuring that world-leading capital markets support our firms to raise the capital they need to continue to grow and invest. Clause 82 introduces UK listing relief, which means that transfers of a company’s securities will be subject to relief from stamp duty reserve tax for the first three years after the company lists in the UK.

Stamp duty reserve tax and stamp duty are charges on transfers of UK securities. They are vital sources of revenue for the Exchequer, and combined they are forecast to raise up to £5.3 billion a year by the end of the forecast period. The Government are focused on ensuring that the UK is the best place for firms to start, scale, list and stay, and we have delivered an ambitious programme of reforms to build on those strong foundations.

The changes made by the clause will remove the 0.5% stamp duty reserve tax charge on the transfer of a company’s securities for three years from the point at which the company lists its shares on a UK-regulated market. That will enable newly listed companies to secure higher share prices, boost trading volumes and improve access to capital.

[Mark Garnier (Wyre Forest) (Con)]

It is great to hear the Minister talking about making the City of London a pre-eminent place in which to grow and list companies, and this is a very welcome measure. However, if he accepts that stamp duty is what has been holding back the listing of shares, why do the Government not go the whole hog and get rid of stamp duty altogether, thereby making the City of London comparable with pretty much every other major developed stock market in the world?

[Dan Tomlinson]

As the hon. Member knows, there are always trade-offs to be considered in taxation policy design. As I have just outlined, there is around £5 billion of revenue here. We must ensure we get the balance right between raising revenue and continuing to support growth and the ability of companies to grow and invest in the UK.

We did make changes at the Budget, for example to venture capital trusts, enterprise investment schemes and enterprise management incentives to encourage start-ups in particular to scale up in the UK, as one of our frontier sectors seeing growth. We have made changes to support that. I note the Opposition’s perspective, but on balance we think this is a good change to make on its own. We look forward to seeing the impact that it will have and we will continue to keep our tax measures under review.

New clause 15 would require the Chancellor to publish, within 12 months, a report on the potential benefits of extending the period in which the UK listing relief applies beyond three years. The Government have carefully considered the scope of this relief, including the length of the relief period. The first few years after listing are crucial for companies as they endeavour to establish long-term viability on public markets, with the most vital period being the initial one or two years. However, our judgment is that the benefits of significantly extending the relief beyond this period would not represent best value for money, as the Exchequer cost would increase while the benefits for firms would diminish with each additional year. I therefore commend clause 82 to the Committee and ask that new clause 15 be rejected.

[James Wild]

I rise to speak to clause 82 and new clause 15 tabled in my name and those of my right hon. and hon. Friends. As we have heard, clause 82 introduces a time-limited relief from stamp duty reserve tax for companies listed on a UK-regulated market. The Committee will know that stamp duty is charged at 0.5% on trades in chargeable securities such as shares. This form of transaction tax is among the most economically inefficient, in the same way stamp duty is on homes: it dampens the market, prevents people from moving and undermines labour market flexibility. As a result, we have committed to abolishing stamp duty on house sales—not stamp duty on shares—and that has been very warmly welcomed.

Under clause 82, trades in a newly listed company’s securities will be exempt from that 0.5% charge for the first three years after the company lists, provided specified conditions are met. The relief will apply to new listings from November last year, with the detail on the qualifying markets and securities set out in the clause, with which hon. Members will, I am sure, have familiarised themselves. We on this side of the Committee support the principle behind the clause.

Some Opposition Members have highlighted the potential benefits of scrapping this transaction tax entirely. We all want to see more companies listing and raising capital in the UK, and steps to lower frictional trading costs can contribute to that ambition. However, my new clause 15 seeks to go further by requiring the Government to publish a report on the potential benefits of extending the stamp duty relief beyond three years. Specifically, I am asking Ministers to assess how a longer relief period could affect the attractiveness of UK markets for new and returning listings, and the impact on capital raising, investment and Exchequer revenues. According to the “Budget 2025 Policy Costings” document, historical listing activity has raised between £14 billion and £17 billion of capital each year. The same document shows that the relief is expected to cost the Exchequer £25 million in the first year, rising to about £50 million a year once fully implemented.

--- Later in debate ---

How many new listings does the Treasury expect the relief to attract or retain over the forecast period? On what modelling are those estimates based? Why was the three-year period chosen? Perhaps the Minister will elaborate slightly on his very brief introductory justification. How does the measure fit within the broader strategy that the Government must be pursuing—taking up those suggestions from TheCityUK in that report—in order to ensure that the UK is the most attractive place in the world to list? Will the Government commit to publishing regular data on the number of companies that are claiming the relief, and its impact on liquidity and listing behaviour? New clause 15 offers a practical way to help answer some of those questions, and to ensure that this measure delivers lasting benefits for UK markets, rather than being a short-term signal when people are making long-term decisions.

[Dan Tomlinson]

As with other measures that have been debated this week, for example on business rates, it seems that the Conservatives were just getting around to reform on the issue. Now they are in opposition, they seem to have developed a significant zeal for reform and tax cutting that they did not show at all when they were in government—for example, leaving business rates unreformed, as well as leaving this measure totally unreformed.

[James Wild]

I am surprised that the Minister has brought up business rates. This is very important. We look with sympathy at having to reverse the Chancellor’s mess, although the Minister will be coming back in a few months, I am sure, with a further U-turn. Just to clarify on business rates, did the Government choose to scrap the 40% relief that was in place when they came into office?

[Dan Tomlinson]

I do not know whether you want the conversation to continue on a tax that is not in scope, Mrs Harris, but I am happy to answer the question.

[The Chair]

Can we keep to the clause, please?

[Dan Tomlinson]

Indeed, Mrs Harris. I respect your judgment and authority in such matters.

As I said, the Government carefully considered the scope of the relief, including the length of the relief period. The first few years after listing are vital in establishing longer-term liquidity, the most important period coming right at the start. The benefits of extending the relief significantly beyond that period, in our judgment, would not represent value for money for the taxpayer.

[Mark Garnier]

The Minister talks about value for money and the cost, but the alternative is that there will be no listings, so it does not cost anything because this is revenue that the Government would not otherwise have. If they levy this stamp duty, people will not list—they will go to other markets. If they remove it, people will list. There is not actually any change in the revenue to the Government. I do not understand why they cannot extend it. It is not lost revenue because it never would have been generated in the first place.

[Dan Tomlinson]

Of course there will be companies that will list under the current tax regime, and changing the tax would lead to lower revenues for the companies that would have listed anyway. We have to look at both sides of the coin. [Interruption.]

[The Chair]

Order. Mr Garnier, please stop chuntering from a sedentary position.

[Dan Tomlinson]

The Government are doing a lot to continue supporting the UK’s vibrant capital markets. We have some of the deepest capital markets globally. We have, for example, changed UK listing rules to bring the UK into line with international best practice. We are also changing and improving the prospectus regime, significantly cutting the amount of paperwork that a firm needs to produce while providing better and more relevant information to investors.

We are taking a range of actions to support our capital markets and to support firms to list here. We have seen some good progress in recent months, with more companies choosing to list in the UK, and I hope and expect that we will see more of that soon.

Question put and agreed to.

Clause 82 accordingly ordered to stand part of the Bill.

Clause 87

Rates of duty effective from 6pm on 26 November 2025

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clause 88 stand part.

New clause 31—Review of effects of sections 87 and 88 on illicit tobacco market—

“The Chancellor of the Exchequer must, within six months of this Act being passed, publish an assessment of the impact of the provisions made under sections 87 and 88 on the illicit tobacco market.”

This new clause would require the Chancellor of the Exchequer to publish an assessment of the impact of sections 87 and 88 on the illicit tobacco market.

--- Later in debate ---

[Dan Tomlinson]

Clauses 87 and 88 implement changes announced at Budget 2025 concerning tobacco duty rates.

At the Budget, my right hon. Friend the Chancellor confirmed that the Government will increase tobacco duty in line with the escalator. Clause 87 therefore specifies that the duty charged on all tobacco products will rise by 2 percentage points above retail prices index inflation. The new tobacco duty rates will be treated as having taken effect from 6 pm on the day they were announced, which was 26 November 2025. In October 2026, tobacco duty will rise again in line with the escalator with the introduction of vaping duty. That is to preserve the price differential between vaping and tobacco products to ensure the duty on vaping does not make smoking more attractive, and will maintain the incentive to choose vaping over smoking.

New clause 31 would require the Government to publish an assessment of the impact of the changes to tobacco duty rates on the illicit tobacco market within six months of the Bill being passed. The Government will not accept the new clause, as the potential impact on the illicit market is already one of several factors that we consider when we take decisions on tobacco duty rates. We have already published a tax information and impact note alongside the Budget to set out the expected impact of this measure. I commend clauses 87 and 88 to the Committee and I reject new clause 31.

[James Wild]

I rise to speak to clauses 87 and 88, as well as new clause 31 tabled by the Conservatives. As the Minister said, clause 87 increases tobacco duty and the minimum excise tax with effect from Budget day, as is traditional. As he also outlined, tobacco duty is clearly charged on cigarettes and other tobacco products, while the minimum excise tax ensures that cheaper cigarettes do not escape the appropriate levels of taxation.

Clause 88 sets out a further increase from October this year, introducing an additional uplift in line with RPI, alongside a one-off increase of £2.20 per 100 cigarettes and a similar rise for hand-rolled tobacco. The one-off increase coincides with the introduction of the new vaping products duty, which we may get to talk about later in Committee.

As the Committee discussed last year, in the autumn Budget 2024, the Government announced that the measure was intended to preserve the price gap between tobacco and vaping products, with the same £2.20 rate applying across both categories. These measures will result in a sharp rise in the duty per pack and per pouch. While we broadly support these measures, there are concerns about the implications for illicit trade and enforcement. As we discussed in the Committee of the whole House on the Budget and the Finance Bill in relation to the Government’s almost doubling of gambling taxes, the risk, as always, is that such steep increases widen the price gap between legal and illegal products, making it more profitable for criminal networks, and more tempting for consumers to turn to the black market.

The tobacco duty has been around for a long time, and in recent years successive increases have sought to maintain the financial incentive for people to switch to vaping or to give up entirely. The OBR forecasts that tobacco duty will raise around £8 billion in the current financial year, a modest rise of 0.8% from the previous year, before receipts fall steadily to £7 billion by 2031. The tax information and impact note suggests that the Exchequer impact from this measure will peak at about £130 million before tailing off, consistent with those forecasts.

In economic terms, it would appear that tobacco duty is pushing beyond the point of maximum returns—beyond the Laffer curve peak. As Members of this House, our focus should be on ensuring that further increases in gambling taxes, or the tobacco taxes that we are debating here, do not simply fuel illegal trade. Raising prices on tobacco inevitably risks boosting demand for illicit products, with the associated criminality that blights our communities and fuels organised crime gangs. Even the TIIN acknowledges that some consumers may switch to cross-border or illicit purchases.

HMRC says that it will “monitor and respond” as part of its anti-fraud strategy, but frankly, more clarity and more action are needed. Will the Minister outline specific measures that HMRC will use to counter any shift towards the black market? What assessment has been made of the risk to consumers who buy illicit products, both in terms of the health impacts and the costs to public services such as our NHS?

Mrs Harris, you are probably wondering what the scale of this problem is. According to HMRC, 10% of cigarettes and 35% of hand-rolling tobacco consumed in the UK are from illegal or non-UK duty-paid sources. However, industry data suggests—I of course recognise that the companies have an interest, and I do not take their figures at face value—that the problem may be far worse, with up to 30% of cigarettes and over 50% of hand-rolling tobacco now being sourced illicitly. If accurate, those are levels that have not been seen the mid-2000s.

I cited similar data in Committee during the passage of the Finance Act 2025, when similar provisions were brought forward. Can the Minister update me and the Committee on what discussions have taken place with HMRC about the discrepancy in the estimates? We have one estimate of 10% and another of 30%; that is a huge difference, and we have to get to the actualité.

HMRC’s own director of indirect tax—I want to see that on a business card—has said that illicit tobacco costs the taxpayer around £1.8 billion a year in lost revenue. That is a lot of tax being avoided that could be collected, were this legislation properly implemented. Is that the Government’s estimate? If not, can the Minister provide more up-to-date figures on the gap between legal and illegal sales? It would also be helpful to know whether the Government have assessed the cumulative impact on retailers and enforcement bodies, if the illegal market continues to expand. That is precisely the purpose of new clause 31, which would require

“an assessment of the impact of the provisions made under sections 87 and 88 on the illicit tobacco market.”

HMRC launched its first strategy to tackle illicit tobacco back in 2000. I will not go through them all, but subsequent updates, working closely with Border Force, have delivered progress. They have reduced the duty gap on cigarettes by a third and on hand-rolling tobacco by half, which is a welcome success. The previous Conservative Government launched a strategy in March 2024, building on that record.

I am pleased to see that the trading standards powers we introduced in July 2023 are producing results. By early January this year, over £1.4 million in civil penalties had been issued for illicit tobacco sales. When in government, we recognised the importance of enforcement. The Public Accounts Committee, on which my hon. Friend the Member for Mid Bedfordshire serves and I had the pleasure of serving for two years, estimated that every £1 spent by HMRC on compliance recovers £18— a fine rate of return.

--- Later in debate ---

As I have set out, we will not oppose these measures, but we will continue to press the Government on the growth of the illicit market, because every £1 lost there is £1 that is not funding the NHS, our schools or enforcement itself. I look forward to the Minister’s response to my questions about HMRC’s plans to deal with the market, what the difference is, how we will get robust data, what progress has been made in the years since I last raised this, and the proposal to give HMRC’s powers to trading standards to enforce the law, tackle illicit trade and break up the criminal gangs that blight our communities.

[Dan Tomlinson]

Let me respond to some of the Opposition spokesman’s points. HMRC’s estimate of illicit trade is published annually in “Measuring tax gaps”, which are official statistics produced to the highest quality standards. They adhere to the values, principles and protocols set out in the UK Statistics Authority’s code of best practice for statistics and are regulated by the Office for Statistics Regulation. HMRC is always looking for ways to strengthen them, but the Government consider them to be the most reliable estimates of illicit trade. As he set out, the figures produced by the tobacco industry or those working on its behalf cannot be regarded as a fully neutral assessment of the situation on the ground.

The Opposition spokesman asked about the latest figures. The latest figures from the 2023-24 tax year are that the tobacco duty gap was 13.8%, equivalent to £1.4 billion. He is right that every penny not collected there is a penny not going towards public services. We need to continue to focus our efforts on what we can do to reduce that figure. He mentioned the work of the previous Government, and this Government will build on that. We will continue to work with Border Force to seize cigarettes and hand-rolling tobacco. The Committee may be interested to know that in the 2023-24 tax year, HMRC and Border Force together seized 92,435 kg of hand-rolling tobacco. We are continuing to see what more we can do. HMRC and Border Force published a strategy in 2024 setting out the continued commitment to reduce the trade, with £100 million of funding in enforcement capability and £1.4 billion to recruit 5,000 compliance officers.

I had not heard the Opposition spokesman’s point on trading standards before; I did not have the pleasure of serving on the Public Bill Committee of last year’s Finance Bill when he raised it. The Government’s policy position is as it stands, but I am always interested to hear policy ideas. I will take his point back to the Department.

Question put and agreed to.

Clause 87 accordingly ordered to stand part of the Bill.

Clause 88 ordered to stand part of the Bill.

Clause 89

Vehicle excise duty for light passenger or light goods vehicles etc

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 17—Statement on increases to vehicle excise duty for cars and light goods vehicles—

“(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 increase to vehicle excise duty made under section 89.

(2) The statement under subsection (1) must include details of the impact on—

(a) the automotive sector,

(b) household incomes, and

(c) the UK economy.”

This new clause would require the Chancellor of the Exchequer to make a statement to the House on the impact of the increase to vehicle excise duty under section 89 on the automotive sector, household incomes and the UK economy.

[Dan Tomlinson]

I will keep my remarks brief, if only to give the hon. Member for North West Norfolk more time to inform us of his opinions on this matter. Clause 89 makes changes to uprate vehicle excise duty rates for cars, vans and motorcycles in line with the retail prices index measure of inflation from 1 April 2026. New clause 17 would require the Chancellor to make a statement to the House on the impact of that 2026-27 increase to VED rates, but the increase announced in the Budget is in line with the retail prices index, meaning that rates will remain unchanged for vehicle owners in real terms by that metric. It is therefore the Government’s judgment that the new clause is unnecessary. I therefore commend clause 89 to the Committee, and recommend that new clause 17 be rejected.

[James Wild]

I am very happy to share my views with the Committee on each and every clause as we go through; that is part of what we are here to do. I am also happy for the Minister to expand on the merits or otherwise of his legislation at will. If he prefers to keep it brief, we can read into that what we wish.

Clause 89 increases vehicle excise duty, the annual charge for keeping a car, van or motorcycle on the roads, in line with the retail prices index. Those changes take effect in relation to licences taken out on or after 1 April. Let us be clear: in practice, that means higher costs for almost every driver. New clause 17 seeks to make sure that those impacts are assessed. It specifically looks at the impact on the automotive sector, household incomes and the UK economy.

We will not vote against clause 89, but the Government should not take our position as an endorsement of their wider approach to motorists. Vehicle excise duty flows straight into the Treasury’s general fund, and the amount that a driver pays depends on the vehicle type, registration date and emissions, with rates adjusted. According to the OBR, vehicle excise duty is forecast to raise getting on for £12 billion by the end of the decade, due in no small part to the RPI increases. It is interesting that the Minister is keen to increase people’s taxes by RPI on a regular basis but will not give such a commitment on a fairly minor charitable threshold. We will leave that there, though, as we have debated that clause.

Ministers like to describe these increases as modest. On their own they may be, but we have to look at all these things in the round, and the impact of these clauses on individuals. If we look at all the costs—the hike in fuel duty and the new mileage-based charge planned for electric and plug-in hybrid electric vehicles, which will cost the average driver £255 a year—the cumulative impact begins to bite. That is why the new clause looks at the impact of this measure. That all comes on top of rising insurance premiums, servicing costs and of course the wider pressure on household budgets. Everyone’s bills are going up, and there seems to be no end in sight.

Let us not forget that it was this Government who decided to end the 5p fuel duty cut that the last Conservative Government introduced—a decision that will cost the average family around £100 a year from September. Then, from next April, the long-standing fuel duty freeze that was in place for 16 years will also be scrapped, replaced by inflation-linked rises. That freeze has saved motorists £120 billion since 2010, but once again, drivers are being asked, through this measure, to pay the price for the Government’s failure to get a grip on the economy.

Motorists and motoring organisations including the RAC have rightly warned that these charges come at a time when the cost of living remains high and public transport options are patchy—particularly outside our major cities, as we discussed in the context of private hire vehicles and taxis. For many in rural areas like my own, a car is not a luxury but a necessity to get around, get to work and see family. Many people do not have an alternative to their car. Drivers are paying more, yet the Prime Minister boasts about things like his £3 bus fare cap, which he quietly increased by 50%. That is why new clause 17 would require an assessment of the impact of the increase in vehicle excise duty.

Although we will not vote against the clause, we expect some answers from the Minister. Will he confirm whether the Treasury has modelled the combined impact of these motoring costs—VED, fuel duty, the upcoming road pricing charges—on household budgets, particularly in rural areas where public transport is limited? What assessment has been made of the impact on small businesses that depend on vans and light goods vehicles to operate in each of our constituencies every day? Those are the people we should think of when we consider clauses such as this. New clause 17 would help to deliver the clarity that Britain’s 50 million motorists deserve.

[Dan Tomlinson]

In response to the shadow Minister’s question, the Government do consider the impact of each individual tax measure on businesses and consumers in the round with the others, at Budgets and in between them too. As a result, we have concluded that this is the right and proportionate way forward, to protect revenue and make sure that we can increase revenue in line with inflation, rather than beyond it.

Question put and agreed to.

Clause 89 accordingly ordered to stand part of the Bill.

Clause 90

Vehicle excise duty for rigid goods vehicles without trailers and tractive units

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 91 to 93 stand part.

Clause 95 stand part.

New clause 18—Statements on HGV Vehicle Excise Duty and HGV Road User Levy—

“(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 increase to HGV vehicle excise duty made under sections 90 to 93 and the increase to the HGV Road User Levy made under section 95.

(2) The statement under subsection (1) must include details of the impact on the—

(a) haulage sector,

(b) decarbonisation of the logistics industry, and

(c) UK economy.”

This new clause would require the Chancellor of the Exchequer to make a statement to the House on the increases to HGV vehicle excise duty under sections 90 to 93 and to the HGV Road User Levy under section 95, including their impact on the haulage sector, decarbonisation of logistics and the UK economy.

[Dan Tomlinson]

Clauses 90 to 93 will make changes to the vehicle excise duty rates for rigid goods vehicles without trailers and tractive units, the cab of an articulated lorry, rigid goods vehicles with trailers, vehicles with exceptional loads, and haulage vehicles other than showman’s vehicles. Clause 95 will make changes to uprate the heavy goods vehicle—HGV—levy.

The registered keeper of a vehicle is responsible for paying VED. The rates depend on the vehicle’s revenue weight, axle configuration and Euro emissions status. The HGV levy is payable for both UK and foreign HGVs using UK roads. A reformed HGV levy was introduced in August 2023, which varies according to the vehicle’s weight and Euro emissions status.

New clause 18 would require the Chancellor to make a statement to the House—in a similar way, I believe, to new clause 17 that we just discussed—on the increases to HGV vehicle excise duty under clauses 90 to 93, and the HGV road user levy under clause 95. Similarly, given that the uprating is in line with inflation and that rates will remain unchanged in real terms for vehicle owners, it is the Government’s view that the new clause is not therefore necessary, and I urge the Committee to reject it.

[James Wild]

The clauses deal with changes to vehicle excise duty for heavy goods vehicles, rigid good vehicles with and without trailers, vehicles with exceptional loads, and haulage vehicles other than showman’s vehicles. I welcome the exemption for showman’s vehicles as we look forward to the King’s Lynn Mart, which has been going for 800 years. On 14 February, I will be joining in the civic procession through the middle of King’s Lynn, before getting on the dodgems for the traditional dodgem ride, with other civic figures. Hon. Members should feel free to come along—it is on a Saturday. It is always cold for the Mart, but it is well worth coming along to.

Together, these provisions will uprate the VED and the road user levy by RPI. We have concerns about the timing of the increases, and the absence of meaningful backing for the most affected industries, especially the logistics sector, which keeps Britain moving. HGV vehicle excise duty is already complex, with more than 80 different rates, varying based on the characteristics of weight, emissions, class and configuration. Of course, as the Minister referred to, HGVs are also subject to the road user levy, which was introduced in 2014 as a charge for using the network. That levy was rightly suspended in August 2020 during the pandemic, and the reformed levy that the Minister referred to was reintroduced in August 2023, but it was frozen in the autumn statement that year.

--- Later in debate ---

[Mr Reynolds]

The haulage sector has seen significant challenges in recent years: increases in fuel prices, increases in wages and significant changes in the Employment Rights Act 2025, business rates and vehicle excise duty, as we see here. I would not be the investment and trade spokesman for the Liberal Democrats if I did not mention another challenge for the road haulage sector in recent years, which is the significant amount of red tape involved in Brexit, and the cost of that.

The Government’s EU reset has not touched the sides, as haulage associations have been telling us recently. The Business and Trade Committee recently heard about some goods moving from the UK to France that required 29 different stamps on their paperwork. If one stamp goes in the wrong place, the vehicle gets stuck in France or sent back. That is an additional cost for the road haulage sector, on top of all these extra costs and the vehicle excise duty increases.

For example, we were told on the Business and Trade Committee about a vehicle that was sat in France for almost one month because of paperwork that was not quite correct and small technical challenges. That vehicle being sat in France for one month meant consistent driver changes and meant the freezer compartment having to be kept on to ensure that the goods did not spoil. There was a £6,000 cost to the business because of two stamps being in the incorrect place. If we add that to the £2,000 cost per truck of the changes to vehicle excise duty, we see very clearly that the significant changes that the Government are making in quick succession are not helping the sector, which needs all the support it can get.

[Dan Tomlinson]

I thank the hon. Member for North West Norfolk for his romantic invitation to King’s Lynn; I may be otherwise engaged on that date, but I thank him for it all the same. I am interested to see whether any Members wish to intervene to say whether they will be taking up the invitation, but it is good to hear that he is an active constituency MP.

We do, of course, look at measures in the round, as the hon. Member for North West Norfolk implored me to. We did so ahead of the Budget, and I will continue to work with my right hon. Friend the Chancellor on tax policy in the run-up to the Budget at the end of the year. We are providing stability this year for the private sector and for individuals by moving away from the relatively chaotic approach under the previous Government of having multiple tax events with big swings and roundabouts twice a year, so future tax changes will not come until the end of the year, but that will give me more time to consider things in the round.

[James Wild]

Is the Minister therefore ruling out any further support for hospitality, leisure and retail businesses in the Chancellor’s spring statement?

[Dan Tomlinson]

The Government will consider all tax measures in the round in the usual way in the run-up to the Budget. It would not be right for me to speculate on what will or will not be in the Budget; it is a long way away, and there is much to consider in the meantime. Conservative Members decided to bring up inflation, which hit 11% under them in 2022, pushing up prices for everyone up and down the country, leaving businesses and consumers significantly worse off in the worst Parliament on record for living standards.

[James Wild]

The Minister is a fair man, so he will recognise the impact that the pandemic and the war in Ukraine had on inflation and energy prices. Could he confirm what the inflation rate was on the day the Government came into office and what it is today? That is an important context for his comments.

[Dan Tomlinson]

Over the months ahead, as a result of the action that this Government have taken to bring stability back to the economy, I look forward to seeing inflation return to 2% by the end of the year, as is forecast by the Bank of England.

I thank the hon. Member for Maidenhead for bringing up the botched Brexit deal that the previous Government left us. Under the leadership of the Prime Minister and Ministers in the Cabinet Office and elsewhere in Government, we continue to work to reduce barriers to trade and deepen our relationship with our nearest trading partner. As the Minister responsible for customs and excise, I am always looking at what more we can do to support those who move goods across borders and trade with our partners in the EU.

Question put and agreed to.

Clause 90 accordingly ordered to stand part of the Bill.

Clauses 91 to 93 ordered to stand part of the Bill.

Clause 94

Vehicle excise duty: expensive car supplement

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 19—Report on expensive car supplement—

“(1) The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 94 on—

(a) the automotive sector,

(b) the sale of hybrid cars, and

(c) vehicle excise duty revenues from high-value vehicles.

(2) The review must consider whether the threshold set under section 94 remains appropriate.”

This new clause would require the Chancellor of the Exchequer to report on the impact of section 94 on the automotive sector, sales of hybrid cars and vehicle excise duty revenues from high-value vehicles, and to consider whether the threshold remains appropriate.

[Dan Tomlinson]

Clause 94 will make changes such that the vehicle excise duty expensive car supplement threshold is increased to £50,000 for zero emission cars, from its current level of £40,000. This change will take effect from 1 April 2026 and will apply to zero emission vehicles first registered on or after 1 April 2025 for tax renewals from April 2026.

The expensive car supplement is a supplement to VED payable by vehicle keepers for five years, from years two to six following a car’s first registration. The rate is currently £425 a year; that will increase to £440 from 1 April 2026, in line with RPI, and is charged in addition to the standard rate of VED. The additional charge was, I believe, originally introduced in 2017 under a previous Government so that those who can afford the most expensive cars pay more than the standard rate paid by other drivers.

Clause 94 will increase the threshold for zero emission cars from £40,000 to £50,000. This measure is projected to benefit over half a million drivers of zero emission vehicles over the next five years. It will also incentivise electric vehicle take-up. Increasing numbers of motorists will benefit in future years as the zero emission vehicle population grows.

New clause 19

“would require the Chancellor…to report on the impact of section 94 on the automotive sector”

and on other issues. As is usual practice, a tax information and impact note was published at the Budget, outlining the anticipated impacts of this measure as well as the expected revenue impacts of the change.

The Government remain fully committed to the EV transition, which will drive economic growth, help the country meet its climate change obligations and improve air quality. By increasing the ECS threshold to £50,000 for zero emission vehicles, clause 94 supports those goals.

[James Wild]

I rise to speak to clause 94 and new clause 19, which stands in my name. Clause 94 makes changes to the expensive car supplement in vehicle excise duty, as the Minister referred to, specifically for zero emission vehicles. This is an extra £425 charge that applies to most cars with a list price above £40,000. Under the clause, the Government propose to increase the threshold to £50,000, but only for zero emission vehicles. That means that buyers of higher-value electric vehicles will avoid paying the charge, while the £40,000 limit still applies to petrol, diesel and hybrid cars. This change is due to take effect from April 2026.

Let us recall that, back in the Public Bill Committee on last year’s Finance Bill, one of the Opposition’s “review” new clauses called for an independent assessment of the £40,000 threshold and its impact on consumers, particularly for electric vehicle sales, because we said that it was not at the right level. The Minister’s predecessor rejected that idea, and now here we are: the Ministers have quietly decided to raise the very threshold that we urged them to raise a year ago. They are playing catch-up, but they get there in the end. Is the Minister willing to admit that they have been a bit slow to follow the points that we made? Maybe we will be here in Committee next year, talking about other clauses on which the Minister has rejected things and reversed his position.

That brings me to the hybrid point. The Government now seem to have decided that hybrids no longer warrant support, despite the fact that they are critical in bridging the transition to fully electric vehicles. I would be grateful if the Minister expanded at length on the reasoning behind that decision, and on how many jobs in the UK are dependent on the manufacture of hybrid models when a lot of our electric vehicles come from China, where the Prime Minister is now.

We are broadly supportive of the measure, having recommended it a year ago, but let us be realistic: it will not do anything for most of the households in our constituencies, who simply cannot afford a new electric vehicle, especially one that costs £50,000. That is completely out of reach for people in my constituency. I do not know whether that is also the case in constituencies nearer to London, but it is certainly the case in mine.

How does this increase fit with the wider EV policy and charging infrastructure and its roll-out? To support ordinary people up and down the country, we should be joining countries such as Canada—along with the EU, or so it looks—in scrapping the mandate forcing manufacturers to produce EV vehicles and ending the 2030 ban on the sale of new petrol and diesel cars.

New clause 19 would require a proper review of the policy, its effects on the automative sector and the impact on the sale of hybrid cars and on vehicle excise duties. It would ensure a consideration of whether the threshold remains appropriate as market prices shift.

I hope that the Government will accept this accountability and transparency in policymaking, which will benefit everyone. Will the Minister at least commit to reviewing the threshold in future, particularly if it turns out that it needs to be adjusted? Will he also look at the hybrid point?

[Mr Reynolds]

We welcome the uprating of the expensive car supplement for EVs to the value of £50,000, supporting EVs and EV take-up. However, we are surprised that during the Committee’s first sitting on Tuesday, when I asked about extending zero VAT for charging infrastructure beyond 2027, the Economic Secretary declined to do so. I am aware that the Minister who is present today was not there, but that is slightly confusing. Here, we see the Government supporting electric vehicles and increasing the threshold from £40,000 to £50,000, but not applying the same policy by supporting electric vehicles post 2027 in other clauses of the Bill.

The Economic Secretary, who was in the Minister’s place on Tuesday, is now in China; I do not know whether I should commiserate with the Minister for not being invited on that trip. We are concerned about floods of electric vehicles that are coming in from China, undercutting European and British competitors. We are worried that they will be impacted by that £50,000 change, but several British vehicles will not be. I am sure that we do not want a world in which the Government are unintentionally encouraging British residents to buy electric vehicles made in China rather than electric vehicles from Britain. I hope that the Minister will clarify that point for us.

[Dan Tomlinson]

I am sorry to report to the Committee that when the Chancellor and I made the decision to increase the threshold ahead of the Budget, I was not aware of the representations that the hon. Member for North West Norfolk had made in last year’s Finance Bill Committee. If I am still in my role in the run-up to the Budget later in the year, of course I will bear in mind everything he has said today. I have already taken some notes that I will take back with me.

The hon. Member is right to note the important role that hybrid vehicles play in the transition. Ultimately, however, to move towards our goal of net zero by 2050, we need to move to a fully clean vehicle fleet over the coming decades, so we want to particularly encourage fully electric vehicles.

We will keep this measure under review; it is important that we do so. This has been an ask of the car manufacturers here in the UK that we want to support. I take the points from the hon. Member for Maidenhead about making sure that consumers can buy vehicles that are produced here in Britain. I hope that a change such as this, which shows the Government’s intent to support the electric vehicle transition, will be a consideration for vehicle manufacturers as they choose where to produce new EV cars in the years to come. Along with other measures that we set out in the Budget, this shows our intention to work alongside the industry to support that transition.

The hon. Member for North West Norfolk raised a point about how high the supplement is. He said that many constituents in rural Norfolk, but also in north London, will find it very challenging to afford to buy a new car that costs between £40,000 and £50,000. That is true in lots of parts of the country, but as I am sure he is aware, it is important that we seek to encourage those who can afford such a car to do so, because they will then sell their cars on at a cheaper value that people may be able to afford. It supports the general health of the car market overall if we can increase the affordability of these—granted—relatively expensive vehicles. That is why the Government have brought forward this change: to support the transition and to reduce the cost of purchasing new vehicles within the £40,000 to £50,000 bracket.

Question put and agreed to.

Clause 94 accordingly ordered to stand part of the Bill.

Clause 95 ordered to stand part of the Bill.

[The Chair]

I think now is an appropriate time for a comfort break. Please will Members get back as quickly as possible?

--- Later in debate ---

[Dan Tomlinson]

I thank the Opposition for that warm welcome back after our break.

Clause 96 sets the rates of air passenger duty for the year 2027-28, as announced at the Budget. The rates will take effect on 1 April 2027. Following previous increases to APD, the Government will uprate rates in line with RPI from 1 April 2027. As was previously announced, they will be rounded to the nearest penny, which constitutes a real-terms freeze. This will continue to make sure that airlines continue to make a fair contribution to the public finances, particularly given that tickets are VAT-free and aviation fuel incurs no duty. The Government expect these measures to have an impact on approximately 600 airlines and aircraft operators.

New clause 20 would require the Chancellor to publish an assessment of the impact of changes to air passenger duty under clause 96 on the aviation industry, passengers, household finances at different income levels and the public finances. The air passenger duty national statistics on different APD rates administered by HMRC are published annually through the APD bulletin. The bulletin, which is updated annually, includes statistics and analysis on APD receipts up to the latest full month before its release, and airline passenger numbers one month behind that of duty receipts in the UK. New clause 20 is therefore unnecessary.

New clause 32 would require travel operators liable to air passenger duty to ensure that, where a boarding pass is issued, the change in the level of air passenger duty made under clause 96 and charged in respect of the passenger’s journey is clearly stated on the boarding pass. Air passenger duty is charged to airlines on a per-passenger basis on departure from UK airports. Although airlines can pass the cost of the tax on to passengers, that is a commercial decision for them. I therefore commend clause 96 to the Committee, and encourage the Committee to reject new clauses 20 and 32.

[The Chair]

James?

--- Later in debate ---

[James Wild]

Thank you, Mrs Harris. I am almost the only one who has said anything in this Committee, so hopefully people know my name. I rise to speak to clause 96 and to my new clauses 20 and 32.

As the Minister has set out, clause 96 sets air passenger duty rates for the 2027-28 tax year, uprating them in line with RPI. I believe that APD is one of the few taxes for which rates are set well in advance so that the sector knows of the increases. The clause will also expand the higher rate to all private jets over 5.7 tonnes. This applies to passengers departing from UK airports, with rates determined by distance and travel class.

My new clause 20 would require the Government to publish a full impact assessment of the APD changes on the aviation industry, on passengers, on households of all income levels and on the public finances. New clause 32 seeks to bring greater transparency to the travelling public; it would require that the change in the level of APD charge be clearly stated on boarding passes so that every passenger knows how much the rate has gone up as a result of tax imposed by the Government. The Minister says that it is a commercial decision whether airlines pass on the cost, but he will be familiar with how the world works. If a business is taxed more, it is likely to pass on the cost rather than absorbing it into what can be quite thin margins. It may not be able to absorb it, so if it does not pass it on, it will go bust.

This could start a wave of transparency. At the petrol pump, we could see how much of the price of a litre is going straight out in tax. In a pub, we could see on a pint glass how much of the pint goes on tax. Those ideas are not included in my new clause, but they have given me inspiration for when we return to the Floor of the House on Report. The new clause would bring greater transparency; I would hope that the Government and Ministers are willing to be more open.

According to the Office for Budget Responsibility, APD will raise £4.1 billion this year, which is forecast to rise to £6.5 billion by 2030-31, driven by rate increases and passenger growth. While the Government reap the higher revenues, they must also recognise the impact and pressure on families getting away for a holiday—I would say, “Come to Norfolk”—and on regional airports and the wider economy. There are concerns about the impact on people saving up for a family holiday; about the availability of routes that might be slightly marginal and which the increases might make uneconomic; and about affordability for families.

The British Airline Pilots Association said that the latest rise is:

“Bad news for passengers, especially families going on holiday”.

The Business Travel Association put it rather more bluntly:

“APD is not simply a passenger charge; it is a tax on global connectivity”.

It highlights an economy flight to India, a key trading partner of the UK. For 2027, the APD alone will be over £100 per passenger, and that is of course before any accommodation or other costs. It is a significant additional factor if a family of four is travelling, perhaps to see family or to go to some of the great sights in India. I enjoyed a visit there a few years ago, and I am happy to discuss where I went with colleagues after this sitting, as I fear it may be out of scope. What will this mean for children? What analysis has been done of how it might affect consumer behaviour? Will it put people off flying?

New clause 32 is about transparency. Everyone would be able to see on their boarding pass how much has been added as a result of this stealth tax. We are unable to put the full amount, due to resolutions passed by the House, which is why we would put the annual amount. Such taxes should be more visible to consumers.

From 2027, all aircraft over 5.7 tonnes will face a higher charge, and that change follows the 50% rise planned for April. When we talk about private jets, people may think of pop stars gadding around, but most private jets are corporate aircraft that are used as capital assets. They are not luxury toys; they are about people flying to trade and secure jobs in our economy. It is about people being internationally connected and going to places such as India—[Interruption.] The hon. Member for Burnley is pulling a face, as if that is not the reality, but it is what these jets are. We want people to get on a plane, go and do deals, come back and secure investment into our country. [Interruption.] The Minister is nodding. Perhaps that is why he is the Minister and not on the Back Benches.

The Prime Minister has just hired a private jet to go to China, because he could not take the Royal Squadron flight due to national security concerns. Perhaps the Minister can tell us how much chartering that plane has cost the taxpayer in air passenger duty.

We do not oppose clause 96, but we expect the Government to be up front about the impact of the tax rises they are ramming through in this Bill. We want transparency for families going on holiday, who will see prices going up and will have to pay more to get away. Our new clauses simply ask for some transparency and accountability, which are often missing from the Government’s approach to taxation.

[Dan Tomlinson]

One thing to note about Labour Back Benchers is that they are on the Government Benches, making changes for their constituents. They are supporting the work of this Government to improve living standards for people up and down the country, to ensure economic stability and to bring down interest rates. They are doing the right thing by their constituents.

[The Chair]

Order. Can we stick to the clauses that we are debating?

[Dan Tomlinson]

Of course, Mrs Harris.

On the point that the hon. Member for North West Norfolk raised, it would be an unnecessary administrative burden to ask airlines to reformulate how they print and design their boarding passes as a result of an Opposition new clause, so I do not support it.

Question put and agreed to.

Clause 96 accordingly ordered to stand part of the Bill.

Clause 97

Rates of climate change levy

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 21—Report on Climate Change Levy rates—

“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 97 on—

(a) energy-intensive industries, and

(b) the UK’s international competitiveness.”

This new clause would require the Chancellor of the Exchequer to report on the impact of section 97 on energy-intensive industries and the UK’s international competitiveness.

[Dan Tomlinson]

Clause 97 makes changes to the main rates of the climate change levy, with effect from 1 April 2027. Since 2001, CCL has provided an incentive for businesses and the public sector to be energy efficient by adding a tax on the non-domestic supply of energy. Energy efficiency is one of the most cost-effective ways in which businesses can cut emissions, and permanently reducing energy use also helps to improve the UK’s energy resilience.

CCL sets four separate main rates for different energy products. The liquefied petroleum gas rate has been frozen since 2019, and it will continue to be so from April 2027. The changes made by clause 97 will increase CCL rates on gas, electricity and solid fuels in line with the retail prices index. This represents a small increase to business bills, but it will ensure that the behavioural incentives of the tax are maintained while also protecting the public finances. The Government announced a wider review of CCL at the spring statement in 2025, and we remain committed to this to ensure the tax remains up to date in the ever-changing energy landscape.

New clause 21 would require the Chancellor to report on the impact of clause 97 on energy-intensive industries and the UK’s international competitiveness within six months of the Bill being passed. I reassure the Committee that the Government already consider the impact of CCL on energy-intensive industries and competitiveness, and a number of reliefs are available to such businesses. For example, the exemption for certain processes in sectors such as steel, ceramics, cement, glass, metal forming and aluminium provides £270 million of relief per year. The Government do not believe that new clause 21 is necessary.

I therefore commend clause 97 to the Committee and ask that new clause 21 be rejected.

[James Wild]

Environmental taxes are obviously a very important topic for our constituents and businesses, so it is important that we scrutinise them appropriately. Clause 97 raises the climate change levy—the tax on non-domestic energy use for electricity, gas and solid fuels—while freezing the rate for LPG. As the Minister said, it was first introduced in 2001 to encourage energy efficiency.

This uprating will take effect from April 2027. According to the OBR, around £2 billion will come in as a result. We must look at the additional burden being placed on businesses. Again, we need to look at all of these things cumulatively, which is why I welcome the Government’s decision in the autumn to extend the climate change agreements for a further six years—by allowing qualifying businesses to benefit from reductions at a time when businesses are facing significant headwinds, this offers some much-needed respite.

Of course, British manufacturers are paying higher prices than the European average—I think it is more than 50% more for electricity—while the gap with the United States is wider, for understandable reasons. However, high energy costs are one of the issues holding back growth and productivity in the country. We should be looking to reduce the burden and cost of energy, rather than increase it, and this measure will obviously put up the rate.

New clause 21 would require a report on climate change levy rates, and it would require the Chancellor of the Exchequer to review the impact on energy-intensive industries and the UK’s international competitors. I am thinking about sectors such as ceramics, glass, data centres and gigafactories. These are the industries that drive innovation, exports and skilled jobs, and we should consider the impact of such measures on their ability to do business in the UK.

That is why we have set out a different approach that does not follow the fundamentalism of the Energy Secretary, who is picking arbitrary dates and loading up costs by rushing to meet them, rather than getting the benefits of technology development and innovation. Our plan would bring down the cost of energy, because taxing industrial energy is not a strategy for growth.

What assessment has the Minister made of the greater impact of these rates on British manufacturers’ productivity, competitiveness and ability to grow? If he cannot answer that question, perhaps he will support new clause 21 so that we can have a review after the event to see what the impact has been.

[Dan Tomlinson]

The hon. Member for North West Norfolk is right that high energy costs are one of the big challenges facing industry and consumers. The Government are doing all we can to accelerate the roll-out of clean power. That includes nuclear power, which as a country we have not invested in for way too long, and we desperately need more of that firm baseload power. We also need more intermittent clean power through wind and solar. We cannot turn things around overnight, but in time, I hope and expect that these interventions will lead to lower bills for both businesses and consumers. However, I would be the first to say there is much more to do on this, given the high energy costs and surging inflation we inherited from the previous Government, particularly after 2022.

Question put and agreed to.

Clause 97 accordingly ordered to stand part of the Bill.

Clause 98

Rates of landfill tax

--- Later in debate ---

[The Chair]

With this it will be convenient to discuss new clause 22—Review of landfill tax changes—

“(1) The Chancellor of the Exchequer must, within 12 months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 98.

(2) The report under subsection (1) must in particular assess any effects on—

(a) construction and infrastructure projects,

(b) investment in ports,

(c) levels of recycling and illegal dumping,

(d) progress towards the Government’s environmental objectives, and

(e) Exchequer revenues.”

This new clause would require the Chancellor of the Exchequer to report on the impact of section 98, including any effects on construction and infrastructure projects, port investment, recycling and illegal dumping, progress towards environmental objectives and Exchequer revenues.

[Dan Tomlinson]

Clause 98 increases the standard rate of landfill tax in line with the retail prices index. It increases the lower rate by the same cash amount, and it will take effect from 1 April 2026. This tax was introduced 20 years ago, and it is charged on materials disposed of at a landfill site or an unauthorised waste site in England and Northern Ireland. The objective of the tax is to divert waste away from landfill and to support investment in more circular waste management options, such as recycling and recovery.

The Government consulted earlier this year on proposals to reform the tax to drive more materials out of landfill, and to design out incentives for landfill tax fraud. The hon. Member for Grantham and Bourne (Gareth Davies) is not here, but I enjoyed his video on this, in which he appeared with a hard hat. He, and others, have engaged on this issue.

I particularly welcome the engagement from industry, which has welcomed the Government’s decision. The National Federation of Builders said we had

“really engaged with industry”,

and that the decision put forward after the Budget, following the consultation, would

“allow the industry to start preparing for the circular economy”.

Meanwhile, the chief executive of Biffa said that our decision

“not to converge the two rates…is a good outcome for the industry”.

I am glad that we have a very good tax policy. We are making progress, consulting in good time, engaging with industry, and coming forward with a proposal to make sure the gap does not get any wider on landfill tax—we are increasing the lower rate by the same cash amount as the increase in the higher rate—without adding significant burdens on those who seek to construct and build this country’s future, which we must do after 14 long years of under-investment and decline.

New clause 22 would require the Government to make an assessment of the impacts of clause 98. At the Budget, the Government published a tax information and impact note for this measure, and our approach has been informed by extensive engagement with business. The Government oppose new clause 22 on that basis, and I urge the Committee to reject it. I commend clause 98 to the Committee.

[James Wild]

Clause 98 increases the standard and lower rates of landfill tax from 1 April, uprating them in line with the retail prices index. In practical terms, that means the standard rate will increase to £130.75 per tonne, with the lower rate applying to less polluting materials increasing by the same cash amount.

Landfill tax, as the Minister said, is intended to discourage disposal in landfill and promote recycling and recovery, and of course we support that aim. However, it is also right that we scrutinise the real-world effect of these changes on business costs, recycling rates and wider environmental outcomes. That is why we have tabled new clause 22.

According to the Budget 2025 costings document, the measure is expected to raise £35 million in 2026-27, increasing to £130 million by the end of the decade. Members will remember the intense speculation ahead of the Budget that the Government might move to a single landfill tax, and the Minister referred to a consultation. The speculation did not come from nowhere; it came from a Government consultation that proposed to do precisely that.

As such, the Minister could have been a bit more up front that this is something the Government were consulting on, presumably because they thought it might be a good idea. Indeed, I recall raising this directly with the Chancellor at Treasury questions earlier last year, where she accused me of scaremongering when I spoke about her own consultation, so I am glad that she has dropped her proposal to move to a single rate. Had she gone ahead with it, material such as topsoil could have faced a thirty-onefold increase.

The Minister kindly referred to my hon. Friend the Member for Grantham and Bourne and his video; he led a determined campaign alongside the industry to stop the reckless proposals put forward by the Chancellor. They could have added £28,000 to the cost of a new home and increased road construction costs by up to 25%.

When we asked what discussions the Treasury had had with the Ministry of Housing, Communities and Local Government before coming forward with its proposal for a thirtyfold increase in the tax rate, it was clear that there had not been any. There was then a sudden panic that the 1.5 million new homes target would be sunk by the Treasury’s actions. I welcome the rethinking of this policy—I will be generous to the Minister on that—to spare the sector yet another unnecessary blow that could have worsened house building numbers and jeopardised the key infrastructure upgrades that we all want to see across the country.

So far, so good, but—and there is always a “but”—the Government’s retreat on that issue does not mean all is well with these proposals. The long-standing exemption for dredging material and its removal has caused deep concern, if the Committee will accept the pun, in the ports and water sector.

The British Ports Association, I believe, has written to the Minister as well as the Chancellor, warning that if these changes proceed unchecked, we may see

“the collapse of major industrial and development projects, particularly in ports, rivers and canals”.

I declare an interest, as King’s Lynn in my constituency has a fine historical port. Indeed, the wealth of King’s Lynn was built on our trading links with the Hanseatic League in medieval times. The knock-on effects of removing the exemption could be significant; delayed waterway clean-up projects, increased flooding in vulnerable areas, and reduced investment in our ports, which keep our country trading.

New clause 22 seeks a proper assessment of how these tax changes will affect construction and infrastructure projects, investment in ports, recycling levels and illegal dumping rates, and progress towards the Government’s environmental objectives. The Minister needs to set out how the Government are responding to address the serious concerns raised by the British Ports Association, which, if correct, could have a very damaging effect on major infrastructure. We welcome that the proposals put forward in the consultation have been ditched, but there are concerns that the Minister now needs to address.

[Martin Wrigley]

I endorse my hon. Friend’s comments. We have a number of quarries in Newton Abbot, and the same principles apply. I am, however, doubly pleased that the extensive increase was not included in the Budget. I was taken to a local factory in Newton Abbot that makes high-value, high-performance propellers that it exports all over the world. The factory was to be put out of business, because it pours the metal into moulds of sand, and the cost of disposal of that sand would have been more than it could have borne. That would have shut down a £20 million-a-year business. I am extremely grateful that the increase has not been implemented, but I draw the Minister’s attention to such side effects when considering future proposals.

[Dan Tomlinson]

I thank Opposition Members for their contributions and for welcoming the Government’s decision on this matter at the Budget. I find it a bit tiresome that the Conservatives, when we consult, accuse us of consulting, and when we do not, accuse us of not consulting. It is right and proper, where possible, for the Government to engage with industry on proposals and then come forward with good policy outcomes. I am glad that there has been acknowledgment across the Committee that we have listened, engaged and come forward with proposals that are proportionate.

[James Wild]

It was not the fact that the Government consulted that we objected to; it was that they were consulting on a crazy idea that would have increased costs for industry 31-fold. Consult away, but do not consult on bad ideas.

[Dan Tomlinson]

The refining fire of a consultation process is something that I am happy to stand behind.

On the shadow Minister’s important point about the decision to remove the dredging exemption, I have received correspondence from the sector on the issue and will continue to engage with it. The change is not scored in the Budget. To be very clear, it was not made with the express intention of raising revenue; the Government’s judgment, after consultation, was that it would get the balance right between supporting the circular economy and encouraging more environmentally friendly ways of carrying out the activity. I want to continue to engage sincerely with the sector, so I will be responding to the correspondence I have received. I am sure that we will continue to engage.

[James Wild]

The industry’s concerns are urgent, so if it persuades the Minister on certain points, will he table amendments on Report—the Bill will return to the House in the near future—to address them?

[Dan Tomlinson]

I am sorry to tell the shadow Minister that this matter is not being legislated for in this Finance Bill; it will be for next year’s Finance Bill.

Question put and agreed to.

Clause 98 accordingly ordered to stand part of the Bill.

Clause 99

Rate of aggregates levy

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clause 100 stand part.

Government amendments 27, 28 and 26.

Schedule 23.

Government motion to transfer schedule 23.

New clause 23—Report on aggregates levy rate—

“The Treasury must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 99 on—

(a) the construction industry, and

(b) infrastructure projects.”

This new clause would require the Treasury to report on the impact of section 99 on the construction industry and infrastructure projects.

[Dan Tomlinson]

Clause 99 makes changes to increase the rate of the aggregates levy in line with the retail prices index from 1 April 2026. Clause 100 and schedule 23 make changes to aggregates levy legislation in preparation for its replacement in Scotland with the Scottish aggregates tax.

The changes made by clause 99 increase the rate of aggregates levy from £2.08 per tonne to £2.16 per tonne from 1 April 2026. The changes made by clause 100 and schedule 23 make aggregate moved from a producer’s site in Scotland to England, Wales or Northern Ireland liable to aggregates levy. In addition, they provide an exemption where the aggregate has previously been supplied and will be subject to Scottish aggregates tax. Lastly, they provide for a tax credit from aggregates levy for aggregate moved from England, Wales or Northern Ireland to Scotland. The changes will take effect from 1 April 2026, when the Scottish aggregates tax is due to come into force.

Amendments 26 to 28 are needed to ensure that the legislation interacts correctly with Scottish Government legislation so that a credit from aggregates levy is available on aggregates moved to Scotland only in circumstances in which Scottish aggregates tax is payable on the movement.

--- Later in debate ---

[Mr Reynolds]

Clause 99 introduces a very small increase in the rate of aggregates levy, but a small increase when dealing with massive numbers is still quite a large increase. High Speed 2, for example, is predicted to use 20 million tonnes of aggregate during phase 1. That means that the measure will add about £3.2 million to the bill for HS2, which we know is already significantly over budget. Has the Minister worked out the cost associated with money being passed from the Government to HS2 and then from HS2 back to the Government through things like the proposed aggregates levy increase?

[Dan Tomlinson]

On the question asked by the Opposition spokesman, the hon. Member for North West Norfolk, and implied in the specific question about HS2 impacts from the Liberal Democrat spokesman, the hon. Member for Maidenhead, the key thing is that the aggregates levy provides a price incentive to use more recycled aggregate, which we would all support, rather than virgin aggregate. Increasing the aggregates levy rate in line with inflation will ensure that the value of that price incentive does not fall in real terms.

It is important for administrative reasons and for our ability to collect tax without undue complexity that, even where services are provided ultimately for the benefit of the public sector, the taxes apply in a uniform way. It would become more complicated than it would be worth to apply the tax differently to parts of different industries, or to different contracts, depending on whether they were being used for HS2 or something else.

Question put and agreed to.

Clause 99 accordingly ordered to stand part of the Bill.

Clause 100 ordered to stand part of the Bill.

Schedule 23

Aggregates levy: amendments relating to disapplication of levy to Scotland

Amendments made: 27, in schedule 23, page 535, line 22, after “from” insert “premises in”.

This amendment together with Amendments 28 and 26 revises the inserted sub-paragraph (za) of regulation 13(2) of SI 2002/761 to accommodate expected changes to provisions of the law relating to Scottish aggregates tax.

Amendment 28, in schedule 23, page 535, line 23, after “Ireland” insert

“operated or used by a person registered under section 24 of the Act for any purpose specified in subsection (6) of that section”.

See the explanatory statement for Amendment 27.

Amendment 26, in schedule 23, page 535, line 24, leave out from “waters” to end of line 25.—(Dan Tomlinson.)

See the explanatory statement for Amendment 27.

Schedule 23, as amended, agreed to.

Ordered,

That Schedule 23 be transferred to the end of line 5 on page 468.—(Dan Tomlinson.)

Clause 101

Rate of plastic packaging tax

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clauses 102 to 104 stand part.

--- Later in debate ---

[Dan Tomlinson]

Clauses 101 to 104 encourage greater demand for recycled plastic, help create demand for chemically recycled material, and allow for a more level playing field for plastic recyclers, rewarding the recycling of waste plastic. This is supportive of the Government’s broader environmental goals. The plastic packaging tax was introduced on 1 April 2022 as a part of the previous Government’s resources and waste strategy. It is the Government’s view that the clauses implement that tax in the right and proportionate way. I will not go through each in detail, but I will of course answer any questions that the Committee may have.

[James Wild]

Clauses 101 to 104 amend the plastic packaging tax introduced in 2022 to encourage the use of recycled and reduced plastic. At the end of August last year, around 5,000 businesses were registered for the tax, and 38% of plastic packaging manufactured or imported into the UK was declared as taxable under it. The tax applies to packaging with less than 30% recycled content and is charged per tonne of plastic packaging components. The Opposition believe that the Government must ensure that the policy is working effectively in practice, encouraging the industry to change and delivering genuine environmental benefit, and not simply adding cost.

Clause 101 increases the packaging tax rate, this time in line with CPI, not RPI. Could the Minister explain why? In principle, that is reasonable, to maintain its value and sustain the incentive to recycle, but it is a practical reality that many businesses simply cannot get enough high-quality recycled plastic at reasonable prices, so raising the rate without addressing that supply constraint risks making packaging more expensive but not greener.

Recycling firms are already facing higher energy bills and rising labour costs as a result of both global pressures and some of the measures that have been introduced. It is often still cheaper to import virgin or recycled plastic from Asia than to buy recycled content from within Europe, and loopholes in legislation may make it more profitable to export plastic waste than to process it here at home.

The Guardian, which I confess is not my usual paper of choice—[Interruption.] It is not the Minister’s either; it is good to get that on the record. It recently reported that 21 plastics recycling and processing plants across the UK have shut down in the last two years, which is a direct result of the imbalance between export incentives, cheap virgin plastic and low-cost imports from Asia.

How much additional revenue does the Treasury expect this rate increase to bring in, given that I think receipts actually fell in 2024-25? What increases in recycled content are the Government assuming will result from the measure? Has the Treasury assessed whether the costs will simply be passed on to consumers through higher prices for everyday goods? We want a tax that drives genuine behaviour change, not one that just adds to the cost of living.

Clause 102 allows chemically recycled plastic to count towards the 30% recycled threshold and introduces a mass balance approach. That is a welcome recognition of innovation and new technology. However, analysis from Pinsent Masons notes that it will introduce significant certification and evidential demands on manufacturers and importers, and many small and medium-sized businesses fear an extra compliance burden in the absence of clear guidance or support. Can the Minister set out to the Committee, and to those companies, what practical support the Government will provide to help businesses adapt to the new rules, and will Ministers commit to reviewing the effectiveness of the measure within a reasonable period to ensure that it is genuinely driving more recycling?

Clause 103 excludes pre-consumer plastics, such as factory offcuts, from the definition of recycled content from April next year. The Government say that that is to ensure that the tax incentivises genuine recycling of post-consumer waste, rather than reusing scrap material. That is reasonable as it goes, but Pinsent Masons has warned that some manufacturers will no longer be able to treat their own production offcuts as recycled content. While the overall burden of tax may not have changed, the burden of liability could shift from those gaining relief through mass balance accounting to those losing relief for pre-consumer materials. The Government should be up front about who will bear the costs of the changes.

Finally, clause 104 deals with commencement. Businesses need certainty ahead of the changes, and time to adapt their supply chains and get the relevant certification and other measures lined up. Can the Minister confirm that HMRC will be publishing detailed guidance in advance? He may tell me that it is already out there and that I have not seen it yet, but if it is not, can he assure me that it will be published in good time for those companies?

[Dan Tomlinson]

I thank the Opposition spokesman for his questions. May I put on record my thanks to the officials for the support that they have provided to me today, in my first appearance in a Bill Committee as a Minister?

The hon. Member asked why the tax is increasing in line with CPI rather than RPI. All new tax measures introduced since 2018 have been uprated by CPI instead of RPI, so that is perfectly in keeping with established practice. That is good to know.

The hon. Member also about the mass balance approach. That is an accepted model already used in a range of industries, including cocoa and timber. Respondents to the consultation on a mass balance approach agreed that combining it with third-party certification is the best approach to prevent fraud and abuse. HMRC will continue to work with stakeholders on the detailed policy development, including independent certification requirements, which will be designed to be fair and robust and to maintain the integrity of the tax.

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[Dan Tomlinson]

Clause 105 legislates for the new rates of the soft drinks industry levy to apply from 1 April 2026. It amends section 36(1) of the Finance Act 2017 to reflect the new rates of the levy to apply from 1 April 2026. Those rates are £2.08 and £2.78 per 10 litres of prepared drink, for the lower and higher bands respectively. I commend the clause to the Committee.

[James Wild]

I am surprised that the Minister covered this important clause so briefly, as will become clear in my remarks. Clause 105 increases the soft drinks industry levy—the tax on soft drinks with added sugar, which is charged per litre, with higher rates applied to drinks containing more sugar. The Government propose to uprate the levy by combining one fifth of the CPI inflation from 2018 to 2024 and full CPI inflation between Q2 2025 and 2026. In practice, that all together means a total rise of 27%—I am surprised that the Minister did not want to get that figure on the record; it is a significant increase.

The soft drinks industry levy has worked in meeting its objectives, but we had a debate on it last year and, and as I warned then, we have serious concerns about the Government’s decision to backdate an inflation increase over a six-year period. That is an unprecedented move, which raises serious questions about fairness, consistency and confidence in the UK tax system.

The soft drinks industry levy was introduced in 2017 by the Conservative Government to help tackle obesity, diabetes and tooth decay, particularly among children. By any reasonable measure, it has been a success. There has been a 46% reduction in sugar in fizzy drinks since the original tax came into force, and 89% of soft drinks sold now in the UK are not subject to the charge due to reformulation. As the British Soft Drinks Association points out, since 2015, more than 1 billion kilograms of sugar have been removed from the UK diet. Soft drinks now account for just 6% of the UK’s total sugar intake.

The industry has responded to the incentives that Parliament put in place by investing heavily, innovating and reformulating on a huge scale. That is why the backdated tax rise in clause 105 is so troubling. Imposing, in one go, six years of inflation over a period when it was not imposed represents a 27% retrospective increase, something that I think—unless I am corrected by the Minister—is without precedent in recent UK fiscal policy. It is not simply a technical adjustment; it is a departure from the principles that underpin our tax system, such as clarity and predictability.

As we have recently discussed when considering other clauses, inflation uprating is normally applied annually, not retroactively over a six-year period. When alcohol duty or fuel duty is frozen, the Treasury does not go back and seek to make up for the years it was frozen by adding them to the rate—although maybe that is what the Government are going to do—but that is precisely what the Government are now doing with the soft drinks levy. As I pointed out to the Finance Bill Committee last year, if the same backdating principle were applied elsewhere, the results would be very troubling. According to research that the House of Commons Library kindly produced for me, if the Government were to take the same approach to fuel duty as they applied to the soft drinks levy—there has been a long freeze in fuel duty—fuel duty would rise by 64%, while the aggregates levy would rise by 67%. No one would defend that, so why is it acceptable in this scenario to have such an increase?

Businesses make long-term decisions on investment, employment and pricing based on the stability of the tax regime. To introduce retrospective changes on this scale undermines that certainty and, I fear, risks setting a dangerous precedent. Is this now Government policy? Can the Minister rule out—as the Minister at the time failed to rule out—the Government taking a similar approach with other taxes, such as fuel duty? I wonder if he will be able to give us a bit more confidence. Will the Government commit to not applying such levels of retrospective taxation-inflation increases to other sectors?

In the context of this debate about the soft drinks industry levy and the increase in it, also important is what might happen—given that the threshold and the rates have been set—if there are proposals to lower the rate to bring more soft drinks into the tax, such as milk-based drinks—the milkshake tax—coffee drinks and milk substitutes that exceed the same sugar threshold. If that happened, that would potentially be another hit to the cost of living. Industry has estimated that compliance costs could run into the tens or possibly hundreds of millions of pounds, if such an approach were taken, moving the goalposts when the policy has delivered on its aims. The hospitality and drinks sector already face a lot of pressures, so they do not need to see further increases.

I therefore think that applying a retrospective 27% tax increase is a move that the Government should not take lightly. We support the principle of the industry levy and the goals that it serves, but this is concerning, and I look for some confidence from the Minister that the retrospective approach to taxation will be a one-off.

[Dan Tomlinson]

Our approach to uprating taxes is plain to see for all the different approaches that we have taken. The Government set out their position on fuel duty, for example, and we have discussed many upratings today in Committee. The Government’s judgment in this specific circumstance was that uprating in line with inflation, as in previous years, was an appropriate step to take to protect the real-terms value of the SDIL and to maintain incentives for manufacturers over time. The Government are happy to stand by that position, although of course it is well within the rights of the Opposition to take a different approach.

Question put and agreed to.

Clause 105 accordingly ordered to stand part of the Bill.

Clause 106

Amendment of customs tariff power

Question proposed, That the clause stand part of the Bill.

[Dan Tomlinson]

The clause relates to trade defence. As set out in the trade strategy, the Government committed to strengthen the UK’s trade defence toolkit in response to an increasingly turbulent global trading environment. The clause supports those commitments and ensures that the Government can continue to respond to changes in the global trading system.

Unfair trade practices, including distortionary subsidies and dumping goods below cost in foreign markets, have a long pedigree. What has changed rapidly in recent years is their sheer volume and the range of markets and indeed British businesses that they threaten. Our trade defence system needs to be sharper and more flexible to respond to the increasingly turbulent global trading system.

The UK remains committed to upholding the rules-based international system that has benefited us well, but in an unstable and volatile world, we cannot afford to be left behind and we need to be more agile in the face of a range of potential future shocks. That is why clauses 106 to 108 strengthen the UK’s trade defence toolkit, making it more closely aligned to that of international peers. The clauses will help to ensure that we can best protect UK interests, including in critical sectors such as steel, which are vital to our national security and critical infrastructure.

The changes made by the clause will put beyond doubt that we are able to apply tariffs on a global basis or against a group of countries, where consistent with international agreements to which the UK is a party. This measure strengthens the UK’s trade defence toolkit, ensuring that the Government can continue to respond to changes in the global trading system, as well as to unfair trading practices where they occur. I commend the clause to the Committee.

[Mark Garnier]

Before I go into the details of the clause, and before the Committee discusses the subsequent two clauses, it is worth getting on record how much the Opposition object to trade wars and increasing tariffs. Such tariffs harm the country that introduces them. Take what has been going on in America as an example. On its “liberation day”—as I think its Government called it—it introduced very heavy tariffs, including on something as simple as the iPhone, which the American people would consider to be one of the greatest inventions and greatest products they have ever had. It seemed that the person who introduced those tariffs had completely failed to observe that 95% of an iPhone is made in Vietnam and China, as a result of which the tariffs increased the price of iPhones for the American people, which was completely against the intentions of that Government.

Tariffs are really bad, and we have been trying to get them down for an awfully long time. However, I completely understand the point that the Government are trying to make with the Trade Remedies Authority and the toolkit that the Government need in order to respond to certain issues. It is vital that we have the ability to move on things such as tariffs, and I suspect that the Minister is 100% aligned with me on this, but I stress that we have lessons from history, from when such actions have gone hideously wrong.

The Smoot-Hawley Tariff Act of 1930, introduced by President Hoover, was designed by Senator Smoot and Representative Hawley to try to help American businesses and American farmers by increasing tariffs. The net result was a global trade war that resulted in a 65% drop in global trade. That is what happens when people muck around with tariffs; that is where the damage can come. I completely appreciate that these measures are, I suspect, a very necessary response to what is happening on the other side of the Atlantic, where there is a very unpredictable trade policy, so it is the right thing to do. However, I urge the Minister to talk to all his colleagues about this matter, and to reassure the Committee that these measures are not about having our own version of that policy, and about increasing tariffs in order to have a trade war, but about having a set of relevant measures that mean that the Government can act in defence to what could be a hostile attack on trade.

[Dan Tomlinson]

I thank the hon. Member for his comments. It is good to converse with a new Opposition spokesman and I look forward to more conversations and discussions with him—though I do not have favourites. I want to be really clear—and I am glad to have the chance to be so—that the UK will continue to champion the free and fair trade that has benefited us so much in our history as a small, independent trading nation. We will always look to work with international partners to protect the rules-based international trading system. With this measure, we are not lapsing into protectionism and we will always make sure to balance the need to use these powers when and if they may be required in individual circumstances, with a continued focus on the need to be open because that is the route to sustained and long-term prosperity for a country with an economic and geopolitical position such as ours.

Question put and agreed to.

Clause 106 accordingly ordered to stand part of the Bill.

Clause 107

Dumping and subsidisation investigations

[Mr Reynolds]

I beg to move amendment 44, in clause 107, page 129, line 32, at end insert—

“(10) Before giving a direction under sub-paragraph (1), the Secretary of State must lay before Parliament an impact statement setting out—

(a) the evidence on which the Secretary of State has concluded that the conditions in sub-paragraph (1) have been met,

(b) an assessment of the potential impact on consumer prices and UK supply chains,

(c) the reasons why a direction is considered necessary in the circumstances, and

(d) whether coordination with other jurisdictions, including the European Union, has been considered.

(11) A direction under sub-paragraph (1) shall cease to have effect if, within the period of 21 sitting days beginning with the day on which the statement under sub-paragraph (10) is laid, either House of Parliament resolves that the direction should be annulled.”

This amendment would require the Secretary of State to provide Parliament with an impact statement before directing the TRA to initiate a dumping or subsidisation investigation, and would give Parliament the power to annul such directions within 21 sitting days.

--- Later in debate ---

[Mark Garnier]

Clause 107 gives the Secretary of State the power to direct the Trade Remedies Authority to initiate a dumping or subsidisation investigation. We support measures that tackle any unfair trading practices, including dumping and subsidisation. We are also supportive of measures that bring power back into the hands of Secretaries of State and Ministers. That is especially important when it comes to practices that could harm our industries and our constituents.

One example of that is the steel industry. Back in 2016, it was reported that Tata Steel had suffered more than 1,000 job losses, including 750 from Port Talbot alone. Tata stated that the reason for this was the flooding of cheap imports, particularly from China. This will continue to be a problem. According to the OECD, Chinese steel imports surged to a record level of 118 million tonnes in 2024. Interestingly, there are different points of view on this. For those in the building industry, the idea of having an awful lot of cheap steel coming into the country is not that unattractive, but it would affect our domestic industries.

How the Government curb dumping and subsidisation must be accompanied by, at least in part, a deterrent effect. That is crucial for investigations that implicate large and powerful countries. Clause 107 removes the opportunity to implement any deterrent effect because it caps duties imposed on the dumping margin or subsidy amount, not at the injury margin. I acknowledge that this is in line with World Trade Organisation rules. However, injury margins can often exceed dumping and subsidy margins due to their accurate reflection of the true economic harm inflicted on UK industries. Each time, they have been overridden due to the lesser duty rules, and the removal of this rule could have given the Government the opportunity to apply a regime that reflects injury margins better in dumping and subsidy investigations. That would not only protect UK industries but send a clear message to those who engage in these abhorrent trade practices that this will not be tolerated and will be met with serious repercussions. I would be grateful if the Minister could expand on the Government’s rationale not to cut duties at the injury margin. It is quite a technical question, and if he feels the urge to write back, that might save him the trouble of getting into a lot of technical detail.

We are supportive of the thrust of amendments 44 and 45, tabled by the hon. Member for Maidenhead. It is important for decision makers to be accountable to Parliament for their decisions, whether that is the Secretary of State or the Trade Remedies Authority. I suspect that these amendments will be voted down, so could the Minister help the Committee understand what safeguards are in place to address the concerns outlined by the hon. Member for Maidenhead?

Clause 108 gives the Secretary of State the power to direct the Trade Remedies Authority to initiate a safeguarding investigation. It is important that the UK has the necessary defensive measures where there is injury to UK industries. However, clause 108 requires clarity on the conditions that enable the Secretary of State to direct the Trade Remedies Authority to initiate an investigation.

I have two points on this. First, on the requirement of evidence of increased quantities in a good, clause 108 does not introduce any parameters or a threshold that would distinguish a legitimate increase in quantity of goods from an increase that warrants investigation. Secondly, there is no definition or guidance on what constitutes “serious injury”; the clause does not make clear what serious injury means. Without the clarification, the clause grants the Secretary of State substantial discretion in determining whether those conditions have been met. Fundamentally, though, on both these clauses, we must ensure that these important decisions are made with technical rigour and on the evidence. It is incredibly important that they are not driven solely by political whim. I ask the Minister for an assurance on that point.

[Dan Tomlinson]

I will not expound on the detail of the clauses, but I will explain why the Government cannot accept the amendments.

On amendment 44, any public disclosure of evidence before an investigation is formally launched risks undermining it. The formal initiation of an investigation is a defined procedural step, and once an investigation has been formally initiated, the TRA may recommend the imposition of provisional duties. If there was a gap between publicly disclosing evidence and initiating an investigation, it might incentivise exporters to increase shipments of the goods concerned into the UK to avoid potential future duties. It would also risk contravening our international World Trade Organisation obligations. The rules are clear that authorities must avoid publicising the application for an investigation before a decision has been made to initiate it. To our knowledge, no such parliamentary veto exists in comparable trade remedy systems internationally, but I assure the House that the process will remain transparent and led by the evidence.

On amendment 45, the Trade Remedies Authority is already required by our domestic legislation to publish the consumer and wider economic impact of proposed anti-dumping or countervailing duties. As part of its dumping and subsidisation investigations, the Trade Remedies Authority must advise the Secretary of State on whether and how any recommended anti-dumping or countervailing duties would meet the economic interest test as set out in legislation. The Secretary of State must then have regard to that advice when considering whether to accept or reject the recommendation. This advice is included in the TRA’s published reports across the case life cycle, including a statement of essential facts, which is included on the public file ahead of a recommendation to the Secretary of State.

Since he has given me leave to do so, I will write to the shadow spokesperson, the hon. Member for Wyre Forest, on his specific question.

[Mr Reynolds]

It is important to remember that one can support both free trade and protection against unfair dumping—they are not mutually exclusive—and I think the amendments strike a balance between them transparently. Amendment 44 gives Parliament meaningful oversight of ministerial decisions to initiate investigations, and amendment 45 ensures that decisions account for impacts on consumers and businesses relying on imported inputs. Together, they strengthen democratic accountability while maintaining our ability to act against unfair trading practices. I ask the Minister to reconsider his thoughts on amendment 44 when we push it to a vote.

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Question proposed, That the clause stand part of the Bill.

[Dan Tomlinson]

Clause 109 amends sections 20 and 20A of the Customs and Excise Management Act 1979 to update HMRC’s existing powers to require all ports to provide and fund customs infrastructure.

Customs infrastructure is essential to protecting the UK by ensuring that risk-based checks on goods entering and leaving the country can take place. Provision of that infrastructure by ports is a long-standing requirement. When we left the EU, the Government funded and operated customs infrastructure at inland border facilities for ports that do not have enough space for this infrastructure within the port itself. Only two inland border facilities remain: Sevington inland border facility in Kent and Holyhead inland border facility in Wales. As confirmed in the border target operating model in autumn 2023, Government provision of these inland border facilities was always intended to be temporary.

Clause 109 would, first, require the small number of ports assessed as having insufficient space on site for customs infrastructure to provide equivalent infrastructure at an offsite location, which must be approved by HMRC. Secondly, all ports will now be responsible for providing and funding the customs infrastructure required for border checks on goods. This levels the playing field between ports, bringing all ports into line with the long-standing model. I commend the clause to the Committee.

[Mark Garnier]

Clause 109 shifts the responsibility for the remaining two inland border facilities from the Government to the port authorities. The switching of inland border facilities services and operations to a commercial basis was something that the last Government were exploring.

However, we query whether clause 109 goes a little too far. It would require the ports to prepare to take on the additional responsibility of providing equivalent infrastructure. We appreciate why the ports received the additional Government assistance in the first place, especially considering the far-reaching effects that any disruption in Dover could have. However, while I agree that the ports must be able to stand on their own feet, clause 109 risks the ports’ introducing additional import and export charges being applied to every lorry and trailer that passes through. The magnitude of the price increases could be substantial for businesses, which may end up passing on the additional costs to consumers—not to mention that they would be in addition to the port inventory charges that the port of Dover implemented from 1 January this year.

I recommend that the Government assess the impact that the legislative changes in clause 109 would have on these ports, the businesses and hauliers that rely on them and consumers, who will have to pay a higher price. We get the principle of the clause, but we are concerned about whether there are any adverse knock-on effects on trade through the ports.

[Dan Tomlinson]

We do not expect that the changes will result in significant cost changes. How ports that currently benefit from the inland border facilities choose to recover any costs is a commercial matter. It is worth noting that the ports have benefited from significant public investment that has already been made in the development and operation of inland border facilities since we left the EU.

Question put and agreed to.

Clause 109 accordingly ordered to stand part of the Bill.

Clause 110

Increases to rates of levy

[Dan Tomlinson]

I beg to move amendment 12, in clause 110, page 134, line 20, at end insert—

“(2A) In consequence of the amendments made by the preceding subsections, in section 189 of the Economic Crime and Corporate Transparency Act 2023, in subsections (3)(b)(ii) and (11) (which operate by reference to provisions amended by this section), for ‘large or very large’ substitute ‘in any of bands B to D’.”

This amendment makes a consequential amendment as a result of the new bands.

[The Chair]

With this it will be convenient to discuss clause 110 stand part.

[Dan Tomlinson]

Clause 110 will make changes to the rates charged to businesses under the economic crime (anti-money laundering) levy from April 2026. The changes will increase the revenue raised each year by the levy by £110 million from 2027-28 onwards.

The levy was introduced to provide a long-term, sustainable source of funding for initiatives aimed at tackling money laundering. In 2024-25, the levy funded 455 new roles fighting economic crime in organisations, including in the National Crime Agency and City of London police, and delivered a new digital service for suspicious activity reporting, which onboarded precisely 15,211 organisations. In a constrained funding landscape, we believe that the levy is right place to find the money for these initiatives. The Government have decided to change the rates charged to businesses under the levy to provide sufficient funding to deliver key projects in the economic crime space over the next three years.

The changes made by clause 110 will increase the charge paid by businesses with an annual revenue between £10.2 million and £36 million from £10,000 to £10,200 per annum. It will also introduce a new band for businesses with an annual revenue between £500 million and £1 billion. Lastly, it will increase the charge paid by businesses with an annual revenue exceeding £1 billion to £1 million from April 2026. As the levy is collected a year in arrears, the increased rates will first be collected in the financial year beginning April 2027. The changes have been designed with proportionality and fairness at their core, and no business will pay more than 0.1% of its UK annual revenue in levy charges.

Government amendment 12 seeks to update the language in the Economic Crime and Corporate Transparency Act 2023, which refers to the current band names “large” and “very large”. These will be changed to refer to the new band names A, B, C and D. The amendment contains no policy changes; it will just bring existing legislation in line with the new economic crime levy band names. I commend the clause and the amendment to the Committee.

[Mark Garnier]

The previous Conservative Government introduced the levy back in 2022 as a proactive measure to combat money laundering and strengthen our economy. As my hon. Friend the Member for Arundel and South Downs (Andrew Griffith), now the shadow Business Secretary, said when he brought it in,

“the levy will provide an important private sector contribution from those industries at highest risk of being abused for money laundering.”

We support robust action against money laundering, but we have one or two concerns about the scale. The introduction of a new band C, with a £500,000 levy for businesses with a revenue of between £500 million and £1 billion, is a substantial new burden on businesses that are already heavily regulated and are already investing significant sums in anti-money laundering compliance. To be clear, a business with £500 million to £1 billion revenue used to pay £36,000 and will now have to pay half a million—a 1,289% increase.

The Government’s own impact assessment suggests that between 100 and 110 businesses will be affected by the levy rise in this band C. It is a really big rise, so it would be helpful if the Minister could justify the nearly 1,300% rise for firms moving into the new band C. Perhaps he could also say whether he has had any representations from any businesses about the effect it could have on investment, staffing level, productivity and all the rest of it.

The simultaneous reduction in the threshold for the “very large” band, band D, means that more businesses fall into the higher levy. Will the Minister talk about the rationale for that? Has he considered the potential impact on the UK’s competitiveness, particularly mid-sized firms that may now face substantially higher costs?

[Dan Tomlinson]

On competitiveness, the Government of course do not place any additional burdens on businesses lightly, but reducing economic crime helps the good functioning of the UK economy and our competitiveness, so we think that this is a proportionate change.

The shadow Minister is right to identify that there are significant changes in band C. Previously, businesses with revenue of £500 million paid only 0.007% of their UK revenue, while those with revenues of, for example, £36 million paid 0.1%. That was a significant imbalance. This change seeks to address that disparity by aligning contributions more closely with revenue size so that contributions are proportionate to revenue—more proportionate, but still bands over the broad swathe of business size. This is to make contributions fairer and more consistent, and it will ensure that larger businesses contribute proportionately to the overall funding requirement.

Amendment 12 agreed to.

Clause 110, as amended, ordered to stand part of the Bill.

Clause 111

Removal of time limit to claim relief under section 106(3) of FA 2013

Question proposed, That the clause stand part of the Bill.

[Dan Tomlinson]

Clause 111 removes a restrictive time limit within which relief from the annual tax on enveloped dwellings can be claimed. This measure updates the legislation to remove the current restrictive time limit for claiming relief from the ATED. Companies are still required to deliver their ATED returns on time—typically 30 days from the start of the chargeable period. ATED returns not delivered by the filing deadline will remain subject to penalties for late filing. The time limits for amending a return already delivered to HMRC are unchanged. This clause will come into effect from the date of Royal Assent of the Bill and will have effect as if it had always been in force. HMRC is currently applying its discretion to accept late claims pending enactment of this legislative change. The change is necessary to ensure that the law reflects our policy aims for relief from the ATED. I therefore move that clause 111 stand part of the Bill.

[Mark Garnier]

The ATED was originally brought in back in 2013 under the coalition Government to discourage the use of corporate structures to hold high-value residential properties. Reliefs were built into the system to ensure that genuine commercial property businesses were not caught by the charge. However, those reliefs were subject to a clear 12-month time limit for making a claim. That was for two reasons: first, it helps ensure that relief claims are made while the facts are still reasonably clear. Secondly, it simply aligns with normal tax time limits.

Now the Government want to remove that time limit entirely. Without a deadline, if claims are made over the original 12-month period, HMRC could be required to revisit historical ATED returns long after they were filed. Given service levels in HMRC are already stretched, it is unclear why the Government have chosen to do that. It could increase, rather than reduce, administrative burdens on HMRC. Have the Government assessed the resource implications for HMRC of processing claims made more than a year after the relevant adjustment period?

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[Dan Tomlinson]

Yes; in anticipation of the Budget and the announcements made at the Budget, work was carried out between HMRC and policy officials in the Treasury to assess the implications of tax changes on businesses and on the Government, and this is set out in the usual way.

Question put and agreed to.

Clause 111 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Mark Ferguson.)