HC Deb 14 June 1944 vol 400 cc1999-2000
The Solicitor-General (Major Sir David Maxwell Fyfe)

I beg to move, in page 12, line 43, to leave out "ten shillings," and to insert "one pound."

The Clause has the effect of changing the procedure as to Income Tax with regard to small court payments. Instead of the maker of the payment being entitled to deduct tax before he pays the recipient, the recipient of the payment will be assessed upon it. The object of this Amendment is to deal with the two classes of payment under the Bastardy Act and under the Guardianship of Infants Act where the payment in respect of a child may be up to one pound. To get all the payments in order, and to cover these necessary payments in respect of children, we felt that the same course, which we are suggesting for the other payments, should be applied to these. Therefore, we suggest that one pound is the correct amount.

Mr. Woodburn

This is a matter which might affect a large number of people and, for the sake of clarity, may I ask whether this will mean that, in a large number of cases, people who are recipients of such allowances, will not have to reclaim Income Tax which has been falsely or wrongly paid by the payer; that this will eliminate a double transaction, and that people whose income falls below the Income-Tax limit and are in receipt of these allowances, will no longer be troubled by Income Tax repayments?

The Solicitor-General

My hon. Friend has got the gist of the matter. The policy of Income-Tax collection is always to collect it as soon as you can, in the ordinary way, but where you have a court order, to produce the result which my hon. Friend has referred to, the payer would have to deduct tax, and in the days when people were more Income-Tax conscious the payer was always inclined to deduct tax from the payment and the recipient then had to make a claim, if his or her income was under the allotted figure. In the change which we have brought about, the payer will not deduct Income Tax, and, if the recipient is under the Income-Tax figure, he or she will have to make a return in the necessary cases, but will not have to pay tax. On the other hand, if the payment brings the income over the figure, then he or she will have to pay tax. I hope I have made it clear.

Mr. Woodburn

There is one other point. Is there not the possibility of double Income Tax being charged on such allowances? For example, supposing a man gets £4 a week, he is charged Income Tax on that £4 under the Pay-as-you-earn scheme. He makes an allowance to his wife, who is separated from him, as the result of a court order. Is the wife liable, if she is an Income-Tax payer, to pay Income Tax on that portion of the allowance on which the husband has already paid tax? If they were living together as a married couple, Income Tax would be paid only on their joint incomes, whereas, if Income Tax were charged afterwards, it would mean taxing the allowance on both the man's and the wife's income, although it was really the husband's income.

The Solicitor-General

The payer has the right to deduct from his income the amount he has to pay. That prevents the double taxation which my hon. Friend has in mind.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.