Finance Bill 2025-26 Committee of Whole House preview

Committee of Whole House debate on Finance Bill 2025-26 takes place on Monday 12 and Tuesday 13 January 2026. Below we summarise the clauses set for debate and the amendments tabled by the government and opposition parties for discussion.

These include the government increasing the combined allowance for inheritance tax agricultural and business property from £1 million to £2.5 million.

There is a note below on the committee stage process that explains, among other things, why so many tabled amendments are requests for reviews, statements and assessments of various kinds. (The short answer is that non-government MPs are very limited in the amendments they can table to tax legislation.)

Reports on the debate will appear on the CIOT website in due course.

Day One (Mon 12 Jan)

Group 1: Clauses 1 to 8 and Schedules 1 and 2 (income tax charge and rates)

This group covers income tax rates. The debate is expected to focus on proposed increases to the rates on dividend, savings and property income. The resolutions authorising increases to dividend and savings rates were opposed by the Conservatives, Lib Dems, Reform UK and DUP. Conservative and Lib Dem new clauses focus on the impact the changes will have.

The clauses and schedules

This group includes:

Clause 1 (Income tax charge for tax year 2026-27), which enables government to collect income tax, an annually renewed tax.

Clause 2 (Main rates of income tax for tax year 2026-27) which sets the main rates for 2026-27 (20%, 40% and 45%), which will apply to non-savings, non-dividend income of taxpayers in England, Wales and Northern Ireland.

Clause 3 (Default and savings rates of income tax for tax year 2026-27), which sets (a) the savings rates which will apply to savings income of all UK taxpayers, and (b) the default rates which will apply to non-savings, non-dividend income of taxpayers who are not subject to the main rates of income tax, Welsh rates of income tax or the Scottish rates of income tax. (Income tax rates and thresholds on non-savings, non-dividend income for Scottish taxpayers are set by the Scottish Parliament. The UK rates are reduced by 10 pence in £1 for Welsh taxpayers, and the Welsh rates of income tax for non-savings, non-dividend income are set by the Welsh Parliament and added to the UK rates.)

Clause 4 (Increase in dividend ordinary and upper rates) which increases the ordinary and upper rates of income tax on income from dividends by 2% each from 2026-27 on, to 10.75% and 35.75% respectively. (But there is no increase in the dividend income additional rate which remains at 39.35%.)

Clause 5 (Savings rates of income tax for tax year 2027-28) which increases the basic rate on savings income by 2% to 22%, the higher rate by 2% to 42% and the additional rate by 2% to 47%, all from April 2027.

Clause 6 (New rates of income tax on property income) and schedule 1 (Property and savings rates of income tax: consequential amendments). These enable the introduction of separate rates of income tax on property income, including defining the meaning of “property income” and establish that, in the hierarchy of total income, property income will now be taxed after employment, trading and other income but before savings and dividend income.

Clause 7 (Property rates of income tax for tax year 2027-28) sets the property income tax rates for England and Northern Ireland at 22% (basic rate), 42% (higher rate) and 47% (additional rate) in 27-28.

Clause 8 (Scottish and Welsh property rates set by Scottish Parliament and Senedd) and schedule 2 (Scottish and Welsh property income rates) make provision for these rates to be set by the Scottish and Welsh parliaments.

Amendments and new clauses

The Conservatives have tabled:

New clause 10, which would require the Chancellor to make a statement on the impact of the increase in dividend rates on, among others, household saving decisions and the domestic equity market.

New clause 11, which would require the Chancellor to make a statement on the impact of the increase in savings rates on household saving decisions and outcomes for all British savers and pensioners.

New clause 12, which would require the Chancellor to make a statement on the impact of the increase in property income tax rates on the private rental sector in each nation and region of the UK.

The Lib Dems have tabled:

New clause 2, proposing a review of the impact of the increase of income tax on property income on rent prices.

Group 2: Clauses 9, 10 and 69 (freezing of allowances)

Debate on this group is expected to focus on the impact of fiscal drag as income tax and inheritance tax thresholds are frozen until 2031. The resolution extending the personal allowance freeze was opposed by the Conservatives, Lib Dems, Reform UK, Greens, Plaid Cymru and DUP. While this topic was selected for Committee of the Whole House by the Conservatives it is a particular focus for the Lib Dems, for whom raising the personal allowance was a signature policy during the coalition years, and the party has tabled amendments to remove all three of these clauses from the Bill.

The clauses

This group includes:

Clause 9 (Freezing starting rate limit for savings for tax years 2026-27 to 2030-31) which keeps the starting rate limit for savings at £5,000 in 2026-27 and through to 2030-31, allowing individuals with less than £17,570 in employment or pensions income to receive up to £5,000 of savings income tax free.

Clause 10 (Basic rate limit and personal allowance for tax years 2028-29 to 2030-31) keeps the income tax personal allowance at £12,570 and the basic rate limit at £37,700 for a further three years (ie until 2030-31). The higher rate threshold will therefore be £50,270 for these years.

Clause 69 (Rate bands etc for tax year 2030-31) keeps inheritance tax nil-rate bands, already set at current levels until April 2030, fixed at these levels for a further year until April 2031. Thus the nil-rate band will continue at £325,000, the residence nil-rate band at £175,000, and the residence nil-rate band taper will continue to start at £2 million.

Amendments and new clauses

The Lib Dems have tabled:

Amendments to remove all three of these clauses from the Bill

New clause 3, which would require HMRC to notify individuals who, as a result of the freezing of income tax thresholds in the Act, will pay income tax for the first time or move into a higher tax band.

New clause 4, which would require the government to assess and publish a report on how the freezing of tax thresholds to 2030-31 impacts households at various income levels.

New clause 5, which would require the government to assess how many people will be in each income tax bracket from 2026-27 through to 2030-31, together with comparative figures before and after that period.

The Conservatives have tabled:

New clause 13, which would require the government to publish an assessment of the impact on the average earner of extending the freeze on the basic rate limit and personal allowance for the tax years 2028-29, 2029-30, and 2030-31.

New clause 14 which would require the government to publish an assessment of the impact of the personal allowance on those pensioners whose only income is the state pension for the tax years 2027-28, 2028-29, 2029-30, and 2030-31.

New clause 15, which would require the government to publish an assessment of the fiscal impacts of exempting pensioners whose sole income is the basic or new State Pension (without any increments) from paying small amounts of income tax.

Group 3: Clause 62 and Schedule 12 (agricultural property relief and business property relief)

Despite government concessions on the level and transferability of the APR/BPR allowance this remains the most contentious measure in the Bill. Opposition parties will oppose this measure outright as well as seeking to lessen its impact by delaying its introduction, removing the anti-forestalling provisions and qualifying its effects by, for example, excluding land actively farmed by the transferor or a member of their family from the provision.

The clause and schedule

Clause 62 and schedule 12 introduce new rules for inheritance tax to limit the amount of relief that is available on the value of qualifying agricultural property and relevant business property that is comprised in an individual’s estate or in a settlement (trust). 100% relief on qualifying property will no longer be unlimited but will instead be limited by the introduction of a new maximum allowance. (This is £1 million in the Bill but the government has tabled amendments to raise it (see below).) Thereafter the rate of relief will be 50% (ie an effective inheritance tax rate of 20% rather than 40%).

Unused allowance for 100% relief will be transferable between spouses and civil partners. If the first death was before 6/4/26, it will be assumed the entirety of the allowance will be available for transfer to the surviving spouse or civil partner.

Amendments and new clauses

The government has tabled:

Amendments 24-29 to increase the 100% relief allowance for APR and BPR (and related allowances) to £2.5 million.

The Conservatives have tabled:

Amendments 1 and 2 to remove clause 62 and schedule 12 respectively from the Bill.

Amendments 3-23 to remove the transition period in respect of the changes to APR and BPR and delay the implementation date so that the changes would take effect for transfers made after 1 March 2027.

The Lib Dems have tabled:

Amendments 42 and 43, which would maintain 100% BPR where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendments 45 and 46, which would apply 100% BPR where the property was acquired before 31 March 2026.

Amendment 44, which would apply 100% APR where the property has been owned by the transferor for at least 10 years as part of a business that is actively operated by the transferor or a member of their family.

Amendment 47, which would apply 100% BPR where the property was acquired before 31 March 2026.

Amendment 48, which would cause agricultural property to only be subject to IHT if, within 10 years of the relevant transfer, the agricultural land giving rise to the charge is either (a) sold (and the owner has not purchased agricultural land elsewhere), or (b) ceased to be used for farming.

Amendment 40, which would begin indexation of relief allowances in 2027 rather than 2031.

Amendment 41, which would require the relief allowance to rise in line with increases in the value of agricultural land if this is above inflation.

New clause 6, which would require the government to publish an assessment of the impact of this measure on family-owned farms and businesses.

New clause 7, which would require the government to publish an assessment of the potential merits of uprating the relief allowance for agricultural property annually by the change in the value of agricultural land.

New clause 16, which would require the Treasury to prepare a report reviewing the operation of the rules regarding share buyback in relation to APR.

New clause 17, which would require the Treasury to conduct a review of the effects of the anti-forestalling provisions relating to APR.

The SNP have tabled amendments 31-36, which would remove the transition period in respect of the changes to APR and BPR so that the changes take effect for transfers made from 6 April 2026.

Sorcha Eastwood (Alliance Party of Northern Ireland) has tabled new clause 1 which would require the government to publish an assessment of the effects of the APR changes in Northern Ireland.

Day Two (Tue 13 Jan)

Group 4: Clauses 63 to 68 (inheritance tax on pension interests)

This grouping extends inheritance tax to unused pension funds and related benefits. The resolution was opposed by the Conservatives, Lib Dems, Reform UK and DUP. Conservative and Lib Dem amendments seek to explore the impact this change will have on pension savings, on those who act as personal representatives for the deceased and on HMRC. They also seek to improve the running of the change through effective guidance and a dedicated helpline.

The clauses

Clause 63 (Tax to be charged on certain pension interests) brings unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes.

Clause 64 (Liability for tax on pension interests) sets out the liability for IHT on pension interests following a death.  It provides that in circumstances where the personal representatives (PRs) pay the IHT and that IHT is not an expense of the estate, the PRs are to be repaid by the person in whom the property is vested.

Clause 65 (Withholding of benefits and payment of tax by pension scheme administrator) provides for PRs of deceased members of registered pension schemes to request the pension scheme administrator withholds paying benefits to beneficiaries equal to 50% of their entitlement under that pension where certain conditions are met. It also provides for pension beneficiaries and PRs of deceased members of registered pension schemes to request that the PSA pay their IHT liability directly to HMRC where certain conditions are met.

Clauses 66 (Connected amendments to IHTA 1984) and 67 (Connected amendments to income tax rules) legislate for various changes flowing from clause 63.

Clause 68 (Commencement of sections 63 to 67) provides for when clauses 63 to 67 commence. This will be 6 April 2027.

Amendments and new clauses

The Lib Dems have tabled:

New clause 18, which would require HM Treasury to review and report on the effects of this measure, including its impact on individuals’ pension savings and beneficiaries, on personal representatives, pension scheme administrators and HMRC, and behavioural effects on how pensions are used, and to publish the findings to Parliament.

New clause 19, which would require the government to report on the impact of IHT rules on personal representatives, including personal liability for tax on pension assets outside the estate and the practical difficulties of identifying and valuing multiple pension arrangements within existing time limits.

New clause 20 would require the government to address delays in the payment of inherited pension pots by reviewing HMRC’s tax administration processes, with the aim of preventing prolonged waiting periods for bereaved families.

The Conservatives have tabled:

New clause 22, which would require the Chancellor to make a statement on the effects of charging IHT on pension interests on pension saving levels, household saving decisions and personal representatives.

New clause 23, which would require the government to consult on the potential impacts of these changes. The consultation must consider the extent to which the changes deliver better outcomes for UK savers and pensioners.

New clause 24 would require HMRC to publish comprehensive guidance on the implementation of these changes and establish a dedicated helpline for enquiries relating to IHT on pension interests.

Group 5: Clauses 83 to 85 and Schedule 13 (gambling duties)

The Lib Dems, in particular, have been calling for higher taxes on the gambling sector for some time and are likely to have chosen these clauses for Committee of Whole House debate to probe whether they go far enough.

The clauses and schedule

Clause 83 (Rate of remote gaming duty) increases the rate of remote gaming duty (RGD). This change is to have effect from 1 April 2026.

Clause 84 (General Betting Duty on remote bets) introduces a new rate of General Betting Duty (GBD) that will apply to bets placed remotely. The new rate will be set at 25% and apply from 1 April 2027.

Clause 85 (Abolition of bingo duty) and Schedule 13 (Abolition of bingo duty: consequential and transitional provision) provide for Bingo duty to be abolished with effect from 1 April 2026.

Amendments and new clauses

The Lib Dems have tabled new clause 21, which would require the government to undertake an assessment of the impact of these changes in respect of the treatment of free bets and freeplays for calculating general betting duty on remote bets.

The Conservatives have tabled new clause 25, which would require the Chancellor to make a statement about the effects of the increase in gambling duties.

Group 6: Clause 86 (rates of alcohol duty)

While the Bill simply increases alcohol duty in line with inflation it provides an opportunity for opposition parties to raise the plight of pubs in particular and the hospitality sector generally, which is suffering under a combination of tax rises, high energy prices and other costs, and a rising minimum wage.

The clause

Clause 86 increases rates of alcohol duty in line with RPI inflation. This clause also amends marginal discount and cumulative discount figures, thereby maintaining the relative value of Small Producer Relief. The clause also provides an increase to the simplified rates for calculating excise duty on alcoholic products brought into Great Britain. These changes will take effect on 1 February 2026.

Amendments and new clauses

The SNP have tabled amendment 30 to remove this clause from the Bill.

The Lib Dems have tabled:

New clause 8, which would require the government to review and report on the impact of this measure on the hospitality sector, including effects on employment and business viability.

New clause 9, which would require the government to assess and report on the cumulative impact on the hospitality sector of alcohol duty measures in the Act alongside wider fiscal changes, including employer National Insurance contributions and business rates.

The Conservatives have tabled new clause 26 which would require the Chancellor to make a statement about the effects of the increase in alcohol duty.

Note: Committee stage and amending the Finance Bill

Committee stage of bills is where detailed (in theory at least) legislative scrutiny takes place. With the Finance Bill it always takes place in two stages. The Opposition can select which issues are discussed in 1-2 days’ debate in the Committee of the Whole House (in which all MPs can participate) and the remaining clauses (the majority) are considered in public bill committee by 15-20 MPs (party make-up reflecting the balance of the Commons as a whole).

MPs outside government are very limited in their ability to amend the Finance Bill.

MPs cannot increase ‘a charge upon the people’, extend the objects and purposes of a charge, or relax the conditions and qualifications set out by the government when recommending a charge, as this would trespass on the constitutional preserve of the government – its power of financial initiative. MPs can seek only to reduce a tax rate or increase a tax relief, provided that the result of their amendment is not an increase in the charge (compared to the situation prior to their proposed change).

Additionally, as with all other bills the scope of the Finance Bill is set out in its long title. This is, for Finance Bill 2025-26, in the form: “a Bill to make provision in connection with finance.” As a result the Bill can only include provisions relating to the imposition and alteration of taxes to raise money for financing central government as a whole. It cannot – for example – include any provision to impose a charge to finance other bodies in the public sector (such as local authorities), or to authorise borrowing, or include any provision to impose a charge for a specified expenditure purpose.

Additionally any amendments must be within the scope of the resolutions passed.

All this helps to explain why a large proportion of the amendments tabled to the Finance Bill by opposition parties are requests for reviews, statements and assessments of various kinds. This reflects how hard it is for non-government MPs to propose substantive tax changes (though they can of course vote directly against individual measures). It sometimes also reflects that the opposition may not be directly opposed to a measure but rather are sceptical it will have the impact the government say, or they think insufficient work has been carried out assessing the impact the measure will have.

Amendments are numbered in the order they are tabled, though there is separate numbering for amendments and new clauses.

Schedules are usually debated with the clauses they relate to.

New clauses that relate to a particular clause or set of clauses will often be debated with that clause.