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(1) The Treasury must publish reviews of whether the payment of Class 1A contributions on termination awards under sections 1 and 2 has had—
(a) any effect on the number of termination awards made above £30,000;
(b) any effect on the size of termination awards made above £30,000; or
(c) a disproportionate effect on—
(ii) pregnant women,
(iii) persons aged 50 or over, or
(iv) any other group of people with protected characteristics (within the meaning of the Equality Act 2010).
(2) The first review under subsection (1) shall be published no later than 24 months after this section comes into force.
(3) Subsequent reviews under subsection (1) shall be published no later than 24 months after publication of the previous review.—(Peter Dowd.)
This new clause would provide for a general review of the termination awards provisions of this Act within every period of 24 months.
Bought up, and read the First time.
Question put, That the clause be read a Second time.
I beg to move, That the Bill be now read the Third time.
I am grateful to all the right hon. and hon. Members who participated throughout the passage of the Bill, particularly in Committee. I thank the Committee’s Chairs, my hon. Friend Sir Henry Bellingham and Siobhain McDonagh.
This is a small and narrowly drawn but none the less important Bill that continues the Government’s aim of aligning tax and national insurance contributions where it is right to do so. The Bill aligns the employer national insurance contribution treatment of termination awards and sporting testimonials with the current tax treatment. It also raises about £200 million a year for the public finances.
As I mentioned in previous debates, the Bill has been expected for some time. The measures were first announced at Budget 2015, consulted on thereafter and so have been widely expected and subjected to a great deal of scrutiny. The effect of the changes in the Bill will mean that a 13.8% class 1A employer national insurance charge will be applied to income derived from termination awards and sporting testimonials that are already subject to income tax.
I would like to reiterate my thanks to hon. Members who participated in the debates. I thank my superb officials at HM Treasury and Her Majesty’s Revenue and Customs, whose patience and professionalism never ceases to impress me. I commend the Bill to the House.
It is a pleasure to speak on behalf of the official Opposition on Third Reading. It is also a pleasure to speak opposite the Exchequer Secretary, who has been left holding the baby no less than three times this evening—understandable, perhaps, given the immense turbulence currently occurring on the Government Benches. I echo his thanks to the officials who have been involved with the Bill and to all those who made so many contributions, particularly in Committee.
As we have said repeatedly, this is a meagre Bill. We have many concerns about it that have not been addressed during its passage and were certainly not addressed this evening. First, on sporting testimonials, we still lack clarity on the scope of the Bill due to its terminological ambiguity. We still do not have any proper projection from the Government with regard to its impact on charitable giving.
On termination payments, we remain deeply concerned that the Bill still leaves the door open to reducing the value of national insurance-free termination payments. As a result of the Bill—the Minister even acknowledged this in his speech just now—we could see a reduction in the amount of NI-free payments going to those who are losing their jobs through secondary legislation. That is completely inappropriate and something we will not accept. The Government themselves have admitted that the measures will exert downward pressure on wages. There will also be a negative impact on termination payments, because they will be passed on from employers to employees.
There are huge problems with our tax system. They are not dealt with by this thin and meagre Bill. As a result, we will be voting against it on Third Reading.
The Bill does not do what the Government set out to do, which is to simplify the tax system. The tax system is not simpler as a result of the changes that are being made. It will be more complicated and companies will have a larger administrative burden. It also reduces wages. I raised concerns about the fact that those who are already at the bottom of the pile will be receiving less in wages as a result of the changes the Government are making. I am happy to vote with the Opposition.
Having said that, I felt that the Committee was good-tempered and we discussed the issues at some length. It was really nice to have an evidence session in Committee. Hopefully, we will move on to the Finance Bill Committee taking evidence so that we can have more informed debates.
Finally, I would like to thank a couple of our staff members who have been involved in the progress of the Bill—Emily Cunningham and Chris Mullins-Silverstein—for their work in supporting us. My speeches would have been much less informed if it had not been for their help and support.
Question put, That the Bill be now read the Third time.