Finance (No. 2) Bill 2026-01-12

The right hon. Member asked how the Government reconciled their good effects with numerous U-turns since the Budget was put forward, to which Dan Tomlinson responded that the Government's approach has been consistent in raising revenue and reducing borrowing. He mentioned that borrowing is falling every year of the forecast due to decisions made by the Government.

The hon. Member questioned how they could help lower and middle-income families who are paying higher taxes, noting that £55.5 billion would be raised from them rather than millionaires, affecting 4.8 million individuals moving into the higher rate and 600,000 into the additional rate band.

The hon. Member clarified for the public that debt is levelling off as a share of GDP and may possibly fall slightly by the end of the forecast period but is rising in absolute terms. He also pointed out that while income tax rates are not changing in this Bill, fiscal drag means that hundreds of thousands of people will see their marginal earnings taxed significantly differently in future years.

Asked if the Treasury had analysed how much of the tax increase would be passed on to renters.

Called out for a question, but was told to let the Minister proceed further with his speech.

Responded that rental prices are mainly driven by supply and demand. He urged Liberal Democrats to support planning reforms aimed at lowering cost of renting and owning homes. The Minister continued explaining specifics of clauses increasing tax rates on property, savings and dividend income starting from 2026-27.

Expressed concern about the change in taxation rate on dividends, arguing that it discourages enterprise culture by taxing returns on risk more heavily than un-risky income.

Opposed to the Bill, stating that it does not create a savings culture. He agreed with concerns about overtaxing risk and enterprise. Clauses 4 and 5 were described as having significant consequences for savers, pensioners, investors, small businesses and discouraging UK equity investment from international investors.

Expressed concern that those who save will be penalised under the higher rate of tax, suggesting it is immoral and wrong to tax interest on savings at 40%.

Supports clause 4, arguing that the tax hits the wealthiest and ensures economic growth. It rebalances taxation between earnings and income from wealth, such as dividends. The measure is easily implementable and supported by international evidence.

Questions whether increasing dividend taxes will result in less entrepreneurship and investment in the economy, suggesting it may discourage risk-taking and business growth.

Argues that taxing dividends could harm savings culture and reduce investments. Cites data showing most dividends go to those outside the top 1% of earners, questioning if it is a tax on the rich.

Critiques the clauses for adding complexity, raising taxes on small businesses and savers, and risking unintended consequences in the property market. Highlights concerns raised by professional bodies about new income tax rates and lack of clarity on policy intent.

The Government's tax changes are making things more complicated, with recent research showing HMRC failing to answer one in five taxpayer calls over the last decade. The Liberal Democrats call for a review of the impact of section 7 on rent prices and require the Chancellor to lay before the House an assessment of the Bill’s tax changes on rent prices.

Responded to points raised by highlighting improvements in NHS waiting lists, increase in police officers, and opening breakfast clubs in primary schools. The two percentage point increase in landlord income tax is fair and reasonable. Changes on dividend taxation will not have a significant impact on business investment. The Government are committed to building 1.5 million new homes in this Parliament.

Asked the Minister whether the hon. Friend was surprised by Opposition Members' comments about the complexity of implementing clause 4, highlighting it as a straightforward change to dividend taxation rates.

Acknowledged the Government's focus on economic growth and stability, praised business people for their contributions to prosperity, and questioned if the Minister agreed that workers and businesses need to contribute towards the nation’s economy.

Discussed HMRC's performance in terms of missed calls and raised concerns about the impact of tax changes on rent prices. Emphasised the need for better customer service from HMRC.

Questioned the Minister on whether freezing income tax thresholds breaches manifesto commitments.

Asked why there are £300 million-worth of cuts in Devon to NHS services. The Minister responded by stating that overall, the Government is spending significantly more on the NHS due to changes to taxation.

Critiqued the Government's actions as breaking manifesto commitments and questioned the use of tax revenue for compensation payments related to Chagos islands, ID system costs and net zero policies.

Suggested that families are paying £12,000 in taxes to cover benefits bill. Encouraged the Government to return to original proposals encouraging people back into work and cutting benefits bill.

Asked if freezing tax thresholds would hurt working people as Chancellor had previously concluded. The Minister maintained that it was necessary for revenue-raising purposes and adhering to manifesto commitments.

Expressed concern about pensioners being taxed on their state pensions for the first time due to the freeze in allowances, questioning which pensioners will be affected and how exemptions apply.

Critiqued the freezing of student loan thresholds as regressive, highlighting that it would result in lower-earning graduates paying more back over their loan period. Questioned why £6 billion is taken from this measure.

Described the freezing of income tax thresholds as a breach of Labour's promises, stating that it will raise around £23 billion in taxes. Criticised the government for not delivering on their promise to protect pensioners from paying small amounts of tax.

Asked whether freezing the rate is a breach of Labour's manifesto or if there is an in-principle objection, questioning whether it is about party politics. Emphasised that millions of people were misled.

Questioned the definition of 'small tax' promised by the Chancellor and asked for a cost assessment of this promise.

Emphasised that regardless of degree, the Chancellor's promise is being broken as pensioners will pay income tax. Agreed with Gareth Davies' position.

Criticised the stealth taxes introduced by Conservatives and continued by Labour, stating they will cost British taxpayers £67 billion annually by 2031.

Opposes clause 10 for extending the freeze on personal income tax allowance and basic rate limit from 2028 to 2031. Highlights that Labour has broken promises made during the last election regarding growth, taxes, and welfare reform. Criticises the Government's failure to control public expenditure leading to higher tax burdens, especially affecting middle earners and pensioners.

Supports Sir Ashley Fox’s position that clause 10 will cause more people to be dragged into taxation from 2030. Emphasises the negative impact on middle earners and pensioners who are now being pushed into higher tax brackets despite working hard throughout their lives.

Concerned about the freezing of thresholds impacting pensioners, inquires how the Government will implement a workaround mentioned by the Chancellor to avoid mandatory tax returns for those affected. Urges for clarity on what constitutes 'small tax' and if there is an impact assessment available.

Questions the necessity of freezing income tax thresholds in light of debates about pension benefits, suggesting a reevaluation of policies like the triple lock. Advocates for a serious debate on alternative funding solutions for social care and vulnerable pensioners.

Concerns about plan 2 student loans being impacted by the thresholds. The Government should sponsor medical students and ensure they do three or four years in the health service, as Wales does.

Welsh example of sponsoring medical students to retain them in the health service. Young people are being saddled with debt and leaving due to lack of support.

The decision not to make work pay through higher taxation will have macroeconomic impacts, personal consequences for many facing cost of living crisis, and impact on people’s confidence in the democratic system. The Government promised no income tax increases but now 750,000 people earning £12,500 per year are dragged into the tax system.

This Government is raising taxes on struggling families by freezing income tax thresholds. Clause 10 freezes the basic rate limit at £37,700 and personal allowance at £12,570 until 2030-31. This policy will hit ordinary families, low-income earners, and pensioners whose only income is the state pension. It is a short-sighted tax grab that ignores the most vulnerable in society.

The Government's new clause 15 asks for an assessment of exempting pensioners with no additional income from paying income tax. More details will be provided later this year, and it would be premature to set out the impacts now.

The Minister has stated that pensioners receiving only the new state pension will not have to pay income tax. However, he did not clarify whether this applies to those who received the old basic state pension but were contracted out with alternative provisions.

The Minister needs to provide more details on how the pension provisions will affect pensioners and give an indication of when such guidance will be published.

Welcomes the estimated 85% reduction in inheritance tax for farms from next year. Acknowledges it as a proportionate measure to prevent wealthy individuals from exploiting APR. Requests collaboration with DEFRA to ensure an accurate definition for the new sustainable farming incentive, enabling small and medium-sized farms to benefit.

Emphasises the importance of crofting in his constituency's economy and social structure. Requests the Minister's attention on ensuring that any measures do not discourage the continuation of crofting, which could be detrimental to local communities.

Defends the Government's actions, highlighting previous Conservative-led government failures in supporting farmers and rural communities. Acknowledges engagement with representatives from various sectors and notes that changes were made based on extensive consultations leading to reforms expected to strengthen public finances by £300 million.

Raises concerns about the specific needs of Northern Ireland's farmers, noting differences in family farm structures compared to the rest of the UK. Urges for a similar commitment and engagement as seen with Scottish representatives.

Critiques the Government's lack of responsiveness towards Northern Ireland farmers, emphasising missed opportunities for meetings with key unions despite earlier promises. Suggests that the Minister should meet the Ulster Farmers’ Union to address ongoing issues.

Challenges the policy's complexity and suggests scrapping it entirely, arguing for a more straightforward approach to support the farming sector. Questions the necessity of retaining measures that only yield £300 million in revenue.

Raises specific issues regarding inconsistencies in tax liabilities based on ownership structures, lack of indexation for future increases, and clarifies the interest-free payment options. Questions the fairness and practicality of the current structure.

Illustrates the absurdity of tax implications through a local example, highlighting how differing ownership models can lead to disparate tax outcomes for farms valued similarly. Emphasises personal interaction with affected constituents and the complexity introduced by these reforms.

Opposes the reforms as they are not fair or sustainable. Seeks to mitigate damage by removing anti-forestalling measures, highlighting that elderly farmers have been robbed of their ability to plan. Criticises the Government for not engaging with farmers adequately and for changing figures frequently.

Questions the shadow Minister about confidence in current government figures, suggesting they are still questionable compared to initial estimates.

Supports the Shadow Minister's argument, urging the Treasury to take time and build consensus on data before proceeding with policy changes.

Raises concerns about practical implementation of tax changes and valuation discrepancies between different regions. Calls for consideration of how tax liability varies across the country.

Welcomes government's changes to proposed thresholds, praising Treasury's swift response to Welsh Affairs Committee report. Emphasises importance of protecting smaller-scale family farms while targeting wealthy estates.

Compliments Ruth Jones' work on the committee and suggests a Wales-wide impact assessment is necessary given the unique nature of agriculture in Wales.

Welcomes the changes made by the Government but criticises the original proposal for its lack of understanding of real-world impacts on farming. Emphasises that family farms face existential threats due to high input costs, labour shortages, and challenges in the supply chain.

Corrects Charlie Maynard's statement about which party first opposed the tax changes, highlighting that it was the Conservative Party.

Clarifies that the Conservatives negotiated trade deals that decimated farming in his constituency of North Cornwall. He criticises the original proposal and its impact on farmers.

Welcomes the increase in the threshold but asks for active support from the Government to help farmers be stewards of the countryside and protect future food security.

Questions whether the £100 million or £300 million raised by the tax is minuscule, especially for hard-pressed constituents. Asks how Liberal Democrats would pay for their proposed policy.

Welcomes the Finance Bill and the amendments to APR and BPR which establish 100% relief up to £5 million for a couple, transferable between spouses. Acknowledges the engagement of farmers in his constituency.

Grateful to farmers for their engagement and education on the matter and thanks the Prime Minister and Treasury for the policy amendment. Highlights support from Labour rural research group.

Lamont argues that farmers feel betrayed by the Labour party's introduction of an inheritance tax on farming businesses. He questions whether David Smith regrets not rebelling against this policy.

Moore criticises the changes to inheritance tax thresholds for family businesses, particularly farming and hospitality sectors. He questions why the Government has not addressed the cliff edge in IHT liability and highlights bizarre scenarios of different tax liabilities based on ownership structures. Moore also discusses practical issues with valuation office capacity and family businesses facing high BPR liabilities.

Ellis thanks the Chancellor, Prime Minister, and colleagues for raising thresholds for agricultural property relief and business property relief. She acknowledges the work of her Labour Rural Research Group in pushing for these changes to protect family farms and food security.

Scrogham commended the Labour Rural Research Group for its work in improving farmer support. She noted that while farmers are pleased with recent changes, they have been struggling for decades and need continued focus on profitability.

Anderson questioned the Labour Rural Research Group's stance on rejecting Ukrainian eggs entering the UK to support British farmers. He suggested that this is an important point of discussion with Ministers.

Ellis agreed with Anderson, acknowledging the need for serious conversations regarding the impact of foreign competition on British farming communities.

Lockhart criticised the Government's proposed changes to agricultural property relief and business property relief, highlighting that they are insufficient despite recent concessions. She advocated for amendment 3 and related amendments to delay commencement until March 2027.

Shannon commended Lockhart's efforts in the campaign and highlighted that approximately 25% of farmers will not benefit from proposed changes. He urged the Minister to meet with the Ulster Farmers' Union to address these concerns.

Swann questioned the Government's online advice regarding inheritance tax thresholds for different ownership structures, emphasising the need for clarity and fairness in policy implementation.

Highlights the arbitrary nature of taxing a single farmer's farm above £2.5 million while exempting joint owners. Cites that an estimated 25% of farms in Northern Ireland fall above this threshold and are vital to the economy.

Welcomes changes aimed at fairness for family farms, noting that land might be worth a lot but cannot be realised in cash unless sold. Argues against open-ended tax breaks for the wealthiest while supporting small and medium-sized agricultural estates up to £2.5 million per individual and £5 million for couples.

Questions whether those with assets over £1 million should be classified as very wealthy, suggesting that a high asset base does not equate to income generation.

Intervenes but no full position given in the provided text.

Opposes clause 62, arguing it harms investment in food security and rural growth. Proposes amendments to ensure full inheritance tax relief remains for family farms due to high cost pressures on farmers.

Questions the extent of damage caused by the uncertainty over farm taxes, suggesting that many businesses surrounding farming have been affected. Argues that investment has been paused or cancelled and downsizing is occurring due to economic uncertainties.

Farmers are experiencing stress and anxiety due to recent reforms. The Government's farming profitability review highlighted their bewilderment and fear. Some farmers, like David in Compton Dundon, have been fully exempted from the tax but after a year of uncertainty. The reforms raise only £500 million annually yet caused significant disruption. Family farms are not receiving direct support for food production while other European nations do so.

Supports Government amendment 24 increasing the 100% allowance cap for agricultural property relief from £1 million to £2.5 million. Acknowledges the pain caused by initial decision but thanks Government for changing course. Believes amendments fall short of full U-turn desired.

Critiques the self-congratulatory tone in contributions regarding changes to APR and BPR. Points out Labour's failure to listen to concerns raised by farmers across Scotland, including those who could not transfer their farms due to anti-forestalling rules.

Supports amendments tabled by her colleague but against changes to APR and BPR. States that Labour does not understand rural communities, causing uncertainty among farmers in North Shropshire. Acknowledges December's U-turn as a step forward but argues it is insufficient given the situation of dairy farms in the area.

Welcomes the climbdown by the Government on increasing the inheritance tax threshold to £2.5 million, but warns it is a 'diminishing win' due to lack of indexation and will melt away as land values increase. He pleads for the Government to commit to index-linking the concession.

Argues that the tax changes treat family businesses as liquid assets, which is inaccurate and will force sale of productive assets to pay inheritance tax. This can lead to restructuring, job losses, and head office operations being moved abroad.

Acknowledges the distress caused by recent inheritance tax proposals in Northern Ireland and emphasises the importance of farming for food security. She praises farmers' united response, which forced movement from the Government.

Welcomes the change but stresses ongoing uncertainty for older farmers. Recognises the role of Agriculture Minister Andrew Muir MLA in securing this change and highlights Northern Ireland’s distinct farming characteristics and food security implications. Proposes a new clause requiring proper assessment, consultation, transparency, and policy review.

Supports the adjustment to the threshold but notes concerns in areas with high land prices. Emphasises the impact on family-run businesses, particularly holiday parks and hotels. Supports amendments 42 and 48 for continued business relief and uprating of relief allowance annually according to agricultural land value changes.

Supports Lib Dem amendments, particularly new clause 7. Highlights the ongoing challenges faced by farmers due to inadequate funding for rural services and poor trade deals. Stresses the importance of domestic food production in a volatile world.

Expresses concern over changes to inheritance tax relief for agricultural properties. Cites examples of local farmers facing significant challenges due to tax policies and other external factors such as Brexit, inflation, labour shortages, and rural crime. Advocates for a £1 billion increase in the farming budget.

Defends the Government’s policy changes that aim to protect more farms while maintaining core principles of tax relief for agricultural properties. Announces an amendment increasing the allowance for 100% rate of relief from £1 million to £2.5 million.

Asks about indexation scenarios where different estate ownership structures lead to varying IHT liabilities. Questions the rationale for making fiscal changes outside of a Budget announcement.

Proposes amendments to increase the maximum allowance for agricultural property and business property relief from £1 million to £2.5 million, arguing that this adjustment would benefit farmers and small businesses by providing more financial flexibility.

Proposes a new clause requiring the Chancellor of the Exchequer to assess and publish annually uprated relief allowance amounts for agricultural property within six months of the Act's passing, emphasising the need to reflect changes in land value accurately.