HC Deb 23 July 1919 vol 118 cc1486-8

Section eighteen of the Finance Act, 1896 (which determines the rate of interest on death duties) shall, in its application to interest accruing due after the commencement of this Act, have effect as though five percent. were substituted for three per cent. as the rate of interest per annum.

Lieut.-Colonel ROYDS

I beg to move, after the word "due" ["to interest accruing due after"], to insert the words In respect of the estate of persons dying. The effect of this Amendment, if adopted, would limit the operations of this Clause to the estates of persons dying after the passing of the Act. Hitherto there has been no change, or, rather, no increase in the rate of interest payable on instalments. Here, for the first time, this Clause deals with the estates of persons already dead, and increases the rate of interest on unpaid instalments of Estate and Succession Duty from 3 percent. to 5 percent. without any deduction for Income Tax, which may be now at the rate of 6s. in the £. This is the first time there has been any attempt or suggestion that the rate of duty shall be altered, that the Death Duties shall be increased after the death of the testator. It is rather an unfortunate time to introduce a change of this sort, because it is clear if executors are paying Estate and Succession Duty by instalments, there is a desire to retain the estate. This Clause only applies to real estate, and the instalments of Estate Duty and Succession Duty on real estate. This increased rate on unpaid instalments is made just at the time when it is impossible to raise the rents from which the income is derived, for under the Rents Restriction Act little or no increase may be made to meet this increased rate. We have only just emerged from the greatest war in history. A very large number of the deaths connected with the estates in respect of which this increased duty is payable are deaths which have occurred directly or indirectly in consequence of the War. The duties on the estates of persons so dying have been relieved to some extent already, but what we have given with one hand we are in part taking away with the other by this Clause.

It is most unfortunate that any attempt should be made in the way of alteration now inregard to Death Duties in the case of persons who have died before the passing of the Act. I hope very much the Chancellor of the Exchequer will see his way to adopt this Amendment. I would remind him that a very large proportion of the estates of persons who die leaving only small fortunes consist of land or house property. The average property of the person dying and leaving property worth £1,000 or under, to the extent of 40 percent. or 50 per cent., is either land or cottage property. Therefore, this is not the case of putting an imposition only on persons who have large estates. It is concerned very largely with small estates, and just the class of property to which the Rent Restrictions Act applies.

Mr. A. SHAW

I beg to second the Amendment.

I can only add to what my hon. and gallant Friend has said this additional consideration: that I believe it is one of the principles upon which Death Duties are founded that the testator should be given some opportunity of making provision for their payment. If necessary, we should give such an opportunity in the case of the estates of persons already dead. I trust the Chancellor will accede to the very reasonable request of my hon. and gallant Friend.

Mr. BALDWIN

My hon. and gallant Friend who moved this Amendment has, I think, been in communication on the subject with the Chancellor of the Exchequer. I do not think that any hope was held out to him that this Amendment would be accepted. We have not yet, I think, fixed finally the rate of interest. There are Amendments dealing with that subject later, but the principle seems to me to be this: The rate of 3 percent., which was fixed both for the payments by executors and payments to executors, was fixed some years ago, when money was cheap, at the very low rate of 3 percent. The benefit of that 3 percent. has been continued long after the rates for money have risen considerably beyond that figure. It was felt, and I think rightly, that the time had come when the rate to be put into the Finance Act should be more in accord with that ruling in the market. I do not think anyone would contend that even 5 per cent. is an excessive rate, having regard to the value of money to-day.

There is a point which my hon. and gallant Friend raised, and I want to try, having raised it, to say something on it. It may be that at first sight it seems a hardship that all classes of estates should be liable to the increased rate; but, after all, the increased rate is not being made retrospective. It falls from the same date on all estates, and if there be estates which are still in process of paying, they have had the advantage of 3 percent. rate for a longer time. They are on the same footing now with everyone else in being asked to pay the rate more in accordance with the value of money. I do not think it would be practicable or just to make-any exceptions in this case, but that all estates that are paying duty should be put on the same footing. It would have-been quite possible and not unreasonable if my right hon. Friend had suggested an even higher rate than he has. He felt that the advance proposed was not an unfair one in all the circumstances. I hope with this brief explanation the House will negative the Amendment.

Amendment negatived.