HC Deb 14 April 1953 vol 514 cc55-8

Leaving the playing field and the amateur stage, I must take the Committee through a short series of improvements in our taxation system for which I am providing in the Finance Bill. Details will be published in the Bill, so I can be brief now. On the Customs side there are only two—a small change in the Customs Duty on imported mechanical lighter parts, and the renewal of the Customs Duty of £4 a cwt. on hops for a further period of four years.

On the Inland Revenue side, I have again been digging in that mine of useful suggestions, the report of the first Tucker Committee, and have put into the Bill provisions relating to partnerships, to the carrying forward of trading losses for one year for set-off against other income, and to the treatment of payments made by companies towards meeting trading losses of associated companies.

I have also looked at the Interim Report on the taxation of overseas profits, which Lord Radcliffe and his colleagues on the Royal Commission were good enough to produce at my request. I am acting at once on two of their three particular recommendations; first on profits which are blocked overseas, and secondly on unilateral relief for double taxation, which will cost £2¾ million in 1953–54 and £3 million in a full year.

Next, I am making special provision so that transactions designed to put the capital structure of the iron and steel companies in a suitable state for the marketing of their shares may be carried out without attracting an artificial burden of Profits Tax.

There are, alas, two small loopholes I must close. Owing to defective machinery of assessment, residents in the Scilly Isles have enjoyed exemption from tax on income and profits arising there. A Clause in the Finance Bill will bring this happy state of affairs to an end. The Bill will also include a provision to nullify a device whereby certain income arising abroad is applied abroad in repayment of loans enjoyed in the United Kingdom and so escapes the normal charge of United Kingdom tax.

I am also giving a small Stamp Duty exemption for documents used by National Savings Groups, and relief will be given from the full rate of Conveyance Stamp Duty in respect of transfers of certain stocks to be issued by local authorities. This should help those local authorities who wish to borrow on the market.

I also propose to give farmers, who feel the heavy weight of the taxation of compensation received for the compulsory slaughter of animals because of foot-and-mouth disease, a fresh opportunity to elect for the so-called herd basis for tax purposes. This will apply to farmers who have suffered the slaughter of a substantial part of a herd in the last year or two.

I am sorry to trouble the Committee with these points, but as they come in Resolutions I think it would be wrong not to mention them.

We can now leave the realm of administration and come to some matters of more human interest. Since 1925 there has been a special relief for those who have become 65—or, if they are married men, whose wives have reached this age. The arrangement at present is that, if the income is no more than £500, a deduction corresponding to that given for earned income—at present 2/9ths—is allowed on any investment income that is included. The primary object of this relief was to put the relatively small incomes of those who had saved and invested for old age in the same position as the incomes of those who had earned pensions of like amount. The income limit of £500 has remained unchanged since 1925; I now propose to increase it to £600. I hope that this step, which will cost £1 million in 1953–54 and £2½ million in a full year, will bring some relief to certain older deserving sections of the community.

I also propose an increase to £60 in the allowance for dependent relatives, who are incapacitated by old age or infirmity. This allowance has remained unchanged at £50 since 1943–44 although the married, single and children's allowances were improved last year. The housekeeper allowance will go from £50 to £60 at the same time. These proposals will be in line with one of our most cherished traditions: they help those who maintain family unity by caring for the old and keeping a home together for the young. The cost will be £3½ million this year and £4¼ million in a full year.

It has been said that every Chancellor has a particular favourite. I now come to mine. Authors who spend more than a year on a work—and authors frequently do—are at present entitled to a special spreading arrangement for tax purposes where they sell an interest in the copyright of their work for a lump sum payment. I now propose to extend this relief to the more normal case by allowing the royalties of the first two years after publication to be spread in the same way as lump sums. In the case of authors I am extending a concession already made, which will cost very little indeed. Others who may wish to spread out their earnings will realise that their case is being considered in broader terms by the Royal Commission.

I also propose to insert a Clause in the Finance Bill taking power to accept, in payment of Estate Duty, chattels normally kept in houses in which Her Majesty's Government have an interest; or in houses which have themselves been accepted in payment of Death Duties and passed on to the National Trust or other bodies. The "chattels" so simply described are, some of them, historic treasures, which the nation cannot afford to lose sight of; like land and houses, they will be paid for out of the National Land Fund.