Lucy Rigby MP: speeches

Speeches

• 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.

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

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  A criticism of complexity has been made. The aim of these reforms is, of course, simplicity. I think it is recognised across the House that in matters of taxation, simplicity is better. We are ensuring that the legislation works as it is intended to do. The shadow Minister, the hon. Member for North West Norfolk, referred to the Chartered Institute of Taxation. It is important to note this quote from the institute: “Moving from domicile to residence as the basis for taxing people who are internationally mobile makes sense.” As well as being a major simplification, it is a fairer and more transparent basis for determining UK tax. Residence is determined by criteria far more objective and certain than the subjective concept of domicile. Replacing the outdated remittance basis is sensible, and the temporary repatriation facility offers a helpful transition. Another criticism is retrospection. In this instance, the Government feel that a retrospective change is a proportionate response to protect revenue, which, as the hon. Member for Mid Bedfordshire said, is essential for public services. This change will prevent taxpayers from benefiting from unintended windfalls and promotes consistency in the application of rules, bringing the capital gains position into line with the income tax provision. In most cases, trusts will not yet have made capital distributions, meaning that beneficiaries and trustees will have advance notice and can plan their affairs. A further topic that that came up is the reporting of every element of FIG. I have a note on that somewhere, so I will come back to it. I will deal first with the suggestion that restrictions on the TRF are arbitrary. The position of someone who is temporarily abroad arose. The TRF is designed to encourage people to be UK-resident and bring funds into the UK economy. Allowing non-residents to use the TRF would let individuals benefit from the reduced charge without living here or contributing to the UK economy, which would reduce the incentive to become or remain UK-resident. As I said, I reject amendment 1 because there are already measures in place that prevent double counting. I have dealt with amendment 2. I want to deal with the reporting of every element of FIG, which I have a note on, as I said. [ Interruption. ] That is the wrong note. I will have to come back to that.

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

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  Just to warn anyone who is not aware, clause 50 and schedule 8 are not the shortest. The changes they make are technical, but very important. Paragraphs 20 to 22 of schedule 8 prevent multinationals from trying to reduce their pillar two liability by entering into favourable tax arrangements to create pre-regime deferred tax assets or liabilities. Paragraphs 24, 25 and 34 ensure that the profits and losses relating to a UK real estate investment trust are excluded from the charge to domestic top-up tax to avoid double taxation. Paragraph 32 allows the UK to recognise the qualifying undertaxed profit rules of other jurisdictions before the OECD inclusive framework has completed a formal peer review. Paragraphs 36 and 37 provide for a payment for group relief to be treated as a covered tax amount for domestic top-up tax purposes. Paragraph 39 reduces compliance burdens for smaller or non-material entities within a multinational group. Finally, paragraphs 2, 3, 6 to 12 and 16 to 19 update the rules on flow-through entities, permanent establishments, intragroup amounts and cross-border allocations of deferred tax so that the regime operates more smoothly in practice. Taxpayers can elect for most amendments to apply retrospectively from the introduction of pillar two on 31 December 2023. However, taxpayers cannot select individual amendments to apply retrospectively; one election covers the whole package to prevent cherry-picking of favourable amendments. I should remind Members that, in line with the written ministerial statement of 7 January 2026, the clause does not include any amendments connected with the publication of the side-by-side agreement by the OECD/G20 inclusive framework earlier this month. The Government will introduce legislation to do that in the next Finance Bill following a technical consultation. Government amendment 23 ensures that the legislation works as intended by making a small correction to legislative references used. Government amendments 21, 22 and 24 temporarily extend the deadline for making elections to give taxpayers more time to bed in the new IT systems needed to meet their filing obligations. New clause 5 would require the Chancellor to review those technical amendments to the pillar two rules every six months and report on the international implementation of pillar two, among other things. We have already committed to the implementation of pillar two, which, as hon. Members will know, aims to ensure that large multinationals pay their fair share of tax. As a matter of course, the Government keep all areas of tax policy under review, so I reject the new clause. Taken together, these changes implement internationally agreed changes, respond to taxpayer consultation, and ensure that the pillar two rules continue to be effective and administrable in the UK. I therefore commend clause 50 and schedule 8, together with Government amendments 21 to 24, to the Committee.

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

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  Clause 42 abolishes the notional tax credit available to non-UK residents on UK company dividends. That credit no longer serves a purpose, under the modern dividend taxation system, and the change brings non-UK residents in line with UK residents, who do not receive the notional tax credit. It will impact fewer than 1,000 non-UK resident individuals who have UK dividend income and other UK income, such as property or partnership income, a year. The clause removes the outdated notional tax credit for non-UK residents receiving UK dividends, aligning their position with that of UK residents. I commend the clause to the Committee.

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

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  The clause makes changes to ensure sufficient repayment interest is paid to affected companies following a successful challenge of a European Commission decision. It provides that interest is also paid on the amounts of late-payment interest that were recovered and are now repayable. It will affect a small number of UK companies that had amounts collected and later repaid following the successful challenge of the Commission decision. The changes are expected to have a negligible impact on the Exchequer.

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

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  While it is important to be clear about the fact that the additional data is being collected, the details required from taxpayers are brief, and that goes to the question of the additional burden or, indeed, lack thereof. They are brief details of the type of business, the tax calculations for the assets disposed of, and the value of the shares received for the business. The information HMRC requests will be used in analysis and compliance activity, which will tackle abuse of this relief for the benefit of the majority of taxpayers who apply the rules correctly. The point on awareness was fairly raised. I can confirm that new guidance will be provided alongside the self-assessment return. Question put and agreed to. Clause 39 accordingly ordered to stand part of the Bill. Clause 40 Non-residents: cell companies 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 will start with the principle that, because legacies have received tax relief, it is important that they are spent on charitable purposes, otherwise they will be subject to a tax charge. More broadly, the Government are very much committed to supporting charities and their donors through tax relief, which was worth over £6.7 billion in 2024. The changes in the clause are aimed at those charities and donors that seek to make financial gain. They will not penalise charities where legitimate donations are received and investments are made. The measures are intended to protect the integrity of the charitable sector by ensuring that donations, investments and charity expenditure are deployed for charitable purposes, not the avoidance of tax. The shadow Minister fairly referred to any burden that may fall on smaller charities. The Government of course recognise that many small charities are run by unpaid volunteers, and for that reason we have sought to design the new rules in a fair and proportionate way. HMRC will help the sector to understand and prepare for the changes by providing clear communications and guidance. I also want to be clear, in response to the shadow Minister, that the changes to the attributable income rules mean that legacies received by a charity will become chargeable to tax if they are not spent charitably. The changes reflect the fact that this income may have already received considerable tax relief. We have no plans to stop charities accumulating donations, so there will be no deadline for the spending of legacy funds. Question put and agreed to. Clause 52 accordingly ordered to stand part of the Bill. Clause 53 Approved charitable investments: purpose 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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  I can confirm that guidance will be forthcoming, and I am absolutely sure that it will be clear. I am also pleased to confirm that there will be no additional administrative burden on employers, because employers already have to enter a percentage figure on the PAYE notification form; as I say, this change will just require them to limit the in-year relief provided to no more than 30%. The guidance will be given to employers in April when the changes go live. Question put and agreed to. Clause 45 accordingly ordered to stand part of the Bill. Schedule 4 agreed to. Clause 46 Unassessed transfer pricing profits 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 53 changes the definition of “approved charitable investments”. The Government recognise 12 types of investments for charitable tax relief, but presently only one type of investment is required to be for the benefit of the charity and not the avoidance of tax. The Government are extending this rule to all 12 types of investment, making the rules both simpler and tighter. New clause 7 would once again require the Government to report on the impact of clause 53 on charity investment strategies. As with clause 52, these changes are aimed at those charities and donors that seek to make financial gain. They will not penalise charities where legitimate donations are received and investments are made. As the shadow Minister may expect, we have published a TIIN setting out the impact of these changes, which showed that these measures will have a negligible impact on businesses and civil society organisations such as charities. I commend clause 53 to the Committee, and I ask that new clause 7 be rejected.

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

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  I welcome the support that was expressed, on the whole, by the shadow Economic Secretary to the Treasury. I suspect that that support is born from a recognition that we really do need to make the changes. Recent court decisions have shown that the rules as they stand, which date back to the ’70s, do not work as intended, especially when the avoidance carried out is a smaller part of a larger commercial reconstruction. The main effect of the rules will be to discourage the minority—and it is very much a minority—who would otherwise seek to avoid tax. It is about protecting our tax base from abuse for the benefit of the majority of taxpayers who apply the rules correctly. For those reasons, I truly believe that the clauses strengthen the protection against avoidance and will catch tax avoiders. Question put and agreed to . Clause 36 accordingly ordered to stand part of the Bill. Clauses 37 and 38 ordered to stand part of the Bill. Clause 39 Incorporation relief: requirement to claim 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 54 and schedule 9 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 changes made in clause 54 tighten the rules on tainted donations. New clauses 8 and 9 would require the Government to report on the impact of clause 54 and schedule 9 on legitimate charitable giving and the prevention of tax avoidance, to review the implementation of the outcome test in clause 54, and to assess whether it is clearer and more effective that the existing purpose test. I come back to the same justification as for the previous clauses: these changes are aimed at those charities and donors who seek to make financial gain; they will not penalise charities when legitimate donations are received and investments are made. The TIIN, which was published alongside these changes, showed that these measures would have a negligible impact on businesses and civil society organisations. I therefore commend clause 54 and schedule 9 to the Committee, and urge it to reject new clauses 8 and 9.

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

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  Clause 43 makes amendments to the residence-based tax regime that was introduced in the Finance Act 2025. These changes reflect feedback from the Government’s continued engagement with stakeholders to make sure that the regime works as well as possible. Clause 43 and schedule 3 consist of three parts. Part 1 of the schedule makes minor corrections to the foreign income and gains regime and to legislation connected with the ending of the remittance basis. Part 2 of the schedule makes technical amendments to the legislation for the temporary repatriation facility. Part 3 of the schedule amends the temporary non-residence rules by removing the concept of post-departure trade profits from legislation. Clause 44 makes minor amendments to the residence-based tax regime, as introduced in the Finance Act 2025, to ensure that tax-free or exempt income is taken into account correctly under the settlements and transfer of assets abroad matching rules. The clause ensures that the internationally competitive residence-based tax regime operates as intended in relation to foreign income and gains from non-resident trusts and similar structures.

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

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  Clauses 40 and 41 make various changes to the capital gains rules that apply to disposals of UK land and property by non-UK resident persons. Turning first to clause 40, the changes that are being made have been in effect since Budget day and ensure that, for the purposes of the non-resident capital gains legislation, each cell in a cell company is looked at individually for the purposes of the property richness rules. That will prevent the use and ongoing exploitation of such entities to avoid the non-resident capital gains rules and will protect the tax base. Clause 41 makes changes to the rules for non-resident capital gains in respect of double taxation treaties and the requirement to claim double taxation relief, and it also clarifies some unclear terminology. The effect of the changes made by clause 41 is that investors are not required to make or deliver a return in order to claim relief in respect of a particular disposal. In fact, the clause reduces administrative burdens by clarifying when non-resident companies and individuals have to notify HMRC of a disposal. I therefore commend these clauses to the Committee.

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

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  Clause 48 will create a power for the commissioners of HMRC to issue regulations requiring certain taxpayers to file an international controlled transactions schedule. This measure is expected to have an impact on approximately 75,000 businesses within the scope of the UK’s transfer pricing and related rules. Most of these businesses are part of large multinational groups. New clause 4 would include a requirement for the Chancellor to lay a report before the House of Commons, within six months of the Act being passed, on the impact of the implementation of clause 48 on cross-border trade and administrative burdens on business. It asks that the report focus on Government steps to consult affected businesses. Most major economies have similar requirements, and we do not expect the international controlled transactions schedule to have a significant impact on cross-border trade. Rather, this measure is expected to improve fairness, ensuring that multinational enterprises pay tax on profits generated from economic activity in the UK. It is also expected to increase efficiency, meaning that HMRC compliance activity can be more effectively targeted, benefiting compliant taxpayers. I urge the Committee to reject new clause 4.

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

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  To the comments from the shadow Minister, the hon. Member for Wyre Forest, it is important to bear in mind that on the changes we are making to EOTs, even post these changes, the relief that will be on offer remains more generous than for many other options and deeds, such as business asset disposal relief. Of course, the fiscal climate is relevant to the changes we are making. He referred to the point at which the last Government introduced this relief, but as I said, the cost of the relief as a whole is projected to rise to £2 billion by 2029-30 without the action that we are taking. As I said, the fiscal climate is extremely relevant when looking at £2 billion of relief. Importantly, the Employee Ownership Association has stated that the changes we are making are not such as to alter the fundamental strength and purpose of the employee ownership trust model, while also recognising that the previous level of relief, or the level of relief as it stands, was hard to sustain when set against the rapidly escalating fiscal cost. On the comments made by the Liberal Democrat spokesman, the hon. Member for Maidenhead, I set out the reasons why we reject new clauses 28 and 29. I maintain the position of rejecting those and maintaining clause 35 as it stands. Question put and agreed to. Clause 35 accordingly ordered to stand part of the Bill. Clause 36 Anti-avoidance: collective investment scheme reconstructions 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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  Clauses 36 to 38 make changes to the CGT anti-avoidance provisions that apply to company share exchanges and reconstructions, or the reconstruction rules, as they are known. Clause 36 revises the collective investment scheme reconstruction anti-avoidance rule to align with modern provisions with a similar purpose. Clause 37 revises the share exchanges and company reconstruction anti-avoidance rule to align with modern provisions with a similar purpose, too. Clause 38 does exactly the same. The changes made by these clauses, which take effect from Budget day, modernise the anti-avoidance rule so that it focuses directly on arrangements where the purpose, or one of the purposes, is the avoidance of tax. The amendments introduced by the clauses will allow HMRC to address situations where arrangements have been added to otherwise commercial transactions that reduce or eliminate, rather than just defer, a tax charge, allowing them to be more effectively challenged. The rule has been updated so that it affects only the shareholders who benefit directly from the avoidance. Where HMRC agrees that there is no avoidance and the reorganisation is carried out within 60 days of the Budget announcement or if HMRC’s decision is later, the current legislation will apply. For those reasons I commend clauses 36 to 38 to the Committee.

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

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  Again, I welcome the shadow Minister’s support for these measures. However, he is absolutely wrong to suggest that these measures and the broader package will discourage foreign investment in UK companies. He will have heard the titter of laughter when he talked about the importance of stability—that not being something that was provided by his party at all when it was in government. The removal of the notional tax credit will not discourage foreign investment in UK companies, as it will not impact the overwhelming majority of overseas investors who remain outside the scope of UK tax. In order to be affected by the measure, overseas investors will also need to have other taxable UK income, typically rental income or partnership income. If they do not have that, their dividends will not be taxable in the UK while they remain overseas. The shadow Minister is right to refer to my earlier figure that fewer than 1,000 non-resident individuals have taxable UK income in addition to their UK dividends, and that remains the figure that we are working with. Question put and agreed to. Clause 42 accordingly ordered to stand part of the Bill. Clause 43 Non-resident, and previously non-domiciled individuals 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 39 makes a change to incorporation relief for CGT, requiring taxpayers to make a claim for relief and, as a result, improving the data available to HMRC to undertake analysis and compliance activity. Specifically, the change will mean that taxpayers need to make a claim for incorporation relief on their self-assessment return. That will apply to transfers of a business on or after 6 April 2026, and it will allow HMRC to monitor the relief and tackle avoidance more effectively, protecting revenue and helping to close the tax gap, with an additional £225 million expected to be collected over the scorecard period.