Personal Independence Payment
David Gauke Excerpts(12 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Welfare Reform Bill introduces a new disability benefit, personal independence payment (PIP), which will replace disability living allowance (DLA) for working-age claimants from 2013-14. There are a number of existing tax reliefs relating to DLA, and suitable amendments to a number of pieces of tax legislation will be needed on the transition to PIP.
In line with the Government’s approach to tax policy making, legislation relating to these provisions will be published in draft form in due course, with appropriate amendments made in a future Finance Bill (or by Treasury Order if appropriate).
In line with this, the relevant provisions have been removed from the Welfare Reform Bill.
However, the Government have decided to retain the provision in the Welfare Reform Bill that will make PIP tax exempt, in order to provide absolute certainty that these payments will be free of tax.
Modernising the Personal Tax System
David Gauke Excerpts(12 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are committed to making the UK tax system simpler, more transparent and easier to use. As part of this, the Government have today set out further details on a number of initiatives aimed at modernising the personal tax system.
First, there is a discussion document seeking views on improving the transparency and accessibility of personal tax information: “Modernising the administration of the personal tax system: tax transparency for individuals”. The document is available on the HMRC website at:
www.hmrc.gov.uk/consultations/index.htm.
Secondly, there is a document describing the next phase of work to explore options for integrating the operation of income tax and national insurance contributions: “Integrating the operation of income tax and national insurance contributions: next steps”. The document is available on the HM Treasury website at:
www.hm-treasury.gov.uk/tax_income_nics.htm.
Thirdly, there are draft regulations for the introduction of real time information: amendments to the regulations for pay-as-you-earn, national insurance contributions and the construction industry scheme. The draft regulations, and an accompanying technical note, are available on the HMRC website at: www.hmrc.gov.uk/consultations/index.htm.
HM Treasury’s tax consultation tracker has been updated to reflect these publications. It is available on the HM Treasury website at:
www.hm-treasury.gov.uk/tax_updates.htm.
VAT—Low Value Consignment Relief
David Gauke Excerpts(12 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
I am today announcing further reforms to the relief from import VAT known as Low Value Consignment Relief (LVCR). These reforms will make a positive contribution to the UK economy as well as contributing towards the fairness of the tax system and reducing the deficit.
In Budget 2011, the Chancellor of the Exchequer announced that the Government intended to take action to end the exploitation of LVCR, which in recent years has been used on an increasingly large scale to sell low value goods free of VAT to UK consumers, a purpose for which it was never intended. Most of this trade originates from, or is routed through, the Channel Islands.
Our objectives in reforming LVCR are twofold. First, to ensure that UK companies, especially small and medium-sized enterprises, can compete on a level playing field with companies with operations in the Channel Islands. Secondly, to protect tax revenue for the Exchequer while taking into account the costs of collecting small amounts of VAT.
As the first step towards reform of the way in which the UK applies the LVCR rules we legislated in Finance Act 2011 to reduce the LVCR value threshold, below which items are imported free of VAT, from £18 to £15. That change is being implemented from 1 November.
In taking that legislation through the House I made it clear that it was only the first step towards preventing the exploitation of LVCR.
I can announce today that, as from 1 April 2012, LVCR will no longer apply to goods supplied commercially, as part of a distance selling transaction, from the Channel Islands. Legislation to enact this change will be published in draft on 6 December, for inclusion in Finance Bill 2012.
This will mean that supplies from business in the Channel Islands bear the same VAT liability as supplies from VAT-registered businesses in the UK.
My decision to focus action on imports from the Channel Islands reflects:
By far the greatest volume of all international parcel post to the UK from outside the EU is estimated to originate in the Channel Islands, and much of it appears to be linked to the exploitation of LVCR.
Companies based in the Channel Islands can participate in HMRC’s “Import VAT Accounting Scheme”, which allows automatic collection of UK import VAT at source, thus avoiding delays at sorting offices and VAT collection surcharges. The ease of access of companies based in the Channel Islands to the UK consumer market is therefore very similar to that of domestic UK-based companies, in contrast to their non-EU counterparts.
This measure is expected to increase receipts by approximately £100 million per annum. The final costing will be subject to scrutiny by the Office for Budget Responsibility, and will be set out at the autumn statement 2011.
LVCR will continue to apply with the lower £15 threshold to commercial supplies from other non-EU jurisdictions. I have no current plans for further changes to this threshold but will be watching its operation carefully and will take further action if necessary.
The existing import reliefs for gifts (non-commercial consignments) sent from outside the EU, including from the Channel Islands, also remains unchanged.
Oral Answers to Questions
David Gauke Excerpts(12 years, 6 months ago)
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Mr Robert Buckland (South Swindon) (Con)
11. What recent estimate he has made of the level of central Government debt.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Office for National Statistics publishes central Government debt figures monthly. The latest figures released on 21 October gave central Government gross debt as £1.2 trillion or 77.6% of GDP in September. The Government use public sector net debt for their fiscal targets. That figure is also published by the ONS, and it was £966 billion or 62.6% of GDP last month.
Jesse Norman
I thank my hon. Friend for that response. This country continues to bear a huge burden of private finance initiative debt. The Government have made important progress in improving the cost and operation of PFI over the past 18 months. Does he share my view, and that of many of my colleagues, that more can be done to secure a fair deal on PFI, while securing investment in our infrastructure?
Mr Speaker
It would help if the Chair could actually hear the question being asked.
Mr Gauke
My hon. Friend has campaigned tirelessly on this matter. As he knows, the Government have improved the assurance and approval arrangements for PFI, and the transparency. We are seeking to obtain £1.5 billion of savings on existing stock of PFI contracts, and we will of course continue to work hard to improve the situation.
Mr Buckland
With gilt yields at their lowest for 60 years, does this situation not show that the international markets have huge faith in the UK’s debt reduction strategy?
Kelvin Hopkins (Luton North) (Lab)
In 1945, Britain had higher Government debt than now and the Government of that time did not impose cuts but ran a full-employment economy and there was rapid growth. Is it not time that the Government took a leaf out of Labour’s book in relation to running the economy?
Mr Gauke
May I just make the point about the 1945 Government that they were running surpluses from 1948 onwards? If memory serves, the debt in 1945 was 232% of GDP and by 1951 it was 178% of GDP, so they brought debt down. That is not a bad thing to do and this Government want to do it, whereas the Labour party wants to put debt up.
Sammy Wilson (East Antrim) (DUP)
Given the increase in debt caused by the lower growth rates and the impact that that is likely to have on the Government’s deficit reduction plan, what impact does the Minister believe that will have on the United Kingdom’s credit rating? Does he believe that steps need to be taken to inject growth into the economy?
Mr Gauke
It is worth pointing out what Standard & Poor said recently when it confirmed our triple A credit rating. It said that if we abandoned our fiscal plans—if we borrowed more—that credit rating would be at risk. The best way of keeping our triple A rating is by sticking to the plan.
Andrew George (St Ives) (LD)
8. What plans he has to bring forward fiscal measures to support green growth.
Rosie Cooper (West Lancashire) (Lab)
9. How many firms have participated in the national insurance holiday for new businesses.
The Exchequer Secretary to the Treasury (Mr David Gauke)
As of 25 October 2011, Her Majesty’s Revenue and Customs had received 8,761 successful applications for the national insurance contributions holiday. A breakdown of information by constituency on the amounts claimed and jobs supported for the first year of the scheme will be published shortly in a factsheet in the House of Commons Library.
Rosie Cooper
Could the Minister tell the House how much of the £1 billion allocated for the national insurance holiday has actually been given to businesses?
Mr Gauke
As I say, we will be updating the House with all those details shortly, but there are 1,600 or so businesses in the north-west region that are benefiting from it. I visited one of them not far from her constituency a few weeks ago which was very appreciative of the scheme. Where the scheme is available, I encourage hon. Members to highlight it to their constituents.
Julian Smith
May I urge the Minister to reconsider auto-enrolling new businesses on to the scheme, so that rather than their having to apply for it they are placed on it automatically?
Mr Gauke
We looked at auto-enrolment but one of the difficulties was the fact that it would have been years before we could have put it fully in place and we wanted to move quickly to have the scheme in operation. It is important that we highlight the scheme and make sure that publicity is available and that businesses are aware of it. The businesses that I have met that have taken up the scheme are very appreciative of it and it helps them in those difficult first few months.
Nick Smith (Blaenau Gwent) (Lab)
10. What assessment he has made of the level of economic growth in (a) the UK and (b) other EU members states in the last 12 months.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The 2011 Budget announced a £200 million package of support, including 100,000 work experience opportunities for young people, skills training, guaranteed interviews and progression into apprenticeships. This is in addition to the £7.6 billion that we are investing in education and training for 16 to 19-year-olds this year and the £1.4 billion that we are investing in apprenticeships. Young people will also benefit from priority access to the Work programme, which started in June.
Mrs Riordan
What my constituents want is action rather than words, especially on youth unemployment, which stands at nearly 10% in Halifax. When will the Government take real measures to get young people into work and contributing to the economy and society in a positive way?
Mr Gauke
As I said in my answer, we are introducing more apprenticeships, and young people will have priority in the Work programme. The hon. Lady highlights youth unemployment in Halifax. The last estimate showed that it increased by 0.6% from June 2010 to March 2011—but I also have to point out that from 2004 to 2010, youth unemployment increased by 8.5% in Halifax.
Matthew Hancock (West Suffolk) (Con)
Does the Minister share my concern that even during the boom years youth unemployment rose? Will he join me in commending the work placement scheme in Haverhill in my constituency? The work programme and the new flexibility at the jobcentre means that young people can be put into work placements, and more than half of those put in placements end up getting a permanent job.
John Howell (Henley) (Con)
14. What recent representations he has received from the IMF and the OECD on UK economic policy.
Mr Douglas Carswell (Clacton) (Con)
T5. Is my right hon. Friend aware of the TaxPayers Alliance’s excellent report published last week on abolishing national insurance and merging national insurance with income tax? Does he believe that the merger of national insurance and income tax would be a good way to simplify tax in the way that he promised, and will he make it happen?
The Exchequer Secretary to the Treasury (Mr David Gauke)
My hon. Friend will be aware that the Government are looking into merging the operation of national insurance contributions and income tax. We are actively looking at ways in which we can make the tax system more transparent and simpler to understand, and we will be saying more on that subject shortly.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
T8. What does the Chancellor say to the Federation of Small Businesses, which describes his policies as too timid, and out of touch with the sluggishness of the UK’s economy?
HM Revenue and Customs - Discussion Document
David Gauke Excerpts(12 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
HM Revenue and Customs is publishing today a discussion document on pay-as-you-earn (PAYE) pooling. Its purpose is to consult on HMRC’s proposals to alter the PAYE system to give closely connected employers the option of being treated as a single entity for PAYE purposes (PAYE pooling).
The discussion document is available on the HM Revenue and Customs website at: http:// www.hmrc.gov.uk/consultations/.
HM Revenue and Customs (Consultation)
David Gauke Excerpts(12 years, 7 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
On Friday 7 October, HM Revenue and Customs published a consultation on the Social Security (Categorisation of Earners) Regulations 1978 in relation to lecturers, teachers, instructors or those in a similar capacity. Its purpose is to consult on HMRC’s proposal to repeal this part of the regulations.
The consultation document is available on the HM Revenue and Customs website at: http://www.hmrc.gov. uk/consultations/.
Tax Agreement (Switzerland)
David Gauke Excerpts(12 years, 7 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
On 6 October the Government signed an agreement with the Swiss confederation on co-operation on tax matters. The agreement seeks to tackle tax evasion by UK residents through the use of Swiss financial services. It will clear up past tax liabilities through the imposition of a significant one-off levy, safeguard future revenues through a new withholding tax on investment returns, and expand the powers of HM Revenue and Customs to find out about Swiss assets.
The text of the agreement has been deposited in the Libraries of both Houses and is available on the HM Revenue and Customs’ website.
Anti-avoidance
David Gauke Excerpts(12 years, 8 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
I am today announcing that legislation will be introduced in the next Finance Bill to clarify the corporation tax treatment of manufactured overseas dividends (MODs) received by companies. The amendment will ensure that MODs cannot be used to obtain repayment or set-off of income tax that the UK Exchequer does not receive.
The clarification follows disclosure of a new avoidance scheme in which the recipient of a MOD claims to have received it under deduction of UK income tax, which it then seeks to set off against its corporation tax liability, or to have repaid, although no actual UK income tax has been paid.
This measure protects significant amounts of revenue. Any yield from this measure will be reflected in the OBR’s next forecast.
The Government are determined to reduce tax avoidance in order to protect the Exchequer, which provides funding for public services, and maintain fairness for the taxpayer. Accordingly, draft legislation will be published by HMRC later today, putting it beyond doubt that no set-off or repayment of income tax can be made in such cases. The legislation will have immediate effect from today.
Because of repeated avoidance in this area, the Government also intend to issue a consultation document after Budget 2012 on proposals to make wider changes to the tax rules on MODs. This review will form part of the rolling review of high risk areas of the tax code, announced in the Budget 2011 document “Tackling Tax Avoidance”. Its aim will be to reduce the need for this area of the tax code to be revisited in response to new schemes and to simplify the relevant legislation.
The Government recognise that changes to these arrangements could affect financial markets and they are committed to full consultation on any changes, which would have an appropriate lead-in period. Any changes made following the consultation would not come into effect before 1 April 2013.
Tax Policy Consultation and Draft Finance Bill 2012
David Gauke Excerpts(12 years, 8 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government’s approach to tax policy making puts consultation on policy and scrutiny of legislation as the cornerstones.
Over the summer, HM Treasury and HM Revenue and Customs have been seeking the views of interested parties on the tax policies announced at Budget 2011. Responses to these consultations will be published on or by 6 December 2011.
As part of the next stage of consultation draft legislation for these measures, to be included in Finance Bill 2012, will also be published on that date. This will be supplemented by draft explanatory notes and tax impact and information notes. The draft clauses will be open to consultation until 10 February 2012.
Anti-Avoidance (Tax Treaties)
David Gauke Excerpts(12 years, 8 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
On 1 August HMRC published for consultation a technical note and draft legislation outlining a proposed approach to combating tax avoidance arrangements which exploit the provisions of double taxation agreements (DTAs). The responses so far received have made it clear that the proposed legislation, as drafted, could cause significant uncertainty for compliant UK businesses and overseas investors about its intended scope and its practical effect.
The Government are committed to providing certainty to taxpayers and acknowledge the concerns raised in the responses to the consultation. They have therefore decided not to proceed further with the consultation on the proposed legislation and will not include it in the Finance Bill 2012.
The Government will continue to challenge specific arrangements that clearly seek to abuse provisions in a DTA.
This decision reaffirms the Government’s commitment to open and transparent consultation and demonstrates the value of consultation. The Government’s approach set out in their tax consultation framework has been widely welcomed by business and others as providing a much improved basis for developing new legislation. If the Government conclude in the future that alternative approaches for legislating against treaty abuse are necessary, they will consult on these alternatives in line with the tax consultation framework.