HC Deb 24 June 1935 vol 303 cc888-91

(1) Where a person, on entering upon any office (in this section referred to as a "new office"), ceases to hold any other office (in this section referred to as an "old office") and

  1. (a) but for the provisions of this section the tax payable by him on the emoluments of the said offices would have been computed by reference to the provisions of Sub-sections (4) and (5) of Section forty-five of the Finance Act, 1927; and
  2. (b) his average monthly net emoluments arising from the new office for the first twelve months of his tenure thereof, or for such shorter period as his tenure thereof endures, do not exceed by more than twenty per cent. his average monthly net emoluments arising from the old office for the last twelve months of his tenure thereof, or for such shorter period as his tenure thereof endured; and
  3. (c) the nature of the duties of the old and the new offices respectively was and is such as to require the holder thereof to devote substantially the whole of his time to the performance of those duties;
that person shall, on giving notice as hereinafter provided, be entitled to require that all his emoluments arising from the new office as well as from the old office shall be assessed as if they had arisen from one and the same office, and thereupon any assessment already made shall be adjusted accordingly and any tax overpaid shall be repaid.

(2) A person giving notice under this section shall give it in writing to the surveyor not later than the expiration of the eighteen months next after the end of the year of assessment within which he entered upon the new office.

(3) In this section—

  1. (a) the expression "emoluments" has the same meaning as in Section forty-five of the Finance Act, 1927;
  2. 889
  3. (b) the expression "net emoluments" in relation to an office for any period means the emoluments of the office for that period after the deduction of any amount paid or borne for that period by the holder of the office which would be allowable under the provisions of the Income Tax Acts for the purpose of computing an assessment to income Tax under Schedule E;
  4. (c) the expression "office" means an office or an employment the emoluments of which are chargeable wholly under Schedule E.

(4) This section shall apply to any person who entered upon a new office in the year 1933–34 or the year 1934–35 as it applies to persons entering upon a new office in any subsequent year:

Provided that no assessment for any year before the year 1934–35 shall be adjusted under this section.—[Mr. Spens.]

Brought up, and read the First time.

7.25 p.m.


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

The proposed new Clause deals with an Income Tax hardship suffered by holders of offices who have been promoted or transferred during recent years. The holder of an office is assessed upon his salary of the previous year, but pays upon what he expects to earn in the year in which he pays. When the cuts were imposed some years ago, holders of offices had to pay in the first year of the cuts upon their full remuneration of the year before. If they continued to hold the same office until the cuts were restored, they got back, of course, what they lost because there came a year when, on their fully restored incomes, they were assessed on the cut incomes of the year before. A certain number of office holders, however, were promoted or transferred before the cuts were restored, and the result was that for Income Tax purposes they became subject to the present law that from the moment you go into a new office you pay on the salary of that office, whatever it be.

A certain number of office holders, therefore, such as officials in the Civil Service, were penalised in having had an opportunity—or being compelled—to transfer or be promoted. The proposed new Clause suggests that something should be done to meet that class of hardship. The proposal is confined to cases where the salary of the new post does not exceed by more than 20 per cent. the salary of the old post, and where the duties of the new post are, to all intents and purposes, the same or similar to the duties of the old post. It does not attempt to cover cases where a man has been promoted to an entirely different job or from a salary of, say, £2,000 a year to a salary of £5,000 a year. It provides for the small class of case where a person suffered by transfer or promotion before he had an opportunity of getting the benefit of the restoration of the cuts.

One of the clearest examples is that of a judge who has been promoted to the Court of Appeal, or any of the subordinate judiciary who has been promoted or transferred to what is technically a new post. I cannot imagine that more than about 200 cases will be covered throughout the country, or that it means a great loss to the revenue. A hardship, however, has arisen from the present method of assessing these individuals during the last few years, and I hope that the Chancellor will be able to see his way to accept the Clause.

7.30 p.m.


In supporting my hon. and learned Friend, I should like to add my appeal to that which he has made to the Chancellor of the Exchequer to give this proposed new Clause his favourable consideration. The reasons for the Clause have been so well stated by my hon. and learned Friend that it is unnecessary to repeat them, but I would remind the Committee that the amount involved to the Treasury must be very small. The persons concerned are spread over the Services, whether the Civil Service, the local government service, or those large statutory companies which have been restoring, along the same lines as the Government, the cuts that were made at a time of depression. Unless some arrangement of this kind is made, many people—perhaps 100 or 200—who are not drawing big salaries, but whose incomes are assessable for Income Tax purposes, will find that what they thought would be promotion beneficial to themselves will, in the first year of their promoted service, entail upon them a loss. I cannot help feeling that that is a state of affairs which the Committee would not desire to see, and, therefore, I hope that my right hon. Friend will be able to accept the Clause.

7.32 p.m.


Some time ago my attention was called to the position with which those judges found themselves faced who happened to have been promoted to the position of Lords Justices of Appeal. The account that my hon. and learned Friend has given of the position is quite accurate. These judges, if they had remained in their old positions, would have got the benefit of the present Income Tax law, so that while, when their salaries were first cut, they were assessed on their uncut salaries, when the cut was restored they would have been assessed upon their cut salaries instead of upon their uncut salaries, and the second transaction would thus have made up for the first. As a result, however, of their being promoted to a higher position, the salary of which is identical with that of the position they have left, they are, as the law now stands, deprived of the opportunity of having this anomaly made good. That is an inequitable position, and certainly ought to be put right. I should, however, mention to the Committee, that the matter affects, not only one or two judges, but some of His Majesty's Ministers who have changed offices without increase of salary, and no doubt there will be a few cases beyond the Government of public officials, and possibly also local government officials. I think the case is one which in equity ought to be met. My hon. and learned Friend was good enough to submit the form of his Clause to me some little time ago, and it appears to me to be properly drawn. In the circumstances, therefore, I am going to ask the Committee to accept it.

7.34 p.m.


Clearly, where there is a case of injustice or unfortunate incidence of the law of this sort, which applies only to a very few persons, it is not desirable that any one should oppose the regularisation of the matter in a way which seems to be fair and just to the individuals concerned. We know that there has been a good deal of criticism from His Majesty's judges with regard to the cuts, and perhaps this will assist them in feeling that they are being dealt with justly by the House after all.

Clause added to the Bill.