§ Mr. MacColl
I beg to move Amendment No. 31, in page 13, line 2, to leave out from "Act" to the end of line 6.
This matter arose in Committee, as the hon. Member for Hemel Hempstead (Mr. Allason) may remember, when I produced one of my very brilliant and lucid explanations of the Clause, so brilliant and lucid that I outstripped the Clause. The Clause did not say what I said that it said and the Amendment is to make it conform with what I said.
What is proposed is that payments for living accommodation are to be disregarded because people abate rates. If we take board and lodging payments into account as well, that will hit the applicant twice, but there was an exception to this where rent was paid by a sub-tenant, and this was a mistake. Under the Amendment, if a sub-letting of part of the premises is made, the sub-tenant and anyone living with him would be additional persons reducing the reckonable rate and therefore on the payments for disregard the two should be on an equal basis. The hon. Gentleman thought that that was sensible and I agree with it.
§ Mr. Allason
I am not sure that my recollection of what occurred is exactly the same as that of the Parliamentary Secretary. I distinctly recall pointing out the effect of these lines and saying that they appeared to me to be most unfair. The Parliamentary Secretary then said that he had noticed that they did not mean what they purported to mean, but then he had forgotten all about them and he was grateful to me for reminding him of them. He had not only forgotten them but forgotten to do anything about them, and it is only on Report that we find that they are being removed.
708 The curious thing is that they were included with a particular intention and that intention has now apparently been lifted. They were intended to apply to payments made by the sub-tenant to the tenant, and I pointed out that, as worded, the provision would apply to payments made by the sub-sub-tenant to the subtenant. I would have thought that it would have been perfectly possible to amend the Clause to do what the Parliamentary Secretary originally intended it to do, or rather what the Government intended it to do—I must not blame the Parliamentary Secretary too much for this. However, as I wish to see the entire subsection knocked out, I must be grateful to find that at least two-thirds of it are out.
§ Mr. MacColl
The hon. Gentleman is quite entitled to blame the Parliamentary Secretary. The Parliamentary Secretary is paid to be blamed. However, on this occasion I am fairly innocent. In Committee I said:The hon. Member for Hemel Hempstead (Mr. Allason) and I are both right, I think, on the point which he raised. My explanation was admirably clear, logical and succinct. The right hon. Gentleman said that it was not accurate in terms of the Bill and the right hon. Gentleman is right. I am advised that what I said is what ought to be in the Bill and this is a matter which we shall consider before Report."—[OFFICIAL REPORT, Standing Committee D, 8th February, 1966; c. 235–6.]That is exactly what I have said and done.
§ Amendment agreed to.
§ Mr. Hall-Davis
I beg to move Amendment No. 32, in page 13, line 16, at the end to insert:(4) In computing income for the purposes of subsections (1) and (2) of this section, the amount of interest received on deposits held in a building society shall be taken to be the net amount paid to the recipient.This is a simple and straightforward Amendment and I will endeavour to explain it briefly. It is concerned with the grossing up of net receipts, such as dividend payments. I am not sure that it is generally appreciated that when the Bill becomes operative the position regarding tax deducted from small dividends may appear, to some people, to be contradictory and anomalous as between the treatment accorded for Income Tax purposes and rate relief. When 709 a married couple, of whom either the husband or wife is over 65, are in receipt of payments from which tax is deducted at source and their total income does not exceed £575, the limit for age exemption, their purpose in making a return of these net payments to the Revenue is in order to secure a repayment of tax. In other words, disclosure and grossing up operate in their favour and part of their income finds its way to them via the Inland Revenue.
Under this Bill, if their income exceeds £520 and is less than £575, the effect of grossing up before rate relief will be the exact opposite, because for each £ of tax involved it will reduce the relief by 5s., so that in one way they will be augmenting their income and in another they will be diminishing their relief. I can see this causing some bewilderment to many old people. It is important that they should have no fears that in the provisions of this Bill, so far as building society interest is concerned, no question of grossing up will arise.
I am sure that that is not the right hon. Gentleman's intention but the Bill is open to interpretation and it is just possible, in the light of one practice, that it might be so interpreted. In Circular No. 11/66 issued by the Ministry of Housing and Local Government, paragraph 11 reads:The Bill contains no definition of income'. The term is therefore to be interpreted in its fullest sense as ' that which comes in'.In the context of this Amendment—relating to building society interest—my hon. Friends and I are a little apprehensive of the words…interpreted in the fullest sense.There is a precedent. It is only one, but there is a precedent where building society interest is concerned in which it is grossed up. This is for Surtax calculations and has the effect of reducing the pressure on the Revenue. In order to set at rest the minds of ratepayers and to establish beyond doubt that no similar demand on building society interest could arise under the provisions of this Bill, I would ask the Minister to accept this Amendment.
§ Mr. MacColl
There is no dispute about what we want to do here, but I cannot ask the House to accept the 710 Amendment, because I am advised that it is not necessary and might make things more confusing. The hon. Gentleman is more expert in this than I am, but special arrangements are made in the Income Tax Act with the Commissioners of Inland Revenue for building society interest. The building society is responsible for paying tax on interest payments.
It is quite true that the amount paid is a composite rate, designed to balance the swings and roundabouts as between different individuals who receive interest payments. There is no question of the individuals being liable for the tax. It is the building society which is liable, and there is no question of grossing up these rates of interest. They are made free of tax.
§ Amendment, by leave, withdrawn.