HC Deb 31 May 1965 vol 713 cc1262-5

7.30 p.m.

Question proposed, That the Clause stand part of the Bill.

Mr. Peter Walker

May I request that the Government make clear their position upon partially exempted superannuation schemes? In discussing an Amendment I put two points to the Chief Secretary. There is an administrative difficulty in handling the situation in respect of members transferring out of such schemes and in respect of the provision for reserve which such superannuation funds should make. If the Government are not prepared to answer the question now, perhaps they will give attention to it on Report.

Sir Eric Fletcher

I can add nothing to what was said by the Chief Secretary in the main debate. What was said in that debate will be considered between now and Report.

Mr. Lubbock

What is the position of retirement benefit schemes approved under Section 388 of the Income Tax Act, 1952?

Sir Eric Fletcher

As the hon. Member knows, one of the difficulties is that some schemes have been approved under the Section and some have not.

Mr. Lubbock

May I give the hon. Member a minute so that a note may be brought to him?

I understand that the schemes which are exempted are only those specifically mentioned in the Clause. I have looked everywhere to see whether there are any others. I am concerned that a scheme which has been approved by the Inland Revenue for the purpose of reclaiming Income Tax is not, apparently, to be exempt from Capital Gains Tax.

I would also point out that there are certain funds which have never been approved under any specific statutory provisions but which, I think, are called discretionary schemes and which the Inland Revenue have allowed for Income Tax purposes under no particular provision either of the Income Tax Act, 1952, or of any of its predecessors. It seems to me logical that if those schemes have been approved for Income Tax purposes, and if the only object of those schemes is to provide pensions or other superannuation benefits for the beneficiaries, they should also be exempt from the Capital Gains Tax.

I should like to hear from the Minister without Portfolio not only what is the position of Section 388 schemes but also why the Clause was not drawn much more widely to cover all retirement benefits and superannuation schemes which have been approved by the Inland Revenue for Income Tax purposes.

Sir Eric Fletcher

The hon. Member should realise that superannuation schemes vary a great deal. It is for that reason that the Income Tax Act provides that Income Tax relief is available only in respect of superannuation funds which are approved by the Inland Revenue. For example, some provide merely for pensions and others provide for capital sums on retirement. These involve quite different considerations from pure Income Tax considerations. The theory always has been that to participate in relief for Income Tax purposes a superannuation fund should have its provisions approved by the Board of Inland Revenue. It follows as a natural consequence and as a matter of logic that only funds so approved should have the benefit of exemption from the Capital Gains Tax.

Mr. Lubbock

I am sorry to press the hon. Gentleman on this point, but I do not think that he understood what I said. I said that there were schemes which were approved by the Inland Revenue, either under Section 388 or under a discretion given to it, in respect of which it was possible to reclaim Income Tax but that in this Clause only certain Sections of the Income Tax Act, 1952, are mentioned, and that Section 388, which is entitled "Approval of retirement benefits schemes", is not one of them. The Inland Revenue has to approve Section 388 schemes and therefore it comes within the category which the hon. Gentleman has mentioned. Yet Section 388 is not mentioned anywhere in Clause 33. That is what I am arguing about.

There are other schemes which provide pension or other superannuation benefits which are not approved by the Inland Revenue under any Statute but which are approved under a discretion given to the officers of the Inland Revenue. Why cannot the Clause be widened to say that wherever they are approved for Income Tax purposes they shall also be exempt from Capital Gains Tax?

Sir Eric Fletcher

The answer is that until the hon. Gentleman raised the point nobody had ever suggested that these funds should be approved. There is no Amendment on the Notice Paper to suggest that the Bill should be extended to them. I have never heard it suggested, among all the representations which the Government have received on this Bill, that there should be the kind of extension to Clause 33 which the hon. Gentleman suggests.

We thought that the proper course was to apply Section 379. The hon. Gentleman, on the Question, "That the Clause stand part of the Bill", and without tabling an Amendment, has raised an entirely new point. I shall certainly look into it, but my offhand impression is that it would be wrong and contrary to the whole spirit of the Clause to grant the extended relief suggested.

Mr. Peter Walker

The representations made to the Government on this Clause by the Institute of Actuaries asked that all superannuation funds, irrespective of the Section which they came under, should be covered by this Clause. Therefore, representations have been received.

Mr. Lubbock

Would the hon. Gentleman agree to consider this matter on Report if I put a case to him in writing?

Question put and agreed to.

Clause ordered to stand part of the Bill.