Finance (No. 2) Bill – in a Public Bill Committee at 12:30 pm on 29 January 2026.
Clive Efford
Chair, Public Accounts Commission, Chair, Public Accounts Commission
With this it will be convenient to discuss the following:
Clause 76 stand part.
New clause 13—Report on gifts exemption—
“The Chancellor of the Exchequer must, within six months of this Act being passed, lay before the House of Commons a report on the impact of implementation of the provisions of section 75 on—
(a) the volume and value of charitable donations,
(b) the financial position and funding mix of charities and registered clubs,
(c) donor behaviour, including any changes in the use of tax-relieved giving, and
(d) Exchequer revenues, including any distributional impacts across different types and sizes of charities.”
This new clause would require the Chancellor of the Exchequer to report on the impact of section 75 on charitable donations, the finances of charities and registered clubs, donor behaviour and Exchequer revenues.
Dan Tomlinson
The Exchequer Secretary
Clauses 75 and 76 close an avoidance loophole to ensure that the inheritance tax exemption for gifts to charities works as intended. Changes were made in 2023 to the definition of “charity” for multiple taxes, including that the charity must be based in the UK. Some gifts to charitable trusts can still, however, get exemption from inheritance tax, even if they are not themselves charities. They may have no connection to the UK, bypassing the UK jurisdiction condition and other regulation requirements for charities. The tax-paying public may therefore be subsidising relief on money that we cannot be sure is used solely for charitable purposes. The Government are therefore closing this loophole and protecting the exemption for legitimate charities.
New Clause 13 would require the Government to report on the impact of clause 75 on charitable donations. The Government have already published, as the Shadow Minister will have read, a tax information and impact note to set out the impact of the changes. It showed that charities and community amateur sports clubs should be unaffected, as exempt gifts can be made to them in the usual way. New clause 13 should therefore be rejected, and I commend clauses 75 and 76 to the Committee.
James Wild
Shadow Exchequer Secretary (Treasury), Opposition Whip (Commons)
I rise to speak to clauses 75 and 76, as well as new Clause 13 in my name. The clauses fit within the inheritance tax part of the Bill. In Committee of the Whole House, we had debates on the family farm tax and the family business tax, and the damage and distress they are causing in rural communities, so I will not prolong that debate. I will focus briefly on clause 75, however, which tightens the rule on inheritance tax exemptions for gifts to charities and registered clubs, including sports and social clubs. Clause 76 provides limited protection for existing arrangements, seeking to prevent new restrictions from applying retrospectively or unfairly.
New clause 13 would require the Treasury to publish a report on the impact of clause 75, including on the volume and value of charitable donations, the financial health of affected charities and clubs, donor behaviour and impact on Exchequer revenues. We agree with the principle, which the Minister set out, of ensuring that charitable reliefs are used as intended, but it is also important that the Government understand the practical consequence of any tightening of the rules. On Tuesday afternoon, we discussed some of the concerns that charities have about earlier provisions in the Bill, and the potential complexity and bureaucracy that was being added to them. We all know that the charitable sector is under significant pressure, and we do not want to add undue burdens on to trustees of charities in particular.
The 2023 reforms that we introduced had already restricted relief, making it simpler in theory for HMRC to determine eligibility. The sector has warned that further tightening comes at a time when charities are already under financial strain. Can the Minister assure us that the measures will be implemented in a way that mitigates the impact on affected charities? Perhaps, as I asked on Tuesday in a different context, HMRC would provide us with worked examples of scenarios that would be impermissible, to help trustees to fulfil their duties.
Dan Tomlinson
The Exchequer Secretary
12:45,
29 January 2026
I can give the assurance that this will not be an unreasonable burden, or even a small burden, on charities that are continuing to behave in a way that is reasonable and right. I note that thirdsector.co.uk reports that, according to experts, charities are unlikely to be affected by new inheritance tax avoidance measures. I agree with those experts.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
The chancellor of the exchequer is the government's chief financial minister and as such is responsible for raising government revenue through taxation or borrowing and for controlling overall government spending.
The chancellor's plans for the economy are delivered to the House of Commons every year in the Budget speech.
The chancellor is the most senior figure at the Treasury, even though the prime minister holds an additional title of 'First Lord of the Treasury'. He normally resides at Number 11 Downing Street.
The House of Commons is one of the houses of parliament. Here, elected MPs (elected by the "commons", i.e. the people) debate. In modern times, nearly all power resides in this house. In the commons are 650 MPs, as well as a speaker and three deputy speakers.
The Chancellor - also known as "Chancellor of the Exchequer" is responsible as a Minister for the treasury, and for the country's economy. For Example, the Chancellor set taxes and tax rates. The Chancellor is the only MP allowed to drink Alcohol in the House of Commons; s/he is permitted an alcoholic drink while delivering the budget.
The shadow cabinet is the name given to the group of senior members from the chief opposition party who would form the cabinet if they were to come to power after a General Election. Each member of the shadow cabinet is allocated responsibility for `shadowing' the work of one of the members of the real cabinet.
The Party Leader assigns specific portfolios according to the ability, seniority and popularity of the shadow cabinet's members.
Ministers make up the Government and almost all are members of the House of Lords or the House of Commons. There are three main types of Minister. Departmental Ministers are in charge of Government Departments. The Government is divided into different Departments which have responsibilities for different areas. For example the Treasury is in charge of Government spending. Departmental Ministers in the Cabinet are generally called 'Secretary of State' but some have special titles such as Chancellor of the Exchequer. Ministers of State and Junior Ministers assist the ministers in charge of the department. They normally have responsibility for a particular area within the department and are sometimes given a title that reflects this - for example Minister of Transport.
The clause by clause consideration of a parliamentary bill takes place at its committee stage.
In the Commons this usually takes place in a standing committee, outside the Chamber, but occasionally a bill will be considered in a committee of the Whole House in the main chamber.
This means the bill is discussed in detail on the floor of the House by all MPs.
Any bill can be committed to a Committee of the Whole House but the procedure is normally reserved for finance bills and other important, controversial legislation.
The Chairman of Ways and Means presides over these Committees and the mace is placed on a bracket underneath the Table.
