HC Deb 18 April 1940 vol 359 cc1120-1
73 and 74. Mr. McEntee

asked the Chancellor of the Exchequer (1) what is the amount of tax remission on gifts to charities that can be obtained by a person with a charity trust who himself pays Surtax on the highest scale;

(2) whether he will state the amount of tax remission on gifts to charities that can be obtained by a person with a charity trust who does not pay Surtax?

Sir J. Simon

I assume the hon. Member has in mind a case where a person undertakes by deed to make an annual payment to charitable trustees for a period exceeding six years. Under the general provisions of the Income Tax Acts, such an annual payment is admissible as a deduction in computing the payer's total income. It is upon the income as so computed that Surtax, if he is liable to Surtax, is chargeable. If the total income is of such an amount that part of the income falls within the highest scale of Surtax, the rate chargeable on that part is 9s. 6d. in the £. So far as Income Tax is concerned, the person making the payment, whether or not he is liable to Surtax, can deduct Income Tax at the time of making the payment, but in so doing he is merely passing on to the recipient of the payment the tax which he himself has already borne by deduction or direct assessment.

Mr. McEntee

Is it not a fact that many of these people in the higher scale are being subsidised to the extent of 17s. 6d. in the £ at the present time and that to induce them to give £1 you are giving them 17s. 6d.?

Sir J. Simon

The position of the law is as I have stated, and I am sure the hon. Gentleman follows it. If you add together the Surtax charge and the full standard rate it is a fact that persons of great wealth are burdened with a tax of 17s. in the £.

Mr. McEntee

Am I not right in assuming that when people in this scale give donations to charities, under trust deeds, they are entitled to receive back 17s. 6d. from every £1 they give, and that the State does, in fact, subsidise them to that extent?

Sir J. Simon

I do not think it can be called subsidising, but it is the fact that with regard to endowments entered into for over six years in the case of persons with larger incomes, they are making a contribution to public funds so much larger than that made by persons in the lower income ranges that the endowments have a correspondingly greater effect on the Revenue.