HC Deb 21 June 1926 vol 197 cc73-7

  1. (1) Exemption shall be granted—
    1. (a) from Income Tax under Schedule A in respect of lands, tenements, hereditaments, and heritages owned and occupied by a royal asylum for lunatics and mental patients, not being such lands, tenements, hereditaments, or heritages as are mentioned in No. VI. of Schedule A:
    2. (b) from Income Tax under Schedule B in respect of lands occupied by a royal asylum for lunatics and mental patients;
    3. (c) from Income Tax under Schedule D in respect of any profits derived by a royal asylum for lunatics and mental patients.
  2. (2) The exemption granted by paragraphs (a) and (b) of Sub-section (1) of this Section shall not extend to tax in respect of any rent payable or other annual payment to be made by a royal asylum for lunatics and mental patients in respect of lands, tenements, hereditaments, or heritages which are in the use and enjoyment of a person whose total annual income from all sources, estimated in accordance with the provisions of the Income Tax Acts, amount to not less than one hundred and fifty pounds.
  3. (3) Exemption shall not be granted under this Section to a royal asylum if the receipts from private patients are in excess of the receipts from pauper patients.— [Sir Robert Hutchison.]

Brought up, and read the First time.


I beg to move "That the Clause be read a Second time."

This Clause deals with the exemption from Income Tax of the royal asylums, institutions which exist in Scotland. I think it is well that the House should know that those asylums have been sub- scribed to by the public. They are run for no profit and the funds have been administered by individuals who have given their time for no remuneration whatsoever. These royal asylums have in many cases saved the parish councils large capital expenditure in that they accept at a very low rate and cater for patients sent to them by those parishes. In later years the administration of those asylums has been added to by a large number of cases from the parish councils, so that these asylums are not only doing the charitable work which they were originally intended to do, but they are also doing a public work in taking those patients from the various parish councils. Any surplus which their fiends may show at the end of a year is devoted entirely to reducing the rates which are charged to the various patients, as well as to the maintenance of the buildings and to generally developing these very good institutions. There are also one or two smaller institutions—they are not really Royal Hospitals, but they are, district asylums—which to-day are exempt from the very tax from which I am trying to induce the Chancellor of the Exchequer to exempt these Royal Asylums. At the present moment these district asylums are only exempt under Schedule D, and it seems very hard that these Royal Asylums should not be so treated. Under a Royal Charter in 1913 they were given the duty of looking after the patients coming forward from public authorities, and for that reason I think they are entitled to be exempt from many of the duties on which they are now assessed. They take patients who otherwise would cost a very large sum of money and, further than that, they go the length from a charitable point of view to subscribing towards paying part of what otherwise would be charged to poor patients; to those necessitous cases, those mental cases, who are sent there and cannot afford to pay a nominal rate. Those cases are taken by the Royal Asylums at a special low rate, below the actual cost, in order to help them. This shows that these asylums are within the category of charitable institutions. I think that the chief reason why some of them are at present charged Income Tax is because they accept private patients. They undoubtedly do accept private patients, and it is for that reason that they are charged Income Tax, but the whole of the profit that comes from the those private patients goes towards reducing the rates charged to other people; it helps the unfortunate patients who cannot pay any rates at all, and it assists in reducing the rates charged to the parish councils. There are also run in connection with these institutions farms, and the farms have produced a surplus, but those farms are part of the cure of the mental cases, and they also produce the necessary food which is required by those Royal Asylums. I see no reason why, because those farms are run and there possibly is a profit on them, that the asylums ought thereby to be charged Income Tax. Those profits go to the institutions, and they do not go to any shareholder, nor do they go towards remunerating any director or manager. The general running of these institutions comes well within the definite word "hospital," within the meaning of the Act. I hope, therefore, that the Chancellor of the Exchequer will see his way to give some relief to these very excellent institutions, which are doing charitable and public work, and which I think deserve great help from the Government and also from the community.


I regret I am not in a position to accept the proposal put forward by my hon. Friend, much as I should like to do so and readily as I admit the many substantial arguments which he has adduced in support of his new Clause. But at the present time we give a very wide exemption to charity, much wider than the Royal Commission on Income Tax recommended that we should give. We give, in fact, an immense exemption, which costs the Revenue over £10,000,000 a year. Of course, the question arises in all these matters, "Where are you going to draw the line?" and, for my part, I find great difficulty in widening the scope of the exemptions now granted to charities. In order to restrict them within some bounds agreeable to the Revenue, in order not to make very serious inroads on the Revenue, certain conditions have been insisted on. They are not the conditions which the Royal Commission thought ought to have been insisted upon, but they are the only bulwark which the Revenue has against an altogether indefinite variety of arguments for the extension of these exemptions. The Courts have laid down that in the case of a hospital or charity, exemption only applies to institutions maintained to a great extent by charitable endowments or subscriptions. It is not sufficient to say that they are not working for a profit, but they must be maintained to a great extent by charitable endowment. There are several of these Royal asylums in Scotland, but there are only two of them which are covered by the proposed Clause, so I am advised—they are Montrose and Aberdeen. I think, for the sake of meeting the difficulties of these two hospitals, it would be a very serious thing for us to throw over the whole of the existing basis of the exemptions from Income Tax.

My hon. Friend has spoken about the district asylums, but they differ from these two Royal asylums, in that they depend to a substantial extent on money from charitable sources. I am afraid in all these circumstances it is impossible for me to meet the proposal of my hon. and gallant Friend. The whole question of charitable relief, notwithstanding the somewhat adverse recommendation of the Royal Commission, might well be a subject of future. reflection. There is no doubt that even trying to draw the lines where they have to be drawn—and some lines must be drawn—a number of hard cases, borderland cases, must arise. If at any time it were possible to take a more liberal view of those borderland cases, that ought to be done, not on a variety of special exemptions such as figure. on the Order Paper, but it ought to be done as a result of a comprehensive and general consideration of the question and as the result of a successful attempt to lay down more harmonious limiting principles which would prevent the indefinite exemptions which are now the law.

Question, "That the Clause be read a Second time," put, and negatived.