HC Deb 09 May 1944 vol 399 cc1712-3
60. Mr. Oliver

asked the Chancellor of the. Exchequer whether lump-sum payments made by employers to their work-people for long service are subject to Income Tax, and, if so, at what rate is the tax to be levied as these are long-service payments; and how would the tax be paid under the pay-as-you-earn scheme.

Sir J. Anderson

In the ordinary course, such payments as those to which my hon. Friend refers are assessable as emoluments for the year in which they are payable, and tax will be deductible under pay-as-you-earn in accordance with the same rules as apply to other wage payments during the year. If my hon. Friend has any particular case in mind and will send me details, I shall be glad to look into it.

61. Mr. Oliver

asked the Chancellor of the Exchequer whether wages and/or bonuses earned before 5th April, 1944, and paid after that date, are assessable for Income Tax under the scheme of Pay-as-you-earn; and if so, will subsequent adjustments be made having regard to the fact that these items of remuneration would be in excess of the earnings of the year in which they are paid.

Sir J. Anderson

Under Pay-as-you-earn, tax is required to be deducted from all wages, bonuses, and other remuneration, irrespective of the period in which the income was earned. The basis of assessment for 1944–45 and subsequent years is the earnings of the year of assessment, and, where necessary, an adjustment would be made in the assessment in respect of income paid during the year of assessment which related to an earlier year. It is to be remarked, however, that, if it is the employer's practice to pay remuneration in arrear, it would be necessary to bring back into assessment for the year sums paid in the following year, and it may often be found convenient to base each year's assessment on the earnings received in the year.

Mr. Woodburn

Could not these back bonus and other payments be treated in the same way as the Chancellor has agreed to treat payments to artists and authors of literary contributions, and be spread over three years, if that would be to the benefit of the recipient?

Sir J. Anderson

That is a separate question altogether; it has nothing to do with the mechanism of Pay-as-you-earn, to which the Question was related.