Finance (No.2) Bill - report stage preview

Background

At report stage, MPs will consider a number of amendments and new clauses tabled by the government that are intended to bring clarity to certain aspects of the bill and ensure they work in practice once implemented. These are all expected to be agreed by MPs.

A series of amendments and new clauses have also been tabled by the official opposition frontbench (Labour), by the Liberal Democrats and by backbench MPs, including members of the Treasury Select Committee.

Many of the new clauses proposed by opposition figures would require the government to provide impact assessments on a range of measures provided for by the Bill, and typically within six months of it becoming law (unless otherwise stated below).

Along with the other amendments tabled by non-government MPs, they are unlikely to be passed.

Among the most interesting is an attempt to delay the introduction of the multinational top-up tax by a group of backbench Conservative MPs led by the former Home Secretary, Priti Patel and supported by senior Conservative MPs including the former Prime Minister Liz Truss and former Business Secretary, Sir Jacob Rees Mogg.

Members of the Treasury Select Committee, led by the committee’s chair Harriett Baldwin (Con) will attempt to preserve the Office of Tax Simplification, which is set to be abolished once the Finance Bill becomes law, and to hold the Treasury and HMRC to account on their efforts to embed simplification into the tax system should this fail.

A summary of the government and non-government amendments can be found below, grouped by subject matter.

Government amendments and new clauses

Domestic top up tax

New clause 4 makes it clear that the domestic top-up tax imposed by Part 4 of the bill will commence at the same time as the multinational top-up tax contained in Part 3 of the bill.

Communications data

New clause 5 removes a restriction on the exercise of civil information powers which otherwise might prevent their use in certain cases (for example, where online banks or other financial institutions are regarded as telecommunications or postal operators).

Capital allowances

Government amendment 9 ensures that the rules for determining the amount of a balancing charge work as originally intended in all scenarios. Government amendment 10 will ensure that the rules for determining the amount of a balancing charge work as originally intended in all scenarios.

Energy profits levy

The government has tabled three amendments (11-13) designed to ensure the relief works as intended for onshore activities and in Northern Ireland.

Lifetime allowance (pensions)

Government amendment 14 provides that any amount of a stand-alone lump sum in excess of the maximum amount that could have been paid to the relevant pension scheme member free of tax on 5 April 2023 is subject to income tax at the member’s marginal rate.

Alcohol duty

The government has tabled two amendments (15 and 16) which will ensure overseas producers are able to access draught relief.

Electricity generator levy

Government amendment 17 corrects a technical error to secure that the appropriate proportion of the “non-chargeable amount” is charged in all cases.

VAT – deposit schemes

Government amendments 18 and 19 clarify how the liability to account for VAT works in cases where deposit amounts are not repaid and that, when calculating VAT liability, unreturned deposit amounts and the price payable for goods are treated the same way.

Non-government amendments and new clauses

Abolition of the Office of Tax Simplification

New clause 2, tabled by the chair of the Treasury Select Committee Harriet Baldwin (Con) and signed up to by a majority of the committee's members, across the parties, would require the Treasury to report to the committee yearly the steps taken by the Treasury and HMRC to simplify the tax system in the absence of the Office of Tax Simplification. These reports must include information on steps to (a) simplify existing taxes, tax reliefs and allowances, (b) simplify new taxes, tax reliefs and allowances, (c) engage with stakeholders to understand needs for tax simplification, (d) develop metrics to measure performance on tax simplification, and performance against those metrics.

Amendment 7 from Harriet Baldwin (Con) and other Treasury Committee members would retain the Office of Tax Simplification by removing its abolition from the bill.

Lifetime allowance

Labour amendments 18-23 would remove the abolition of the Lifetime Allowance from the bill.

Labour new clause 1 would require the Chancellor to review of the impact of the abolition of the lifetime allowance within six months of the bill becoming law and to make recommendations on how the scheme could be replaced with one targeted at NHS doctors.

Alcohol Duty

Amendment 8 by Daisy Cooper (Lib Dem) requires the Chancellor to provide comparable transitional relief to fortified wine made from fresh grapes, such as port and sherry, as has been made available to other forms of table wine.

Amendment 22, also by Cooper, would require the Chancellor to publish an assessment of the impact of providing comparable transitional relief to fortified wine made from fresh grapes, such as port and sherry, as has been made available to other forms of table wine.

Multinational and domestic top-up taxes

Labour’s new clause 7 would require the Chancellor to report every three months for a year on the UK Government’s progress in working with other countries to extend and strengthen the global minimum corporate tax framework for large multinationals.

Amendment 20 tabled by Priti Patel (Con) would allow the Treasury to delay by regulation the introduction of the multinational top-up tax from its planned 31 December 2023 start date (this amendment has received the support of former Prime Minister Liz Truss and several former Cabinet ministers in the administrations of Truss and Boris Johnson).

Amendment (a) to the Government's New Clause 4 (see above), also tabled by Patel, would introduce the same provision with respect to the timing of the introduction of the domestic top-up tax.

Amendment 21 by Nigel Mills (Con) would enable the Treasury to extend the permitted period for multinationals to make transitional safe harbour elections in the event that other countries are slow to implement the tax.

Electricity generator levy

New clause 12, tabled by Liberal Democrat Treasury spokesperson Sarah Olney (Lib Dem) would require the Government to conduct a review into the energy generator levy with a view to sunsetting the levy when market conditions change.

Liberal Democrat amendments 23-26 would allow generators of renewable energy to offset money re-invested in renewable projects against the levy.

Energy profits levy

Labour’s new clause 8 requires the Chancellor to review the investment allowances introduced as part of the energy profits levy, and to set out what would happen if the allowance for all expenditure, apart from that spent on de-carbonisation, were removed.

Review of section 36 (Share exchanges involving non-UK incorporated close companies)

New clause 9 from Labour requires the Chancellor to review the impact of the measures that affect people with non-domiciled status, including by setting out how many people will be required to pay additional tax and how much this will raise in total.

Review of new bands and rates of air passenger duty

Labour’s new clause 10 requires the Chancellor to publish an assessment of this Act’s changes to air passenger duty on the public finances, carbon emissions, and on the finances of households at a range of different income levels, within six months of the bill becoming law.

Finance Bill (impact assessments of the bill as a whole)

New clause 11 (Labour) requires the Chancellor to publish an assessment of the changes in this Act on the finances of households at a range of different income levels.

New clause 3 has been tabled by Debbie Abrahams (Lab) and would require the Chancellor to report on the health and poverty impacts of the Bill within six months of the Bill becoming law.

Labour’s new clause 6 would require the Chancellor to conduct a review of business taxes within 6 months of the bill becoming law. It should make recommendations on how to increase certainty and investment, before the next Finance Bill is published.

The Liberal Democrats have tabled three new clauses:

New clause 13 would require the Government to produce an impact assessment of the effect of the Act (especially income tax) on the affordability of food.

New clause 14 would require the Government to produce an impact assessment of the effect of the Act on small business with particular regard to inflation and the cost of energy.

New clause 15 would require the Government to produce an impact assessment of the effect of changes to SME R&D tax credits in this act on tech start-ups and scale-ups.