James Murray MP: speeches

Speeches

• 4 Jun 2025 · Business Rates Relief: High-street Businesses · Hansard source

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  It is a pleasure to speak in this debate with you in the Chair, Ms Jardine. I thank hon. Members for their warm welcome. I want to extend my thanks, as many others have, to the right hon. Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson) for securing this debate—and, indeed, for his kind words about how I am doing my job. I thank all hon. Members for their contributions to the debate and for bringing perspectives from their constituencies to it. Although we have had a fair dose of politics, there have also, in fine Westminster Hall tradition, been moments of cross-party agreement and a desire to find a way forward to support high streets in all our constituencies. As Members of this place, we all know how important high streets are to our constituents as centres of economic activity and places where people come together. I was glad to hear healthy competition in the claims about who has the best high street and local pubs in their constituency. [ Interruption. ] I am seeing further bids from the other side of the room. We all know as MPs, and indeed as members of the public in our own right, how high streets unite people. They sustain jobs and are central to the identity of the areas that we represent. That is why the Government are protecting the high street by transforming the business rates system so that it supports investment and is fit for the 21st century. I welcome this opportunity to set out our approach to making that transformation a reality. As many hon. Members have said, retail, hospitality and leisure businesses are the backbone of our high streets—our shops, pubs and cinemas—but they are contending with changing consumer habits and have faced a series of economic headwinds in recent years, including the pandemic. Online services are undeniably convenient and offer great variety, but it is high streets that bring people together. The problem, as many hon. Members have set out, is that business rates fall more heavily on property-intensive sectors, so it is a priority for the Government to ensure that the burden is permanently rebalanced and that high street businesses are protected. We inherited a situation in which protection for high street businesses through retail, hospitality and leisure relief was set to end altogether in April this year. That continued a pattern that had become normal under the previous Government; ratepayers would rightly complain that the fact that RHL relief ended every year by default created an annual cliff edge for RHL businesses. What was supposed to be a temporary, stopgap measure was extended year by year following the pandemic by Conservative Governments, who made no attempt to fix the system and give businesses the certainty and stability they need. That is why at last year’s autumn Budget we announced our intention to change how this is done, by introducing permanently lower tax rates for RHL properties with rateable values below £500,000 from 2026-27. That will give much needed certainty and support to the high street, improving investment and growth in places across England. We intend to introduce two lower RHL multipliers to mirror the existing national small business and standard multipliers. The new small business RHL multiplier will apply to RHL properties with rateable values below £51,000, and the new standard RHL multiplier will apply to RHL properties with rateable values of £51,000 and above, and below £500,000. Those lower multipliers will apply to all RHL properties with rateable values below £500,000. We will have no cash cap per business as the previous Government’s relief had, meaning that all relevant properties will be able to benefit from our approach. Under our Government, any tax cut must be paid for. We saw what happened when the previous Government ignored that rule. That is why we intend to fund this tax cut by introducing a higher rate for properties with rateable values of £500,000 and above. Those properties represent less than 1% of all properties, but include the majority of large distribution warehouses, including those used by the online giants. The Government recognise that business rates form a significant part of the costs of some businesses, but we must make difficult choices to ensure that our plans to support the high street are sustainable. That is why we are asking those occupying the most valuable properties to contribute more to support the vitality of the high street. The rates for new multipliers will be set at the Budget 2025, so that the Government can factor in the upcoming revaluation outcomes and broader economic and fiscal contexts into the decision making. The Non-Domestic Rating (Multipliers and Private Schools) Act 2025 gives Government flexibility in the creation of the new multipliers and their rates within appropriate guardrails, so that the Government do not have unfettered powers. The rate for any higher multiplier cannot be more than 10p higher than the national standard multiplier, while the lower RHL multipliers cannot be less than 20p lower than the national small business multiplier. I emphasise to Members that those are only guardrails, not the intended rates, and the final decisions on the multipliers will be made at Budget in the autumn. The Government recognise that RHL businesses need support in 2025-26, ahead of the permanently lower tax rates being introduced for 2026-27. Hon. Members today have spoken about the impact of changes to RHL relief on high street businesses in their constituencies, but it is worth emphasising again that without any Government intervention, RHL relief would have ended entirely in April 2025. To avoid that happening, our Government decided to provide a 40% business rates discount to RHL properties up to the cash cap of £110,000 per business in 2025-26.

• 4 Jun 2025 · Business Rates Relief: High-street Businesses · Hansard source

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  I thank the hon. Gentleman for his question. As I set out, the new lower multipliers of RHL properties will apply to all RHL properties with rateable values below £500,000. There will be a standard RHL multiplier and a small RHL multiplier for properties with rateable values of £51,000 and below. The definition of an RHL property will broadly follow the definition by which RHL relief is currently allocated. That will be set out in guidance, but hon. Members can expect that to operate in a similar way. The advantage of our approach of permanently lower tax rates and multipliers is that they do not have a cap in the way that the previous Government’s relief did, of £110,000 per business. All properties within the RHL definition with rateable values of less than £500,000 will be able to benefit from this support, helping all the shops that contribute towards high streets across the country. Beyond the changes to the RHL multipliers, I have also had the chance to set out some of the wider work that we are undertaking to transform business rates over the course of this Parliament and create a fairer, modernised system that is fit for the 21st century. I thank the right hon. Member for Stone, Great Wyrley and Penkridge and all hon. Members who have contributed to the debate.

• 4 Jun 2025 · Business Rates Relief: High-street Businesses · Hansard source

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  The permanently lower tax rates will come in in April 2026, so the intervening year is the year that we are currently in. That rate has been set by the Chancellor. The Chancellor makes announcements about rates at fiscal events. The autumn Budget is where she sets out those rates, in the same way that she agreed, at the autumn Budget last year, what the rate would be for RHL relief for the current year, 2025-26. At the autumn Budget this year, she will set out what the permanently lower rates will be thereafter. I would say to businesses looking at their finances this year that from April ’26—from the next financial year—the permanently lower rates will come in. Indeed, it will benefit a broader variety of shops on the high streets, because we are not continuing the cash cap of £110,000 per business.

• 4 Jun 2025 · Business Rates Relief: High-street Businesses · Hansard source

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  I would challenge the right hon. and learned Lady’s use of language, but that issue is rather outside the scope of a debate on business rates. As I was saying, we published a discussion paper at the Budget last year, which invited the industry to help us to design a fairer business rates system that supports investment and is fit for the 21st century. Since publishing the paper last autumn, my officials and I have met more than 250 stakeholders across a range of sectors, including RHL and local government, and have received submissions from a range of businesses, including those from the constituencies of hon. Members present today. We are analysing the responses in detail, and the data and views shared by businesses will inform the business rates policy development process. In the summer, we will publish an interim report that sets out a clear direction of travel for the business rates system, with further policy detail to follow at the autumn Budget 2025. It is worth my briefly drawing hon. Members’ attention to the fact that, beyond the business rates system, the Government are taking other steps to rejuvenate our high streets. We are introducing high street rental auctions to revitalise our high streets and tackle empty properties, which we know can fuel a spiral of decline in town centres. Through the English devolution Bill, the Government will introduce a new community right to buy to help communities to safeguard valued community assets. That will empower local communities to bring assets such as empty shops, pubs and community spaces into community ownership, helping to revitalise our high streets and eliminate vacant properties. Alongside that, the new £1.5 billion plan for neighbourhoods programme will deliver up to £20 million of funding and support over the next decade to 75 communities across the UK, laying the foundation to kick-start local growth and drive up living standards. As part of the programme, local partnerships will be able to fund interventions focused on revitalising high streets. The Government will announce further plans to support high streets in the small business strategy later this year. As we have heard, hon. Members are rightly concerned about the high streets in their constituencies. We are all passionate about the places where we live and that we represent, and we want them to thrive. As I have set out, the business rates system that this Government inherited has been failing to give high streets the long-term, certain and stable support they need, instead providing only stopgap help through RHL relief that has kept changing and has been repeatedly extended ahead of an annual cliff edge. This Government are fixing the foundations of the business rates system, and that starts with permanently rebalancing the burden of RHL properties through introducing permanently lower tax rates from 2026-27.

• 3 Jun 2025 · Inheritance Tax: Family-owned Businesses · Hansard source

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  My hon. Friend is a great champion of businesses and farmers in her constituency. When we were deciding how to reform agricultural property relief and business property relief, we made sure that generous tax reliefs still existed in the tax system precisely because we want to continue to support small and family-owned farms and businesses in particular. I will come to those in a moment. I am conscious that you asked me to give you a few moments at the end, Sir John. Do you mean at the end of my remarks?

• 3 Jun 2025 · Inheritance Tax: Family-owned Businesses · Hansard source

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  It is a pleasure, Sir John, to speak in this debate with you as Chair, and I congratulate the hon. Member for Mid Dunbartonshire (Susan Murray) on securing it—I notice that the debate is being opened and closed by a Murray. I know that some Members are very concerned about the impact of forthcoming reforms to inheritance tax reliefs on businesses in their constituencies, and I understand that people feel very strongly about inheritance tax. I should be clear that the Government believe that our reforms to business property relief and agricultural property relief get the balance right between supporting farms and businesses and fixing the public finances in a fair way. The reforms reduce the inheritance tax advantages available to owners of agricultural and business assets, but still mean that those assets will be taxed at a much lower effective rate than most other assets. Let me make clear that, much like the hon. Lady set out, the Government recognise and greatly value the huge contribution that small and family-owned businesses make to their communities and the economy. Businesses large and small, including family businesses, will create jobs and wealth and be the engines of growth in the economy. Those businesses and their workforces are the backbone of our economy, and they are fundamental to kickstarting economic growth, which is the Government’s No. 1 mission. Those businesses need a Government who will take the right decisions in the national interest, including when they are difficult, to support our security and prosperity. People who own, run and work in businesses of all sizes will remember the economic context that we inherited last year. They know how important responsible financial management is within their own businesses and how the success of businesses and their workforces depends on economic stability and public services that function well. I believe that many of them will understand that, since taking office, the Government have taken a number of difficult but necessary decisions on tax, welfare and spending to restore economic stability, fix the public finances and support public services. None of these decisions, including the decision to reform agricultural property relief and business property relief, was taken lightly, but those tough decisions were left to us by the previous Administration, and no responsible Government could have let things carry on as they were. Alongside our work to stabilise the economy and restore discipline to the public finances, the Government are determined to do everything we can to support businesses to grow. We are overhauling the UK’s regulatory system to reduce burdens on businesses by 25% by the end of this Parliament. We have secured trade deals that will slash the cost of doing business abroad, reduce border checks, cut tariffs and axe red tape. Those trade deals will support jobs and create opportunities for Great British businesses in our biggest current markets and in one of the world’s biggest future markets, too. The Government expect to publish an SME strategy later this year. It will set out the Government’s vision for SMEs, from encouraging entrepreneurship to boosting scale-ups across key policy areas, such as creating thriving high streets, making it easier to access finance, opening up overseas and domestic markets, building business capabilities and providing a strong business environment. Despite the tough fiscal inheritance at the election last year, we have also taken decisions to continue supporting small businesses through the tax system. We have chosen to increase the employment allowance to £10,500 to take many small businesses out of paying national insurance contributions altogether. We froze the small business rates multiplier to protect small properties from inflationary bill increases, and we will introduce permanently lower business tax rates for small retail, hospitality and leisure businesses from 2026.

• 3 Jun 2025 · Inheritance Tax: Family-owned Businesses · Hansard source

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  Got it. To conclude my remarks on the wider support that we are giving to businesses, I also draw hon. Members’ attention to the fact that we committed in the “Corporate Tax Roadmap”, which was published at the autumn Budget, to maintain the small profits rates and marginal relief at their current rates and thresholds, as well as the £1 million annual investment allowance. I know that many Members are concerned about the reforms to inheritance tax that are the subject of the debate, so I will now turn to them. The reality is that the full, unlimited relief introduced in 1992 has become unfair and unsustainable, particularly in the economic context that we inherited. Under the current system, the 100% relief on business and agricultural assets is heavily skewed towards the wealthiest estates, which is clear from the latest HMRC data from 2021-22. More than 50% of business property relief was claimed by just 4% of estates making claims. That means that the wealthiest few per cent of estates claimed £558 million in tax relief. That contributes to the very largest estates paying a lower average effective inheritance tax rate than smaller estates. It is neither fair nor sustainable to maintain such a large tax break for such a small number of claimants, given the wider pressures on the public finances. It is for that reason that the Government are changing how we target agricultural property relief and business property relief. Under the reformed system, estates will still benefit from 100% relief for the first £1 million of combined assets from April 2026, and on top of that there will be an uncapped 50% relief on further assets. That means that inheritance tax will be paid at a reduced effective rate of up to 20%, rather than the standard 40%. Those reliefs sit on top of the standard nil-rate bands and other exemptions, such as transfers between spouses and civil partners.

• 3 Jun 2025 · Inheritance Tax: Family-owned Businesses · Hansard source

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  I reassure my hon. Friend that I, and the wider team of officials, have had a number of meetings with representatives of family businesses and the agricultural and farming sector. We have listened to ideas raised by a number of people we have met, as well as ideas raised in debates in the Commons and in meetings in the Treasury and elsewhere. We have listened, but we remain confident that our approach is a fair way to balance supporting farms and businesses with fixing the public finances, so we stand by our reforms. I should probably conclude. I thank all hon. Members, particularly the hon. Member for Mid Dunbartonshire, for their contributions to the debate. Question put and agreed to.

• 3 Jun 2025 · Inheritance Tax: Family-owned Businesses · Hansard source

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  I believe that the hon. Lady is asking about the taxation of large multinational firms operating in the digital space. I am sure that she is aware of the digital services tax, which is currently in operation. The Government are committed to maintaining that until the pillar 1 international solution is implemented, and I am sure that she is familiar with pillar 2 of the OECD deal on a global minimum corporate tax rate. Large multinational firms are well dealt with on the international level, which is why, in opposition and in government, we have supported the OECD’s two-pillar solution. I do not want to be distracted from the design of the reforms that we are talking about today. Where inheritance tax is due, those liable for a charge can pay any liability on the relevant assets over 10 annual interest-free instalments. That benefit is not seen anywhere else in the inheritance tax system. There has been a lot of discussion of the impact of this policy, so let me set out the numbers, based on HMRC claims data. It is expected that, under these reforms, about 1,500 estates claiming only business property relief will pay more inheritance tax in 2026-27. Two thirds of those estates—about 1,000—are expected to only hold shares designated as not listed on the markets of recognised stock exchanges, such as the alternative investment market. Under these reforms, about three quarters of estates claiming business property relief in 2026-27, excluding estates only holding shares designated as not listed, will not pay any more inheritance tax in 2026-27. The reforms to relief have generated a lot of commentary about the wider impacts, but hon. Members should take care when relying on analysis based on self-selecting surveys from members of representative groups campaigning against the reforms. Indeed, the independent Office for Budget Responsibility is clear that it does not expect this measure to have any significant macroeconomic impacts, and it certified the costing at autumn Budget 2024. It said that the reforms to agricultural property relief and business property relief are forecast to raise a combined £520 million in 2029-30.

• 20 May 2025 · Topical Questions · Hansard source

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  I am sorry to hear about the experience of the hon. Lady’s constituent. To reassure her and her constituent, one of my priorities as chair of the HMRC board is to improve HMRC’s day-to-day performance. We have seen the percentage of telephony adviser attempts handled go from 59% last March to 80% this March. It will remain a priority for me to modernise and digitise the service.

• 20 May 2025 · Topical Questions · Hansard source

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  We are determined to go further and faster to reform business rates, which is why we will publish an update paper in the summer. I am also glad that we can work with councils such as Ipswich to ensure that we can turn around town centres after years of Conservative decline.

• 20 May 2025 · Vulnerable Families: Tax System Support · Hansard source

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  As my hon. Friend will know, spending decisions are for the Chief Secretary of the Treasury to discuss with Departments. I make the general point that investment in mental health, for instance, which she mentioned, is possible only because of the decisions we have taken on taxation to ensure that we can support public spending on mental health services and on support for young people.

• 20 May 2025 · Vulnerable Families: Tax System Support · Hansard source

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  I very much recognise, both as a constituency MP and as a Minister, the importance of making sure that adoptive parents can build a strong family unit with their adoptive children. If I may make a broader point, the only reason we can invest in public services is because of difficult decisions we have taken around taxation. The problem with the Liberal Democrats and other parties on the Opposition Benches is that they are happy to support the extra funding for public spending, but not the tax rises necessary to pay for it.

• 20 May 2025 · Vulnerable Families: Tax System Support · Hansard source

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  The Government are committed to keeping taxes for working people as low as possible. The personal allowance means those earning below £12,570 pay no tax. At our first Budget, we decided not to extend the freeze on personal tax thresholds, which was implemented by the previous Government.

• 12 May 2025 · Income Tax: Personal Allowance · Hansard source

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  It is a pleasure to speak with you in the Chair, Mr Stuart; this is our second debate together in the last few days. I extend my thanks, as many others have, to my hon. Friend the Member for Sunderland Central (Lewis Atkinson) for opening the debate, and I congratulate Mr Frost, who created the petition. I also thank all other hon. Members who have contributed to the debate for setting out their views. I know that this petition has attracted almost 250,000 signatures, so, given the public interest in this topic, it is important that we are debating it. I recognise the views of everyone who has put their name to the petition, and let me be clear that, as a Government, we want taxes on working people and on pensioners, who have worked hard all their lives, to be as low as possible. We were elected to put more money in people’s pockets and, crucially, we were elected to do so in a fiscally responsible way. That is a critical point to understand. We want to keep taxes on working people and pensioners as low as possible, but if we were to follow the calls of some Opposition parties and abandon fiscal responsibility, it would lead to economic chaos and the collapse of public services, and that would harm working people and pensioners the most. Raising the personal allowance to £20,000 would cost more than £50 billion. That is more than the £45 billion of unfunded tax cuts announced by Liz Truss in her disastrous mini-Budget. Conservative and Reform MPs may have cheered Liz Truss on, but like the British people, we in the Labour party know the damage that that caused, and we will never let it happen again. To put it another way, if £50 billion was taken out of public services, that would be equal to wiping out almost the entire UK defence budget or slashing the NHS by a quarter. The British people will not be the winners if public services collapse or chaos returns to the economy. The Chancellor has taken the right decisions to get the UK’s public services back on their feet and to restore fiscal responsibility and economic stability. We will fight to protect those hard-won gains from those who want to see them squandered. In that critical context of fiscal responsibility, however, the Government are doing everything we can to support working people and pensioners. In our first Budget, we decided not to extend the freeze on personal tax thresholds, meaning that people will be able to keep more of their income. We are supporting hard-working families and pensioners through the plan to make work pay and through our significant increases to the national living and minimum wages and the state pension. We know that we will be able to keep taxes down only by delivering sustainable economic growth, which is why our plan for change and our trade deals are so important to make people better off. Of course, an important context for this discussion is the autumn Budget, in which the Government reset public spending and put the public finances back on a sustainable path. The decisions in the Budget were underpinned by the most ambitious package ever to close the tax gap—the difference between what taxpayers owe and what is paid to His Majesty’s Revenue and Customs—alongside tax changes that make the tax system fairer and more sustainable while protecting people’s payslips. The Government are determined to close the tax gap as far as we can, because ensuring that everyone pays the tax they owe is critical for a well-functioning economy, for protecting revenue to fund our public services and for helping to keep taxes on working people as low as possible. In the spring statement, the Chancellor went further and faster to close the tax gap, raising an extra £1 billion in revenue for the public finances. Turning to the personal allowance, it is worth beginning by recognising that the UK has one of the more generous personal tax allowances in the OECD, and the most generous in the G7. As we have heard in today’s debate, it was the previous Government who made the decision to freeze the personal allowance at its current level of £12,570 until April 2028. In the Budget last autumn, this Government decided not to extend that freeze and we kept the basic, higher and additional rates of income tax, employee national insurance contributions and VAT unchanged, meaning that people will keep more of their income. We also had to take a number of difficult but necessary decisions on tax, welfare and spending to restore economic stability, fix the public finances and support public services, given the situation that we inherited from the previous Government.

• 12 May 2025 · Income Tax: Personal Allowance · Hansard source

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  Of course, having a well-functioning welfare state is, in many ways, precisely about protecting people when they have unexpected shocks to their lives. I am not sure that the tax system is the best way to address that, but I think the hon. Gentleman’s broader point about ensuring that the state provides a safety net or cushion against unexpected shocks to people’s lives is an important principle. The focus of today’s debate is very much on tax thresholds, particularly the personal allowance, so I will return to my comments on that. When we took office in July last year, no responsible Government could have let things carry on as they were. Likewise, no responsible Government could now raise the personal allowance to £20,000 at a cost of more than £50 billion, as such a move would put public services back on their knees or risk economic chaos that would push up inflation, mortgages and taxes. The petition suggested that “raising the personal allowance would lift many low earners out of benefits”. We know that our benefits system is currently failing on all fronts; it is failing those who receive benefits, by not helping them to work where they can, and failing taxpayers more widely, through soaring costs to the public purse. We are fixing that by reforming the benefit system to make it more pro-work, while protecting those who cannot work. When people are in work, we want them to be better paid, which is why in April 2025 we increased the national living wage to £12.21 per hour, the third largest proportional increase since 2016, and that is expected to benefit over 3 million workers. We have published the “Get Britain Working” White Paper, which sets out the Government’s plans to reform employment, health and skills support to tackle economic inactivity and support people into good work. Our plan to make work pay represents the biggest upgrade in employment rights in a generation, bringing the UK back into line internationally. It tackles poor working conditions and job security, and by making work more flexible and family friendly, it will support our wider programme across employment, health and skills policy to get Britain working.

• 12 May 2025 · Income Tax: Personal Allowance · Hansard source

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  Many employers recognise that having a productive, secure workforce who can take pride in their jobs and contribute to their fullest ability at work is important not just for the employees themselves but for the productivity of the businesses. That is why we want to see workers with employment rights that will be upgraded through our plan to make work pay, alongside, as I mentioned a few moments ago, a stronger national living wage and national minimum wage under this Government. That focuses, however, on working people and their rights at work and their incomes. The petition also raised concerns about the state pension being subject to income tax. In 2025-26 the personal allowance will continue to exceed the basic and full new state pension. That means that pensioners whose sole income is the full new state pension or basic state pension without any increments will not pay any income tax. The state pension continues to be the foundation of support available to pensioners, backed by the Government’s commitment to the triple lock. This year, over 12 million pensioners have benefited from a 4.1% increase to their basic or new state pension, which means that those on the full new state pension will get an additional £470. Over the course of this Parliament, the yearly amount of the full new state pension is currently projected to go up by around £1,900, based on the latest forecast from the Office for Budget Responsibility. The Government also support pensioners through a range of other means, including free eye tests, NHS prescriptions and bus passes. For pensioners who are eligible for means-tested support, we provide pension credit and housing benefit. I recognise the substantial support for this petition. Hard-working people and pensioners who have worked hard all their lives want taxes to be as low as possible; I understand that. However, as we have set out today, we inherited a mess from the previous Government and have had to take tough choices to set us on a path to generate economic growth. Raising the personal allowance to £20,000 would undermine the work that the Chancellor has done to restore fiscal responsibility and economic stability, and it would slash the funding available for vital public services. This Government remain committed to keeping people’s taxes as low as possible while ensuring fiscal responsibility. Fiscal recklessness hits working people and pensioners the hardest. Parties promising to raise the personal allowance to £20,000 would have to explain how they would cut the NHS by a quarter, or why they want a rerun of the economic disaster we saw under Liz Truss. We as a Government are determined to go further and faster to deliver our plan for change with its key goal of putting more money in people’s pockets by kick-starting economic growth. We will always keep taxes as low as possible while never putting security for families and pensioners at risk. I thank all hon. Members who have spoken.

• 7 May 2025 · Draft Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025 · Hansard source

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  I welcome the Opposition’s support for the draft regulations. The hon. Members for Grantham and Bourne and for North East Fife asked about wider efforts to improve HMRC’s service. I will address that briefly, although I realise that it strays a little beyond the strict boundaries of the regulations, but they are very important questions. As Members might know, when I became Exchequer Secretary to the Treasury and chair of HMRC’s board, I set out our three priorities for HMRC: close the tax gap, improve customer service and reform and modernise HMRC. In fact, they all come together around measures such as these changes to late payment penalties, because we need to make sure that we close the tax gap, modernise the service and improve the service that individual taxpayers and businesses receive. We are in the process of going through the spending review. We will publish a transformation road map after that has concluded, which will set out our plans to improve HMRC’s service. The answer to extended waiting times on the phones cannot simply be to recruit more people to pick up the phones; it has to be to reform the way that HMRC services are delivered. More needs to be done through automation and self-service, with tax being paid without people even having to engage with the system by picking up a phone, because it will happen in a more automated fashion. When they need help, they should be able to get it online rather than having to pick up a phone, so there is a lot of progress there. If Opposition Members want to talk to me about that in future, they are welcome to grab a moment in the Division Lobbies, although we are usually in different ones. The draft regulations will give effect to the Government’s specific decision around the late payment penalties that I set out. It is important to emphasise, because the theme of customer service and supporting individual taxpayers has been raised by other Members, that the Government are encouraging taxpayers facing genuine difficulty to contact HMRC to enter a time to pay arrangement. As I mentioned, that enables taxpayers to pay by instalments over a longer time period. I am grateful to hon. Members for their contributions and I hope all Members will be able to support the draft regulations before us today. Question put and agreed to.

• 7 May 2025 · Draft Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025 · Hansard source

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  I beg to move, That the Committee has considered the draft Finance Act 2021 (Increase in Schedule 26 Penalty Percentages) Regulations 2025. It is a pleasure to serve on this Committee with you as Chair, Mrs Harris. These draft regulations increase the penalties charged for the late payment of certain taxes. They do so by amending the percentage points by which the late-paid tax is multiplied in order to calculate the penalties. The taxpayers affected are those paying VAT, income tax or capital gains tax under Making Tax Digital for income tax. The reform of penalties by His Majesty’s Revenue and Customs intends to modernise the tax system in relation to late payment penalties, as set out in schedule 26 of the Finance Act 2021, incentivising compliance and protecting the public finances. At this stage, the legislation affects only VAT customers for accounting periods beginning on or after 1 January 2023, and those who have voluntarily joined Making Tax Digital for income tax since April 2024. It is, however, the intention over time for penalty reform to replace other late filing and late payment penalties. The effect of the draft regulations will be to increase the late payment penalties for those who do not pay on time. They will change from two percentage points at days 15 and 30, and four percentage points after 30 days, to three, three and 10 percentage points respectively. The reason that we are pursuing these changes is as part of a Government package to bring down the debt balance. We inherited a debt balance of more than £44 billion in March 2024—more than double the £19 billion in March 2019 before the pandemic—and we are determined to use all levers at our disposal to reduce it. We know that unpaid tax deprives public services of vital funding, and puts businesses that pay the right tax at a competitive disadvantage. Closing the tax gap plays a key part in the Government’s efforts to restore economic stability and fiscal responsibility. Let me be clear to Committee members that these changes to late payment penalties do not affect compliant taxpayers who pay their tax on time. This approach continues to encourage taxpayers to pay what they owe on time, while providing a greater disincentive for those taxpayers who are continuously non-compliant, do not engage with HMRC and still owe tax after 30 days. It therefore removes any unfair financial advantage for those who choose not to pay over compliant taxpayers who pay on time. We believe that an increase in these penalties will be an important step in closing the tax gap and encouraging those who owe tax into compliance. For those taxpayers in genuine difficulty, HMRC continues to operate a time to pay scheme. This can spread out debt over a manageable period and, importantly, if payment schedules are abided by, no penalties will be issued. Under the changes that we are making, taxpayers retain the same right of appeal if they disagree with the penalty issued. For those who have a reasonable excuse for their failure to pay, no penalty will be owed, although, as with the current policy operated by HMRC, this can be considered only once the debt has been resolved. As set out in the spring statement by my right hon. Friend the Chancellor, these penalty increases are an essential part of a package of measures to bring down the debt balance and help to close the tax gap. The measures will encourage those who owe their tax to pay their debts or enter into an agreement to do so, while also raising £125 million by 2029-30, according to the Office for Budget Responsibility, from those who do not pay what they owe. In summary, these regulations give effect to the Government’s decision to increase late payment penalties. They increase the differential between those who pay on time and those who do not, as part of the Government’s wider plans to make sure that everyone pays what they owe, to bring down the debt balance and to close the tax gap. I therefore commend the draft regulations to the Committee.

• 8 Apr 2025 · Lowest Incomes: Support · Hansard source

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  Helping people into good work and financial independence is at the heart of our approach to supporting people on the lowest incomes. That is why we have increased the national living wage by 6.7%, which is equal to £1,400 this year for someone working full-time. Our plan to make work pay will tackle the poor job security and working conditions that have been holding back our economy, and the pathways to work Green Paper announced an additional £1 billion investment in employment, health and skills support.

• 8 Apr 2025 · Lowest Incomes: Support · Hansard source

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  The shadow Minister talks about business rates support. I remind him that if we had carried on with the plans inherited from the Conservative party, business rates relief would have ended entirely this month. It is only thanks to a decision of this Government that rates relief is continuing for this year, ahead of permanent reforms that will permanently lower tax rates for retail, hospitality and leisure premises on the high street from April 2026. That is thanks to a decision this Government made.

• 8 Apr 2025 · Lowest Incomes: Support · Hansard source

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  The Government have already taken action on the fair repayment rate, lowering the cap on deductions from universal credit to 15%—it was 25% before the autumn Budget last year. That will benefit 1.2 million households by an average of £420 a year, and 700,000 of the poorest families with children will benefit.

• 8 Apr 2025 · Lowest Incomes: Support · Hansard source

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  At the autumn Budget last year, the Chancellor announced a series of reforms to fix the public finances in as fair a way as possible, and make sure that the wealthiest in society pay their share of tax. The welfare reforms announced in the spring statement are principled reforms to help get people back into work, because work is the best way out of poverty. The reforms also provide support for those who need it and make sure that the system is sustainable for the future.

• 8 Apr 2025 · Topical Questions · Hansard source

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  I think that was a question about business rates reform. As the right hon. Lady will know, we published a discussion paper on transforming business rates. I am sure that the right hon. Lady will have read and responded to that, so I will look out for her consultation response in what we have received. Transforming businesses rates is about ensuring that we make the business rates system fit for the future to support investment and business growth right across the UK.

• 8 Apr 2025 · Topical Questions · Hansard source

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  The Prime Minister’s plan for change sets out our ambitious but achievable target of clean power by 2030. The clean power action plan demonstrates the significant investment requirements to reach that target, including in renewable infrastructure, and the actions that we will take to facilitate that. We have already taken action to remove the de facto ban on onshore wind in England, approved major solar projects and delivered a record-breaking renewables auction.