Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an assessment of the potential merits of reforming the Expensive Car Supplement component of Vehicle Excise Duty for used vehicles to reflect a) vehicle depreciation and b) purchase price at the point of resale.
Answered by Dan Tomlinson - Exchequer Secretary (HM Treasury)
The Expensive Car Supplement (ECS) is a supplement to Vehicle Excise Duty (VED) payable by vehicle keepers for five years, from years two to six following a car's first registration.
The ECS rate is currently £425 per year, increasing to £440 from 1 April 2026 in line with RPI. The ECS currently applies to new cars with a list price of £40,000 or more. As announced at Budget 2025, the threshold will increase to £50,000 for zero-emissions cars only from 1 April 2026, as such vehicles tend to be more expensive.
The ECS was introduced so that those who can afford to access the most expensive cars make a fair contribution. The Government has no plans to change the scope of the ECS.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the (a) adequacy and (b) clarity of HM Revenue & Customs guidance for employers on workplace nursery schemes.
Answered by Darren Jones - Minister for Intergovernmental Relations
The workplace nursery scheme exemption allows employers to offer childcare support to employees without incurring income tax or National Insurance (NI) charges, provided certain conditions are met.
HMRC publishes online guidance on the use of workplace nursery schemes which is reviewed frequently and was last updated in August 2024.
In July 2024 HMRC published an article in its Agent Update as a reminder to businesses of the conditions to be met for the tax exemption to apply following increased awareness of a number of scheme operators advertising their service as having HMRC approval were the partnership requirements were not met.
The article can be found here: Issue 121 of Agent Update - GOV.UK (www.gov.uk)
Employer Supported Childcare schemes are voluntary arrangements. The Government supports these initiatives through relevant tax and NICs reliefs, but it is up to the employer to decide whether or not to offer childcare support to its employees.
The schemes primarily operate through salary sacrifice arrangements, as childcare is one of the few areas where salary sacrifice tax reliefs are still available.
Employers can choose to offer a workplace nursery scheme as part of their employee benefits package to attract and retain skilled employees.
With Tax-Free Childcare, eligible parents can simply open an online account and make payments directly to their childcare provider. For every £8 a parent deposits into their account, the government adds £2 to help with the cost of childcare.
As such, there is no requirement for employers to adopt the schemes.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps she is taking to encourage employers to adopt (a) tax-free childcare and (b) other workplace nursery schemes.
Answered by Darren Jones - Minister for Intergovernmental Relations
The workplace nursery scheme exemption allows employers to offer childcare support to employees without incurring income tax or National Insurance (NI) charges, provided certain conditions are met.
HMRC publishes online guidance on the use of workplace nursery schemes which is reviewed frequently and was last updated in August 2024.
In July 2024 HMRC published an article in its Agent Update as a reminder to businesses of the conditions to be met for the tax exemption to apply following increased awareness of a number of scheme operators advertising their service as having HMRC approval were the partnership requirements were not met.
The article can be found here: Issue 121 of Agent Update - GOV.UK (www.gov.uk)
Employer Supported Childcare schemes are voluntary arrangements. The Government supports these initiatives through relevant tax and NICs reliefs, but it is up to the employer to decide whether or not to offer childcare support to its employees.
The schemes primarily operate through salary sacrifice arrangements, as childcare is one of the few areas where salary sacrifice tax reliefs are still available.
Employers can choose to offer a workplace nursery scheme as part of their employee benefits package to attract and retain skilled employees.
With Tax-Free Childcare, eligible parents can simply open an online account and make payments directly to their childcare provider. For every £8 a parent deposits into their account, the government adds £2 to help with the cost of childcare.
As such, there is no requirement for employers to adopt the schemes.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of introducing a higher stamp duty threshold for first-time buyers in inner London boroughs.
Answered by James Murray - Chief Secretary to the Treasury
Stamp Duty Land Tax (SDLT) is a national tax in England and Northern Ireland charged using the same percentage rates in all areas. This ensures stable and predictable revenue for the Exchequer while maintaining fairness for taxpayers. The current structure of SDLT ensures that those buying the most expensive properties contribute the most. Introducing higher SDLT thresholds for first-time buyers in inner London boroughs could increase complexity and create distortive effects around borders, impacting property markets.
More broadly, SDLT continues to be an important source of Government revenue, raising around £12 billion each year to help pay for the essential services the Government provides. Any reforms to SDLT would have to carefully consider impacts on the Exchequer alongside administrative costs and simplicity for the taxpayer.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of equalising VAT rates for (a) home and (b) public electric vehicle charging points.
Answered by James Murray - Chief Secretary to the Treasury
The supply of energy for domestic use attracts the reduced rate of VAT. (five per cent). Whilst this relief was not designed for charging EVs at home, it applies for all uses of domestic energy. Public EV charging is subject to the standard rate of VAT (20 per cent). This matches the VAT treatment of petrol and diesel, as well as all non-domestic electricity.
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps she is taking to ensure that large corporations pay the correct amount of tax.
Answered by James Murray - Chief Secretary to the Treasury
HM Revenue and Customs’ (HMRC) Large Business team manages the tax compliance of the UK’s 2,000 largest businesses through a resource intensive Customer Compliance Manager (CCM) model because their tax at stake, their size and complexity mean that this is the most cost-effective way of ensuring they pay the right amount of tax. This approach is in line with international best practice on cooperative compliance.
CCMs are senior, highly trained compliance professionals, who lead teams of skilled specialists to scrutinise HMRC’s large business customers. This gives an in-depth knowledge of the business and the economic and commercial environment in which it operates, its appetite for tax planning and its internal governance, which allows HMRC to effectively identify and tackle tax compliance risk and ensure the right amount of tax is paid.
The UK Tax Gap in 2022 to 2023 (Measuring Tax Gaps 2024 Edition) was £39.8bn or 4.8% of total theoretical tax liabilities. The element of the Tax Gap relating to large businesses in 2022 to 2023 was £4.3bn (or 0.5% of the UK’s total theoretical liabilities) decreasing from £7.4bn (or 1.7% of the UK’s total theoretical liabilities) in 2005 to 2006. Whilst the UK tax gap for large businesses remains low (the latest figures showing this customer segment pays over 99% of its theoretical liabilities), HMRC continues to take a risk-based approach, focusing resources to close the Tax Gap.
HMRC subjects large businesses to an exceptional level of scrutiny, investigating around half of the UK’s largest businesses at any given time
As of 31 March 2024, HMRC’s tax under consideration for large businesses was £44.9 billion. Tax under consideration is an estimate of the amount at stake in open enquiries, which demonstrates that HMRC is very actively challenging large businesses on tax that may be due.
During 2023 to 2024, by effectively policing the tax rules as they apply to large businesses, HMRC successfully achieved compliance yield of £11.4bn
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if she will make an estimate of the amount of corporation tax lost due to tax (a) evasion and (b) avoidance during the current financial year to date.
Answered by James Murray - Chief Secretary to the 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 are published annually. The latest estimates are available at: Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023 - GOV.UK (www.gov.uk).
In the tax year 2022 to 2023 the tax gap for Corporation Tax gap was 13.9% of the total theoretical Corporation Tax liability, or £13.7 billion in absolute terms. The amount of the Corporation Tax gap in 2022 to 2023 due to evasion is estimated to be around £2.9 billion, and due to avoidance, around £1.0 billion.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment she has made of the potential merits of basing eligibility for Free Childcare For Working Parents on household rather than individual income.
Answered by Darren Jones - Minister for Intergovernmental Relations
Eligibility is assessed on a per person rather than per household basis because the application is made by the individual, it aligns to the existing boundary in the tax system and means there is no incentive for the lower earner in the household to reduce their income in order to be eligible. The eligibility criteria are kept under review.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she has made an assessment she has made of the potential merits of extending (a) a discount on and (b) an exemption from vehicle excise duty to people receiving Attendance Allowance.
Answered by James Murray - Chief Secretary to the Treasury
The Government is committed to supporting disabled people and is determined that support should be focused on people who need it most. The aim of existing Vehicle Excise Duty (VED) exemptions for recipients of some disability benefits is to provide additional help for people who become disabled early, or relatively early, in life and as a result experience economic disadvantage. These allowances are therefore only available to people who become disabled before State Pension age.
For individuals who develop a disability after State Pension age, Attendance Allowance (AA) is a non-means-tested benefit which provides targeted help with the extra costs of disability and helps them maintain their independence. Unlike Disability Living Allowance and Personal Independence Payment, AA does not have a mobility component and is intended to cover the need for care or supervision an individual requires as a result of their disability rather than specific mobility needs. Individuals can however choose to use their AA to fund mobility aids.
The Government keeps all taxes under review as part of the policy making process, and the Chancellor makes decisions at fiscal events in the context of public finances.
Asked by: Rosena Allin-Khan (Labour - Tooting)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, whether she plans to review the Equitable Life payment scheme.
Answered by Tulip Siddiq
The Equitable Life Payment Scheme has been fully wound down and closed since 2016, and there are no plans to reopen any decisions relating to the Payment Scheme or review the £1.5 billion funding allocation previously made to it. Further guidance on the status of the Payment Scheme after closure is available at: https://www.gov.uk/guidance/equitable-life-payment-scheme#closure-of-the-scheme.