Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will hold discussions with the Secretary of State for Transport on the potential effect of the re-introduction of a return leg exemption from air passenger duty for domestic flights in the UK on (a) regional connectivity and (b) the viability of regional air routes.
Answered by Kemi Badenoch - Leader of HM Official Opposition
The Government has committed to consult on aviation tax reform, as part of which we will consider the case for changing the APD treatment of domestic flights, and the potential impact any measure may have on regional connectivity and domestic routes. We will provide an update on timing in due course.
HM Treasury is engaging with relevant departments ahead of this consultation.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will ensure that future covid-19 business support grant schemes distributed by local authorities are based on the number of businesses and employment in an area rather than a per capita population figure.
Answered by Kemi Badenoch - Leader of HM Official Opposition
The Additional Restrictions Grant, which is allocated on a per capita basis, is only one part of the Government’s comprehensive support package for businesses and local authorities during this time. The Local Restrictions Support Grant (Closed) is allocated on a per-business basis and provides businesses in England which are legally required to close due to national or local restrictions with up to £3,000 per month of closures, depending on their rateable value. Businesses which are legally required to close are also eligible for one-off grants worth up to £9,000, depending on their rateable value.
In addition, through the Local Restrictions Support Grant (Open), local authorities which were subject to restrictions on socialising (in particular a ban on indoor household mixing) before the latest lockdown was announced received additional funding so that they could make grants of up to £2,100 per month to hospitality, leisure and accommodation businesses which were able to remain open, but which were experiencing a severe reduction in demand due to restrictions on socialising. This funding is also calculated on a per-business basis.
Given that both population and business densities create pressures on local authorities, by providing some funding per-head and some per-business we are achieving a fair balance.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment has he made of the merits of introducing a new airside tax-free shopping regime for international visitors at the end of the Brexit transition period.
Answered by Kemi Badenoch - Leader of HM Official Opposition
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss the changes with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
On 25 November the independent Office for Budget Responsibility (OBR) set out their assessment of the fiscal impact of the withdrawal of the tax-free airside sales. The OBR estimate that the withdrawal will raise approximately £170 million per year for the Exchequer, after behavioural responses are taken into account and passenger numbers recover from the impacts of Covid-19.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessments his Department has made of the potential merits of providing alternative airside tax-free shopping regimes for international visitors at the end of the transition period.
Answered by Kemi Badenoch - Leader of HM Official Opposition
Ahead of the end of the transition period, the Government has announced the VAT and excise duty treatment of goods purchased by individuals for personal use and carried in their luggage arriving from or going overseas (passengers). The following rules will apply from 1 January 2021:
- Passengers travelling from Great Britain to any destination outside the United Kingdom (UK) will be able to purchase duty-free excise goods once they have passed security controls at ports, airports, and international rail stations.
- Personal allowances will apply to passengers entering Great Britain from a destination outside of the UK, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme (RES) in Great Britain will not be extended to EU residents and will be withdrawn for all passengers.
- The concessionary treatment on tax-free sales for non-excise goods will be removed across the UK.
The Government published a consultation which ran from 11 March to 20 May. During this time the Government held a number of virtual meetings with stakeholders to hear their views and received 73 responses to the consultation. The Government is also continuing to meet and discuss the changes with stakeholders following the announcement of these policies.
The detailed rationale for these changes are included in the written ministerial statement and summary of responses to the recent consultation: https://questions-statements.parliament.uk/written-statements/detail/2020-09-11/hcws448 and https://www.gov.uk/government/consultations/a-consultation-on-duty-free-and-tax-free-goods-carried-by-passengers. A technical note has also been issued to stakeholders to expand on this document and to respond to issues raised by stakeholders.
The concessionary treatment on tax-free sales currently affects airports that fly to non-EU destinations. The extension of duty-free sales to EU bound passengers will be a significant boost to all airports in England, Scotland and Wales, including smaller regional airports which have not been able to offer duty-free to the EU before.
HMRC estimate that around £150 million of VAT is not charged as a result of tax-free airside sales. As with the VAT RES, extending the relief to the EU would significantly increase the cost of the scheme and result in a large amount of deadweight loss by subsidising spending from EU-bound passengers which already happens.
On 25 November the independent Office for Budget Responsibility (OBR) set out their assessment of the fiscal impact of the withdrawal of the tax-free airside sales. The OBR estimate that the withdrawal will raise approximately £170 million per year for the Exchequer, after behavioural responses are taken into account and passenger numbers recover from the impacts of Covid-19.
The Government also recognises the challenges the aviation sector is facing as it recovers from the impacts of Covid-19 and has supported the sector throughout the pandemic, and continues to do so, including schemes to raise capital, flexibilities with tax bills, and financial support for employees.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what guidance he has issued to overseas sellers who need to register for UK VAT by 1 January 2021 for under £135 goods sold to UK consumers.
Answered by Jesse Norman - Shadow Leader of the House of Commons
HMRC published guidance on 20 July 2020 setting out information on the proposed changes for overseas sellers and online marketplaces.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will provide support to people who receive income via company dividends that are taxed, during the covid-19 outbreak.
Answered by Jesse Norman - Shadow Leader of the House of Commons
Dividends are not covered by the Coronavirus Job Retention Scheme (CJRS) or the Self-Employment Income Support Scheme (SEISS) Grant Extension. Income from dividends is a return on investment in the company, rather than wages.
Those who pay themselves a salary through their own company are eligible for the CJRS. The CJRS is available to employers, including owner-managers, and individuals paying themselves a salary through a PAYE scheme. Where furloughed directors, including companies with a sole director, need to carry out particular duties in order to fulfil their statutory obligations, they may do so provided it is no more than would reasonably be judged necessary for that purpose.
As with the previous SEISS grants, it is not possible for HM Revenue and Customs (HMRC) to distinguish between dividends derived from an individual’s own company and dividends from other sources, and between dividends in lieu of employment income and as returns from other corporate activity.
This means, unlike the SEISS grants that use information HMRC already hold, targeting additional support would require owner-managers to make a claim and submit information that HMRC could not manageably verify to ensure payments were made to eligible companies for eligible activity.
The SEISS Grant Extension continues to be just one element of a comprehensive package of support for individuals and businesses. This package includes Bounce Back loans, tax deferrals, rental support, and other business support grants. The Government has also temporarily increased the Universal Credit standard allowance for 2020-21 by £20 per week and relaxed the Minimum Income Floor, so that where self-employed claimants' earnings have significantly fallen, their Universal Credit award will have increased to reflect their lower earnings.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has to financially support wholesale distributors in localities where local authorities do not include them in eligibility for five per cent discretionary grant funding announced as part of the Plan for Jobs.
Answered by Kemi Badenoch - Leader of HM Official Opposition
During this difficult time for the country, I absolutely recognise the extreme disruption to people’s lives, jobs, and businesses due to the necessary actions to tackle COVID-19. This includes those in the wholesale sector who play a critical role in supporting our food supply chain.
The Government recognises that businesses which are legally required to close due to national or local restrictions will need additional support. This is why we have announced the Local Restrictions Support Grant (Closed) scheme, which will provide businesses in England which are legally required to close with grants of up to £3,000 per four-week closure period, depending on their rateable value.
For businesses which are not legally closed, but which are nonetheless severely impacted by local or national restrictions, we have provided Local Authorities with a further £1.1billion across England via the Additional Restrictions Grant.
Local Authorities have discretion on how to use this funding to support businesses in their areas, but we encourage them to set up discretionary grant schemes to support businesses such as wholesalers which can remain open, but which are nonetheless severely affected by the enhanced COVID-19 restrictions.
Businesses across the country, including wholesale distributors, should also be able to benefit from others measures in the Government’s unprecedented package of support for businesses, including:
• The extension to 31 March of the CJRS, through which employees will receive up to 80% of their usual salary for hours not worked up to a maximum of £2,500 per month;
• Support for the self-employed via the SEISS, which will provide the self-employed with grants worth up to 80% of trading profits, covering November to January;
• The extension of the application deadline for loan guarantee schemes to the end of January 2021;
• An adjustment to the Bounce Back Loan Scheme rules to allow those businesses who have borrowed less than their maximum (i.e. less than 25% of their turnover) to top-up their existing loan; and
• Help for businesses in repaying loans from Government-backed schemes through the Pay as you Grow scheme and allowing lenders to extend the terms of CBILS loans to up to 10 years.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent discussions he has had with the Secretary of State for Business, Energy and Industrial Strategy on extending business rates relief to wholesale distributors.
Answered by Jesse Norman - Shadow Leader of the House of Commons
The Government has provided Local Authorities with £1.1billion across England via the Additional Restrictions Grant, for businesses which are not legally closed, but which are severely affected by local or national restrictions.
Local Authorities have discretion on how to use this funding to support businesses in their areas, but the Government encourages them to set up discretionary grant schemes to support businesses such as wholesalers which can remain open, but which are nonetheless severely affected by the enhanced COVID-19 restrictions.
All business rates reliefs in England will be considered through the business rates review.
In line with the practice of successive administrations, details of ministerial discussions are not normally disclosed.
Asked by: Henry Smith (Conservative - Crawley)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has bring the UK's application of VAT on professional pilot training programmes into line with the VAT applied to (a) those programmes in the EU and (b) other vocational educational courses in the UK.
Answered by Jesse Norman - Shadow Leader of the House of Commons
Under the current VAT rules, education and vocational training can be VAT exempt where it is provided by a government institution or certain regulated organisations. Providing an exemption to all pilot training would come at a cost to the Exchequer. Although the Government keeps all taxes under review, there are no current plans to change the VAT treatment of pilot training programmes.