HC Deb 08 June 1961 vol 641 cc1463-8

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

Mr. Mitchison

This Clause raises a question about the houses of clergymen or ministers of various denominations and, in another connection, what is the same question has arisen quite lately with regard to rating and valuation. The root of the difficulty is that the question of occupation—and this relates particularly perhaps to rates, but, also, I think, to this Clause—is sometimes a little doubtful.

It depends on a complexity of arrangements which vary from one denomination to another. The occupying body may be a council, or committee, or other governing body, or it may be the clergyman or minister himself, and with this goes the further question of how far the occupation is occupation as a residence and how far it is an occupation for the purposes of the office of the clergyman or minister.

7.0 p.m.

As I understand the Clause—and I shall ask the Financial Secretary to be good enough to correct and possibly amplify what I have been saying—its effect is to solve the whole variety of possible cases, or, at any rate, most of them, in the interests of allowing the clergyman or the minister to get the benefit of the house being used for the purpose of his office and occupied by him for that purpose so that he gets entitled to corresponding reliefs.

If I have the sense of the Clause right, I am sure that the Financial Secretary will not mind taking a few minutes to confirm it and, if need be, to amplify it and give us the Government's reasons for having introduced it. Very little was said about it earlier.

Mr. Donald Wade (Huddersfield, West)

I hope that this is an uncontroversial Clause, for it removes some long-standing anomalies. In some cases, dwelling-houses of the clergy and ministers of religion are regarded as dwellings to which the principle of representative occupation applies, but in other cases that principle does not apply. Where the manse or parsonage is owned and occupied by a charity, the notional income for Schedule A is deemed to be part of the income of the charity and is not payable or, if paid, is recoverable. However, where the principle of representative occupation does not apply, a different situation arises and in the past it has been impossible on principle to justify the differences of treatment between one denomination and another.

For example, a clergyman who is an incumbent of a parsonage may be regarded in law as a corporation sole, but the corporation sole is not regarded as a charity and, therefore, Schedule A tax is payable. In the case of ministers of Nonconformist Churches, the principle of representative occupation does not always apply. The property may be owned by a charity, but be regarded as occupied by the Minister. He may occupy it free of rent, but for Income Tax purposes he will be assessed on the benefit of his interest.

I would rather that Schedule A tax was abolished altogether. That would be the simplest way of dealing with the problem. But so long as we have Schedule A tax it is reasonable that all denominations should be treated alike, and the object of the Clause is to ensure that all denominations are put on the same footing.

I happen to have some knowledge of this matter as I am the honorary treasurer of a denominational trust which owns a number of properties of this type, and I therefore welcome the Clause. I understand that it has the support of the Churches Main Committee and it is appropriate that this reform should be introduced this year as a similar alteration in the law is being made in the Rating and Valuation Bill, because similar anomalies have arisen in rating owing to the rather complex situation as it affects parsonages and manses.

I hope that I have accurately described the position, but, if not, no doubt the Minister will correct me.

The Financial Secretary to the Treasury (Sir Edward Boyle)

I entirely agree with the hon. and learned Member for Kettering (Mr. Mitchison) that we ought not to grudge spending a few minutes on this Clause. Since my right hon. and learned Friend's Budget speech, the only reference to the Clause which I can remember was that made by the right hon. Member for Huyton (Mr. H. Wilson) when, on behalf of the Opposition, in the Budget debate he said: we welcome the minor relief given to ministers of religion who pay tax as the beneficial occupiers of manses and vicarages."—[OFFICIAL REPORT, 18th April, 1961; Vol. 638, c. 988.] This relief is the outcome of the consideration which Lord Amory last year promised to give to the tax position of clergymen. Last year we debated as we have debated on many occasions the question of Easter offerings in the Church of England, and on that occa- sion Lord Amory, like so many of his predecessors, pointed out the very great difficulties of giving any such relief, but he promised to consult the representatives of the churches to seek to find some relief which can be given without unfairness to others, and without too fundamental a breach of the principles of our tax law. He went on to say: We will see whether a practicable way of helping clergymen might be to find some means of relieving the burden of Schedule A Tax on parsonage houses as far as that falls on the incumbent."—[OFFICIAL REPORT, 6th July, 1960; Vol. 626, c. 491.] The Clause is the result of the examination which Lord Amory undertook to make.

The hon. Member for Huddersfield, West (Mr. Wade) was quite right about this. The Churches Main Committee was never happy about the Easter offering proposal. In a curious way, that demand, felt very strongly in the Committee, was a demand by the laity. It is relevant to the context of this debate to point out that the Clause has the full support of the Churches Main Committee.

As the hon. and learned Member for Kettering said, the form of the relief substantially follows the pattern of a Government Amendment which has already been debated on the Report stage of the Rating and Valuation Bill. Roughly speaking, the Clause provides that premises which are owned or leased by a charity or, to cover the case of incumbents of benefices in the Church of England, ecclesiastical corporations, and which are made available as official residences of a full-time clergyman or minister of religion shall be treated as if they are owned and occupied by a charity. The effect will be to exempt the minister from tax under Schedule A except, of course, that if he lets part of his parsonage house, any rent which he receives will naturally remain chargeable to tax.

The present situation, as the hon. Member for Huddersfield. West fairly indicated, is entirely unsatisfactory. Some ministers living in houses provided by their denominations already pay no tax in respect of their occupation. Where a minister lives rent free in a house owned by his church and is required to do so for the effective performance of his duties, the church itself or the denomination itself is regarded under Income Tax law as the real occupier and no liability under Schedule A is assessed in that case, because the minister's occupation is "representative" of the Church and, as a charity, the church is exempt from the tax.

Incumbents of benefices in the Church of England are not in this position. The freehold of their parsonage house is vested in them, and they are not representative occupiers but beneficial occupiers. Moreover, there are some ministers of other denominations whose occupation of the premises provided for them is beneficial and not representative. At present in such cases the minister is liable to tax under Schedule A.

That was not a satisfactory situation, and it is a merit of the Clause that it will not only provide some help for the clergy in the sort of way which the Committee has often considered in previous years but, perhaps more important, it will produce uniform treatment for all religious denominations.

It is in full accordance with the view of the Royal Commission on the Taxation of Profits and Income, which in paragraph 922 (2) recommended that the annual value of a Church of England parsonage house should cease to be attributed to the incumbent as income, but this change should not exempt him from liability to tax on any income that he may derive from letting the property or any part of it. The Clause has the twin merit that it treats all religious denominations fairly and in the same way, and that it provides some help in the tax position of clergymen, a subject to which the Committee has often devoted attention. It provides that help in a way that the hon. Member for Sowerby (Mr. Houghton) would regard as a great deal less objectionable than allowing them tax-free the "sacrificial offerings", as they were called, which we discussed last year On all those grounds I commend the Clause to the Committee.

Mr. Mitchison

May I ask the Financial Secretary—I am not sure whether the information has been given—what is the cost of this, and whether any estimate has been made of the rough proportion of people who have this relief already, as compared with those who do not get it but who will get it under this Clause?

Sir E. Boyle

I can assure the hon. and learned Gentleman that the cost of this relief will be negligible. I cannot provide a precise figure, but it will be negligible in amount.

Question put and agreed to.

Clause ordered to stand part of the Bill.