Dan Tomlinson
MP for Chipping Barnet · Labour · United Kingdom
“I hope that once this Great British summer savings period ends on 1 September, we will review that and look at the impact. Of course, the challenge with any VAT reduction is whether it will be passed on to consumers. To be clear, I do not begrudge businesses having more margin, but the objective of the hon.”
“There are a whole range of challenges and also benefits from the protocol and the Windsor framework. I agree with the hon. Member that they do not provide constraints on the policy choice on VAT.”
“The Barnett formula is applied in the normal way to those changes, so the Northern Ireland Executive received £185 million in consequentials as a result of those decisions.”
“I understand that Members are specifically talking about Northern Ireland, but across the country as a whole—some hon. Members did mention the broader campaign around reductions in VAT across the UK—a reduction to 10% in VAT for hospitality would cost around £11 billion a year, which is equivalent to the total expenditure on the Royal Nav…”
“Right now, we are engaging in what could be seen as a similar proposal to the one put forward today. We are doing a time-limited reduction in VAT, not for one sector and one part of the country, but for particular leisure and hospitality activities and consumption across the country as a whole.”
“The fact that I am not announcing this change today does not mean that the Government do not take this issue seriously and understand the representations being made. We are also not standing aside.”
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“(5) The income would have been non-chargeable income to the extent that, without the amendments made by section (Offshore income gains)(1) and (2)(b), it would have exceeded the relevant proportion of income— (a) which would have been treated as arising to the individual by reason of— (i) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or (ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising on or after 6 April 2008, and (b) to which paragraph 101 of Schedule 7 to FA 2008 would have applied, and, for that purpose, “relevant proportion” has the meaning given by sub-paragraphs (9) to (18) of paragraph 126 of that Schedule as they would have been modified by sub-paragraph (3) of paragraph 101 of that Schedule.”
“(4) The income would have been non-chargeable income if, without the amendments made by section (Offshore income gains)(1) and (2)(b)— (a) the income would have been treated as arising by reason of— (i) the matching of a capital payment received (or treated as received) by the individual before 6 April 2008 with an offshore income gain arising on or after 6 April 2025, or (ii) the matching of a capital payment received (or treated as received) by the individual on or after 6 April 2025 with an offshore income gain arising before 6 April 2008, and (b) paragraph 100 of Schedule 7 to FA 2008 would have applied to the income.”
“(3) An individual is not chargeable to income tax under Chapter 2 of Part 13 of ITA 2007 on income treated as arising to the individual under section 732 of ITA 2007 by reason of the offshore income gain to the extent that the income, without the amendments made by section (Offshore income gains)(1) and (2)(b)— (a) would have been treated as arising to that individual under paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001), and (b) would have been non-chargeable income (see subsections (4), (5) and (6)).”
“(2) If the offshore income gain arose in a tax year before the tax year 2025-26 and, by reason of that offshore income gain or a part of it, an offshore income gain was treated as arising in a tax year before the tax year 2025-26 to an individual under paragraphs (2) to (5) of regulation 20 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)— (a) Chapter 2 of Part 13 of ITA 2007 is to be treated as not applying in relation to the offshore income gain arising to the trustees or that part of that gain, and (b) references in section 734 of ITA 2007 to chargeable gains treated as accruing to an individual are to be treated as including the offshore income gain treated as arising to the individual.”
“I look forward to working with my hon. Friend, and other Members who are interested in this topic, to make sure that we move as quickly as we possibly can. Let me thank all Members for their contributions during this this debate. Question put and agreed to . New clause 5 accordingly read a Second time, and added to the Bill . New Clause 6 Offshore income gains: savings “(1) This section applies in relation to an offshore income gain arising to the trustees of a settlement in a case where Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) applies in relation to that gain for the tax year 2025-26 or any subsequent tax year because of the amendments made by section (Offshore income gains).”
“On business rates, the Government have announced a support package for all businesses worth £4.3 billion over the next three years. We have introduced permanently lower multipliers for eligible retail, hospitality and leisure businesses, including those on the high street. In addition, every pub and live music venue will get 15% off its new bill from April. The Government will also bring forward a high streets strategy later this year.”
“One reason we have a challenge with youth participation in the labour market is the broken welfare system and the broken support system that we inherited from the previous Government. The proportion of young adults who are not in education, employment or training is broadly unchanged since the general election. It is too high, and it has to come down. That is why we are reforming our system and providing more support through actions such as our jobs guarantee. That is the right approach, as is the approach we are taking on business rates.”
“Business rates are a devolved matter. The changes that we have announced and the support that we have put in will have consequentials for funding for the Scottish Government. VAT is a broad-based tax that raises a significant amount of revenue for the Treasury. That is important in ensuring that we can manage our public finances and bring in the revenue to be able to get borrowing down, which this Government are doing and previous Governments failed to do. When the Liberal Democrats last had the chance, their choice was to put up VAT rather than cut it.”
“This Government are fully committed to resetting our relationship with the European Union. As the hon. Gentleman highlighted, the previous Government did as much as they could to damage that relationship, damage our productivity and damage our working relationship with our nearest partners. We are seeking to change that: we are negotiating a sanitary and phytosanitary agreement; we are looking at electricity and energy; and we are looking at what more we can do to deepen our trading relationship, which will be good for productivity and jobs. People said that we could not make progress with both the EU and the United States, but we did not have to choose: instead, we are making progress with trading partners across the world.”
“We will be working across Government on the high streets strategy. Treasury Ministers will be working with colleagues in the Ministry of Housing, Communities and Local Government and the Department for Business and Trade. We will make progress on that in the coming weeks, with the strategy to report by the end of the year. We are in the process of working on the details of plans for the review of the pubs and hotels valuation methodology, and I will be happy to engage with my hon. Friend and Members from across the House to get that on a firmer footing for the future.”
“Around one in three businesses continue to benefit from the small business rates relief and do not pay any business rates at all, with an additional 85,000 benefiting from reduced relief as that is tapered away. At the Budget, we also announced changes to small business rates relief so that we can provide an additional two years of support for those businesses seeking to expand into a second property, to support those businesses to grow and to support their communities and jobs.”
“I thank my hon. Friend for her representation of Little Italy in her fantastic constituency. We are working on the high streets strategy. She is right to highlight that with long-term trends, whether the impact of the pandemic or of the shift to online retail, we need to look at this as a whole. On taxation and business rates in particular, we have for the first time provided a wedge in the tax system so that the rate that online giants pay for their warehouses is a third higher than the rate paid by the smallest businesses on the high street. There is a significantly higher multiplier for the larger businesses on my hon. Friend’s high street than for the smaller ones, but we will keep looking at the issue and at what more we can do to support businesses across the tax system.”
“When we bring forward the high streets strategy, it will look in the round at what more we can do on regulation, licensing and the decisions that are made in the Treasury to continue to support small businesses and those on our high streets. That is incredibly important, and we will continue to look at that closely.”
“The Government recognise the important contribution that hospitality businesses make to communities across the UK, including in Northern Ireland. Reducing VAT rates, or applying different VAT rates within the UK, would add complexity and come at a significant cost to the Exchequer.”
“I thank the hon. Member for her representation of her constituents. The Chancellor has already said today, as she said yesterday, that we understand that there are particular pressures facing households that use heating oil for their heating. A meeting has been arranged for tomorrow with the Financial Secretary to the Treasury, which I hope the hon. Member will be able attend to discuss this issue in more detail. We are also going to be in conversations with the Competition and Markets Authority to make sure that we have a fair market that provides a fair price for her constituents.”
“We have made sure to freeze fuel duty since we have been in office. That has saved the average driver 8p per litre at the pump, and it will rise to 11p when the increase does not go ahead in a few weeks’ time. If heating oil is an issue that affects the hon. Lady’s constituents, I hope she will be able to attend tomorrow’s meeting. We are looking very closely at this issue, and at the changes that we can see in oil and gas prices at the moment. As the former Chancellor of the Exchequer, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), said yesterday, it is too early to tell how things will pan out. We have seen significant increases, and today we have seen decreases. We will keep looking closely at what we can do.”
“This is a complex change to implement, but the Government’s position is that it is right to have the same rate of VAT across our country. During the pandemic, there was a cut—a temporary cut—to the rate of VAT and that came at the significant cost of £8 billion. We have to make sure that we can raise revenue from across the country in a fair and consistent way to support the public finances.”
“I thank my hon. Friend for his representations on this matter here today and over many months, and in Westminster Hall just a few weeks ago. The rural fuel duty relief scheme does provide that 5p discount and it will benefit his constituents on the islands and in the communities he represents. We will of course keep all our taxes under review. I will be happy to meet him to talk about this one.”
“I thank my hon. Friend for the question, and for the representation she has provided for her constituents and, through her work on the loan charge and taxpayer fairness all-party parliamentary group, for many across the country who have been affected by the loan charge. At the Budget, we made the decision to write off £5,000 from the liabilities of everyone who has been affected by the loan charge, so about a third of those affected will have their liabilities written off entirely. I look forward to continuing to engage with her and Members across the House on this important issue.”
“The letters that were sent will receive a reply very shortly. A decision was made that in the run-up to the announcement of the independent loan charge review, it would not be appropriate for the Government to set out in detail their views on a live issue that an independent reviewer was looking at. That review was published alongside the Budget. I apologise for the fact that the response has not come in the weeks since; it will be with the hon. Member and the APPG very shortly.”
“The Government regularly assess whether to add energy-saving materials, including heat batteries, to the list of items covered by the current VAT relief, which is set to continue until March 2027. Any decisions would have to be announced by the Chancellor at a fiscal event, but I am happy to discuss the matter.”
“I am always happy to show leadership, and this Government—and, I may say, previous Governments—have worked hard with international partners, both in the OECD and the UN, to do all we can to reduce tax avoidance and evasion by multinational companies. We continue to work with our partners in the UK and abroad to clamp down on tax dodging.”
“The Government are satisfied that it is appropriate to add this use of natural gas to the exemption, thereby helping to ensure alignment and consistency across industrial processes, as well as supporting the relevant part of the chemicals sector. The changes in the draft regulations deliver on the Government’s commitment at the 2025 spring statement to remove CCL costs in respect of electricity used in electrolysis to produce hydrogen. I commend the draft regulations to the Committee.”
“Secondly, the chemical process that converts soda ash into sodium bicarbonate is a new production technology in which natural gas performs two roles: it provides heat and serves as an essential source of the carbon dioxide needed for the production process. Where a taxable commodity is used partly as fuel and partly for a non-fuel purpose, the non-fuel use exemption is intended to accommodate such mixed uses. Yet as things stand, the natural gas used will attract CCL, despite the partial non-fuel use that is fundamental to the chemistry involved. Similar non-fuel use processes in soda ash production are already exempt from CCL.”
“From the outset, the tax has included a non-fuel use exemption, the principle behind which is that when fuels that are liable to CCL are not used for energy, they should not be taxed as if they were. Today, that principle needs to be applied to two modern industry realities that are not currently included in the exemption. First, when produced in a low-carbon way, hydrogen can help to power the UK’s clean energy transition and support our 2050 net zero ambitions. One key method of hydrogen production is electrolysis. In that process, the electricity is not used as a fuel, as it is the feedstock that enables the chemical reaction. Yet without the change in the draft regulations, electricity used in the process would be charged CCL in most cases.”
“I beg to move, That the Committee has considered the draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2026. It is a pleasure to serve on the Committee with you in the Chair, Ms Vaz. The draft regulations exempt from the climate change levy electricity used in—this is a word I am going to struggle to say repeatedly—electrolysis to produce hydrogen and natural gas used as a source of carbon dioxide to produce sodium bicarbonate from soda ash. They do this by expanding the climate change levy non-fuel use exemption to include the relevant new processes. The CCL was introduced in 2001 with the purpose of encouraging energy efficiency across our economy by taxing energy supplies such as electricity or gas.”
“Those in the industry have been asking for the change, which will support them in the move towards using low-carbon technologies and processes, and we wanted to implement it as swiftly as possible. It is my understanding that if the Committee agrees to the changes, they will come into effect immediately—as of tomorrow—which is good. Progress has been very swift now that we have finally got here. There was one other question on which I will have to respond after the Committee, because it is has fallen out of my head. Question put and agreed to.”
“I thank the shadow Minister for his questions. I always enjoy listening to him; one day, I am sure I will do so on a bumper car in his constituency. Those Members who did not serve on the Finance (No. 2) Bill Committee will not know that reference; I will have to update them afterwards. We will conduct the wider review of the CCL as swiftly as possible. It is important that we keep all our taxation policies under review, not least given the changes that are taking place in the economy. It was right that the Government consulted on the changes in the draft regulations earlier in the year, and we will continue to listen to the various industries that are affected by the CCL. We chose to proceed with the option that the shadow Minister outlined in large part because we wanted to make sure we could bring in the change as quickly as possible.”
“I beg to move, That the draft Child Benefit and Guardian’s Allowance Up-rating Order 2026, which was laid before this House on 12 January, be approved.”
“The regulations also make provision for a Treasury grant to be paid into the national insurance fund if required for the same tax year, through a transfer of wider Government funds to the NIF, and extend the veterans employer national insurance relief for two years, until April 2028.”
“The draft Child Benefit and Guardian’s Allowance Up-rating Order sets the rates for both child benefit and guardian’s allowance, and will ensure that those benefits, for which Treasury Ministers are responsible and which are delivered by His Majesty’s Revenue and Customs, are uprated by inflation in April 2026. The draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026 set the rates of certain national insurance contributions classes, and the level of certain thresholds, for the 2026-27 tax year.”
“Without these regulations, child benefit and guardian’s allowance would fall in real terms, and HMRC would be unable to collect NICs receipts. I hope that colleagues will join me in supporting them today.”
“As announced at the Budget last year, employer national insurance thresholds, including the secondary threshold, will also be maintained at their current levels. We have already had a brief discussion about the employer NICs reliefs, including for under-21s, under-25 apprentices, veterans, and new employees in freeport and investment zones. The regulations that we are debating today keep the thresholds for those reliefs at their current levels. The regulations also make provision for the NICs relief for employers of veterans to be extended for two years until April 2028, during which time the Government will continue to consider the most effective way to support veterans into employment as part of the next spending review settlement.”
“Employees’ entitlement to contributory benefits, such as the state pension, is determined by their earnings being at or above the lower earnings limit. Self-employed people’s entitlement is determined by their earnings being at or above the small profits threshold. These regulations uprate the LEL and the SPT. This is the usual process and maintains the real level of income where someone gains entitlement to contributory benefits. The upper earnings limit for employee NICs and the upper profits limit for self-employed NICs—the points at which the main rate falls to 2%—are aligned with the higher rate threshold for income tax. The thresholds will be maintained at their current levels, and these regulations set the levels for the 2026-27 tax year.”
“Members will know, the Government are committed to delivering a welfare system that is fair for taxpayers while providing support for those who need it. These regulations ensure that the benefits for which Treasury Ministers are responsible, and which HMRC delivers, are uprated by inflation in April 2026. Child benefit and guardian’s allowance will increase by 3.8%, in line with the consumer prices index in the year to September 2025. Tax credits awards ended on 5 April 2025, so no changes to rates will be required. I turn to the second set of regulations before us today. As announced at the Budget, the primary threshold and the lower profits limit threshold will be maintained at their current levels until April 2031. These regulations set the level for the 2026-27 tax year.”
“The hon. Member is right: a range of reliefs in the national insurance system help particular groups, including young people and those who have served in our military. It is right that those reliefs are there, and I am glad that the Government took the decision to extend them by two years. The Government publish guidance on the way that the reliefs can be used. We aim to ensure that the guidance supports those who seek to employ young people and people who have served in the military, so that they are able to make employment decisions. Through the tax system, we want to support particular groups to be able to be employed. I thank the hon. Member for his question. I turn to the detail of the Child Benefit and Guardian’s Allowance Up-rating Order 2026. As hon.”
“The shadow Exchequer Secretary invited the Economic Secretary to his constituency. Last week, he invited me to come on Valentine’s day to enjoy the bumper cars. I know the Economic Secretary is glad for the invite, but I am particularly glad for the one I received. Turning to the matter at hand, clauses 139 to 147 and schedule 15 establish the core framework of the carbon border adjustment mechanism, otherwise known as the CBAM— [ Interruption. ]”
“Clause 146 sets out how the CBAM rate is calculated, and clause 147 provides for carbon price relief, allowing the CBAM charge to be reduced where a relevant carbon price has been incurred overseas in relation to the same emissions. That avoids double taxation while maintaining the integrity of the mechanism. Amendment 15 will ensure that the CBAM rate functions as intended, and that CBAM goods face a carbon price comparable to what would apply if the goods were produced in the UK. The clauses are central to mitigating carbon leakage, and supporting the UK’s path to net zero.”
“Clauses 141 to 143 set out when goods are treated as imported for CBAM purposes, and who is liable for the charge. In line with established customs principles, liability rests with the importer, with detailed provisions to ensure that the correct person is identified across different importation scenarios, including goods entering via Northern Ireland or subject to special customs procedures. Clause 144 provides relevant exemptions from the charge. Clause 145 defines “emissions embodied in a CBAM good” and provides powers for the Treasury to specify, in regulations, how those emissions are determined and evidenced.”
“Thank you. Burnley is a fantastic place to visit, and I hope to come before too long. These clauses create the charge to CBAM, define the goods and emissions in scope, identify who is liable, and set out how the tax rate is calculated and how the relief operates. Together they form the substantive charging provisions that will underpin the operation of CBAM from 1 January 2027. Clause 139 introduces CBAM as a new tax and signposts the structure of part 5 of the Bill. Clause 140 establishes the charge to CBAM, which applies to the emissions embodied in specified CBAM goods when they are imported into the UK. Schedule 15 defines the goods in scope, initially covering the aluminium, cement, fertiliser, hydrogen, iron and steel sectors.”
“It is important to note that they will be better off than without a CBAM in terms of competition and fairness in imports. At the moment, there is no CBAM, so the imports that come to the UK in these five sectors are, in a sense, undercutting domestic production if we have higher costs. With the introduction of CBAM, that undercutting will be significantly reduced. The prices faced by importers will be brought into line with those faced by those companies in the UK. There is a valid point to make about the detail and specificity with which the carbon prices that are used within CBAM are set, and that is something that I certainly want to keep under review, but it is good and it is right that we make progress with CBAM as set out in the legislation.”
“That is why these five sectors were chosen, after significant engagement across Government and with stakeholders. The sectoral scope will be kept under review, and there are some sectors that the Government will continue to have conversations with in the coming weeks to understand their concerns and the benefits that there may be to widening the scope in future. We will keep it under review because, at the moment, the focus is on making sure that we can implement this significant change. It is a long piece of legislation and there are lots of good questions, but we want to get this in as drafted first. The shadow Minister made several points regarding the sectors that are already in and the extent to which, in his words, they might be made “worse off”.”
“I thank the shadow Minister for his questions and engagement. This is one of the largest parts of the Bill, and sets out a significant change to taxation and the treatment of imports in order, as he says, to support domestic businesses that may face higher prices than companies seeking to export to the UK that have cheaper prices and higher emissions. To go through some of the questions that were asked, the criteria that were looked at internally—over many years and starting under the previous Government; it has taken five years of work to determine which sectors will be in scope—were whether sectors were already in scope of the UK emissions trading scheme, because it is important that those are aligned; whether there was real risk of carbon leakage; and whether it was feasible to implement in 2027.”
“On the point around groupings and EORI numbers, that is not a phrase that I have come across before, but I am glad that I have heard it. I will make sure to remind myself of the torturous Brexit process and will, I am sure, understand the context there in more detail. We engaged with businesses in advance of making the proposal and feedback indicated that group treatment would confer relatively minimal benefits, so we chose not to implement it at this time. We will, of course, keep that under review though. CBAM is a significant change that has been welcomed by many of the industries in the UK and should go a long way to levelling the playing field for those firms that are producing in these five sectors.”
“We will engage, and have engaged, with the industries that are directly affected by this change, including the fertiliser industry, and those for whom there will be knock-on effects from higher import prices. With fertiliser in particular, it is worth noting that UK-based fertiliser manufacturers have received more free allowances in recent years than they needed to surrender to be able to cover their emissions. As such, they are not, in practice, paying a carbon price at the moment. The CBAM rate will therefore be set at a low level to reflect that. It is something that I have been looking at as Minster because of these issues, and we expect the initial impact of CBAM on the fertiliser sector to be very modest. None the less I take the point that the hon. Member raises, and the Government will continue to look at it.”
“The work that they do is fantastic, really valued and vital to the culture, life and vibrancy of our high streets and communities. Sometimes these small businesses are the only business in a village or a rural community, whether it be a pub, post office or café. We know how important they are to rural and coastal communities.”
“I am happy to go through them in detail, but I will not do so for the sake of time and because it is slightly off topic. Those changes allowed us to provide support for businesses, for example in the business rates system. The main ask of the public was keeping income tax thresholds frozen at the end of the decade for a further three years in addition to the seven years for which the Conservatives decided they would be frozen. This Government do back and value small and medium-sized enterprises. They are at the heart of so many communities; I am sure they are at the heart of your constituency, Mr Dowd, and those of all Members in this room. We value such businesses, their contribution and the hard work and graft that the people who set them up do to grow them, to expand to multiple premises, and to hire more people.”
“For example, the extended producer responsibility for packaging was, I believe, a Michael Gove initiative. The Labour party in opposition learned the lessons of rubbishing the record of a previous Labour Government, and once we stopped doing that we found ourselves re-elected because people put their trust in us. I gently suggest that the Conservatives be careful what they wish for when they criticise policies that the Conservative Government introduced. The debate follows two Budgets in which the Government did have to ask businesses and individuals to contribute more to support our public services. But we did all we could, particularly in the last Budget, which I was closely involved with in the Treasury, to keep the contribution we were asking for as low as possible by pursuing fair reforms to our tax system that were long overdue.”
“That is bringing down borrowing costs for businesses and improving the cost of living for families up and down the country. That means hundreds if not thousands of extra pounds in their bank account rather than going on their mortgage. Economic growth has increased—we outperformed the OBR forecast by 50% last year—and wages have increased across the economy faster in the first year of this Government than in the first 10 years under the Conservatives. Higher wages and better living standards for people in our communities, in his constituency and in mine, mean that there is more money to spend in the shops to support our high streets. The hon. Member raised a range of policies. I would gently say that some of them were implemented by his Government.”
“It is a pleasure to serve under your chairship, Mr Dowd. I am grateful to the hon. Member for Farnham and Bordon (Gregory Stafford) for securing the debate. I believe it is the second debate of his that I have had the pleasure of responding to in Westminster Hall and I look forward to many more in my time as Exchequer Secretary. I am grateful for his contribution, and I am sure the businesses in his constituency will be grateful to him for representing them in this place; it sounds like he has a fantastic set of small and medium-sized enterprises in his constituency. On the broader point of the impact of this Government on the economy, I believe the hon. Member was being too downbeat and gloomy. We have seen six interest rate cuts since this Government took office because of the stability that we have brought back.”