Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what plans he has to provide financial support or compensation to homeowners who are mortgage prisoners with Northern Rock Asset Management.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
We remain committed to supporting as many borrowers as possible with inactive lenders move to a cheaper deal. The government has worked with the FCA to implement rule changes to its mortgage lending rules, removing the regulatory barrier that prevented some customers, who otherwise may have been able to switch, from accessing new products. Inactive lenders have now started contacting borrowers who have been struggling to switch, setting out that options may be available for them on the active market. I will monitor the situation and hope to see even more options available over the coming months.
The FCA recently confirmed additional options to support borrowers, including making intragroup switching easier and extending the window in which interest-only borrowers coming to the end of their term can continue making interest payments, without paying down the capital. These modified rules came into force on 23 October 2020. More information can be found here: https://www.fca.org.uk/news/press-releases/fca-confirms-measures-support-closed-book-and-interest-only-part-and-part-mortgage-borrowers.
UK Asset Resolution (UKAR) – the owner of the Northern Rock Asset Management mortgage portfolio - has worked to help customers looking for a better deal with another lender by;
It is also worth noting that Norther Rock Asset Management’s Standard Variable Rate (SVR) has always been set in line with the SVRs of active lenders.
Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he plans to take with the Secretary of State for Health and Social Care to reclassify sunscreen as an essential healthcare item which would be exempt from VAT to help reduce the incidence of skin cancer.
Answered by Jesse Norman
Under the current VAT rules, sun protection products are subject to the standard rate of VAT. High-factor sunscreen is on the NHS prescription list for certain conditions and is provided VAT free when dispensed by a pharmacist.
Expanding the scope of the current VAT relief would come at a cost to the Exchequer. While all taxes are kept under review, there are currently no plans to reduce VAT on sunscreen products.
Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what discussions he has had with cabinet colleagues on exempting household cleaning products from VAT during the covid19 outbreak.
Answered by Jesse Norman
Cleaning products are subject to the standard rate of VAT. Providing an exemption for these products would come at a considerable cost to the Exchequer and is not possible under the current legal framework. Although the Government keeps all taxes under review, there are no current plans to change the VAT treatment of these products.
Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, for what reason (a) tax free shopping for all passengers travelling from the UK and (b) the VAT refund scheme for foreign tourists are being withdrawn.
Answered by Kemi Badenoch - President of the Board of Trade
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 passengers travelling to the EU 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 has also continued to meet and discuss with key 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.
In 2019 HMRC estimate that VAT RES refunds cost around £0.5billion in VAT for around 1.2million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4billion per annum.
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 Edinburgh and Glasgow and 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.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
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: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the withdrawal of tax free shopping on the competitiveness of UK airports.
Answered by Kemi Badenoch - President of the Board of Trade
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 passengers travelling to the EU 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 has also continued to meet and discuss with key 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.
In 2019 HMRC estimate that VAT RES refunds cost around £0.5billion in VAT for around 1.2million non-EU visitors. In 2019 the ONS estimate there were substantially more EU visitors (24.8 million) than non-EU passengers (16.0 million) to the UK. This implies an extension to EU residents would significantly increase the cost by up to an estimated £0.9billion. This would result in a large amount of deadweight loss by subsidising spending from EU visitors which already happens without a refund mechanism in place, potentially taking the total cost up to around £1.4billion per annum.
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 Edinburgh and Glasgow and 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.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
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: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what impact assessment his Department made on the decision to withdraw tax free shopping for all passengers travelling from the UK.
Answered by Kemi Badenoch - President of the Board of Trade
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 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 United Kingdom, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme in Great Britain will not be extended to passengers travelling to the EU 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 has also continued to meet and discuss with key stakeholders following the announcement of these policies.
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 Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
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: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of (a) withdrawing tax free shopping for all passengers travelling from the UK and (b) the VAT refund scheme for foreign tourists on wider international tourism spending.
Answered by Kemi Badenoch - President of the Board of Trade
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 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 United Kingdom, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme in Great Britain will not be extended to passengers travelling to the EU 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 has also continued to meet and discuss with key stakeholders following the announcement of these policies.
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 Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
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: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the decision to (a) withdraw tax free shopping for all passengers travelling from the UK and (b) the VAT refund scheme for foreign tourists on the Government's policy to promote a Global Britain.
Answered by Kemi Badenoch - President of the Board of Trade
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 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 United Kingdom, with alcohol allowances significantly increased.
- The VAT Retail Export Scheme in Great Britain will not be extended to passengers travelling to the EU 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 has also continued to meet and discuss with key stakeholders following the announcement of these policies.
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 Edinburgh and Glasgow and smaller regional airports which have not been able to offer duty-free to the EU before.
The final costings will be subject to scrutiny by the independent Office for Budget Responsibility and will be set out at the next forecast.
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: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether he has plans to enable people facing financial difficulties during the covid-19 outbreak to draw down more than one quarter of their pension early without incurring 40 per cent tax.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government wishes to encourage pension saving, to help ensure that people have an income, or funds on which they can draw, throughout retirement. This makes pensions tax relief one of the most expensive reliefs in the personal tax system. In 2017/18 income tax and employer National Insurance Contributions relief cost £54 billion.
The Government therefore imposes a charge on early withdrawals, which can be from 40% to 55% depending on the circumstances, both to recoup its investment through tax relief and to provide individuals with a strong incentive to save through their pension for the long-term.
It is for these reasons that the Government does not have any plans to remove tax on pension payments in response to this outbreak. As with all tax policy, this will be kept under review.
Asked by: Patricia Gibson (Scottish National Party - North Ayrshire and Arran)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps small business owners should take whose insurers are deducting the £10,000 Coronavirus Small Business Grant from insurance payouts indicating that businesses have already been compensated by the Government.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government is in continual dialogue with the insurance sector regarding their contribution to the handling of this unprecedented situation. The Government is also working closely with the Financial Conduct Authority (FCA) to ensure that the rules are being upheld during this crisis.
The FCA rules require insurers to handle claims fairly and promptly; provide reasonable guidance to help a policyholder make a claim; not reject a claim unreasonably; and settle claims promptly once settlement terms are agreed. In addition, the FCA has said that, in light of COVID-19, insurers must consider very carefully the needs of their customers and show flexibility in their treatment of them.
Customers who feel that they have not been treated fairly should first make a formal complaint to their insurer. If they then feel that their complaint has not been dealt with satisfactorily, they are able to refer the matter to the Financial Ombudsman Service (FOS), an independent body set up to provide arbitration in such cases. The FOS can help micro-enterprises with annual turnover sheets that do not exceed €2 million, and small businesses with turnover that does not exceed £6.5 million. The decision of the FOS is binding on insurers up to £350,000.
If customers would like to make a general complaint about the practice of deducting small business grants from the value of insurance settlements, the FCA would be happy to hear from them through their consumer support service.
While the FCA can’t resolve individual disputes and will not normally be able to discuss their investigations or findings with the person making the complaint, they can take any information provided into account as a part of their wider monitoring of practices in the sector.