HC Deb 27 February 1968 vol 759 cc1216-7
24. Mrs. Knight

asked the Chancellor of the Exchequer what instructions have been given to the Inland Revenue regarding tax payable on bonus awards for suggestions to improve efficiency in individual business firms.

Mr. Diamond

Under a long-standing practice an award made to an employee for a useful suggestion made under an employer's suggestion scheme is not regarded as taxable if the amount is reasonable and it is not part of the regular duties of the employee to put forward such suggestions.

Mrs. Knight

Will the Minister bear in mind that the instructions which he has outlined are vague and fluctuating? Would he also bear in mind, if he is thinking of changing them, that it is unwise to impose penal taxation on suggestions for improving efficiency and output in industry?

Mr. Diamond

There is no question of any penal taxation. The instructions are not vague, they are clear; and they are not varying, they are permanent. They are clearly understood by all concerned and draw a clear distinction between payments which are made in the ordinary course of duty and payments made outside the ordinary course of duty.

Mr. Hector Hughes

Would it not be right that this tax should be borne by the industrialists who benefit from the suggestions made?

Mr. Diamond

If industries benefit, as I hope they do, their production increases, their sales increase, their profit increases and so their taxation increases.