HC Deb 03 July 1957 vol 572 cc1252-4

Subsection (1) of section two hundred and nineteen of the Income Tax Act, 1952 (which relates to income tax relief on small life assurance premiums), shall be amended to provide that if, in any year of assessment, the total premiums in respect of which relief falls to be granted under this subsection in the case of a married man do not exceed fifty pounds. the relief under this subsection shall be a deduction equal to tax at the standard rate on twenty pounds or on the full amount of the premiums, whichever is the less.—[Mr. H. Hynd.]

Brought up, and read the First time.

Mr. H. Hynd

I beg to move, That the Clause be read a Second time.

At this late stage in the Committee's proceedings I shall be very brief. I claim that the Clause will deal with an anomaly which has been inherited by the Chancellor of the Exchequer, and I hope that it will give him an opportunity of correcting it. I am afraid that the Clause, as it appears on the Amendment Paper, does not reveal the real purpose that we have in mind, and I would therefore like to remind the Committee that in the 1952 Income Tax Act it is provided that premiums for insurance, up to £25, carry a full rebate of tax up to £10. Whether that is on the husband's life or the wife's life, or is taken out by the husband or the wife, it is lumped together to a maximum of £10. That applies even where the wife is separately employed, has an income of her own, and has taken out a separate policy.

I contend that that is unfair and should be put right as quickly as possible. In these days, when so many wives are earning separate incomes, it is all the more burdensome, and there is all the more reason why the Government should look at the position. This would be an important concession, which could have quite a considerable effect in encouraging people to save in this way. As it would not cost the Treasury very much, I suggest that this is a suitable concession to make in this Finance Bill.

Mr. Powell

The hon. Member for Accrington (Mr. H. Hynd) does not think that this Clause would cost very much by way of revenue. I do not know what he means by "very much", but the actual cost would be £8 million, or thereabouts. It is worth pointing out that the benefit of that £8 million of remission would go almost entirely to people who are already paying premiums of between £10 and £150, so that the great bulk would not go to the encouragement of extra saving by way of new insurance policies being taken out.

The hon. Member related his case in part to the question of a husband and wife both with incomes and both with insurance policies. If both husband and wife pay insurance premiums, they do receive the appropriate life insurance relief for the total of the premiums which they pay, so that a husband and wife paying, for example, a total of £30 by way of premium receive exactly the same relief as a married man, paying the same premium from the same income, would receive. The present law is therefore entirely consistent, given the basic principle that the income of husband and wife are aggregated. Where they are separate, then proportionate life insurance relief is given against the two separate incomes.

I do not feel, therefore, that either the narrower purpose which the hon. Member has in mind or the wider purpose, would justify this very large further increase in life insurance relief.

Question put and negatived.