Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will commission an independent review of the proposed changes to Inheritance Tax.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Government has set out the rationale, analysis, and expected impact of all the reforms to inheritance tax announced at Autumn Budget 2024. The independent Office for Budget Responsibility certified the costings are reasonable and central for these reforms. This includes the reforms to agricultural property relief and business property relief from 6 April 2026, the reform to the inheritance tax treatment of pensions from 6 April 2027, and the fixing of the nil-rate band and residence nil-rate band at their current levels for a further two years in 2028-29 and 2029-30.
The Government has no plans to commission an independent review of the reforms.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether her Department has made a recent assessment of the potential impact of lowering the VAT threshold on the economy.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Any change to the VAT threshold would have potential impacts on small businesses, the economy as a whole, and tax revenues, which the Government would need to consider carefully. The Government keeps all taxes under review and any changes are announced at fiscal events.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether HMRC defines SSIPs as pension assets for the purposes of (a) means-tested benefits and (b) financial assessments.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The treatment of Self-Invested Personal Pensions (SIPPs) for the purposes of means-tested benefits and financial assessments does not fall within HMRC’s remit. HMRC’s role is to define and regulate pension schemes for tax purposes, including SIPPs, which may be registered pension schemes under the Finance Act 2004.
Decisions regarding the treatment of pension assets in means-tested benefits are a matter for the Department for Work and Pensions (DWP), while financial assessments for adult social care are administered by local authorities under guidance from the Department of Health and Social Care (DHSC).
HMRC does not define SIPPs as assets for the purposes of benefit entitlement or financial assessments. Any determination of how such pensions are treated in those contexts should be sought from the relevant departments.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the average administrative cost is of collecting VAT from a VAT-registered company.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC calculate annually the cost to collect £1 of VAT. In 2024-25, it cost 0.58 pence, i.e. less than one penny, to collect £1 of VAT on average. This ratio has been broadly stable over recent years.
Cost of Collection - VAT - 5 year Trend from 2020-2021 to 2024-2025 | |||||
| 2020-2021 | 2021-2022 | 2022-2023 | 2023-2024 | 2024-2025 |
pence | pence | pence | pence | pence | |
VAT | 0.63 | 0.52 | 0.54 | 0.58 | 0.58 |
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many non-VAT registered companies there are in West Dorset constituency.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Information on companies that are not VAT registered is not centrally collated and could be provided only at disproportionate cost.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many non-VAT registered companies there are in the UK.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Information on companies that are not VAT registered is not centrally collated and could be provided only at disproportionate cost.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the estimated total turnover of non-VAT registered companies is.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
Information on companies that are not VAT registered is not centrally collated and could be provided only at disproportionate cost.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate she has made of the loss of tax revenue from non-VAT registered companies with turnover above the VAT threshold in the next five years.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HM Revenue and Customs (HMRC) estimates the size of the tax gap, which is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. The tax gap statistics and details of the estimate methodologies are published annually and are available at: Measuring tax gaps 2025 edition: tax gap estimates for 2023 to 2024 - GOV.UK.
The latest estimate of the tax gap for VAT is 5.0% of theoretical VAT liability, or £8.9 billion in absolute terms, for tax year 2023 to 2024. This figure implicitly captures, alongside other sources of non-compliance, companies failing to register for VAT, however a separate breakdown is not separately published due to the methodological approach used to calculate it and the associated uncertainties.
HMRC does not make projections of the future loss of tax revenue due to companies failing to register for VAT. ‘Measuring tax gaps 2026 edition: tax gaps estimates for 2024 to 2025’ is scheduled for June 2026.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the projected annual loss of tax revenue is from non-VAT registered companies with turnover above the VAT threshold.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HM Revenue and Customs (HMRC) estimates the size of the tax gap, which is the difference between the amount of tax that should, in theory, be paid to HMRC, and what is actually paid. The tax gap statistics and details of the estimate methodologies are published annually and are available at: Measuring tax gaps 2025 edition: tax gap estimates for 2023 to 2024 - GOV.UK.
The latest estimate of the tax gap for VAT is 5.0% of theoretical VAT liability, or £8.9 billion in absolute terms, for tax year 2023 to 2024. This figure implicitly captures, alongside other sources of non-compliance, companies failing to register for VAT, however a separate breakdown is not separately published due to the methodological approach used to calculate it and the associated uncertainties.
HMRC does not make projections of the future loss of tax revenue due to companies failing to register for VAT. ‘Measuring tax gaps 2026 edition: tax gaps estimates for 2024 to 2025’ is scheduled for June 2026.
Asked by: Edward Morello (Liberal Democrat - West Dorset)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent discussions she has had with (a) HMRC and (b) stakeholders on the VAT treatment of voluntary payments made to international carbon offsetting projects.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
HMRC engaged with stakeholders prior to clarifying the policy on the VAT treatment of voluntary carbon credits in 2024.
As of 1 September 2024, payments made to non-statutory carbon offsetting projects for the purchase of voluntary carbon credits are in the scope of VAT where the place of supply is the UK. Payments made to international carbon offsetting projects are outside the scope of UK VAT.