§ I now turn to the direct taxes on income. It is my responsibility, as 312 Chancellor, to ensure that the burden of taxation which I regard as necessary at the present time is shared fairly between those best able to bear it. This is not just a matter of fixing the rates of tax and of personal allowances. It has been my consistent aim to make the tax system fairer than it was when we assumed office, and this theme of fairness runs through all my proposals in the personal tax field.
§ First, I propose to introduce legislation in the Finance Bill to require that the Pay As You Earn system should apply to the pay of office workers and other staff engaged through agencies. This is an area where there has been some loss of tax because of the opportunity for claiming self-employed status, and the changes I shall propose will follow broadly what has already been done in the national insurance field. I will also bring forward provisions to make taxable at all income levels the benefit enjoyed by an employee where his employer operates a medical insurance scheme. I think it is particularly necessary for social reasons to ensure that this type of benefit does not escape taxation.
§ There will also be legislation to prevent avoidance of tax by the issue of vouchers to employees instead of normal pay—though I should make it clear that it is not the Government's intention to make any change in the existing luncheon voucher concession.
§ Much preparatory work is required to give effect to all these changes and they will therefore take effect from the next tax year starting in April 1976. So, too, will another measure making a procedural change in the basis under which holiday pay under certain stamp schemes is taxed.