There shall be substituted for subsection (2) of section thirty-four of the Finance Act, 1958, the following subsection:
(2) Where the amount or value of the consideration is less than three hundred pounds, but the instrument is not certified at three thousand five hundred pounds, the duty instead of being charged at the rates stated in subsection (1) above for every fifty pounds or fractional part of fifty pounds of the consideration shall be charged at rates equal to half the amounts so stated for every twenty-five pounds or fractional part of twenty-five pounds of the consideration or, if the consideration is less than twenty-five pounds, at rates equal to one-tenth of the amounts so stated for every five pounds or fractional part of five pounds of the consideration or, if the consideration is less than five pounds, at rates equal to one-fortieth of the amounts so stated for every twenty-five shillings or fractional part of twenty-five shillings of the consideration".—[Mr. du Cann.]
§ Brought up, and read the First time.
§ Mr. Edward du Cann (Taunton)
I beg to move, That the Clause be read a Second time.
This is a narrow but, I hope the Committee will think, a not unimportant point, and I will endeavour to explain it as shortly as I can. The present rate of Stamp Duty payable on the issue of bearer warrants or on the conversion of registered shares to bearer is three times the ad valorem duty applied to the nominal value of the shares represented by the bearer warrant, in question. The minimum value in the ad valorem scale for this purpose is £5.
The practical effect, therefore, of this situation is that when shares of a 189 nominal value of less than £5 are issued the duty is always the same, namely 6s., that is, 6 per cent. For example, if a share of a nominal value of £1 were issued, the duty would be 6s. or 30 per cent, in the case of a share with a nominal value of 10s. the duty would amount to 6s., or 60 per cent.
The new Clause repeats subsection 2 of Section 34 of the Finance Act, 1958, with one exception, which is the three final lines of the new Clause:… or, if the consideration is less than five pounds, at rates equal to one-fortieth of the amounts so stated for every twenty-five shillings or fractional part of twenty-five shillings of the consideration.The object is to set steps below £5, which is the current minimum, to ensure that the rate of duty payable on smaller nominal values is very much less than what is, I suggest, under the present extraordinarily high scale. The four steps are as follows: Up to 25s. the rate of duty would be Is. 6d., up to 50s., 3s., and up to 75s., 4s. 6d. In each case this corresponds to the 6s. scale which is currently in force for shares of £5—which is 6 per cent.
I hope the Committee think that this is a fair and reasonable point. It may be that it would be advantageous to introduce additional steps, but I hope none the less, whatever is thought about graduation, that it will be agreed that the point is right.
§ The Financial Secretary to the Treasury (Mr. J. E. S. Simon)
My hon. Friend the Member for Taunton (Mr. du Cann) has explained the purpose of this Clause which we think in principle a reasonable one. The point is really that although the duty on the transfer of stocks and marketable securities is generally referred to as one of two per cent., in point of fact it proceeds in steps, and it is only at the step that the duty is precisely 2 per cent. On higher amounts the marginal increase over 2 per cent, is unimportant, but on the smaller amounts it can be quite a considerable divergence. For example, the duty on the transfer of a share for £1 is 2s., which is equivalent to a 10 per cent. duty. But the anomaly is even greater when one comes to bearer shares, where the Stamp Duty is an amount equal to three times the duty which would be chargeable on a transfer of a. share, so that on a £1 share it is 6s,. or 30 per cent, of the nominal value.
190 What my hon. Friend is seeking to do is to graduate the scale downwards to relieve that extraordinary incidence of duty. It would have little effect on Stock Exchange transactions because these very small amounts are rarely dealt with on the Stock Exchange, but it might have some effect in dealings in units of a unit trust, particularly on re-purchase, and with small dealings on bearer shares.
There is one matter which we do not think satisfactory. This Clause would not only cover dealings in securities but also dealings in small amounts of property. Occasionally, when one has a conveyance of a house which would come under the various concessions made in recent years, one has at the same time a conveyance of a small amount of property, or an easement, going with it. The duty as the Clause is drawn on such a transfer might involve an odd halfpenny. Unfortunately the stamp has to be impressed and there is no machine for impressing a halfpenny stamp. We think that a Clause can be devised which will meet my hon. Friend's point while obviating the administrative difficulty to which I have referred. If my hon. Friend is willing to withdraw the Clause my right hon. Friend will bring forward a new Clause on Report to meet his point.
§ 11.15 p.m.
§ Mr. Mitchison
We have been told that this Clause would have little effect on Stock Exchange dealings, and so I suppose. We have further been told that it would affect our unit trusts, with which no doubt the hon. Member for Taunton (Mr. du Cann) is familiar, and also dealings in bearer securities. Bearer securities are beginning to have a certain political content. Tate & Lyle and other companies are arranging for the sale of their shares to their employees. This is not a matter which I wish to discuss at the moment, but it appears that the new Clause is directed, perhaps not entirely, but largely, towards that practice, and is for the benefit of those who think that that is the right way of dealing with any extra remuneration which is given to employees.
It may be said that the shares are freely purchased, and the rest. Major considerations are involved here, which we cannot discuss now—I imagine that the Clause will be withdrawn—but we 191 shall watch with interest what the Government propose by way of a substitute, and we shall do so having regard to some of the social implications of the policy encouraged by the Government in these matters.
§ Mr. du Cann
In view of what my hon. and learned Friend has said, for which I am most grateful, I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.