Robert Jenrick
MP for Newark · Reform UK · United Kingdom
“Robert Steele was a beautiful four-year-old boy who died three weeks ago in Newark when he was thrown from an off-road bike that was being driven by a 24-year-old man. This is the culmination of a number of incidents in my town, and many others across the country, involving off-road bikes, e-bikes and e-scooters.”
“The Minister said that Governments are elected to lead. Most people would assume that means that Ministers are elected to lead, because they are accountable to Parliament and to the people.”
“There is an air of total unreality hanging over this debate. Successive Governments have run down our Royal Navy to its present enfeebled state, they have conspired to surrender other British sovereign territory and we have a Government who procrastinate about signing off a new oil field in the North sea—let alone about one in the south A…”
“I welcome the right hon. Gentleman to his position. I have known him for a long time—I wish him well. He has a huge task ahead of him. Earlier in the summer, the Prime Minister said that walking the streets of Makerfield lodged in his mind that so many working people want to see the personal allowance raised.”
“Imagine that you are a worker at JLR worried about your future, and you have the misfortune of watching the Chancellor’s speech, which contains searing economic insights like, “I want to see businesses make a profit.” There was nothing about scrapping electric vehicle mandates, bringing down energy costs by getting rid of net zero targets…”
“The sight of the Government escorting illegal migrants into Portsmouth harbour, the home of the Royal Navy, was a national humiliation. Sometimes I wonder whether Members of this House have no appreciation of the level of anger there is in the country at the rapes, the murders and the billions being wasted that should be being spent on th…”
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“Member for Aberdeen North, it is worth noting that our decision to choose class 1A helps with payroll giving, as this is the class to which it applies, and it would not have been possible if we had chosen another class of national insurance. I turn now to amendment 2 and to new clauses 2 and 5, which tackle broadly similar issues. These provisions request that the Government report on the impact of the measures in the Bill on the amount of income received from sporting testimonials or sportspeople themselves and on charitable giving linked to a sporting testimonial. I will explain briefly to the hon. Members who tabled the provisions why the Government consider that, on this occasion, they are not necessary. First, we expect that there will be a very limited impact on sporting testimonials and charitable giving linked to this practice.”
“In relation to the brief discussion that we had this morning about the definition of a customary testimonial, I would point out that this measure has now been in place, from an income tax perspective, for some time, and we have not had any feedback from sportspersons, sports clubs, sporting testimonial committees or indeed from sports bodies to suggest that there is a problem with that definition. I can reassure the Committee that clauses 3 and 4 do nothing to affect the ability of sportspersons to make donations to their charitable foundations as part of a testimonial when it is organised by an independent committee and the donation is made through payroll giving. Given the line of questioning from the Committee this morning, and further to the point that I made earlier to the hon.”
“As has been said repeatedly, this measure will bring in only a negligible sum, as certified by the OBR. The primary purpose of clause 3 is that, with effect from April 2020, the rules determining the NICs treatment of these payments will be aligned with the income tax treatment that has already been legislated for in the Finance Act 2016. This means that a 13.8% class 1A secondary (employer) NICs charge will be applied to income derived from a sporting testimonial that is already subject to income tax. Clause 4 makes the corresponding changes for Northern Ireland, ensuring that these changes apply throughout the United Kingdom.”
“I will ask my officials for a better answer, but my understanding is that this measure applies only to sportspersons. Although there might be arguments for it, it does not apply to managers and auxiliary staff, just as it would not apply to other people who, as I said in answer to a question this morning, are also engaged in careers that can be cut short, such as a ballet dancer, a performing artist or a Minister, and who might deserve it, but who are not sportspeople. Although this measure will bring in negligible revenue, its value comes in the alignment and simplification of the tax and NICs treatment of sporting testimonials. I cannot emphasise enough that our motivation here is not to raise revenue but to provide greater alignment and simplification.”
“That suggests that if it is normal practice, a sportsperson would have a legitimate expectation of that as part of their employment at the club, and if the sportsperson did not receive the testimonial that they were expecting, that would be an exceptional occurrence.”
“The hon. Lady has already used her lunch break to root out the guidance, in her usual assiduous manner. If Members look at it, they will see that it is thorough. It is several pages long and goes into a degree of detail. I am happy to circulate it to other members of the Committee. It sets out that while the concept of “customary” is not defined in legislation, it has its ordinary, everyday meaning. The guidance says that in general, “customary” means a practice that is recognisable as the norm and where a failure to observe it would be exceptional. I think that is pretty clear.”
“It should not create any more impact than is already in place because we have already legislated for this from an income tax perspective; that is on the statute book. If a sportsperson wanted to use payroll giving today to avoid the income tax liability and ensure that the greatest possible amount of money went to the charity, the sporting testimonial committee today would already have to register for payroll giving, which they would then be able to use a second time for income tax and for the employer’s national insurance liability. This measure does not add bureaucracy. One could argue about the measure that has already been legislated for, but that is already on the statute book and the level of bureaucracy involved is pretty low. We have had another debate around the definition of customary or non-customary sporting testimonial.”
“Let me respond to as many of those points as possible. We have had a discussion of the impact of these measures on charities. Without repeating myself too much, we expect this to have a minimal impact. Where the sporting testimonial committee and the sportsperson make use of payroll giving, there would be no impact whatsoever. Were an individual to receive the money themselves and then pay tax and take advantage of gift aid, there would be a different tax treatment. Obviously, that would be the choice of the individual. The sportsperson and the sporting testimonial committee could and should choose to use payroll giving, which is a very generous and unlimited relief. The hon. Member for Oxford East queried whether the measure would create a new bureaucratic impact on testimonial committees.”
“I am happy to review the guidance and see whether we can give more examples. There are a number of examples within the guidance on a range of different issues, but if it would be helpful to give one or two examples on this specific issue, I am happy to do so. Without sounding as though I am not giving serious consideration to the issue, it is worth restating that this has not arisen as an active issue. Sporting bodies, sportspeople and sporting testimonial committees have not raised it. The practice is of long standing; it dates back to 1927. We legislated for it from an income tax perspective two years ago, and we have not had any adverse feedback since then.”
“Lady also questioned the amount of revenue that is likely to be raised from the measure. We have said that it is negligible, which means, in the terminology of the Treasury and the OBR, less than £3 million per annum; but in all likelihood, it will raise significantly less than that. When we modelled it prior to doubling the threshold from £50,000 to £100,000 it was also negligible—less than £3 million a year—so it is likely to be closer to zero than to £3 million, now that the threshold has doubled. Once again, our motivation in introducing the measure is to clean up, and provide certainty and clarity to individuals and those organising such matches, rather than to raise revenue.”
“My experts at HMRC have looked into that, and the difference in language between the legislation for termination awards and sporting testimonials is accounted for as follows. First, in respect of termination awards, it is a charge on the employer. Secondly, termination awards are treated as earnings of the employment. Thirdly, the liability in respect of sporting testimonials is a charge on a third-party controller of a testimonial. Fourthly, there is no link between sportspeople and the testimonial committee. Fifthly, general earnings include earnings from the employment and any amount treated as earnings in, for example, the testimonial payment. I hope that provides some explanation. If the hon. Lady would like further information, I am happy to write to her and the Committee. The hon.”
“Without repeating myself, we have consulted many of the sporting bodies, and in fact, I met some of them. It is worth restating that in this instance, sporting bodies expressed a legitimate concern that the proposed threshold of £50,000 was too low. The Treasury responded by not just increasing it, but doubling it to £100,000. We have to be careful not to create unfairness for other members of society and taxpayers in the way that their payments are treated at the end of their career, or when one occupation ends and they unfortunately have to move on to another. The hon. Member for Aberdeen North asked this morning, and again this afternoon, why there is a difference in language between part 1 and part 2 of the Bill.”
“I am happy to take away from today’s debate that we will review the guidance and ensure that there is a sufficient number of examples to provide clarity, should anyone require it, although it is not our experience that individuals have requested further clarification in the past. The hon. Lady also questioned the wider point about the impact on different sports, which is one of the objectives of new clause 5. HMRC has announced that testimonials for sports other than football are all likely to be unaffected, as they are likely to be below the threshold. The measure is most likely to impact footballing testimonials. As I said earlier, the average testimonial, to the best of our knowledge, is around £72,000 a year and is therefore unaffected by the measure.”
“I understand that, although those sporting testimonial committees would want a degree of certainty that they were following the law, particularly if large sums of money were involved. They might seek the guidance of sporting bodies, or HMRC, perhaps on an anonymous basis, and that does not appear to have occurred. Earlier in the day, the hon. Lady asked whether the customary test is specific or exclusive to sporting testimonials or whether it has a wider basis in law. There are other examples of the use of the customary test in tax law and case law, one being employer accommodation, where two factors are taken into account: first, how long the practice had existed, and secondly, whether it had achieved general acceptance with the relevant employers. There is therefore a history, as we have already described.”
“No—with respect, I did not say that there would be zero income. I said that within the spectrum of zero to £3 million, the likely amount of revenue raised would be closer to zero than to £3 million. The sums involved are very low—negligible, in our terminology—so I do not have more precise figures, but it helps to give some guidance that it is unlikely to be closer to £3 million. Clearly, the vast majority of testimonials will be excluded, and will be below the £3 million level. I hope that I have been able to allay some of the concerns, and that the amendments will not be pressed. Question put and agreed to. Clause 3 accordingly ordered to stand part of the Bill. Clause 4 ordered to stand part of the Bill. Clause 5 Extent, commencement and short title”
“We hope that they will be able to make those changes as soon as possible. As I said previously, the purpose of bringing this Bill forward now, rather than delaying it any further, was to ensure that there was good time available for employers to make the necessary changes. We hope that we will be able to have it on the statute book in sufficient time for all the relevant stakeholders to make the necessary changes, subject to the smooth passage of this Bill.”
“I do not think that fans’ automatic assumption would be that well-paid sportspeople would pay no tax on the money they make. I appreciate that there are many examples of players being injured and so on, where people would feel particular sympathy for them as individuals. On the wider point of HMRC’s communication, we regularly communicate with stakeholder groups, including representative bodies. We have employer bulletins that give news, including our latest developments, through quarterly updates. That would be particularly relevant to termination payments, where employers could access the latest information as a result of the passage of this Bill in due course. We are currently in consultation with software providers to advise them of these changes, should they become law.”
“I am not sure that there would be any value in specifically advertising to members of the public that we have made this change. If anything, the changes we are making in the Bill increase alignment and simplicity, and increase the number of occasions when some tax will be paid to the Exchequer when a member of the public goes to a testimonial that raises a significant sum of money. Without exactly knowing the feelings of all sports fans, in many cases I think they would expect that a particularly well-paid sportsperson holding the testimonial likely to raise in excess of £100,000 at the end of a successful career would be paying their fair share of tax, and that their sporting testimonial committee would be paying employers’ national insurance.”
“On sporting testimonials, and whether there would be value in educating members of the public that in some circumstances a proportion of the money they spend on their ticket prices or donations will go to the Exchequer, it is worth remembering that any contractual testimonial is already subject to income tax, and also to employers’ and employees’ national insurance contributions, as a result of prior legislation in the Finance Act. The income taxes payable above £100,000 for those testimonials fit into that category. Unless it was specifically advertised by the organisation holding the testimonial, there is no way today that an individual would know which of these categories their particular testimonial would fall into.”
“Those are all technical matters and there is no substantive issue to discuss specifically in relation to the clause. Let me deal with the amendment tabled by the hon. Member for Aberdeen North, which centres on how we might communicate the measure to raise public awareness. Without repeating myself, this is one of those Bills that has been around for some time, has been consulted upon and been part of Budget measures. I will not repeat the list I already read out. It is well known and is expected by members of the public who take an interest in these matters—perhaps a limited number—and by tax professionals and employers. I do not think that on this occasion a specific public communication awareness campaign is necessary.”
“I will briefly describe the purpose of clause 5 before turning to the hon. Lady’s amendment. First, the clause confirms that the Bill applies across the whole of the UK. That is because national insurance is an excepted matter under the Northern Ireland Act 1998. Secondly, it provides that the clause takes effect on the day that the Bill is passed. The clause also provides that the provisions in the Bill come into force on a day that regulations specify. It is intended that they will take effect on 6 April 2020. That was previously announced at Budget 2018 and will ensure that the measures come into force at the start of the 2020-21 tax year. Finally, the clause provides that the Bill, once passed, will be known as the National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019.”
“I hope that will reassure her that we intend carry out a review in due course and that will be available for those who take an interest in it.”
“As a Wolves supporter, I am slightly bitter at the moment. To answer the point made by the hon. Member for Aberdeen North, without repeating comments already made today, I appreciate her legitimate arguments. We feel that the measures in the Bill have been sufficiently consulted on. The long-standing tradition that a new piece of legislation will be reviewed within three to five years will apply. The review’s outcome will be in the public domain. It will be sent to the Treasury Committee. Ordinarily, it would be published on its website, and the hon. Lady or any other interested Members would be able to view it there. It will not be a private document only for the consumption of members of the Committee.”
“As stated at the time of the Finance Bill—later the Finance Act 2016—the rules governing sporting testimonials are now changing to give clarity to the national insurance treatment as well. Currently, when a sporting testimonial is non-contractual or non-customary, it can be organised by a third party, rather than the club or employer, to raise money without it being subject to NICs. Where the employer arranges the testimonial, or if it is part of the contract, or if there was an expectation that the sportsperson would be entitled to one, the testimonial is already subject to income tax and NICs.”
“As this is a Budget measure, this sum has already been reflected by the Office for Budget Responsibility in its projection for the public finances. Let me turn to the second measure in the Bill, which deals with aligning the employer class 1A national insurance treatment of income from sporting testimonials with the income tax treatment. As many hon. Members will be aware, a sporting testimonial is a one-off event—or series of related events—held on behalf of sportspeople who have played for a certain club for a long time. This often takes the form of an exhibition match involving famous players from the past and present. The testimonial can be used to raise money for the sportsperson before retirement, or sometimes to raise money for charity. The relevant income tax changes were debated and came into force from April 2017.”
“Moreover, the current misalignment incentivises an admittedly small number of well-advised employers to disguise final payments as compensatory termination awards that benefit from a national insurance charge exemption. These reforms will close that loophole. The Bill will place a 13.8% class 1A employer national insurance charge on income derived from termination awards on amounts over £30,000. However, I want to assure hon. Members that, when it comes to employee national insurance, these payments will remain entirely exempt. We have chosen to continue to ensure that employees will not face any additional liability as a result of these changes in terms of employee national insurance. This measure will raise around £200 million per annum for the Exchequer, which will make an important contribution to our public services.”
“Following the OTS recommendations, the Government announced at Budget 2016 that they would be reforming the tax and national insurance treatment of termination awards. As I said, the reforms to the income tax treatment of termination awards were legislated for in the Finance (No. 2) Act 2017 and took effect from April 2018. The Government confirmed at Budget 2018 that the associated reforms to national insurance legislation would be in place for April 2020. However, the fact that termination awards are currently subject to different income tax and national insurance treatment has created confusion, and that is what we are attempting to deal with today.”
“It found that relatively few employers and employees properly understood the regime. There was confusion, and the regime was therefore ripe for reform and simplification. The OTS specifically identified three areas of misunderstanding on which it recommended we take action. First, certain forms of termination awards are exempt from employee and employer national insurance contributions and the first £30,000 is free from income tax. However, there is a common misconception that the first £30,000 of any termination payment is automatically tax free. Secondly, many employers believe that this exemption applies where in fact it does not, and thirdly, employers are unaware of the different income tax and national insurance treatment of termination payments.”
“These measures were first announced at Budget 2015. They were then consulted on and published in draft in December 2016. They were subsequently reconfirmed at Budget 2018, so it is reasonable to say that they are expected by those affected and have been subject to much scrutiny. Together, they mean that a 13.8% class 1A employer national insurance charge will be applied to income derived from termination awards and sporting testimonials that are already subject to income tax. Let me first set out the measure that covers termination awards. Between 2013 and 2014, the Office of Tax Simplification reviewed the tax treatment of employee benefits and expenses. The OTS published an interim report in August 2013 identifying termination awards as one of a number of priority areas.”
“I beg to move, That the Bill be now read a Second time. This is a small and narrowly drawn, but nonetheless important, Bill. It aims to provide a welcome simplification of the tax treatment of termination awards and sporting testimonials. The corresponding rules determining the income tax treatment of termination awards and sporting testimonials were legislated for in the Finance Acts of 2016 and 2017. At that time, it was made clear that we would return and replicate those rules in national insurance legislation in due course, to ensure that there was not a persistent misalignment. Implementation of the measures in this Bill will replicate those rules in national insurance legislation. By the nature of national insurance, it is required to have a separate piece of legislation from the Finance Bill.”
“Our motivation is primarily the simplification of the tax system and the avoidance of doubt for sportspeople and those advising them, rather than to increase revenue materially.”
“My hon. Friend makes a good point, and our analysis is the same. Last year, only around 220 sporting testimonials of any kind took place in the United Kingdom, and a large number will have been contractual. Certainly, the highest-profile ones, such as those of premiership footballers or leading cricketers for significant county clubs, are usually contractual. As I will go on to say, because the measure has a one-off £100,000 threshold during the career of the sportsperson, a large number of those 220 testimonials will fall below the threshold. Less high-profile sportspeople, who will perhaps have lower earnings, are likely to be within the threshold. We are talking about a small number of relevant testimonials and, as hon. Members will see in the Bill’s accompanying documents, the measure will raise a negligible sum.”
“Yes, and I must also declare an interest as a member of Nottinghamshire county cricket club. We have given the matter a great deal of thought. The proposal was raised several years ago, as I said, and we consulted at that time with the sporting bodies, including the England and Wales Cricket Board. It was my right hon. Friend the Member for South West Hertfordshire (Mr Gauke), then the Financial Secretary to the Treasury, who discussed the matter with the cricketing bodies. When the proposal was first brought forward, the threshold was £50,000 but, having spoken with the sporting bodies, we made the decision to increase it to £100,000, making it significantly more generous and allaying some of the concerns that my hon. Friend the Member for Taunton Deane (Rebecca Pow) sets out.”
“In conclusion, it may be a small and narrowly drawn Bill, but it is none the less important and includes two measures that simplify our tax code. Like many right hon. and hon. Members, I would like greater simplification of the tax system, but that journey must begin with single steps, and we are taking one of those today in simplifying the tax code in two significant respects that will have real-world consequences for individuals, who will benefit from a simpler system. The Bill will also raise a significant sum for public services and support our continued efforts to improve the public finances. It brings the national insurance and tax treatment of termination awards and sporting testimonials into closer alignment, and I commend it to the House.”
“As I have said, Her Majesty’s Revenue and Customs estimates that only around 220 testimonials occur each year, most of which will remain unaffected as they either fall below the £100,000 level or are part of a previous contractual arrangement, which is commonplace in most sports. Although the measure will bring in negligible revenue—we estimate less than £3 million a year—its value comes in the alignment and simplification of the tax and NICs treatment of sporting testimonials and clarity for those taking part in testimonials or those on sporting testimonial committees. Sporting bodies and other relevant stakeholders are expecting the changes, because our intention to make them has been known since at least 2015. As the changes required an NICs Bill, there has been a short delay, but that is what we are attempting to do today.”
“From April 2020, non-contractual and non-customary testimonials arranged by third parties will now be subject to NICs above a £100,000 threshold. A third-party testimonial committee will be liable to pay the class 1A employer NICs charge on the amount raised above £100,000. These types of testimonials will not be subject to employee NICs, to ensure that the sportsperson is not adversely affected. Again, as with the termination awards measure, we have chosen to act in relation to employer national insurance contributions, not employee contributions, so there remains a benefit to individuals in that respect. I reassure hon. Members that the vast majority of sportspeople will be unaffected by the Bill because they will not exceed the £100,000 threshold.”
“Very good. I re-emphasise not only that there is a £100,000 threshold, but that this is about fairness. All sportspeople who have a contractual right to a testimonial, which is commonplace, will have been paying income tax and national insurance on the benefit from that for some time, so this measure merely provides a greater degree of certainty and fairness. Of course, some of the clubs organising such testimonials will be smaller, or they may involve testimonial committees, so providing them with the clearest possible advice will be helpful. It will also ensure that there is no doubt in their minds when doing a good thing that is in the interests of players who may be at the end of their careers or may have been injured prematurely.”
“Manufacturing output has grown by 8.3% since the start of 2010, having fallen sharply as a result of the financial crisis. The manufacturing sector has seen productivity increase more than three times faster than the UK economy as a whole over the past 10 years. It accounts for almost half of UK exports, and directly employs 2.6 million people.”
“My right hon. Friend the Chancellor and other Treasury Ministers are working with the banks, which tell us that they are making funds available to businesses that need support as their cash flow is under pressure and need working capital in the months ahead. Of course, the best service that any of us in this House can do for manufacturers and businesses across the United Kingdom is to support a negotiated exit from the European Union as soon as possible.”
“The Treasury and other Departments have advanced plans to support the manufacturing sector should that be required in the event of a no-deal exit. The evidence we see shows that, if we can secure a negotiated exit, there is a great deal of business investment waiting to go back into the economy. This year could turn out to be a strong one for the British economy, if only we can secure the deal.”
“If the right hon. Gentleman wants to support this country’s manufacturing sector, he and his colleagues should support a deal so we can leave the European Union in an orderly fashion. We are taking a number of important steps to support manufacturing, including increasing the annual investment allowance from £200,000 a year to £1 million, making research and development tax credits more generous, and backing schemes such as “Make Smarter”, which help the manufacturing sector to embrace automation and digital technology and move forward with confidence.”
“I can confirm that. The UK remains the European leader for foreign direct investment, venture capital investment and tech investment. Even in manufacturing, which is under a certain degree of strain, the UK remains the ninth largest manufacturing nation in the world.”
“Not at all. Manufacturing exports are up 35% since 2010. We are investing in the manufacturing sector through our industrial strategy. We are creating a tax system that is pro-business. We are reducing corporate taxes to amongst the lowest in the developed world. The hon. Gentleman would do the opposite and reverse that. The very clear message that businesses give us, particularly international investors in this country, is that the threat of a hard left Labour Government dwarfs the risk of a Brexit outcome. We want to secure the future of the British economy in a resolutely pro-enterprise country.”
“The British economy is remarkably robust in its present state. We are seeing continued economic growth, record levels of employment and record low levels of unemployment. Businesspeople, investors and entrepreneurs the length and breadth of the country know that the greatest threat to our prosperity is a hard left Labour Government.”
“The Government have increased support for low-carbon electricity generation through consumer-funded levies, from £1.3 billion in 2010 to over £7.3 billion today, spending £30.7 billion since 2010. This support has enabled the UK to become a world leader in clean growth, and the private sector has invested more than £92 billion in clean energy since 2010.”
“I thank the hon. Lady for that question, but that is not our experience. The investment that I have just described that is going into the sector is very considerable. Renewable capacity has quadrupled since 2010. Renewables’ share of electricity generation increased to 33% last year—a record high. The UK is decarbonising and we are meeting our climate change targets.”
“The Mayor of Greater Manchester has the resources that he requires. The Government are supporting Mayors and urban areas across the country to take action on air quality, and we are providing money from national Government, for example through the £2.6 billion transforming cities fund, of which Greater Manchester has a significant share, to invest in the transport solutions of the future.”
“My hon. Friend is absolutely right. Last month, in the spring statement, my right hon. Friend the Chancellor was able to add to those policies by announcing a scheme to help small and medium-sized enterprises to reduce their carbon footprint; a new marine zone around Ascension Island; support for the renewables sector; the new future homes standard, to ensure that from 2025 homes are built with low-carbon heating and high levels of energy efficiency; and many other policies.”
“The UK Government are supporting tidal energy. We have looked at any schemes that have become available to us. We have to balance the interests of the ratepayer, the taxpayer, to ensure that the schemes that we do support are the right strategic technology and the right value for money for the UK.”
“The facts speak for themselves. The UK is on track to over-deliver comfortably on the first three carbon budgets out to 2022. The clean growth strategy sets out how we will meet our fourth and fifth carbon budgets, which take us to 2032, while keeping down costs for consumers, creating good jobs in the clean energy market and growing the economy.”