City minister accused of ignoring £2bn car finance tax loophole

City Minister Lucy Rigby is facing criticism for her response to a £2 billion tax loophole that benefits banks involved in the car finance scandal. The loophole allows lenders, including major banks with motor finance divisions registered as "non-bank entities," to avoid 2015 rules preventing them from deducting compensation payouts from their profits when calculating corporation tax. This exemption, confirmed by the Office for Budget Responsibility, will cost taxpayers £2 billion over the next two years. Bobby Dean, a member of the Treasury committee, urged Rigby to intervene, but her response indicated that these lenders fall outside the scope of the 2015 rules. Dean has accused the government of siding with the industry over consumers and taxpayers.

Explore how the topics in this article connect to other news stories