Written questions by Wrigley.

What assessment her Department has made of the (a) feasibility and (b) effectiveness of implementing Making Tax Digital for Income Tax, in the context of discontinuing Making Tax Digital for Corporation Tax.

HMRC is on track to implement Making Tax Digital (MTD) for Income Tax for those with income over £50,000 from April 2026, with a wide range of customers already testing the service in live running HMRC has completed a comprehensive cost-benefit analysis which shows the programme continues to deliver value for money for the taxpayer. The latest analysis and figures are published in the June 2025 Accounting Officer Assessment, which is available at: Making Tax Digital Programme Accounting Officer Assessment (updated) - GOV.UK The evidential basis for the benefits of MTD for Income Tax, includes economic analysis, evaluations and research and stakeholder feedback. The published evaluation of MTD for VAT found that it had successfully delivered against its objectives; businesses keeping digital records and updating them more frequently generated additional tax revenue in line with expectations. While some stakeholders have raised concerns about the costs of compliance, HMRC’s comprehensive evaluation of MTD for VAT suggests that these are offset over time by reduced errors, improved efficiency, and better financial management. HMRC has undertaken detailed assessments of the potential impact of MTD for Income Tax on compliance costs and administrative requirements across different customer groups, including self-employed individuals, small businesses, and landlords. These have been modelled using the Standard Cost Model and published in Tax Information and Impact Notes (TIINs). The latest published assessment is available at: Extension of Making Tax Digital for Income Tax Self Assessment to sole traders and landlords - GOV.UK HMRC has undertaken public consultation, independent research and user testing to assess the readiness of small businesses for the rollout of MTD for Income Tax. This engagement has informed the design of MTD for Income Tax and led to a phased implementation, tailored support, and focus on providing a wide range of affordable software options. HMRC has adopted a co-creation approach to bring stakeholders into the heart of the design process, ensuring that the service is shaped by user needs and that businesses are supported through the transition. Approximately 4,000 participants are currently involved in testing. These cover a range of income types and customer journeys. Findings from testing are used to refine software functionality, improve guidance, and ensure the service meets the needs of small businesses. HMRC expects most required to use MTD will be able to do so successfully but recognises that some may face challenges using MTD. Although committed to supporting as many taxpayers as possible to move onto digital services, HMRC will exempt those who genuinely cannot use MTD due to age, disability, or digital exclusion. HMRC undertook exploratory work on MTD for Corporation Tax but concluded that the MTD model was not the right fit for the varying needs of the diverse Corporation Tax population, which ranges from multinationals to microbusinesses to charities. HMRC are developing an approach for the future administration of Corporation Tax which better suits this population.

What assessment she has made of the potential impact of the time taken for Companies House to reconcile their information with HMRC on the ability of new businesses to (a) employ staff, (b) register for PAYE and (c) issue VAT invoices.

The Government recognises the importance of efficient and timely coordination between Companies House and HMRC in supporting the operational readiness of newly incorporated businesses. There is currently a timely data-feed between Companies House and HMRC. HMRC continue to review how improved data-sharing and increased automation can support new businesses and reduce administrative burdens.

What performance indicators are used by the HMRC for the registration of (a) VAT registration numbers and (b) corporation tax authentication codes; and how often such targets were met in each of the last three years.

HMRC aim to process 80% of VAT registration applications within 40 working days of receipt.They processed 80.25% of VAT registrations within 40 days of receipt in 2022/23, 88.08% in 2023/24 and 94.73% in 2024/25.Improving day-to-day performance is a key priority for HMRC. The HMRC Transformation Roadmap, published in July, sets out how they will deliver improved services which will mean a better experience for taxpayers, agents, and businesses.There is no authentication code for Corporation Tax registration. For customers who register with Companies House, registration for Corporation Tax is automated. Information sharing means that HMRC systems create a customer record within 48 hours, without the need for any additional customer input. The customer’s unique taxpayer record is then sent to them by post. When a customer enrols to the Government Gateway for Corporation Tax, an activation code is issued automatically by post.

If her Department will make an assessment of the potential impact of the time taken by HMRC to issue (a) Corporation Tax Authentication Codes and (b) VAT registration numbers on small businesses; and what steps she is taking to reduce that time.

HMRC aim to process 80% of VAT registration applications within 40 working days of receipt.They processed 80.25% of VAT registrations within 40 days of receipt in 2022/23, 88.08% in 2023/24 and 94.73% in 2024/25.Improving day-to-day performance is a key priority for HMRC. The HMRC Transformation Roadmap, published in July, sets out how they will deliver improved services which will mean a better experience for taxpayers, agents, and businesses.There is no authentication code for Corporation Tax registration. For customers who register with Companies House, registration for Corporation Tax is automated. Information sharing means that HMRC systems create a customer record within 48 hours, without the need for any additional customer input. The customer’s unique taxpayer record is then sent to them by post. When a customer enrols to the Government Gateway for Corporation Tax, an activation code is issued automatically by post.

What comparative assessment she has made of the effectiveness of IT systems used by (a) Companies House and (b) HMRC.

No comparative assessment has been completed of the IT systems. HMRC and Companies House have a joint commitment on sharing data and analytics to tackle corporate fraud relating to accounting and registration services.

If she will make an assessment of the potential merits of (a) digitising and (b) streamlining the HMRC process for issuing (i) VAT registration numbers and (ii) corporation tax authentication codes.

As part of the Government’s commitment to improve customer experience through reform and modernisation of tax and customs administration, HMRC recently published the Transformation Roadmap. As part of this plan, HMRC will continue to explore opportunities to digitise their services where it is right to do so. This includes the development of a secure and GDPR compliant digital method to communicate VAT registration details with customers. Until this is developed, VAT registration numbers are sent by physical post which minimises the risk of fraud by preventing the interception of VAT numbers by fraudsters. Similarly, the activation code for a customer to add corporation tax (CT) services to their business tax account must be delivered by a secure process. HMRC are investing in their legacy corporation tax system in order to provide the foundation for future improvements and will work with customers to ensure that they meet the needs of the diverse CT population.

If she will make a comparative assessment of the average processing times for (a) VAT and (b) Corporation Tax registration by (i) HMRC and (ii) other countries in the Organisation for Economic Co-operation and Development.

HMRC is not able to provide a comparative assessment of the average processing times for (a) VAT and (b) Corporation Tax registration by (i) HMRC and (ii) other countries in the Organisation for Economic Co-operation and Development (OECD). The OECD do not publish information of this nature.

What discussions her Department has had with the National Cyber Security Centre on (a) long-term contract costs and (b) cybersecurity implications of awarding government-wide data infrastructure work to Palantir Technologies.

The National Cyber Security Centre is part of GCHQ, and works closely with the rest of Government to improve the cyber security of critical infrastructure and systems.It is HMG policy not to comment on the details of the Single Intelligence Account, including contract costs and conversations with HMT.

If she will make an assessment of the potential impact of the High Income Child Benefit Charge on people earning just over £50,000 per year.

By withdrawing Child Benefit from high-income parents where the higher earner earns £60,000 or more, the HICBC helps to ensure the sustainability of the public finances and protect our vital public services. Information on the number of households that have a joint income of over £90,000 that are not subject to the High Income Child Benefit Charge is only available at disproportionate cost.

Whether she has made an assessment of the potential impact of the High Income Child Benefit Charge on (a) single-earner and (b) dual-earner households with similar or higher combined incomes.

By withdrawing Child Benefit from high-income parents where the higher earner earns £60,000 or more, the HICBC helps to ensure the sustainability of the public finances and protect our vital public services. Information on the number of households that have a joint income of over £90,000 that are not subject to the High Income Child Benefit Charge is only available at disproportionate cost.

If she will make an assessment of the potential merits of using household income to levy the High Income Child Benefit Charge.

By withdrawing Child Benefit from high-income parents where the higher earner earns £60,000 or more, the HICBC helps to ensure the sustainability of the public finances and protect our vital public services. Information on the number of households that have a joint income of over £90,000 that are not subject to the High Income Child Benefit Charge is only available at disproportionate cost.

If she will make an estimate of the number of households that have a joint income of over £90,000 that are not subject to the High Income Child Benefit Charge.

By withdrawing Child Benefit from high-income parents where the higher earner earns £60,000 or more, the HICBC helps to ensure the sustainability of the public finances and protect our vital public services. Information on the number of households that have a joint income of over £90,000 that are not subject to the High Income Child Benefit Charge is only available at disproportionate cost.

With reference to the Spring Statement 2025, whether she has had discussions with Cabinet colleagues on the potential impact of welfare reforms on costs to the NHS.

The Chancellor discussed welfare reforms with Cabinet colleagues in the usual way ahead of the publication of the Pathways to Work Green Paper and Spring Statement 2025. As the Chancellor and the Work and Pensions Secretary have set out, these reforms will make the benefits system more pro work, and putting it on a more fiscally sustainable trajectory so that it can continue to protect the most vulnerable. The Government is committed through its Plan to Change to getting the NHS back on its feet and has prioritised investment into it through a £22.6bn increase in resource spending for DHSC from 23/24 to 25/26.

What fiscal steps she plans to take to support small businesses with (a) energy prices, (b) inflation and (c) business rates.

At Autumn Budget the Government announced it was freezing the small businesses multiplier for 2025-26, and extending the retail, hospitality and leisure (RHL) business rates relief for 1-year at 40% (up to a cash cap of £110,000 per business). This means over a million properties will be protected from inflationary increases. In summer, the Government will publish an interim report that sets out a clear direction of travel for the business rates system, with further policy detail to follow at Autumn Budget 2025. On energy prices, the Government supports businesses with electricity costs through the British Industrial Energy Supercharger. This is targeted towards businesses that are simultaneously more exposed to competition through trade and more impacted by higher energy prices. Currently the scheme saves businesses approximately 34% on electricity costs. The Bank of England has responsibility for sustainably returning inflation to the 2% target, and the Government is supporting them to control inflation by reducing borrowing year on year from 2025-26 and meeting the fiscal rules.

If she will make an assessment of the potential merits of (a) increasing Employment Allowance and (b) reducing National Insurance contributions for small businesses.

The Government has taken necessary decisions to fix the public finances and create long-term stability in which businesses can invest and thrive.The Government decided to protect the smallest businesses from the changes to Employer NICs announced at the last Budget by increasing the Employment Allowance from £5,000 to £10,500. This means that this year, 865,000 employers will pay no NICs at all, and more than half of all employers will either gain or will see no change. It means employers will be able to employ up to four full-time workers on the National Living Wage without paying employer NICs.

Whether she plans to raise the VAT registration threshold in line with inflation to support small businesses.

At £90,000, the UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD. This keeps the majority of businesses out of the VAT regime altogether.Any consideration of changes to the threshold would have to carefully balance potential impacts on small businesses, the economy as a whole, and tax revenues. Tax breaks reduce the revenue available for public services and must represent value for money for the taxpayer.

What steps her Department is taking to reform business rates to reduce the financial burden on small high street businesses.

The Government is creating a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century. At Autumn Budget 2024, we took the first step with the announcement of permanently lower tax rates for the Retail, Hospitality and Leisure properties that make up the backbone of our high streets, from 2026-27. Ahead of these changes being made, the Government recognises that businesses will need support in 2025-26. As such, we have prevented the current RHL relief from ending in April 2025, extending it for one year at 40 per cent up to a cash cap of £110,000 per business, and we have frozen the small business multiplier.The Budget announcements reflect the Government’s first steps to support the high street. We want to go further to modernise the system, and so, we have published a Discussion Paper setting out priority areas for reform. This paper invites industry to help co-design a fairer business rates system that supports investment and is fit for the 21st century. In summer, the Government will publish an interim report that sets out a clear direction of travel for the business rates system, with further policy detail to follow at Autumn Budget 2025.

What steps her Department is taking to reform business rates to reduce the financial burden on small high street businesses in Newton Abbot constituency.

The Government is creating a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century. At Autumn Budget 2024, we took the first step with the announcement of permanently lower tax rates for the Retail, Hospitality and Leisure properties that make up the backbone of our high streets, from 2026-27. Ahead of these changes being made, the Government recognises that businesses will need support in 2025-26. As such, we have prevented the current RHL relief from ending in April 2025, extending it for one year at 40 per cent up to a cash cap of £110,000 per business, and we have frozen the small business multiplier.The Budget announcements reflect the Government’s first steps to support the high street. We want to go further to modernise the system, and so, we have published a Discussion Paper setting out priority areas for reform. This paper invites industry to help co-design a fairer business rates system that supports investment and is fit for the 21st century. In summer, the Government will publish an interim report that sets out a clear direction of travel for the business rates system, with further policy detail to follow at Autumn Budget 2025.

Pursuant to the Answer of 1 April 2025 to Question 42193 on Digital Technology: Taxation, what recent discussions she has had with her G20 counterparts on the taxation of the digital economy.

G20 Finance Ministers and Central Bank Governors met in February 2025. International taxation was among the topics discussed, including OECD/G20 work on addressing the tax challenges arising from the digitalisation of the economy through ‘Pillar 1 and 2’ reforms to international corporate taxation. South Africa subsequently published a Chair’s summary of these meetings which is indicative of G20 members’ views.

If she will take steps to ensure the digital service tax is not repealed.

The Digital Services Tax (DST) is an interim tax measure to ensure that digital services providers pay UK tax on digital services that reflects the value they derive from UK users. The UK remains committed to reaching a global solution on the taxation of the digital economy through Pillar 1 of the G20-OECD Inclusive Framework project. It is UK’s intention to repeal our Digital Services Tax (DST) when this international solution is in place.