§ Section twenty-eight of the Finance Act, 1923 (which relates to the allowance for pairs and which was continued in force by Section twenty-seven of the Finance Act, 1942, until the fifth day of April, nineteen hundred and forty-seven) shall have effect as if in Sub-section (2) of the said Section twenty-eight for the words "one-fourth," "one-fifth," "twenty pounds" and "one-sixth." there were substituted respectively the words "one-third," "one-fourth," "twenty-five pounds," and "one-fifth."—[Mr. Bellenger.]
§ Brought up, and read the First time.
§ Mr. Bellenger
I beg to move, "That the Clause be read a second time."
The point I wish to put to the Chancellor and the Committee on this Amendment is a substantial one, and although I do not propose to take up a lot of time in elaborating it my argument, briefly, is this: The Chancellor knows that in arriving at the net assessable value of house property and, indeed, all properties under Schedule A tax, the statutory allowance for repairs is deducted from the gross value to arrive at the net annual value for Schedule A tax. That statutory allowance was fixed many years ago—I think it first appeared in the 1923 Act—and it varied according to the value of the property fixed by the tax assessors each year. In the case of small properties under a value of £40 per annum the allowance is one quarter, or £10 per annum. I think even the Chancellor himself, although he may live in a house which is assessed at more than £40 per annum, will agree that it is impossible, and will be impossible for many years after the war, to carry out properly repairs to houses of that kind by an expenditure of £10 each year. If one takes the type of house which I imagine 499 the Chancellor lives in—a house of £100 a year or over assessable value—the allowance for repairs is higher. It is £20 if it has an assessable value of £100, and it is one-sixth for anything over £100. That case is even worse. The bigger the property the less adequate becomes the allowance for repairs. It may be said that this difficulty may be overcome by the alternative which is open to taxpayers to take a five years' average so that the Commissioners can accept that as the actual cost of repairs spread over that five years. But I think this is a difficult and cumbrous operation of the Schedule A tax and, moreover, small taxpayers have a long time to wait.
I believe that those who pay Schedule A tax can actually submit to the tax inspector the cost of repairs year by year, but even that is not quite adequate, because during the war owners of property are not permitted to carry out repairs, because they cannot get materials and labour. So, repairs are accruing, and at the end of the war there will be a heavy bill. The allowance which the Chancellor makes under the Finance Act is inadequate. I hope the right hon. Gentleman realises the force of the point I am putting to him and will be prepared to deal with my Clause in the same way as he dealt with the preceding one. This is a matter which is agitating the minds of house property owners all over the country; we ought to bring our Finance Acts up to date and keep them modern. The statutory allowance for repairs is totally inadequate, and on the grounds of equity to the taxpayer and on the ground of encouraging house owners to keep their property in good repair, we ought to grant a proper allowance.
§ The Attorney-General
Taxpayers who are affected by these provisions of the Income Tax Acts are in a favourable position, which, perhaps, cannot be said of all taxpayers. They are in a favoured position for this reason. There is a scale laid down which is deducted from the annual value, whether any repairs are carried out or not. A person may have a new house to which no repairs are necessary for some time, but still get an allowance accruing according to the annual value of the house. On the other hand, if you live in a house which needs repairs over and above this scale, if you take the trouble 500 to keep a record of the money you spend on repairs, you can claim on the actual money that you spend. It would be difficult to see how you could have fairer or more generous provision than that, an automatic scale applied whether you do repairs or not, the actual repairs, taken over an average, I agree, as they must necessarily be, if you think the scale does not meet your case. Therefore my right hon. Friend does not feel that this is a matter which he should undertake to look into further or deal with now.
As the hon. Member said, at the moment one cannot spend anything on repairs, and surely it cannot be the right time to put up the automatic allowance when it is more or less conceded that no one will be able to spend that amount of money. When we get into the times when repairs can be done and the house situation gets more normal, it may well be that the cost of repairs will be found to have gone up, but it may also be that annual values will have gone up too, and they may have gone up to an extent which makes the existing proportion a reasonable one. The only circumstances in which it would be right to reconsider these automatic deductions would be not so much in the interests of taxpayers but in the interest of saving everyone trouble. If it can be shown that, taking the country as a whole, these proportions have fallen, having regard to the various alterations in cost of repairs and annual values, below the general average cost, there would be a case for putting them up. At present there is not and there could not be, because repairs cannot be done. I agree, to this extent only, that these proportions ought to represent the general average of repairs over the whole country. Until it can be shown that they have got out of step with that general average my right hon. Friend does not think it would be right to alter them, and, if anyone is spending more, he has only to take the trouble to keep a record of what he spends and he gets it allowed as a deduction.
§ Question, "That the Clause be read a Second time," put, and negatived.