Finance Bill — House of Commons, 2016-06-27
Topic: Macroeconomics
David Michael Gauke (Conservative, Centre-right): The Government have done considerable work in recent years to ensure that Departments do not engage in arrangements that drive down the tax bill in a way that is not the intention of Parliament On clauses 16 and 17 and the issue of the withdrawal of the valuation check service, the Government believe that the impact will be negligible on employee share ownership. The Government do not expect the withdrawal of these services to have an impact on the take-up of employee ownership schemes. The valuation service has not been withdrawn for the most relevant two employee ownership schemes, including enterprise management incentives, company share option plans, savers who earn share option schemes, share incentive plans and the employee shareholder status This rather raises the question raised by the hon. Member for Wolverhampton South West as to why we have so many different schemes. Well, each of the tax advantage share schemes has a specific policy objective, reflected in the specific qualifying conditions. Share reward schemes are greatly valued by both companies and employees, and the Government believe that these schemes can have a positive impact on productivity Finally, on clause 18 and the concerns that this is retrospective legislation and that it is too complex, let me be clear that the changes introduced here are relatively straightforward. More complex proposals that were announced at the Budget will instead be legislated for in Finance Bill 2017, after the Government have consulted on the technical detail over the summer. One of the main purposes of the consultation will be to ensure that genuinely innocent arrangements are not affected. On the suggestion that the legislation is retrospective, the Government expect those who have avoided tax to pay their fair share. The Government intend to legislate for the new charge in Finance Bill 2017, following the consultation that I have just mentioned. The public and tax practitioners will be able to comment on that consultation Normal hard-working people do pay their taxes. They are paid a salary; they are not paid in loans. It is not right that those who use these schemes receive remuneration without paying tax on it. All affected scheme users will have the opportunity to repay their loans or to pay tax on them before the changes come into effect. This is in addition to the previous settled opportunities which closed in 2015. I hope those points of clarification are helpful to the House. I hope, therefore, that the Government clauses and amendments can be supported, and I urge hon. Members proposing their own new clauses or amendments not to press them. If not, I urge my hon. Friends to oppose them Amendment 22 agreed to. Amendments made: 23, page 14, line 10, at end insert— "( ) In section 109 (priority of Chapter 5 over Chapter 1), after subsection (3) insert— "(4) In a case where the cash equivalent of the benefit of the living accommodation is nil— (a) subsections (2) and (3) do not apply, and (b) the full amount mentioned in subsection (1)(b) constitutes earnings from the employment for the year under Chapter 1."" Amendment 24, page 14, leave out lines 13 to 16 and insert — ""(1A) Where this Chapter applies to a car or van, the car or van is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms on which it is made available to the employee or member constitute a fair bargain)."" Amendment 25, page 14, line 35, at end insert— "( ) In section 120 (benefit of car treated as earnings)— (a) in subsection (2) after "case" insert "(including a case where the cash equivalent of the benefit of the car is nil)", and (b) after subsection (2) insert— "(3) Any reference in this Act to a case where the cash equivalent of the benefit of a car is treated as the employee’s earnings for a year by virtue of this section includes a case where the cash equivalent is nil." ( ) In section 154 (benefit of van treated as earnings)— (a) the existing text becomes subsection (1) of that section, and (b) after that subsection insert— "(2) In such a case (including a case where the cash equivalent of the benefit of the van is nil) the employee is referred to in this Chapter as being chargeable to tax in respect of the van for that year (3) Any reference in this Act to a case where the cash equivalent of the benefit of a van is treated as the employee’s earnings for a year by virtue of this section includes a case where the cash equivalent is nil."" Amendment 26, page 14, leave out lines 37 to 39 and insert— ""(1A) Where this Chapter applies to a loan— (a) the loan is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms of the loan constitute a fair bargain), and (b) sections 175 to 183 provide for the cash equivalent of the benefit of the loan (where it is a taxable cheap loan) to be treated as earnings in certain circumstances."" —(Mr Gauke.) Clause 7, as amended, ordered to stand part of the Bill. Clauses 8 and 9 ordered to stand part of the Bill. Clause 10 Diesel cars: appropriate percentage Amendment proposed: 2, page 15, line 29, after "omit", insert ", except in the case of a low emissions vehicle,".—(Rob Marris.) Question put, That the amendment be made.