HC Deb 12 June 1956 vol 554 cc438-9

Motion made, and Question proposed, That the Clause stand part of the Bill.

Mr. Mitchison

Would the right hon. Gentleman, weary though he is, tell us a little about what the Clause does?

Mr. H. Brooke

The main purpose of the Clause is to give effect to the recommendation of the Millard Tucker Committee that purchased life annuities should no longer be taxed in full but that so much of the annuity as represents a return of the purchase price paid should be exempt from taxation.

I think I am right in saying that this has been a bone of contention for upwards of fifty years. In the past, a number of authoritative bodies have recommended that the old system of subjecting the whole of the annuity to tax should be continued though it seemed to anybody who approached the subject without knowledge to be grossly unfair. We have now had a definite recommendation from the Millard Tucker Committee, which is in line with that which seems right to reasonable people looking at the matter with no great financial knowledge. So it appears that the amateurs and—shall I say?—the experts are in agreement. This is a Clause that will give effect to that recommendation, and it contains certain consequential provisions. I do not think there is any big question of principle here, or some Amendments would have been put down.

1.15 a.m.

Mr. Mitchison

I plead guilty to having got the right hon. Gentleman to explain that, in the very clear and simple language he used, in order to say how cordially I personally welcome this Clause. I think my hon. and right hon. Friends will do the same. I remember very well a distinguished and successful teacher in my constituency who was getting on in years coming to me and telling me he had been saving all his life for an annuity and of the real shock it was to him—he was not a teacher of economics or taxation—to discover he had to pay tax, not only on the interest, for he recognised that, but on the repayment element in it. I had absolutely no answer to him. I am exceedingly glad that what I think is a piece of simple justice is being done at last.

Clause ordered to stand part of the Bill.