Schedule 5 - Insurance contracts: change in accounting standards

Finance (No. 2) Bill – in the House of Commons at 6:00 pm on 2nd February 2022.

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Votes in this debate

  • Division number 183
    A majority of MPs voted for a range of tax and pensions provisions including keeping key income tax rates unchanged and to increase the normal pension age to 57 from 6 April 2028.

Amendments made: 31, in schedule 5, page 137, line 16, leave out “the words in brackets” and insert—

“(adjusted, where relevant, in accordance with step 2)”.

This amendment clarifies which words are to be omitted from Step 4 in section 76 Finance Act 2012.

Amendment 32, in schedule 5, page 137, line 18, after “etc)” insert—

“(i) in subsection (2), in paragraph (a) omit “(but see subsection (3))”;”

This amendment omits a reference in section 77(2) Finance Act 2012 to section 77(3), which is also being omitted.

Amendment 33, in schedule 5, page 137, line 34, leave out paragraph (h) and insert—

“(h) in section 128 (relief for transferee in respect of transferor’s BLAGAB expenses)—

(i) in the heading, after “transferor’s” insert “excess”;

(ii) omit subsections (2) to (4);”—(Lucy Frazer.)

This amendment ensures that the provisions of section 128 Finance Act 2012 relevant to the transfer of excess basic life assurance and general annuity business expenses in the context of a transfer under Part VII of the Financial Services and Markets Act 2000 are retained.

Third Reading.

Photo of Lucy Frazer Lucy Frazer The Financial Secretary to the Treasury

I beg to move, That the Bill be now read the Third time.

In the autumn Budget, the Chancellor set out a vision to build a stronger economy that would allow this country to bounce back from the pandemic. This Finance Bill takes forward measures that will help to turn that vision into reality and drive growth for our country long into the future. Its measures will support business across the UK, including our banking, creative and shipping sectors. In addition, the Bill will protect businesses and the public by clamping down on tax evasion and economic crime, improving trust and building a fairer UK economy.

I turn first to the measures in the Bill designed to safeguard and strengthen industry and the wider economy. To help businesses invest and grow, we are extending the annual investment allowance at its highest-ever level of £1 million until 31 March 2023. The £1 million AIA level means that more than 99% of businesses will have their plant and machinery expenditure covered.

We are also extending the support offered to the creative industries by providing additional tax reliefs to theatres, orchestras, museums and galleries as the sector recovers. These rates of higher relief will provide a further incentive for new productions, exhibitions and concerts up to April 2024.

Finally, reforms to the UK tonnage tax regime will encourage more firms to base their headquarters in the UK to use our world-leading maritime services industry and to fly the flag of the UK. This will bring jobs and investment throughout the country, and especially to our coastal communities.

I now turn to how the Bill will deliver stronger public finances. The Bill sets the rate of the bank surcharge so that the combined rate on banks’ profits will increase to 28% from April 2023. It also increases the surcharge allowance to £100 million. These changes will ensure that the banks continue to make a fair contribution while encouraging growth and competition for smaller groups within the UK banking market.

The 1.25% increase on dividend income rates from 6 April 2022 will help fund the health and social care settlement, ensuring that contributions are made based on employed and self-employed earnings. The Government are also introducing the new 4% residential developer tax on the most profitable developers. This will raise at least £2 billion over the next decade to help pay for the removal of unsafe cladding, providing reassurance to home owners and boosting confidence in the UK housing market.

At the heart of this Finance Bill is the desire to safeguard taxpayers’ interests and deal with those who avoid paying their fair share. The economic crime levy will help deliver the Government’s objectives to combat economic crime and will raise an expected £100 million per year to fund anti-laundering measures. The levy is calculated by UK revenue and provides the fairest and simplest method for the anti-money laundering regulated sector to contribute further. That will cement the UK’s reputation as a secure country in which to conduct business and solidifies the Government’s ambition to permanently tackle economic crime.

As I mentioned earlier, the Bill’s measures will clamp down on tax avoidance and evasion. It will give HMRC more powers to tackle promoters of tax avoidance schemes by levying penalties on UK entities that enable them. The measures are accompanied by an increase in the duty charge on tobacco products by 2% and a rise in the minimum excise tax to 3% above RPI inflation, alongside new measures to tackle duty evasion. That will help reduce the long-term burden on the NHS and improve public health generally.

By targeting businesses that manipulate electronic records to evade tax, the Bill reinforces the Government’s efforts to tackle unscrupulous businesses that carry out electronic sales suppression. The measures are essential to Britain’s reputation as a global hub for businesses and as a secure and transparent place in which to conduct business.

I thank hon. and right hon. Members for their helpful and insightful contributions to the debates during the Bill’s passage.

To conclude, this Finance Bill supports our efforts to build a stronger economy. It tackles tax evasion and avoidance, and, ultimately, its measures will create a brighter and simpler future for industry, the economy and the UK as a whole. For those reasons, I commend it to the House.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury) 6:43 pm, 2nd February 2022

When we first debated this Finance Bill on Second Reading in November last year, it was clear to us that it offered nothing to help people struggling with the rising costs of living and facing tax rises this April. Since that time, pressures on people across this country have only become more intense, and the need for the Government to act has only become more urgent.

Inflation is now at its highest rate in decades and energy bills are set to soar in April, just as the Chancellor is set to hike national insurance on working people. That tax rise, when combined with energy price rises and other tax hikes, will leave families on average £1,200 worse off a year. Yet there is nothing in the Bill to help with the cost of living. There is, however, a tax cut for banks in the Bill, despite bankers being widely expected to receive large bonuses this year, as investment banks’ profits have soared off the back of a wave of takeovers and mergers caused by the pandemic. It shows just how out of touch this Chancellor is. At the weekend, he decided to dig in over his tax rise for working people. By the middle of the week, he is using the Bill to cut taxes for banks by £1 billion a year.

In earlier debates on the Bill, we were critical of the Government for not doing enough to combat economic crime. We welcome the principle of a levy, but we are left wondering why on earth legislation that would set up a register of overseas owners of UK property—a critical tool to tackle money laundering—has been left to gather dust. On Second Reading, we challenged the Government over their failure to establish such a register. Our country has earned the shocking reputation as the world’s laundromat for illicit finance. A new public register would bring desperately needed transparency to the overseas ownership of UK properly, and would help to stop it being used for money laundering.

Since that time, the need to bring transparency to the question of who owns high-end property in the UK has only become more urgent. Economic sanctions against Russia will never have the effect that they should as long as our Government let those who are linked to Putin and his regime hide their wealth in the mansions of Knightsbridge and Belgravia.

We also asked what the Bill does for another type of property: buildings with unsafe cladding that need to be remediated. We questioned Ministers on how they had arrived at their decision on the level of the residential property developer tax when so much more was needed to protect leaseholders from bearing the cost. Since we first raised our concerns about the detail of that tax, the Government have realised that they were wrong to make leaseholders in buildings of between 11 metres and 18 metres take out forced loans to cover the cost of cladding remediation in their buildings. The Housing Secretary now says that he is planning to convince developers to hand over £4 billion voluntarily. If he fails, we want to know how leaseholders and those in need of affordable homes will be protected. Despite our questioning earlier today, Treasury Ministers have been unable to offer people the reassurance they need.

Finally, there is no plan for growth in the Bill. We are stuck in a low-growth, high-tax cycle. With strong growth, we would have the chance to create new jobs, with better wages and conditions, in every part of this country. With low growth, it gets ever harder to meet the challenges we face, and the Tories have no choice other than to put up taxes.

The shadow Chancellor, my hon. Friend Rachel Reeves, has set out Labour’s plan for growth: investing in skills, research and development, and the industries of the new green economy; choosing to buy, make and sell more in Britain; and creating jobs in every part of the country. We would build a stronger economy with our plan to give working people the respect they are due, to give people real economic security, and to ensure prosperity in every part of Britain. That is the approach that our country needs in order to grow and meet the challenges of the future.

Right now, people across the country need the Government to protect them from the cost of living crisis and protect our country from dirty money from Russia. All we have instead is a Prime Minister who does everything he can to protect himself. We opposed the Bill on Second Reading and, as our reasons for doing so have only grown stronger, we will vote against it tonight.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury) 6:47 pm, 2nd February 2022

I thank the Government and the official Opposition Front-Bench teams for the way in which proceedings on the Bill have been conducted. We have all learned an awful lot about each other, and it has been a genuinely interesting process. I thank the Clerks, Chris Stanton and Kevin Maddison, for their support, without which we would definitely have struggled to put our amendments forward. I thank Clorinda Luck, one of the SNP’s senior researchers, for stepping in at short notice to cover some of the research on the Bill—I am very grateful to her for that work.

Although some of the measures in the Bill are welcome, we in the SNP have to oppose it because it is such a missed opportunity to do so much more about economic crime and the scourge of money laundering and kleptocracy coming to the shores of these islands. There is a lack of action to tackle the misuse of Scottish limited partnerships and shell companies, and to tackle the money flowing through the very city we are standing in. The Bill is also a missed opportunity to do more on net zero in particular. Given last year’s COP, there should have been a great deal more to focus minds and move to a greener and fairer economy.

The Bill is indicative of a Government who are removed from the problems that ordinary people face and who are without solutions to the challenges that our constituents are seeing right now: the challenges of inequality, the scars of 10 years of austerity, the cost of living crisis, which is making life so very difficult for so many people right now, soaring inflation and energy prices that are spiralling out of control.

Contrast that with the opportunity presented by Kate Forbes in the Scottish Parliament last week. With the limited powers that we have over the Scottish Budget, that Budget offers great hope to the people of Scotland. We look enviously at the powers that we could have as a full, independent, normal nation with the full levers to make the real inroads into inequality, to make life fairer, better and more just for the people of Scotland. So we cannot support this Budget and we wish that very soon we will have that full range of powers to make things better for our own citizens.

Question put, That the Bill be read the Third time.

Division number 183 Finance (No. 2) Bill — Third Reading

A majority of MPs voted for a range of tax and pensions provisions including keeping key income tax rates unchanged and to increase the normal pension age to 57 from 6 April 2028.

Aye: 299 MPs

No: 226 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 119 MPs

Absents: A-Z by last name

The House divided: Ayes 302, Noes 226.

Question accordingly agreed to.

Bill read the Third time and passed.