§ The Solicitor-General (Sir Peter Rawlinson)I beg to move, in page 19, line 21, to leave out subsection (5) and to insert:
(5) Paragraph 7 of Schedule 4 to this Act shall apply in relation to the year 1963–64 as it applies in relation to subsequent years, but with the substitution for sub-paragraph (1) of the following sub-paragraph: —(1) Where this paragraph applies to an estate for the year 1963–64 the owner shall be treated for the purposes of tax under Schedule A or under Chapter II of Part VII of the Act of 1952 (excess rents) as if he were not the occupier of any part of the estate occupied by him, and as if—This was the Amendment referred to by the hon. Member for Cardiff, South-East (Mr. Callaghan) yesterday, in relation to the fact that between Friday of last week and Monday there was a change in the first two lines. I might be helpful to the House if I explain just how that came about. It was with the intention of helping the House, because otherwise there would subsequently have had to be an Amendment. If it had been left in its other form it would have related to paragraph 6 of Schedule 4, when it has been changed to paragraph 7 of the new Schedule. It was, therefore, not in any way to alter the sense, but to avoid a printing Amendment later, and to make it clear that the Amendment was put down.but as respects any period during which the sub-paragraph (1) hereinbefore contained does not exclude the operation of subsection (2)(a) of this section, the cost of the maintenance, repairs, insurance and management of any part of the land referred to in that sub-paragraph as the estate, being a part in the occupation of the owner, shall be disregarded in the application of section 101(4) of the Act of 1962 to the land.
- (a) in relation to a part of the estate which for any period in the year is not comprised in a lease under which he is the
1462 landlord, he were entitled under a lease of that part to rent for the said period, becoming due from day to day, at a rate per annum equal to the annual value of that part ascertained in accordance with Schedule 7 to this Act; and - (b) in relation to a part of the estate which for any period in the year is comprised in a lease under which he is the landlord, the rent, so far as it relates to that part, were at a rate per annum not less than the annual value of that part ascertained in accordance with the said Schedule 7.",
9.45 p.m.
The Amendment is consequential on the proposed new provision in Schedule 4, paragraph (7), to which I have referred, and it relates to mansion houses on land managed as one estate. Under the present law—under the Income Tax Act, 1952—properties on land managed as one estate are treated as a unit for maintenance claim purposes. Thus an excess of expenditure of one property over the annual value of that property as assessed under Schedule A can be set off against the rents of other properties on the same estate.
The Bill provided originally that where an owner-occupied house was managed as one estate with rented property in 1962–63, the owner occupier could still claim the expenses on the house against the rents of the rest of 1463 the estate if he elected to bring in the current annual value of the house on the other side of the account. This, however, did not go far enough because houses which benefit from this relief do not command a rent which covers the cost of repairs.
The new paragraph (4) of Schedule 4, which we will come to later, provides that expenses can be set off against the rents of other properties on the estate only if the rent is a "full rent"; and with a large mansion no one will pay or take a rent sufficiently high to cover the expenses of upkeep.
The new paragraph provides that where such a house is let the owner shall still have the option to set off his expenses against the rents of other properties on the estate, on the condition that the owner is treated as receiving a rent of not less than the current annual value. Thus the Amendment is consequential to the new paragraph (7) and it was obviously right that this should apply in the way that it is applied—both where the house is owner occupied and where the house is let.
§ Amendment agreed to.
§ The Solicitor-GeneralI beg to move, in line 43, at the end to insert:
(6) Paragraph 9 of Schedule 4 to this Act, and the provisions of paragraph 10 of that Schedule modifying the application of the said paragraph 9 in certain cases, shall apply for the purpose of computing rent payable by a person in determining his liability to tax for the year 1963–64 under section 175 or 176 (excess rents) of the Act of 1952 as they apply for the purpose of computing amounts deductible for purposes of Case VIII in subsequent years.The Amendment gives an intermediate landlord who in 1963–64 pays a chargeable premium, or amount in the nature of a premium, the appropriate annual write-off against his rental income for 1963–64 It is a consequential matter and arises out of the new paragraph (9) of Schedule 4.
§ Amendment agreed to.