Clause 1

Judith Cummins Excerpts

Monday 12th January 2026 Commons Chamber

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

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

With this it will be convenient to discuss the following:

Clause 10 stand part.

Clause 69 stand part.

New clause 3—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 4—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 5—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 13—Assessment of the impact of changes to the basic rate limit and personal allowance for tax years 2028-29 to 2030-31—

“The Chancellor of the Exchequer must, within three months of this Act being passed, publish an assessment of the expected impact on an average earner of the provisions of section 10.”

This new clause requires the Secretary of State to publish an assessment of the impact on the average earner of extending the freeze on the basic rate limit and personal allowance for the tax years 2028-29, 2029-30, and 2030-31.

New clause 14—Assessment of the impact of the freezing of the personal allowance on those in receipt of the state pension for the tax years 2027-28 to 2030-31—

“(1) The Chancellor of the Exchequer must, before the start of the tax year 2027-28, publish an assessment of the impact of the freezing of the personal allowance on those in receipt of the state pension for the tax years 2027-28 to 2030-31.

(2) The assessment made under subsection (1) must include details on the estimated total income from tax receipts received in each tax year from individuals whose only income is the state pension.”

This new clause requires the Secretary of State to publish an assessment of the impact of the personal allowance on those pensioners whose only income is the state pension for the tax years 2027-28, 2028-29, 2029-30, and 2030-31.

New clause 15—Assessment of the impact of exempting from income tax pensioners whose sole income is the basic or new State Pension—

The Chancellor of the Exchequer must, within three months of this Act being passed, publish an assessment of the fiscal impacts of exempting pensioners whose sole income is the basic or new State Pension (without any increments) from paying small amounts of income tax.”

[Dan Tomlinson]

In opening debate on this second group of clauses, I want to reflect on why we are making changes to the tax system. I am looking forward to no interventions at all on this speech from Opposition Members—their interventions seemed to dry up in my last speech, so maybe they have now finished with them. Of course, we make these changes to modernise the tax system, to make it fair and fit for purpose and to adapt to a changing world, but we also make these changes so that we can raise the revenue to fund our public services. Yes, the Bill holds thresholds constant till the end of the decade, but in doing so contributes to our being able to renew our public services while maintaining the highest levels of public investment in four decades to stimulate economic growth and ensure that those with the broadest shoulders pay their fair share.

--- Later in debate ---

[Dan Tomlinson]

The hon. Member mentions the change to student loan thresholds that was announced at the Budget. The Government have looked at our taxation system in the round, and at our benefits system—for example, there are the changes to Motability—to ensure that we are raising the revenue that we need in a proportionate and reasonable way, and the measures that we are debating tonight enable us to do that. I will not let Opposition Members, who repeatedly voted to freeze thresholds until 2028 when they were in government, try to rewrite history as we debate these clauses.

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

I call the shadow Minister.

[Gareth Davies]

I wish to speak to new clauses 13 to 15, which are in my name, but first I will cover what the clauses in this group mean for British taxpayers. If you will forgive me, Madam Chair, I will do so slightly out of numerical order. Clause 9 sets the starting rate limit for savings for tax years 2026-27 to 2030-31, keeping it fixed at £5,000. That is an important allowance for so many with relatively low incomes, including those who work part-time or are retired. Clause 69 fixes the various inheritance tax thresholds at their current level for a further tax year, 2030-31. Clause 10 freezes the basic rate limit for income tax at £37,700, and sets the personal allowance at £12,570 for tax years 2028-29, 2029-30, and 2030-31.

According to the Office for Budget Responsibility, the Labour Government’s freeze to income tax thresholds will raise around £7.6 billion in 2029-30 alone, and more than £12 billion in 2030-31. This is a £23 billion tax rise; clause 10 alone is a £23 billion broken promise. The OBR is clear: 920,000 more people will be pushed into the higher rate, and 780,000 more people will be pushed into income tax altogether. We have already heard the Minister try to explain away Labour’s breach of the promises that it made to the British people. The best the Chancellor can manage is to say that it is not her fault, because she was very clear in the small print—a technicality dressed up as an excuse. But people are not stupid. It would not be quite so embarrassing if the Chancellor herself had not proclaimed so theatrically in her first disastrous Budget that extending the threshold freeze would hurt working people. Yet here we are, and it is no surprise that the Prime Minister is breaking records for unpopularity. New clause 13 would ensure that the Government undertook an assessment of the impact of clause 10 on the average earner, because we all know that working people will be hurt very badly by this clause.

--- Later in debate ---

[Gareth Davies]

Exactly. I have nothing to add to that; the right hon. Gentleman puts it perfectly. New clause 14 would require a proper assessment of clause 10’s impact on state pensioners, and new clause 15 would require an assessment of the cost of the Chancellor’s so-called exemption from small amounts of tax—let her define that in a piece of legislation; I do not think she will be able to. Clause 10 is simple: another Labour tax promise has been broken and pensioners will pay the price. I hope that Members from across the Committee can see that and that they will vote with the official Opposition tonight.

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

I call the Liberal Democrat spokesperson.

--- Later in debate ---

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

[The First Deputy Chairman of Ways and Means (Judith Cummins)]

With this it will be convenient to consider the following:

Amendment 42, in schedule 12, page 443, line 13, leave out from “and” to end of line 16 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 45, page 443, line 13, leave out from “and” to end of line 16, and insert—

“(c) either—

(i) is attributable to property acquired before 31 March 2026, 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% business property trust relief where the property was acquired before 31 March 2026.

Amendment 43, page 443, line 22, leave out from “and” to end of line 25 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 46, page 443, line 22, leave out from “and” to end of line 25 and insert—

“(c) either—

(i) is attributable to property acquired before 31 March 2026, 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 apply 100% business property trust relief where the property was acquired before 31 March 2026.

Amendment 44, page 443, line 37, leave out from “and” to end of line 3 on page 444 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 47, page 443, line 37, leave out from “and” to end of line 3 on page 444 and insert—

“(b) either—

(i) is attributable to property acquired before 31 March 2026, 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% business property trust relief where the property was acquired before 31 March 2026.

Amendment 48, page 444, line 15, at end insert—

“(1D) Where the whole or part of the value transferred is treated as reduced by 50% under subsection (1), the resulting inheritance tax liability is chargeable only if, within 10 years of the relevant transfer, the agricultural land giving rise to the charge is either—

(a) sold (and the owner has not purchased agricultural land elsewhere), or

(b) ceased to be used for farming.”

Government amendments 24 to 26.

Amendment 3, in schedule 12, page 451, line 22, leave out “30 October 2024” and insert “1 March 2027”.

This amendment, along with amendments 4 to 23 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 31, page 451, line 22, leave out “30 October 2024” and insert “6 April 2026”.

This amendment, with Amendments 32 to 36, 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 4, page 452, line 3, leave out “30 October 2024” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 32, page 452, line 3, leave out “30 October 2024” and insert “6 April 2026”

See explanatory statement for Amendment 31.

Government amendments 27 to 29.

Amendment 5, in schedule 12, page 454, line 17, leave out “30 October 2024” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 33, page 454, line 17, leave out “30 October 2024” and insert “6 April 2026”

See explanatory statement for Amendment 31.

Amendment 40, page 455, line 31, leave out “2031” and insert “2027”

This amendment would begin indexation in 2027 rather than 2031.

Amendment 41, page 455, line 33, at end insert—

“(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.”

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

See explanatory statement for Amendment 3.

Amendment 7, page 461, line 3, leave out sub-paragraphs (2) and (3)

See explanatory statement for Amendment 3.

Amendment 34, page 461, line 3, leave out sub-paragraphs (2) to (4)

See explanatory statement for Amendment 31.

Amendment 8, page 461, line 17, leave out “sub-paragraph (3) will not apply” and insert

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

See explanatory statement for Amendment 3.

Amendment 9, page 461, line 21, 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 3.

Amendment 35, page 461, line 21, 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 31.

Amendment 10, page 461, line 28, leave out “30 October 2024” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 36, page 461, line 28, leave out “30 October 2024” and insert “6 April 2026”

See explanatory statement for Amendment 31.

Amendment 11, page 461, line 31, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 12, page 461, line 33, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 13, page 461, line 36, leave out “6 April 2026” and insert "1 March 2027”

See explanatory statement for Amendment 3.

Amendment 14, page 461, line 38, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 15, page 462, line 3, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 16, page 462, line 7, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 17, page 462, line 15, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 18, page 462, line 19, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 19, page 462, line 30, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 20, page 462, line 35, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 21, page 464, line 14, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 22, page 464, line 21, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Amendment 23, page 464, line 27, leave out “6 April 2026” and insert “1 March 2027”

See explanatory statement for Amendment 3.

Schedule 12.

New clause 1—Section 62: application in Northern Ireland—

“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, publish an assessment of the effects of the measures in section 62 as they apply in Northern Ireland.

(2) The assessment must consider—

(a) the number of estates in Northern Ireland expected to be subject to the reduction in agricultural property relief made under this Act,

(b) the potential benefits to farmers in Northern Ireland of exempting land used for agricultural purposes from the changes to agricultural property relief made under this Act,

(c) the potential costs to the Exchequer of exempting land used for agricultural purposes from the changes to agricultural property relief made under this Act,

(d) the impact of the measures on farm succession, land retention, and the viability of agricultural businesses in Northern Ireland, including any potential implications for the resilience and security of the UK’s food supply, and

(e) any other matters that the Chancellor of Exchequer deems appropriate.

(3) In subsection (2), “land used for agricultural purposes” does not include land that falls within the Financial Conduct Authority’s definition of a land-banking investment scheme.

(4) In carrying out the assessment, the Chancellor of the Exchequer must have regard to—

(a) the average farm size and land valuation profile in Northern Ireland,

(b) the prevalence of intergenerational family farming in Northern Ireland,

(c) the interaction between agricultural property relief and devolved agricultural support schemes, and

(d) any disproportionate impact on rural communities in Northern Ireland.

(5) The assessment must be carried out following meaningful consultation with—

(a) the Department of Agriculture, Environment and Rural Affairs in Northern Ireland,

(b) representatives of farmers and land-based businesses in Northern Ireland, and

(c) such other persons as the Chancellor of the Exchequer considers appropriate.

(6) The Chancellor of the Exchequer must, within three months of publishing the assessment, lay before Parliament a statement setting out the steps the Government intends to take in response to the assessment’s findings.

(7) The Chancellor of the Exchequer must keep the operation of the measures in section 62 under review in light of the assessment and publish a further assessment within 18 months of this Act coming into force.”

New clause 6—Impact assessment of section 62 prior to implementation—

“(1) The Chancellor of the Exchequer must, within three months of the passing of this Act, lay before the House of Commons an assessment of the impact of implementation of section 62 on family-owned farms and businesses.

(2) The assessment made under subsection (1) must consider potential impacts on—

(a) business continuity,

(b) land use, and

(c) rural employment.”

New clause 7—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 17—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.”

[Dan Tomlinson]

As we come to the final group in today’s Committee stage on the Bill, I am pleased to open this important debate on clause 62, schedule 12 and the many associated amendments. As reiterated throughout the day, the Bill delivers on the choices made at this Government’s two Budgets. It delivers fair and necessary reforms that strengthen the foundations of our economy and provide a secure future for our country. The choice at those two Budgets was austerity and decline or investment and renewal, and on both occasions the Labour Government rejected austerity and chose renewal.

Clause 62, schedule 12 and Government amendments 24 to 29 make changes to agricultural property relief and business property relief in order to target them more fairly, contribute to the sustainability of public finances and fund public services. Under the current system, the 100% relief on business and agricultural assets is heavily skewed towards the wealthiest estates. According to HMRC data for 2021-22, 40% of agricultural property relief across the UK was claimed by just 7% of the estates making claims. That is £219 million in tax relieved from just 117 of the largest estates in the country, and it is a similar picture for business property relief: more than 50% of BPR was claimed by just 4% of the estates making claims. That is a striking £558 million in tax relieved from just 158 estates.

That contributes to the very largest estates paying lower average effective inheritance tax rates than the smaller estates, and significantly lower average effective inheritance tax rates than most people who end up paying IHT will pay. That is the status quo that those seeking to reverse the Government’s reforms in full wish to perpetuate. It is not sustainable and, in the Government’s view, it is certainly not fair to maintain such a large tax break for such a small number of claimants, especially in the context of the wider pressures on the public finances and public services.