Written questions by Whittome.

What assessment she has made of the potential merits of extending the ability of schools and academies to reclaim VAT under Section 33 of the VAT Act 1994 to further education colleges.

Further Education (FE) funding is vital to ensure people are being trained in the skills they need to thrive in the modern labour market. The 2025 Spending Review provided an additional £1.2 billion per year by 2028-29 for skills and £1.7 billion of capital funding to help colleges maintain the condition of their estate. In addition, the Government is providing £375 million of capital investment to support the FE system to accommodate increasing student numbers.For their non-business activity, FE colleges are unable to reclaim VAT incurred. We operate several VAT refund schemes for schools and academies which are designed variously to ensure that VAT is not a burden on local taxation, and that academies are not disincentivised to leave LA control. FE colleges do not meet the criteria for either scheme.In relation to business activity, FE colleges enjoy an exemption from VAT which means that they do not have to charge VAT to students, but cannot recover it either.

What assessment she has made of the potential impact of the proposed cap on salary sacrifice benefits on younger workers' pensions.

A Tax Information and Impact Note (TIIN) was published alongside the introduction of the Bill containing the changes to pensions salary sacrifice. Everyone using salary sacrifice will still benefit from the tax advantages available up to the £2,000 cap. The government supports all individuals to save into pensions through a generous system of income tax and NICs reliefs worth over £70 billion a year. Of employees making pension contributions through salary sacrifice, those under the age of 30 are far more likely to be protected by the £2,000 cap than those above the age of 30.

What assessment she has made of the benefits of introducing additional taxation on large SUVs.

Vehicles used or kept on public roads pay Vehicle Excise Duty (VED). Cars registered on or after 1 April 2017 pay a variable first year VED rate according to the emissions of the vehicle, before moving to a standard annual rate after the first year. For certain vehicle classifications, such as heavy goods vehicles (HGVs), VED liability is calculated in accordance with the vehicle's weight in order to reflect in part the road damage caused by heavier vehicles. However, this is not the case for cars, due in part to their relatively lower impact on road damage compared to heavier vehicles. When making changes to the tax system, the Government considers a range of trade-offs, such as complexity in the tax system and administrative burdens. The Government annually reviews the rates and thresholds of taxes and reliefs to ensure that they are appropriate and reflect the current state of the economy. The Chancellor makes decisions on tax policy at fiscal events in the context of the public finances.

What assessment her Department has made of the potential merits of establishing a taskforce on improving access to travel insurance for people with cancer.

The government does not intend to establish a taskforce on travel insurance for people with cancer at this time. However, the government recognises the important role of insurance products, including travel insurance, in building the financial resilience of consumers and protecting them when things go wrong. The government’s Financial Inclusion Strategy seeks to close gaps in protection and ensure that the insurance sector is well-placed to support the financial wellbeing of households and vulnerable customers. In addition, the Financial Conduct Authority (FCA), the independent body responsible for regulating and supervising the financial services industry, requires firms to treat customers fairly. Since 2021, the FCA also requires firms providing travel insurance to signpost consumers to a directory of specialist providers if they are declined cover, offered cover with an exclusion, or charged a significantly higher premium based on a pre-existing medical condition. The FCA has robust powers to act against firms that fail to comply with its rules. Different insurers may take a different view of the relevant factors in determining the price of insurance based on their differing claims experience. The government would always encourage consumers to shop around for the most suitable cover at the best price. The British Insurance Brokers’ Association (BIBA) can offer guidance on how to look across the insurance market for suitable products and may be able to provide names of specialist brokers. BIBA can be contacted at: www.biba.org.uk/find-insurance/.

What assessment she has made of the potential impact of the proposed higher business rates multiplier for properties above £500,000 on cultural venues.

The Government is delivering a long overdue reform to rebalance the business rates system and support the high street, as promised in our manifesto. The Government is doing this by introducing new permanently lower tax rates for eligible retail, hospitality and leisure (RHL) properties, including cultural venues with rateable values below £500,000. These new tax rates are worth nearly £900 million per year and will benefit over 750,000 properties. These new tax rates must be sustainably funded and so the Government is also introducing a higher rate on properties with rateable values of £500,000 and above. This represents around only 1 per cent of properties.

What assessment she has made of the potential impact of the proposal to require charities to spend gifts from wills within a set timeframe in the draft Finance Bill 2025-26 on legacy giving.

Charities rightly enjoy generous tax reliefs. However, a small number of charities are receiving tax relief in ways that were not intended by Parliament. Charity tax rules are being strengthened to improve HMRC’s ability to challenge abusive arrangements in an appropriate and proportionate way. The new charity rules in the Finance Bill 2025-26 for legacy giving will ensure a charity uses tax relieved income for its charitable purposes. They will not require charities to spend gifts from wills within a set timeframe. The new rules will replace the current purpose test with an outcome test. This will better prevent the abuse of tax reliefs through arrangements designed to give financial advantages to donors in return for their donation. Updated guidance will support charities and donors, giving clarity and reassurance around the rules and making it clear that the honest majority of donors and charities will remain unaffected by these reforms.

What assessment she has made of the potential impact of changing from a motive or purpose test to an outcome test as outlined in the draft Finance Bill 2025–26 on the volume of charity donations.

Charities rightly enjoy generous tax reliefs. However, a small number of charities are receiving tax relief in ways that were not intended by Parliament. Charity tax rules are being strengthened to improve HMRC’s ability to challenge abusive arrangements in an appropriate and proportionate way. The new charity rules in the Finance Bill 2025-26 for legacy giving will ensure a charity uses tax relieved income for its charitable purposes. They will not require charities to spend gifts from wills within a set timeframe. The new rules will replace the current purpose test with an outcome test. This will better prevent the abuse of tax reliefs through arrangements designed to give financial advantages to donors in return for their donation. Updated guidance will support charities and donors, giving clarity and reassurance around the rules and making it clear that the honest majority of donors and charities will remain unaffected by these reforms.

What steps she is taking to ensure that the review of the Loan Charge is (a) independent, (b) transparent, (c) robust and (d) free from interference.

The Government commissioned an independent review of the loan charge to help bring the matter to a close for those affected whilst ensuring fairness for all taxpayers. The Government will respond by Autumn Budget 2025. The independent review was led by Ray McCann whose name was suggested by one of the Loan Charge campaigners. The terms of reference made it clear that he would be supported by a team of officials based outside of HM Treasury and HMRC, none of whom had previously worked on this policy area. Mr McCann was responsible for deciding how to conduct the review and will also have the final say on what is included in his report. HMRC has guidance and training in place for customer advisors on identifying people who need extra support and providing reasonable adjustments to meet their needs. HMRC can offer support to individuals with disguised remuneration liabilities through manageable payment plans and its well-established Extra Support Service. Where appropriate, HMRC will signpost people to relevant voluntary and community organisations and where needed, to a dedicated Samaritans helpline for specialist emotional support where people can talk though any concerns or worries.

What assessment she has made of the potential impact of the Loan Charge on the mental health of those affected; and if she will take steps to prevent such harm.

The Government commissioned an independent review of the loan charge to help bring the matter to a close for those affected whilst ensuring fairness for all taxpayers. The Government will respond by Autumn Budget 2025. The independent review was led by Ray McCann whose name was suggested by one of the Loan Charge campaigners. The terms of reference made it clear that he would be supported by a team of officials based outside of HM Treasury and HMRC, none of whom had previously worked on this policy area. Mr McCann was responsible for deciding how to conduct the review and will also have the final say on what is included in his report. HMRC has guidance and training in place for customer advisors on identifying people who need extra support and providing reasonable adjustments to meet their needs. HMRC can offer support to individuals with disguised remuneration liabilities through manageable payment plans and its well-established Extra Support Service. Where appropriate, HMRC will signpost people to relevant voluntary and community organisations and where needed, to a dedicated Samaritans helpline for specialist emotional support where people can talk though any concerns or worries.

Whether it is her policy to retain the fair and reasonable remit of the Financial Ombudsman Service, in the context of fraud complaints.

The Financial Ombudsman Service (FOS) plays an important role in providing consumers with a cost-free and quick route to resolve disputes with financial services firms. My recent review of the FOS concluded that the framework in which it operates has resulted in it acting as a quasi-regulator in a small but significant minority of cases. That is why, as part of the Leeds Reforms, the Chancellor announced the most significant package of reforms to the FOS since its inception. The review concluded that the ‘fair and reasonable’ test should be retained and adapted, to align it with the overall regulatory approach for financial services and provide greater predictability and consistency to consumers and firms. The government is currently consulting on proposed legislation to adapt the ‘fair and reasonable’ test to make clear that, where conduct complained of is in scope of FCA rules, compliance with those rules will mean that a firm has acted fairly and reasonably. It also proposes a mechanism for the FOS to refer a case to the FCA where there is ambiguity about FCA rules, to request a view on how its rules are intended to be applied, to ensure consistent application of regulatory standards by the FOS. Regarding fraud, victims of fraud who wish to make a complaint about their financial services provider will continue to be able to bring complaints to the FOS, and the proposed changes to the legislative framework under which the FOS operates will not affect the FOS’s role in handling these complaints.

What assessment she has made of the potential impact of reducing the annual Cash ISA allowance on older savers.

ISAs incentivise saving and investment for future goals by providing tax advantages to individual taxpayers. The Government recognises the important role that cash savings play in helping households build a financial buffer for a rainy day. The Government continues to consider reforms to ISAs and savings to achieve the right balance between cash savings and investment and ensure better outcomes for both savers and the UK economy.

What assessment she has made of the adequacy of the transparency of business bank account fees.

The Government recognises the importance of transparency in business bank account fees, enabling businesses to make informed choices when selecting banking services. It is important that businesses shop around for their banking needs as this drives competition, improves choice and helps keep prices competitive. There are a number of policies that help facilitate this: small businesses with fewer than 50 employees and an annual turnover of less than £6.5m are able to use the current account switch service – designed to make it easier to shop around for their business current account. The Financial Conduct Authority, as the independent regulator, sets requirements for banks to ensure that fees and charges are communicated clearly and fairly to customers, where such activity falls within its regulatory remit.

What steps she is taking to ensure that SMEs (a) are not misled by banks (b) are not unfairly charged and (c) can access the financial services they need.

The Government recognises the vital role that financial services play in supporting millions of SMEs across the UK. We are committed to ensuring that SMEs are treated fairly by banks and have access to the financial services they need.The provision of business banking services is largely a commercial matter, but there are certain regulatory and statutory protections afforded to SMEs. Notably, Consumer Credit Act protections apply to certain small businesses (sole traders, unincorporated bodies and two or three person partnerships). The FCA is able to investigate issues where this falls within their regulatory remit and the application of the Consumer Duty to micro-enterprises.In addition, the Financial Ombudsman Service has jurisdiction over 99% of business banking disputes, providing a wide safety-net for businesses and an important avenue for redress if SMEs feel they have been misled, unfairly charged or mistreated.Earlier this year, the Government also legislated to strengthen customer protection standards in cases where banks and other payment service providers close accounts or terminate services. As a result, under the new requirements, both personal and business customers will be given more notice of closures and will be entitled to a sufficient explanation for their provider’s actions. More widely, the Government is committed to encouraging competition in financial services to help stimulate a strong and diverse market for SMEs and improve access to finance. While we continue to monitor issues relating to accessing financial services, service provision and charging models remain commercial matters for individual firms.

What assessment she has made of the potential merits of reducing employer National Insurance contributions for employees returning to work after a year or more of unemployment.

There are a wide range of factors to take into consideration when introducing a tax relief. These include how effective the relief would be at achieving the policy intent, how targeted support would be, whether it adds complexity to the tax system, and the cost. The Government is committed to providing people who are out of work with the personalised support they need to find work, aiding the long-term ambition of an 80% employment rate. At the Spending Review, the Government increased funding for employment support to over £3.5 billion by 2028-29, helping people to access the skills they need to progress, tackling unemployment and inactivity and ensuring more people are in better jobs.

What steps she is taking to ensure that HMRC processes tax refunds within a (a) reasonable and (b) transparent timeframe.

HMRC recognises that tax refunds are important for customers, and aims to process repayments as a priority. HMRC’s correspondence service standard is to respond to 80% of priority post within 15 working days. Monthly performance against this standard is published at https://www.gov.uk/government/collections/hmrc-monthly-performance-reports HMRC’s online services include a ‘Where’s my reply’ tool which provides estimated response times. The tool is available here: https://www.gov.uk/guidance/check-when-you-can-expect-a-reply-from-hmrc

What recent progress she has made on the reform of business rates.

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 with rateable values below £500,000, 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.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 assessment her Department has made of the potential merits of introducing a tiered business rates system to support (a) emerging and (b) small 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 with rateable values below £500,000, 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.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 she is taking to ensure that (a) creditors and (b) debt collection agencies (i) respond to customer enquiries and (ii) amend credit files in a timely manner.

Consumer credit lenders and debt collection agencies are regulated by the Financial Conduct Authority (FCA) and must comply with its rules. Under the FCA’s Consumer Duty, providing effective customer support is a key requirement. Regulated firms must provide customer support that is prompt, accessible, and easy to understand. The FCA also expects firms to regularly review and improve their customer support processes. In accordance with data protection laws, a person’s credit file must accurately reflect their credit history. If a consumer thinks their credit record is inaccurate, then they should first contact their lender or the relevant reference agency (CRA) and ask them to update their details. If a consumer believes these organisations have not corrected the inaccurate information they have reported, they can complain to the Information Commissioner’s Office (ICO). The ICO enforces data protection laws and may take action if it finds the CRA has failed to make necessary corrections.

What steps she is taking to ensure that creditors and debt collection agencies respond to customer enquiries and amend credit files in a timely manner.

Under data protection laws, the information on a person’s credit file must accurately reflect their credit history. If an individual believes that an organisation, such as a creditor or a debt collection agency, has not corrected inaccurate information reported to credit reference agencies, they can submit a complaint to the Information Commissioner’s Office (ICO). The ICO is responsible for upholding information rights and enforcing data protection legislation. If the ICO finds that the organisation has indeed failed to make the necessary corrections, it may take enforcement action.

What steps she has taken to ensure that those operating under disguised employment models in the hairdressing industry do not receive tax advantages compared to traditional employers since the Minister for Employment Rights, Competition and Markets met with representatives from the personal care sector in November 2024.

HMRC is committed to ensuring the tax system operates fairly and efficiently, creating a level playing field for all compliant businesses. Most businesses pay what they owe, but a minority fail to register or only declare a portion of their earnings for tax. This minority deprives our vital public services of funding, affects fair competition between businesses, and places unfair burdens on everyone else. The ‘rent-a-chair’ model is a legitimate business model widely used in the hair and beauty sector and, where applied correctly, can result in individuals being classed as self-employed for employment purposes. Whether an individual is employed or self-employed is not a matter of choice but is determined by the actual terms and conditions under which they work. This is underlined by an agreement between HMRC and the National Hair and Beauty Federation, which clarifies standard practices in the industry for VAT purposes. The agreement advises that salon owners and their contractors should have an agreement in writing that clearly and accurately reflects their working practices. Both parties can use HMRC’s Check Employment Status for Tax (CEST) tool to check the employment status of an engagement. HMRC will stand by the self-employed or employed determination that the CEST tool provides, so long as the information given is accurate. If a business chooses to operate the ‘rent-a-chair’ business model this could result in individuals being classed as self-employed for tax purposes. In all such cases HMRC would expect businesses to meet their legal obligations regarding paying the right taxes and National Insurance contributions. HMRC are committed to tackling false self-employment and will investigate evidence that suggests businesses have misclassified individuals for tax purposes. HMRC will challenge businesses that either artificially separate to avoid exceeding the VAT registration threshold or design schemes to reduce the amount of VAT they owe and will take steps to ensure that they pay the right amount of tax. HMRC’s approach to tax compliance includes a range of activities that aim to both detect and tackle current non-compliance and change future behaviours. HMRC aims to help and support customers to understand their tax obligations and promoting compliance by simplifying policies and procedures, providing clear guidance to make it easy for them to get things right, providing accessible digital services to make it easier to register to pay the appropriate taxes, providing targeted support and guidance, and intervening early to reduce mistakes. However, HMRC will not hesitate to use stronger sanctions against those who deliberately choose not to comply, including potential criminal prosecutions for the most serious cases involving tax evasion.