HC Deb 21 July 1953 vol 518 cc187-8
22. Mr. Nabarro

asked the Chancellor of the Exchequer the policy of his Department in regard to assessment for Income Tax and Surtax of the interest earned or accrued on small savings in the Post Office and Trustee Savings Banks; what is the minimum deposit or the minimum sum of annual interest earned or accrued which attracts an assessment to Income Tax and Surtax by the Inland Revenue authorities; and whether he will make a statement.

Mr. Boyd-Carpenter

All such interest of whatever amount, is chargeable where the recipient is liable, to tax and must be included in the taxpayers' return. In practice no assessment is made where the total amount of savings bank interest plus any other interest not taxed at source is less than £1.

23. Mr. Nabarro

asked the Chancellor of the Exchequer how many accounts for small savings are currently conducted by the Post Office and Trustee Savings Banks; in the instance of how many of these accounts the interest earned or accrued was assessed to Income Tax and Surtax in a period of 12 months, ending on the latest date on which a calculation can conveniently be based; and what was the estimated number of accounts in the said period to which no assessment was made.

Mr. Boyd-Carpenter

The number of active accounts conducted by the Post Office and Trustee Savings Banks is about 23 million and 6½ million, respectively. I regret that the information asked for in the last two parts of the Question is not available.

Mr. Nabarro

Can my hon. Friend say whether the effort being made by the Inland Revenue to assess the tax on no fewer than 29½ million accounts is in fact proving a deterrent to the investment of small savings in the Post Office Savings Bank and the Trustee Savings Bank, and, if so, does he contemplate any change in the present arrangements?

Mr. Boyd-Carpenter

While not accepting my hon. Friend's figures, in view of the fact that direct taxation is paid by some 16½ million people in all in this country, the figures do not suggest, if one takes the savings investments which are liable to tax as a whole, that any such effect as my hon. Friend fears has actually operated.

Lieut.-Colonel Lipton

Is the hon. Gentleman not aware that the rate of withdrawal from Savings Banks, to which the hon. Member rightly draws attention, is due not so much to the potential liability to tax, as to either a shortage of cash on the part of the depositors or lack of confidence in the present Administration?

Mr. Boyd-Carpenter

The difficulty in accepting the hon. and gallant Gentleman's suggestion is that the overall position is very much better than it was.

Mr. Nabarro

Would my hon. Friend agree that whereas there are now 16½ million Income Tax payers in this country and there is a total of 29½ million of these small accounts in the Post Office Savings Bank and the Trustee Savings Bank, it is still necessary for the Inland Revenue to assess on the whole of those 29½ million accounts in order to ascertain whether the depositors have in fact any liability to pay tax?

Mr. Boyd-Carpenter

I do not follow my hon. Friend so far as that, nor, I assure him, have the Inland Revenue any such a craving for unnecessary work.

Mr. Gaitskell

Is there any reason why, if small earnings under P.A.Y.E. are all subject to tax unearned income should also be subject to tax?

Mr. Boyd-Carpenter

As the right hon. Gentleman knows, with the exception of special provisions in respect of National Savings Certificates, savings of this or any other character have been treated as other incomes have been treated.