Lucy Rigby MP: speeches

Speeches

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Clauses 150 to 155 and schedule 18 make the general, supplementary and commencement provisions for CBAM. They are designed to ensure that CBAM integrates properly with the wider statute book, operates coherently over time and comes into force as intended from 1 January 2027. More specifically, clause 150 introduces schedule 18, which makes supplementary amendments to other legislation to ensure that CBAM operates consistently alongside existing customs and tax law. Clauses 151 and 152 provide key definitions and interpretation provisions, including the meaning of “emissions”, “carbon dioxide equivalent”, “importer” and “CBAM good”. These clauses are designed to ensure clarity and legal certainty across the regime. Clause 153 provides a power to make provision in relation to linked emissions trading schemes. This allows imported goods originating in countries with linked emissions trading scheme arrangements to be excluded from CBAM, reflecting international co-operation and avoiding unnecessary duplication. Clause 154 sets out how regulations and notices under CBAM are to be made, including the applicable parliamentary procedures, to ensure appropriate scrutiny, with affirmative or made affirmative procedures applying where regulations have a significant impact. Clause 155 provides for commencement and transitional arrangements. CBAM will apply to goods imported on or after 1 January 2027, with powers to smooth the transition during the initial years of operation. In summary, clauses 150 to 155 and schedule 18 provide the essential supporting framework that allows for the effective functioning of CBAM, and I commend them to the Committee.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Clauses 131 to 138 and Schedule 14 set out general provisions to ensure the effective implementation of the duty and the scheme. Clause 131 allows for the publication of information to ensure effective enforcement of the duty and the scheme. Clause 132 details the instances in which information may be shared between the commissioners and any persons with functions relating to the duty. It will allow information to be transferred in both directions, ensuring successful implementation and the proper joining up of compliance efforts. For any unauthorised disclosure, the clause includes an offence under section 19 of the Commissioners for Revenue and Customs Act 2005. The changes made by clause 133 provide a definition for local enforcement authorities and allow them to investigate whether businesses in their local areas are compliant with the duty. Clause 134 ensures that HMRC can make regulations and publish notices to make further provisions in relation to both the duty and the scheme. Clause 135 provides that regulations must be made by statutory instrument and sets out circumstances in which the made-affirmative procedure must be followed, including any provision that extends the cases in which vaping products are required to be stamped. Clause 136 allows for schedule 14 to the Finance Act 2020 to make changes to the Finance Acts of 1994, 2007, 2008, 2017 and 2021. Clause 137 does not make changes to legislation but merely ensures that the Bill is interpreted correctly. Clause 138 provides that the duty and the scheme will commence on 1 October 2026, and that vaping products manufactured or imported before that date will be liable if a duty stamp is affixed to that product. Two technical amendments are proposed to clause 138. Amendment 13 clarifies the drafting to ensure elements of the regulations can come into force at the proper time. Amendment 14 puts beyond doubt that the criminal offences under these schemes can apply to vaping products, regardless of the date that they were produced or imported. The amendments ensure that the duty can be successfully administered, and neither one reflects any change in Government policy.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Anyone selling illicit vapes puts the public at risk and undermines legitimate businesses. One million illegal vapes were seized by trading standards in the last full year for which statistics are available, so we know that this is a significant enforcement challenge. Clause 121 introduces enforcement powers to protect the integrity of the vaping duty stamps scheme. The changes made by clause 122 support robust compliance efforts under the vaping products duty and the stamps scheme, ensuring that only legitimate vaping products are supplied in the UK and penalising those who do not comply with the law. The changes made by clause 123 penalise those who lose stamps or attempt to use invalid stamps on illegitimate products to circumvent the rules. Clause 124 ensures that those who do not comply with the relevant regulations for the duty and stamps scheme are liable to penalties. Finally, clause 125 provides for the forfeiture of legitimate vaping products to complement the penalties imposed under the previous clauses. I commend the clauses to the Committee.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  As I stated in our debate on the previous group, the vaping products duty is a new excise duty on vaping products manufactured or imported into the UK from 1 October 2026. Clause 117 is important in setting out what a duty stamp is for the purposes of the vaping products duty and the conditions under which a vaping product is considered sufficiently stamped and compliant with the vaping duty stamps scheme. The changes made by clause 118 will allow HMRC commissioners to appoint an approved supplier to produce and distribute vaping duty stamps. In addition, the clause allows a fee to be charged for the duty stamp, separately from the liability of vaping products duty, and explains that that charge may not be offset against duty liability. The changes introduced by clause 119 will establish a formal approval requirement for UK businesses to purchase duty stamps under the vaping duty stamps scheme, which will allow HMRC commissioners to maintain control over the scheme and ensure compliance. Clause 120 will ensure that overseas vaping manufacturers have a representative in the UK who is legally and financially responsible for their compliance with the vaping duty stamps scheme, to ensure robust oversight. We are safeguarding compliance by requiring overseas manufacturers to operate within the framework of UK law, strengthening control and accountability across the supply chain. There will be impacts on all overseas importers and manufacturers of vaping products, who will be required to appoint a UK representative in the manner that I have described. Together, the clauses will ensure that the vaping products duty is robustly enforced through a secure duty stamps regime and that all manufacturers, whether they are based in the UK or overseas, are subject to clear accountability. I commend clauses 117 to 120 to the Committee.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  The shadow Exchequer Secretary referred to some of the points agreed at the EU-UK summit last May. As he knows, the EU and the UK agreed to work towards linking our respective ETSs. He will not expect me to comment on ongoing negotiations, so I will not do that, but I will say that we are committed to working closely with all interested stakeholders, including international partners, through the CBAM policy design process and, of course, we consulted extensively on the design and implementation of this measure. We have conducted information sessions at the World Trade Organisation and had extensive bilateral engagement with over 30 jurisdictions since announcing our intention to introduce a CBAM in December 2023. The UK will also engage through the UK CBAM international group, which serves as a forum through which the UK Government can understand the views of international partners and share updates. The shadow Exchequer Secretary will forgive me for reiterating what I know he already knows, which is that all tax policy is kept under review. He rightly refers to our desire to smooth the transition—that is absolutely key. We will ensure that there is sufficient time built in to facilitate that smooth transition, and time to test systems as well. Question put and agreed to. Clause 150 accordingly ordered to stand part of the Bill. Schedule 18 agreed to. Clauses 151 to 155 ordered to stand part of the Bill. Clause 156 Prohibition of promotion of certain tax avoidance arrangements Question proposed, That the clause stand part of the Bill.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Beautiful Norfolk—I know it very well. He compared Norfolk with more metropolitan areas. Local enforcement authorities, particularly trading standards, play a central role in tackling illicit vapes on the high street, and as has been mentioned, over 1 million illegal vapes have been seized in a single year under existing powers. Clause 133 gives local authorities the powers they need to conduct inspections and checks relating to both the duty and the scheme, to ensure that compliance work can be carried out effectively at retail level. That will complement the work of HMRC, which happens upstream. We have already announced additional funding for trading standards in the context of wider tobacco and vaping measures, alongside £10 million for Border Force and the recruitment of over 300 HMRC compliance officers focused on this area. Giving these powers to local authorities, backed by additional resource, will help to ensure that the new regime is enforced on the ground and that compliant retailers are protected from what would otherwise be unfair competition. Question put and agreed to. Clause 131 accordingly ordered to stand part of the Bill. Clauses 132 to 136 ordered to stand part of the Bill. Schedule 14 agreed to. Clause 137 ordered to stand part of the Bill. Clause 138 Commencement and transitional provision Amendments made: 13, in clause 138, page 146, line 24, at end insert— “( ) Sections 114(4) (production only in accordance with regulations) and 117(1) (duty to stamp in accordance with regulations) come into force on such day as the Treasury may by regulations appoint.” This amendment would allow the requirements to produce and stamp vaping products in accordance with regulations to be brought into force at the same time as the regulations. Amendment 14: in clause 138, page 146, line 27, after “2027” insert “, and have effect in relation to vaping products irrespective of when they were produced or imported”— (Lucy Rigby.) This amendment would clarify (in light of the fact that stamping requirements are to be set out in regulations) that the criminal offences can apply to vaping products produced or imported before the Act is passed or the regulations are made. Clause 138 , as amended, ordered to stand part of the Bill. Clause 139 Introduction to CBAM

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  It is good to hear that the shadow Exchequer Secretary will not oppose the clauses. He is right about the policy impetus behind what we are doing. For the first time in the UK, more people vape than smoke. The chief medical officer has been clear that vaping is not risk-free, and those who do not smoke should not vape.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  It is good to be back, Sir Roger. The vaping products duty is a new excise duty on vaping products manufactured or imported into the UK from 1 October 2026. The changes made by clause 112 will create a new charge to excise duty and set out the rate, which is £2.20 per 10 ml, rounded down to the nearest penny. The changes made by clauses 113 and 114 will define a vaping product and what constitutes production for the purposes of the vaping products duty. The changes made by clause 115 make clear the powers under which regulations on the vaping products duty will be made, in anticipation of its entry into force on 1 October 2026. Finally, the changes made by clause 116 will allow HM Revenue and Customs to manage and collect the vaping products duty and provide administrative powers around the storage of vaping products before duty has been paid, as well as penalties. Together, clauses 112 to 116 will establish a coherent and enforceable framework for the vaping products duty and will ensure that vaping products are taxed appropriately. I commend them to the Committee.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  The comments of the shadow Exchequer Secretary, the hon. Member for North West Norfolk, refer to the deliberately tough nature of the enforcement regime; there is a real emphasis on deterrence, and there are penalties that apply. It includes the forfeiture powers, which are targeted at serious non-compliance. Where retailers are found selling unstamped products outside duty suspense or breaching key obligations under the scheme, HMRC and Border Force will have the power to seize associated vaping products, including legitimate duty-paid stock. As I said, that is part of a deliberately tough enforcement regime and is a strong deterrent aimed at those who choose to mix illegal products with legitimate ones on the same premises. I am sure we all understand that without such powers, rogue traders can treat penalties as simply a cost of doing business while continuing to profit from illicit trade, and I am sure we all want to avoid that. The shadow Exchequer Secretary made a number of points about ensuring that the use of powers is proportionate. Given the judicial or criminal processes associated with the use of these powers, it is entirely fair to say that all the usual processes around charging, in a criminal sense or otherwise, will apply. Inherent within those processes are balance and fairness, including taking into account the rights of the accused. It is good to mention the draft guidance, which will be shared with HMRC-run industry groups well ahead of the go-live date on 1 April, which I hope is sufficiently specific for the shadow Exchequer Secretary. He will be pleased to know—he may already know—that the interim guidance is already on gov.uk, if he is stuck for things to do this evening. I think I am right in saying that the points raised by the Liberal Democrat spokesperson, the hon. Member for Maidenhead, as to liability under these offences will be made explicitly clear in the guidance, such that there is no doubt in those circumstances. Question put and agreed to . Clause 121 accordingly ordered to stand part of the Bill . Clauses 122 to 125 ordered to stand part of the Bill. Clause 126 Dealing in duty stamps Question proposed, That the clause stand part of the Bill.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Clauses 156 to 162 introduce a new statutory prohibition on the promotion of tax avoidance arrangements. If you will forgive me, Sir Roger, I will set out a little more background on these clauses than I have on others, which I think is important. HMRC already can and regularly does stop people promoting marketed avoidance schemes, where it can identify the person or company doing the promotion. However, the controlling minds behind avoidance schemes often simply close down the company they use to promote the scheme before promoting a very similar scheme from a new company with different directors—everyone will be familiar with that concept of phoenixing. HMRC needs to identify and issue a new stop notice to each new entity and, during that time, promoters continue to sell the scheme and cause harm to taxpayers and the UK tax system. This measure will prohibit certain tax avoidance schemes from being promoted without HMRC first having to notify promoters, and will put a stop to promoters playing a game of cat and mouse with HMRC. These clauses are about targeting those who continue to promote tax avoidance. They are not intended to be directed against legitimate tax advisers who are operating to a high professional standard but, while acting in good faith, make genuine mistakes. Furthermore, the Exchequer Secretary has asked HMRC officials to work with stakeholders in developing published guidance to address the fine detail of exactly how the prohibition will work in practice. I turn to the individual clauses. Clause 156 will prohibit the promotion of avoidance arrangements that have no realistic prospect of success, as well as enabling HMRC commissioners to prohibit further arrangements in regulations. Any arrangements specified must have been, or be likely to be, marketed to seek a particular tax advantage, unlikely to result in that tax advantage, and likely to cause harm to taxpayers. Clause 157 provides for the definition of “promotion” of arrangements. It includes important exemptions, such as where goods and services are provided on commercial terms without the knowledge that they are being used to promote tax avoidance, or where legally privileged advice or information is provided. Clause 158 requires regulations implementing this policy change to be subject to the made affirmative procedure. That will ensure that the regulations take effect immediately, protecting the Revenue and taxpayers, while also ensuring proper oversight by this House. For anyone breaching the prohibition or the regulations, civil penalties may apply under clause 159, or a criminal offence under clause 160. Under clause 161, where a responsible person has led an entity or partnership to commit a criminal offence through their consent, connivance or neglect, that criminal offence will also apply to them. Clause 162 contains relevant definitions and commencement provisions. In summary, this measure will allow HMRC to stop the promotion of tax avoidance and tackle the persistent group of promoters. It will ensure that taxpayers and the UK tax system are protected from the harm caused by these promoters.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  I am grateful to the shadow Exchequer Secretary, the hon. Member for North West Norfolk, and the Liberal Democrat spokesperson, the hon. Member for Maidenhead, for their comments. I think we are all aiming for the same thing: a robust and tight enforcement of all the measures. On the shadow Exchequer Secretary’s point about moving towards a purely digital system, the reality is that that would be harder for consumers and for trading standards officers to use on shop floors, and consultation responses highlighted that it could impose greater burdens on small retailers than a visible stamp. The scheme is designed to have a physical label with embedded digital features, and that two-factor design is central to the compliance strategy. A visible, secure stamp gives retailers, consumers and enforcement officers an immediate way to spot non-compliant products at a glance, without the need for specialist equipment. As I said, however, the digital element is very important; it is similar to a secure QR code, allowing stamps and products to be scanned and verified in real time. That two-factor design is central to the compliance strategy. On the question of fees, they have been set to cover the cost of operating the scheme. The Government conducted a competitive tender process for the broader scheme. The shadow Exchequer Secretary is absolutely right that HMRC has promised clear guidance in this area, and that will be published in due course. The Liberal Democrat spokesperson fairly raised a comparison with alcohol duty stamps. HMRC consulted the alcohol industry and enforcement authorities and determined that alcohol duty stamps now play a minimal role in tackling alcohol duty evasion and that more effective controls now exist. HMRC is introducing duty stamps alongside the vaping products duty because of the distinct and significant non-compliance risk associated with the vaping market; it is about the utilisation of modern technology and digitalisation to support the delivery of the vaping products duty. I hope I have explained to him that we have examined the alcohol duty comparison and do not see a direct read across. The Liberal Democrat spokesperson also raised an important point about money laundering and anti-money laundering, which the Government take extremely seriously—in fact, we are reforming the supervisory function and compliance on AML. Question put and agreed to. Clause 117 accordingly ordered to stand part of the Bill. Clauses 118 to 120 ordered to stand part of the Bill. Clause 121 Forfeiture Question proposed, That the clause stand part of the Bill.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  The shadow Exchequer Secretary asked about HMRC making compliance-checking methods available. There will be an app for access based on scans of products. It will be available before 1 October, and no scanning will be required before that date. He, fairly, asked a question about the flow of information. That is covered by subsections (3) and (4) of clause 132, which ensure that information can be used only for the purposes for which it was disclosed. Indeed, any other purpose would require further permission from the commissioners. Subsection (4) sets out the penalties that would apply for contravening the preceding provisions. The shadow Exchequer Secretary also asked about the resources available to trading standards and local authorities. He mentioned Norfolk, is that right?

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  The shadow Minister will appreciate that it is a requirement of UK domestic legislation to put companies in the position that they would have been in had the recovery legislation not been introduced, and it is that principle on which the clause is based. Question put and agreed to. Clause 51 accordingly ordered to stand part of the Bill. Clause 52 Legacies to charities to be within scope of tax Question proposed, That the clause stand part of the Bill.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  Turning to the non-Government amendments, new clause 28 asks His Majesty’s Revenue and Customs to assess the potential benefits of establishing a digital application process for taxpayers seeking to pay capital gains tax by instalments following disposals to employee ownership trusts. The facility to pay CGT in instalments is a long-standing feature of the tax code and is well understood by both taxpayers and HMRC. The process for applying to pay by instalments is clearly set out within HMRC guidance and applications are dealt with swiftly once they have been received by HMRC. My officials have met representatives from the employee ownership sector to provide bespoke guidance on how these instalment payment provisions apply to disposals to EOTs. That engagement continues. I therefore ask the hon. Member for Maidenhead to withdraw new clause 28. In any event, it should be rejected. New clause 29 asks the Chancellor to lay a report before the House within the next 12 months assessing the impact on small and medium-sized enterprises of the changes made under clause 35. The Government monitor the impact of all changes made to existing tax reliefs. However, publishing a report on the change introduced by clause 35 within the next 12 months would not be reasonable as the first full tax year of these changes is the tax year 2026-27, so HMRC will not have complete information to assess their impact. New clause 29 should therefore be rejected. In addition to rejecting new clauses 28 and 29, I commend clause 35 to the Committee.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  Clause 47 will simplify the UK’s transfer pricing rules, which protect our tax base by ensuring that transactions between UK companies and related parties are priced appropriately. The changes made by the clause include the general repeal of UK-to-UK transfer pricing where there is no risk of tax loss. This will provide a meaningful simplification for businesses. Alongside it, amendments have been made to the participation condition, intangibles, commissioners’ sanctions, interpretation in accordance with OECD principles, and financial transactions. Government amendment 20 will ensure the consistent use of terminology with respect to financial transactions throughout the legislation. The changes made by the clause will update UK law in line with international standards, will reduce compliance obligations and will address areas of potential legislative weakness. I commend clause 47, schedule 6 and Government amendment 20 to the Committee.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  The ICTS will help HMRC to focus compliance resources, as has been discussed, on the most meaningful transfer pricing risks. We think that it will also lead to greater efficiencies by encouraging up-front compliance and reducing the length of transfer pricing inquiries. Those outcomes will benefit the compliance of taxpayers and HMRC. Clause 48 gives the commissioners of HMRC the power to issue regulations that will determine the detailed design of the ICTS, including the information to be provided, the format of the schedule and the commencement date of the filing obligation. A consultation was held in 2025, and we will carry out a technical consultation on the draft regulations in spring 2026. The obligation is expected to take effect for accounting periods beginning on or after 1 January 2027, which is designed to allow time for businesses to adapt to what they need to do. The shadow Minister suggested that the proposal will lead to an administrative burden; actually, it is intended to mitigate additional administrative burdens by requiring the reporting of readily available objective information. We will continue to be guided by these principles as we move into the detailed design phase, working—as one would expect—with affected businesses. Question put and agreed to. Clause 48 accordingly ordered to stand part of the Bill. Clause 49 Permanent establishments Question proposed, That the clause stand part of the Bill.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  Clause 46 will introduce a new corporation tax assessing provision for unassessed transfer pricing profits. It will replace the diverted profits tax, a stand-alone tax that will be repealed in its entirety, providing a significant simplification. The changes made by the clause will make the rules clearer and more straightforward for businesses to implement, and will support access to treaty benefits, including relief from double taxation under the mutual agreement procedure. The removal of the diverted profits tax as a stand-alone tax is a very significant simplification, and bringing the rules into the corporation tax framework will clarify the interaction with transfer pricing and access to treaty benefits. I therefore commend clause 46 and schedule 5 to the Committee.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  I am grateful to my hon. Friend for his intervention. I think it is right to say that the reporting of every element of FIG will not be necessary. I am afraid I shall have to confirm in writing exactly why that is the case. Question put and agreed to. Clause 43 accordingly ordered to stand part of the Bill . Schedule 3 Non-resident, and previously non-domiciled individuals Amendment proposed : 30, in schedule 3, page 271, line 26, leave out from “amount” to end and insert “is the lower of— (a) the value of the amount when it first arose to the individual, or (b) its value on 6 April 2025.”— (James Wild.) This amendment provides that where an investment derived from foreign income has fallen in value, the temporary repatriation facility (TRF) charge is paid on the reduced value of the investment at the point the TRF opened. Question put, That the amendment be made.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  Clause 52, in combination with the other clauses in the Bill, will support the Government’s aims of closing the tax gap by strengthening compliance powers to challenge abusive arrangements by which donors or trustees of charities can enrich themselves. The clauses also simplify the tax rules by equalising the tax treatment of investment types and tax reliefs used by charities. The changes made in clause 52 will bring legacies into the definition of “attributable income”. New clause 6 would require the Government to report on the impact of clause 52 on charitable giving through estates and on the income of the charity sector. The changes are aimed at those charities and donors who seek to make a financial gain. They will not penalise charities when legitimate donations are received and investments are made. The Government have published a tax information and impact note that sets out the impact of the changes, and it showed that the measures will have a negligible impact on businesses and civil society organisations such as charities. Once the measures have been implemented, HMRC will assess the impact by monitoring tax reliefs claimed by UK charities, so a formal evaluation is not required. I therefore propose that clause 52 should stand part of the Bill, and that new clause 6 should be rejected.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  It is important to recognise that the tainted donations rules ensure that the usual tax reliefs are not available where someone gives money to a charity with the intention to benefit financially from it. Previously, HMRC was only permitted to consider the intention of a donation and whether a donor had received a financial advantage from a donation, but now, with these changes, it will also be able to consider the outcome of the donation and whether a donor had received financial assistance. In that respect, considering the outcome of a tainted donation is a positive step towards challenging abusive arrangements. As I have said in relation to previous clauses, HMRC will come forward with clear guidance on the application of the clauses, and, to the shadow Minister’s point, that guidance might well contain examples. We are taking a range of steps to ensure that the charity sector and the wider public are aware of the changes, which I hope reassures the shadow Minister. A detailed summary of consultation responses has been published. As I said, HMRC will provide clear and practical guidance in advance of implementation. Question put and agreed to. Clause 54 accordingly ordered to stand part of the Bill . Schedule 9 agreed to. Ordered , That further consideration be now adjourned. — (Mark Ferguson.)

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  I confirm that the shadow Minister is right about the origin of the proposals and the date of the consultation. It is entirely right that we are bringing UK transfer pricing legislation up to date; it was last materially updated in 2004, so it is high time that these rules were updated. Question put and agreed to. Clause 47 accordingly ordered to stand part of the Bill. Schedule 6 Transfer pricing Amendment made: 20, in schedule 6, page 318, line 41, at end insert— “(ba) in subsection (4)(b), for ‘issuing company’, in both places it occurs, substitute ‘borrower’,”.— (Lucy Rigby.) The amendment deals with a missing consequential change to section 154 of the Taxation (International and Other Provisions) Act 2010 (transfer pricing). Schedule 6, as amended, agreed to.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  I am grateful to the shadow Minister for his comments. International co-operation on such matters, as he said, is extremely important. The side-by-side agreement, as I have made clear, will be the subject of future legislation, which will be the opportunity for scrutiny. However, as I also made clear, that agreement ensures that all large multinationals will pay their fair share of tax through the application of pillar two and pre-existing minimum tax rules, while offering welcome simplification and stability to UK businesses. We have to be clear that US multinationals, like every other multinational company, are still subject to the UK’s 25% corporation tax on the profits that they make in the UK. They are also still subject to the UK’s domestic minimum tax rate of 15%. We recognise that a degree of complexity is inherent in pillar two, but we must not forget that it applies only to large multinational businesses and that it is needed to stop businesses shifting their profits to low-tax jurisdictions and not paying their fair share of tax in the UK. I think the shadow Minister acknowledges that that is exactly why we need it. That being said, in relation to the complexity, the UK continues to be a strong proponent of work to develop simplification of the system, including the recently agreed permanent safe harbour. As stated in our “Corporate Tax Roadmap”, the Government will also consider “opportunities for simplification or rationalisation of the UK’s rules for taxing cross-border activities” following the introduction of pillar two. Question put and agreed to . Clause 50 accordingly ordered to stand part of the Bill . Schedule 8 Pillar Two Amendments made: 21, in schedule 8, page 358, line 9, leave out “50” and insert “50A”. This amendment is consequential on Amendment 22. Amendment 22, in schedule 8, page 379, line 26, at end insert— “50A In Schedule 16 (multinational top-up tax: transitional provision), after paragraph 2 insert— ‘Transitional extension to deadline for elections 2A (1) Schedule 15 (multinational top-up tax: elections) has effect in its application to a pre-2026 election as if in paragraphs 1(2)(b) and 2(2)(b) of that Schedule for “no later than” there were substituted “before the end of the period of 12 months beginning with the day after”. (2) In sub-paragraph (1), a “pre-2026 election” means an election which specifies an accounting period ending before 31 December 2025 as— (a) in the case of an election to which paragraph 1 of Schedule 15 applies, the first accounting period for which the election is to have effect, or (b) in the case of an election to which paragraph 2 of Schedule 15 applies, the accounting period for which the election is to have effect.’” This amendment extends the deadline for making an election to which Schedule 15 of the Finance (No. 2) Act 2023 applies in cases where the election specifies an accounting period ending before 31 December 2025. Amendment 23, in schedule 8, page 379, line 27, leave out paragraph 51 and insert— “51 (1) In FA 1989, in section 178 (setting of rates of interest), subsection (2) is amended as follows. (2) In paragraph (x)— (a) for ‘51’ substitute ‘33A’; (b) after ‘Finance’ insert ‘(No.2)’; (3) In paragraph (y), for ‘51’ substitute ‘33A’.” This amendment deals with a consequential amendment that was missed when paragraph 33A was inserted in Schedule 14 to the Finance (No.2) Act 2023 by the Finance Act 2024. Amendment 24, in schedule 8, page 379, line 38, at end insert— “(3A) The amendment made by paragraph 50A has effect in relation to accounting periods beginning on or after 31 December 2023.”— (Lucy Rigby.) This amendment provides for the amendment inserted by Amendment 22 to have effect in relation to accounting periods beginning on or after 31 December 2023. Schedule 8 , as amended, agreed to . Clause 51 Controlled foreign companies: interest on reversal of state aid recovery Question proposed, That the clause stand part of the Bill.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  In answer to the comments of the Liberal Democrat spokesperson, the hon. Member for Maidenhead, as in relation to the previous clauses, I can confirm that HMRC will be coming forward with guidance that will make clear the exact scope of the changes and what needs to happen on behalf of charities in order to ensure compliance. The compliance changes apply equally to all charities regardless of size. I come back to the statement that I recognise I have made repeatedly: these changes, along with those in the previous clause, are designed to protect the integrity of charitable tax reliefs. Although some smaller charities may need to review processes, the measures are proportionate and targeted at preventing abuse—not burdening charities, which in the main do incredibly good work. The shadow Minister, the hon. Member for North West Norfolk, questioned whether some specific wording had been considered as part of the Bill. I am afraid I cannot confirm that now, and will have to get back to him in writing. Question put and agreed to. Clause 53 accordingly ordered to stand part of the Bill. Clause 54 Tainted charity donations: replacement of purpose test with outcome test Question proposed, That the clause stand part of the Bill.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  It important to recognise that, as I perhaps should have explained at the outset, the legislation in this area is 20 years old. The purpose of making the changes that we are making is to update it and to account for the fact that there have been considerable developments in the international tax landscape since it was first drafted, most notably in relation to the attribution of profits to permanent establishments. The shadow Minister mentioned the OECD. This legislation is interpreted in accordance with the OECD model tax convention and commentary, so it will always be interpreted using the most recently available model and commentary. The OECD council approved a 2025 update in November 2025, which can be found online. The full update will be published in 2026, if it has not been already. I hope that gives the shadow Minister some assurance. Question put and agreed to. Clause 49 accordingly ordered to stand part of the Bill . Schedule 7 agreed to. Clause 50 Pillar two Question proposed, That the clause stand part of the Bill.

• 27 Jan 2026 · Finance (No. 2) Bill (Second sitting) · Hansard source

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  I welcome the “hurrah” from the shadow Minister. On his latter point about double taxation treaties, as he will know, many of the agreements were negotiated before the introduction of the non-resident capital gains regime. As treaties come up for renegotiation, as they do, or as we negotiate new treaties, we will seek to include a provision in the capital gains article to allow the UK to exercise our domestic taxing provisions in full. On the shadow Minister’s point about cell companies and the extent to which they are used to avoid tax, there is anecdotal evidence that such structures have been created to help individuals avoid paying tax on gains made through the disposal of UK land and property, and the changes to the rules seek to cure that. Question put and agreed to. Clause 40 accordingly ordered to stand part of the Bill. Clause 41 ordered to stand part of the Bill. Clause 42 Abolition of notional tax credit on distributions received by non-UK residents Question proposed, That the clause stand part of the Bill.