Fourth Schedule.—(RELIEFS IN RESPECT OF TAX UNDER SECTION THIRTY-SIX.) (Hansard, 6 July 1960)

§ Sir E. Boyle
I beg to move, in page 72, line 15, to leave out "income tax chargeable under" and insert "tax chargeable by virtue of"
642 This should be considered with the Amendment in page 74, line 4, to leave out "amount of that tax" and insert 'tax chargeable by virtue of that section". These Amendments implement a promise which I gave in Committee on an Amendment moved by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) to make it clear that the reliefs in this Schedule apply, as is intended, to Surtax as well as to Income Tax.

§ Mr. Powell
It is in contemplating an Amendment of this sort that one realises what a fine thing it is to be a Parliamentary draftsman, for here in this subtle way is achieved the purpose which I have attempted to achieve by the blunt bludgeon of simply putting in the words" including Surtax" I am grateful to my hon. Friend for doing it and for doing it in this elegant fashion.

§ Sir E. Boyle
By leave of the House, I should like to say that at another time and at a different hour I shall be glad to explain to my hon. Friend how elegantly these Amendments perform the task which he had in mind.

§ Mr. Powell
Indeed, I understand.

§ Mr. Jay
However elegant it may be, it seems that as many words were necessary as in the Amendment of the hon. Member for Wolverhampton, South-West (Mr. Powell).

§ Sir E. Boyle
I beg to move, in page 72, line 22, after "charge" to insert "against".
This is a purely drafting Amendment. The word "against" was inadvertently omitted in the printing of the Bill.

§ Sir E. Boyle
I beg to move, in page 73, line 39, to leave out from "date" to the end of line 46.
I think that it might be for the convenience of the House to take Amendments 84 and 88 together. They are purely consequential on the Amendments which we discussed earlier to Clause 37.

§ Sir E. Boyle
I beg to move, in page 74, line 24, at the end to insert: 8. Where the income of the holder or past holder of the office or employment for the year of assessment of which the payment is treated as income includes income, tax on which he is entitled to charge against any other person, or to deduct, retain or satisfy out of any payment which he is liable to make to any other person, the amounts referred to in sub-paragraphs (a) to (c) of paragraph 7 of this Schedule shall be calculated as if that tax were not chargeable in respect of that income. This Amendment has a certain interest for two reasons. I was going to say that the first reason was that it is the first substantive Amendment to the Fourth Schedule without the advantage of the hon. Member for Glasgow, Craigton (Mr. Millan), but that is no longer true. It is interesting to note that it was a point raised in Committee by my hon. Friend the Member for Shipley Mr. Hirst). There is a case where that hon. Member and my right hon. Friend found themselves in close agreement.
The point is that paragraph 7 of the Fourth Schedule as drafted gives insufficient relief in certain types of case where a taxpayer makes a payment from which he is entitled to deduct tax. The type of case in which paragraph 7, as previously drafted, gives a wrong result is where the annual payment made by the taxpayer exceeds his ordinary income for the year, that is to say, his ordinary income apart from salary which is disregarded in giving relief. In such a case tax at the full Standard Rate might be charged several times on the part of the income used to make the annual payment.
The Amendment puts the matter right by providing that the computation of the relief under paragraph 7 is to be made on the basis of ignoring tax which is used to frank charges. The effect will be that the taxpayer who makes a payment from which he is entitled to deduct tax will be treated in the same way as the taxpayer who makes a similar payment but who is not entitled to deduct tax.
The Amendment actually provides that the computation of relief is to be made on the basis of ignoring tax which the taxpayer is entitled to deduct from someone else. I do not think that the Amendment can be said to widen the scope of the Schedule, but it certainly removes an injustice which would remain if we left it unamended.

§ Sir E. Boyle
I beg to move, in page 74, in line 40, to leave out from "than" to end of line 41 and to insert: one complete year, or exceeds an exact number of years, it shall be treated for the purposes of this paragraph as one complete year or as the next higher number of complete years, as the case may be". This Amendment gives effect to the intentions of Amendments put down by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) on the Committee stage but which were not discussed. Its effect is slightly to extend the "top-slicing" relief given under paragraph 7 of the Schedule. Where a payment represents compensation for loss of office, as the House is aware, a claim can be made—"top-slicing," as we say—by reference to the holder's number of years of unexpired service, defined in the Schedule as … the number of complete years taken into account in calculating the amount of the payment, being years for which the holder of the office or employment would have been entitled … to retain it.
If the period in question is two years and six months, the original intention of the Schedule was that the figure two would be taken for "top-slicing" purposes. The object of this Amendment is to round up rather than round down in these cases. In the example we are taking it would be three rather than two years. Where the period is just less than a complete number of years the Bill, in its original form, was somewhat ungenerous in taking only complete years into account. Although this matter is one of judgment, we felt it was a reasonable point to suggest that in these cases we should round up rather than round down, and that is the purpose of this Amendment.

§ Mr. Deputy-Speaker (Sir Gordon Touche)
The next Amendment is in page 76, line 10. The Question is—

§ Mr. Diamond
On a point of order, Mr. Deputy-Speaker. I apologise for putting this to you, but do I understand that discussion on the Amendment to page 76, line 10, has been exhausted?

§ Mr. Deputy-Speaker
Yes, the hon. Gentleman is correct. The House was invited to discuss this Amendment with 645 a previous Amendment and it was agreed so to do. I call it now for decision.