CLAUSE 49.—(Relief under s. 16 of Finance Act, 1907, in connection with certain settled property to cease.) (Hansard, 4 July 1927)

Commander WILLIAMS

I put an Amendment down to reject this Clause, because it is once again adding to the capital taxation of the country, which the party I stand for thinks to be against the best interests of the nation as a whole. When I came down this afternoon I hardly expected the Chancellor of the Exchequer would give much away in the sense of money. When the right hon. Gentleman the Member for Norwich (Sir Hilton Young) was speaking, the Chancellor of the Exchequer approved, apparently, the principle that if money could be saved and put to capital purposes it was a good thing in the interests of the country as a whole. But if you are to save money and add to the capital resources of the nation, what is the good of the Chancellor of the Exchequer coming down and adding additional burdens? I protest against the insertion of this Clause, which adds something like £800,000 to the revenue of 1061 the country and takes something like £800,000 out of the savings of the country and places it in the pocket of the Exchequer. I would like to point out and emphasise that in two out of the three years in this country there has been some addition to the individual taxation. It is against the policy of the Government at the election, which was that they would not in any way, or any sense, put additional taxation on capital. I certainly gave that pledge. I believe that promise was made by the Prime Minister when he said he was against a capital levy in any form. I know perfectly well the Chancellor of the Exchequer will bring out that this is some form of amalgamation of capital which did not take place before; that it escaped the notice of his predecessors. But they did not really miss very much, Not very much was missed by the Leader of the Liberal party in the 1909 Budget. I would say, on behalf of what I believe is a considerable portion of the party to which I belong, that I very deeply regret that we should have any addition whatever to the capital taxation of the country, and I would like to ask the Chancellor of the Exchequer whether he will not do something to grant a concession in this particular respect.

§ Mr. McNEILL

I listened to what my hon. Friend said just now, but I must say I could not trace any very close connection between his observations and the Clause with which he was dealing. There is really nothing about which he or any other Conservative Member has anything to complain in this proposal. The Clause does not create a hardship. What it does is to put an end to a special privilege which has been quite accidentally enjoyed, I think, by an oversight rather than otherwise, for some years by a small and particular class of property owners. The hon. Member has not explained to the Committee how this Clause arose, and I would like to remind the Committee that it has rather an intricate history. It really arises from an oversight. The duty was first introduced in 1894, and it was then charged upon the aggregate value of all the property passing at a man's death, and special provisions then applied to settled property. Settled property at 1062 that time was not to be charged with Estate Duty more than once during the period of the settlement unless it passed on the death of a person who had power himself to dispose of the property. If I may give an example. Supposing that a property owner "A" died in the year 1900, leaving settled property by will to "B" for life, with remainder to "C." Duty was payable on the death of "A" as settlor but not on "B's" death, because he had no power to dispose of the property. All the settled property passing on the death of the tenant for life was aggregated with all his other property to determine the rate of the duty if the settled property was liable to duty at his death; that is to say, if he had power to dispose of it, but not otherwise. This state of the law, as one can well understand, was not long in that condition, and in the year 1900, on the recommendation of a Committee set up to look into the matter by the Chancellor of the Exchequer of the day, the law was altered in so far as the, settlement applied to the property settled by a person who died before 1894, when the Estate Duty was first introduced, on which duty would have been payable if he had died after 1894. The Committee will see how much depends on the accident of the date of a particular man's death.

I will take in example. If the settler, whom we will call "A," died say in 1890 and "B," being the first tenant for life, died in 1900; in that case the latter was the first death under the settlement after the introduction of the duty, then the settled property was aggregated not to the rest of the property of "A" who died before but with the rest of the property of "B" the tenant for life which was very unsatisfactory. On "B's" death, which I have assumed to have occurred in 1900, if "A" had happened to die in 1895, one, year after, the introduction of the duty in 1894, it would have been on his property and not on "B's" that the aggregation would have taken place. Therefore, the whole of that depended upon the mere accident of the date of death. Some relief was given in 1907, but in 1914 the whole position was altered, because as from that date the special provision about settled property was swept away, and the duty was made payable on the death of the tenant for life in the case of the settlement. But 1063 this particular one small class of settlements made before 1894 were overlooked, and that particular matter was not dealt with at that time. It is only now after a very considerable time that the anomaly has been detected, and we are now putting it right. That is entirely the scope of the present Clause—merely to remove that very obvious anomaly, and it will give no possible grievance to anybody.