Clause 1

Jim Shannon Excerpts

Monday 12th January 2026 Commons Chamber

[Dan Tomlinson]

I thank the right hon. Member for giving me time to top up my glass of water—and for his intervention. The Government have been very clear in our approach since we took office. We needed to raise revenue to fund public services, and we have been consistent in our objectives in that regard. We also needed to get borrowing down, and borrowing is falling in every single year of this forecast because of the decisions we have taken. I believe it is the fastest reduction in borrowing in the G7, bringing back economic stability and allowing the Bank of England the space to cut interest rates, as it has already done six times since the general election.

The Finance (No. 2) Bill will deliver on the choices that the Government have made, and we will renew public services. We have taken the decision to lift hundreds of thousands of children out of poverty, to get more people into work and, crucially for our long-term growth prospects, to maintain the highest level of public investment for 40 years, all while keeping borrowing this year as a share of GDP to its lowest level in six years and doubling our headroom against our fiscal rules.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for what he is putting forward. The OBR has said that some £55.5 billion will be raised, but the money is not coming from millionaires. It is coming from lower and middle-income families, which means that some 4.8 million more individuals will be paying the higher rate and some 600,000 more individuals will move into the additional rate band. How, in all honesty, can we help those in the lower and the middle brackets? The millionaires can afford it; the others cannot.

[Dan Tomlinson]

One way we are seeking to support everyday working people and families across the country is by making the decisions—many of them have been opposed by the Opposition, I must say—to raise taxes on those with the very largest estates and the very highest wealth. In fact, over this Parliament, as a result of the decisions made in the Budget in 2025 and the Budget in 2024, we will be raising an additional £10 billion of revenue from wealth and from those with the greatest wealth, which enables us to minimise our ask of everyday families when it comes to the topic we will be debating later in this sitting.

Turning in detail to the clauses we are debating, clauses 1 to 3 are on income tax, which is the largest source of Government revenue and helps to fund the UK’s schools, hospitals and the other essential services we rely on. In the coming year, it is expected to raise £359 billion. Each year, the Government have to legislate to charge and to set the rates of income tax. The rates of income tax are not being changed by this Bill; we are confirming that they will remain the same.

Clause 1 imposes an income tax charge for the coming financial year. Clause 2 sets the main rates of income tax at 20%, 40% and 45%. These will apply to non-savings, non-dividend income taxpayers in England and Northern Ireland. Income tax rates in Scotland and Wales are set by their respective Parliaments. Clause 3 sets the default rates at the same levels as the main rates—namely 20%, 40% and 45%. These rates apply to the non-savings, non-dividend income of taxpayers who are not subject to the main rates of income tax, the Welsh rates of income tax or the Scottish rate of income tax. Income tax is a vital revenue stream for our public services, and clauses 1 to 3 ensure that it will continue to be so in the year ahead—2026-27.

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Clauses 4 to 8 will, together, implement hikes in the rate of income tax on income from dividends, savings and property in the years to come.

[Jim Shannon]

A valid point that my constituents have brought to my attention is that if they pay the higher rate of tax, tax on the interest from savings rises to 40%. Those who scrimp and save and put their money away for a rainy day will be penalised. Does the shadow Minister agree that that is absolutely immoral and very wrong?

[Gareth Davies]

I agree. We are trying to create a savings culture. We are trying to get people to take responsibility, and to put their income away for a rainy day and for their retirement. As I will go on to say, the Opposition’s position is that the Bill does not achieve that; in fact, it does the very opposite.

As I was saying, clause 4 increases the ordinary and upper rates of income tax charged on dividend income by 2%, a fact the Minister seemed to miss out in his opening remarks. The income tax rate hike will apply from the tax year 2026-27. Clause 5 sets the savings rate of income tax for the tax year 2027-28 two percentage points higher than it is this year, and than the rate set in the Bill for 2026-27.

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[Vikki Slade]

I will be honest and say that, not having been to university, I do not know the details of the different groups. My students are all very recent graduates, so they went in knowing that they would have enormous debt and recognising that they would be more than £50,000 in debt, with probably no prospect of ever paying it off. I do not think they went in realising that they would get such a bad deal when they were at university, with eight hours of contact time a week and PhD students doing their lectures, rather than actual lecturers, some of whom cannot even speak English and are here only for their visas. Students are having a really rough time, and this measure is just rubbing salt into the wound.

[Jim Shannon]

I have often said in this Chamber in the last three or four years that the Government should sponsor medical students—those working to be doctors or whatever the position may be in the medical service—and ensure that they do three or four years in the health service. Wales does that, and it works. I have a constituent from Newtownards—we will never get her back in Newtownards, because she has fallen in with a Welshman; she will stay there and marry him, and that is it—who had to stay for three years, but she got all her student fees paid. Is that not what Government should be doing to make it easier for young students and to retain them in the health service?

[Vikki Slade]

I always value the interventions of the hon. Member. As the aunt of a young GP, Bethan, who has more than £100,000-worth of debt, I think it is ridiculous that our young people are being saddled with this situation. I have constituents who have deliberately gone to study in Wales so that they are able to get that benefit. It is time for us to look collectively at analysing the cumulative impact of the issues faced by our young, aspirational adults, because we will see more of them deciding to go abroad, and we desperately need our home-grown talent to stay.

Thirdly, I turn, as most Members have done, to pensioners. The older age group will have been pleased to hear that they are due to be exempted from the tax threshold if their only income is the state pension, but two constituents—Colin from Wareham, who is a regular correspondent, and John from Lytchett—have written to suggest that the Chancellor may have inadvertently misled Martin Lewis. I will not use their other accusation, as I will get into a lot of trouble. One said that most pensioners are expected to survive on a weekly state pension that is four times lower than the average wage, and that mandating that they be taxed will plunge many older people into desperation and poverty. They have suggested that it is not quite accurate that the state pension alone will not be taxed—I am using my words very carefully—so can the Minister assure me and my constituents, like others, that from April, those with no income other than the state income and modest savings will pay no income tax, particularly because there appears to be nothing in the Bill about that?

Finally, given that millions of people with tiny private pensions and, in particular, many pensioners will be dragged into tax, will the Minister consider the Lib Dem proposal for a pensioners’ “red phone” to ensure that they do not spend hours hanging on the telephone?

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[Carla Lockhart]

I rise to speak about the changes to agricultural property relief and business property relief in clause 62 and schedule 12. I do so having stood shoulder to shoulder with farmers from my constituency of Upper Bann, from across Northern Ireland and from across this entire United Kingdom; they have lobbied, protested and spoken with one voice in defence of their livelihoods and their family farms since the tax grab was announced. It has been my greatest honour to come alongside and fight this battle with them. It is because of their persistence that we have seen any movement at all from this Government.

While I acknowledge that the increase in the inheritance tax threshold to £2.5 million represents a concession, it is a hard-won one. It was not offered freely; it was forced by the strength and unity of the farming community and by the courage of the minority on the Back Benches of the Labour party. Even so, it remains wholly insufficient and fails to address the fundamental unfairness that remains embedded in the Bill.

Ultimately, we on the DUP Benches—indeed, Members rights across the Ulster Benches—want to see this policy scrapped in totality. That is why I support amendment 3 and the linked amendments 4 to 23, which would delay the commencement of these changes to 1 March 2027. Farming families planned succession responsibly and in good faith under the rules as they stood; changing those rules mid-stream is unjust and destabilising, and it undermines confidence across the entire sector.

[Jim Shannon]

I commend my hon. Friend for all that she has done in this campaign; she was very much to the fore. I also commend the Ulster Farmers’ Union on the stance that it took—it never gave in and stood its ground the whole way through, as did the NFU across Scotland, England and Wales. She has farmers in her constituency, as I do in mine, and some 25% of farmers who own farms in Northern Ireland will not benefit from the changes. Some of those farmers are my neighbours, and they have been farming for generations. Does my hon. Friend agree that, when it comes to this legislation, the Minister is duty-bound to meet the Ulster Farmers’ Union to discuss these matters?