§ If any person makes an insurance on his life, or on the life of any other person, with any insurance company legally established in the United Kingdom, or in any British possession, or lawfully carrying on business in the United Kingdom, and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured, and that so much as the holder of such policy or his legal personal representatives may direct of the capital sum payable there under will on the death of the assured be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty then to the extent to which such capital sum is so paid and applied the same shall not be aggregated with any other property for the purpose of fixing the rate of estate duty but shall form an estate by itself.—[Colonel Courthope.]
§ Brought up, and read the First time.
§ Colonel COURTHOPEI beg to move, "That the Clause be read a Second time."
The purpose of the Clause is to encourage the provision by insurance for the payment of Death Duties. The Death Duties in their conception were described by Sir William Harcourt as deferred Income Tax. If that analogy is maintained it is clearly not right that insurance during the lifetime of any individual for the provision of the sum which will become payable by way of estate duty at his death should itself be subject to Death Duties. In other words, in a case where an insurance provides on the face of it that on death the sum shall be paid to the Commissioners of Inland Revenue—that it can be applied for no other purpose—the capital sum of that insurance shall not go into the aggregate of the deceased's estate for the purpose of assessing that estate for Death Duties.
Mr. GRAHAMI hope that the hon. and gallant Member will not find it necessary to go to a Division. The object of the Amendment is perfectly clear. It seeks to obtain a preference for provision made by way of insurance for the payment of 2171 Death Duties. I think that would be a differentiation with regard to Income Tax in favour of one form of saving. Apart altogether from the departure from the method usually adopted it would undoubtedly cost the Exchequer in a full year not less than £800,000. That is a fatal difficulty in the case. There are other difficulties. The unfair differentiation of the benefit would inure to the large rather than the small estates. For these reasons the Government are unable to accept the Clause, and I hope the hon. and gallant Member will not press it.
§ Question, "That the Clause be read a Second time, "put, and negatived.