RELIEF FOR PRIVATE RESIDENCES (Hansard, 5 July 1978)

§ The Minister of State, Treasury (Mr. Denzil Davies)
I beg to move, That the clause be read a Second time.
The new clause meets the recommendation that we made in Committee on the basis of an Opposition amendment giving relief from capital gains tax in respect of the sale of some private residences. It extends the scope of section 29 of the Finance Act 1965, which exempts an owner-occupier from capital gains tax where he disposes of his home, to include an individual who is living in job-related accommodation who disposes of a dwelling house, or part of a dwelling house, which he intends to occupy eventually as his main residence.
It will be remembered that in Committee I conceded that there were good arguments for accepting the Opposition amendments. There were some technical problems and the new clause meets the Government's commitment.

§ Mr. Jerry Wiggin (Weston-super-Mare)
It is only right and proper for me and my hon. Friend the Member for Mid-Sussex (Mr. Renton) to welcome the new clause. It is an amalgam of two new clauses that we moved in Committee to deal with the very points that the right hon. Gentleman has put to the House.
The difficulties that are experienced are now well known to the House as they have been put before it in difference ways by my right hon. and hon. Friends for at least the past three years in Committee and on Report. It is obviously to be welcomed that the Government have now accepted the problem and understand the difficulties of those concerned. I sincerely welcome the clause, especially on behalf of those who have job-related accommodation in agriculture. I and my hon. Friends are most grateful to the Government for introducing it.
I am sorry that there has been some hardship over the last two years for those who have been faced with the worry of not knowing that this concession was available. The arguments were very good and I am delighted that they have been accepted.

§ Mr. Tim Renton (Mid-Sussex)
Like my hon. Friend the hon. Member for Weston-super-Mare (Mr. Wiggin), I welcome the new clause. I am pleased that 602 the Government have taken up the suggestion that we made in Committee not only this year, but in previous years, to help a person living in job-related accommodation who has another house to which he proposes subsequently to move, perhaps on retirement. As my hon. Friend said, this clause deals with the hardship of which we have been aware for many years. Unlike my hon. Friend, when I raised the point in Committee, it was to deal not only with a person in agricultural employment but specifically with the man who runs a grocer's shop to which a sub-post office is attached with accomodation above the shop and who has a house in some other part of the country to which he hopes to retire.
There is one point that I should like the Minister to clarify. Is it clear that if, whilst a person is still living in job-related accommodation, he sells the house to which he proposes to retire or which he owns, even though he has not yet moved into that house, he would be free of capital gains tax liability? I think that is so, but I should like the Minister's assurance.

§ Mr. Wiggin
I think that it is accepted that the rationale to this clause is that the people affected find the need to stay in the house market. In other words, they are protecting themselves against inflation and the difference in price. We conducted our argument on that point. Indeed, it does not matter whether the person concerned is the headmaster of a school, a farm manager or a policeman. The point is that if he has a house, he must be able to keep it in the house market as a capital investment so that, when he retires or changes his job, he has the capital appreciation, if necessary, to be able to move. It must be transferable.

§ Mr. Renton
That is the exact point. In a sense, it reaffirms my point that, even if the house is sold whilst the owner is living in job-related accommodation, the proceeds from the sale should be free of capital gains tax so that, as my hon. Friend said, he still has the capital available to purchase another house. Such people, as my hon. Friend said, are staying in the house market. Subject to that question, I welcome the new clause.

§ Mr. Peter Rees (Dover and Deal)
The Minister of State moved the new 603 clause so baldly and with such a notable lack of luxuriance that I think we should spend a minute or two, as my hon. Friends the Members for Weston-superMare (Mr. Wiggin) and Mid-Sussex (Mr. Renton) have done, to explain to the House and to those outside who may be following our debates how the new clause finds itself on the Order Paper.
Of course, we recognise the responsiveness of the Minister of State to the pleas that we made upstairs, particularly in the debate on new clause No. 67. But that clause, in its turn, picked up a theme which had run through our debates over two, if not three, Finance Bills.
The House will recall—indeed, I am sure that the Minister of State will confirm—that this point was originally picked up in relation to mortgage interest relief. I deprecate the use of the words "job-related accommodation". I prefer the more old-fashioned phrase "tied accommodation". It was observed from the Conservative Opposition Benches that those in tied accommodation—that is generally understood; people do not usually understand the jargon of "job-related accommodation"—were particularly harshly treated against a background of high taxation in a highly inflationary world with house prices going up year by year, so that, when the time came for them to retire, they had nowhere to live. That was what led my hon. Friends and I to raise the question of mortgage interest relief. Indeed, all credit to the Minister of State, because I think that he conceded that point in our debates several years ago.
Therefore, we came to the question of capital gains tax, which had not been covered. My hon. Friend the Member for Mid-Sussex instanced sub-post offices. My hon. Friend the Member for Westonsuper-Mare, ever tender of the agricultural world, instanced farm managers—indeed, it may soon apply to people working at every level in agriculture—being anxious to buy their own accommodation.
I have had representations from the prison service, the police, the forces, the Church and mine managers. I am sure that hon. Members on both sides of the House can add to that list. It is an important point. As my hon. Friends have pointed out, it is right that they should get the capital gains relief on their proper 604 homes of which they would be deprived because they have to spend their working careers in tied accommodation.
On that basis we welcome the new clause. We must be grateful to the Minister for responding to our pleas, but particular credit must go to my hon. Friend the Member for Weston-super-Mare and my hon. Friend the Member for Mid-Sussex. We can extend a general unqualified welcome to the new clause, late in the life of this Administration as it comes.

§ Mr. Denzil Davies
I can give the hon. Member for Mid-Sussex (Mr. Renton) the assurance that there will be no charge to tax in the circumstances that he outlined.
The hon. and learned Member for Dover and Deal (Mr. Rees) chastised me for moving the new clause too baldly. The main congratulations for this concession go to the hon. Member for Weston-super-Mare (Mr. Wiggin), who moved a similar amendment in Committee. On the Amendment Paper it was not supported by his Front Bench, although it was in speeches. I find that rather surprising. This is a concession which we are pleased to grant.

§ Mr. Wiggin
We must be realistic. There were several hundred amendments in Committee. The Committee stage was taken in a short time and, therefore, the number of names is not relevant. My hon. Friends supported me in this issue last year and the year before and when the original legislation was drafted. It is not fair to say that we have not been as one on this issue. The amendment was in my name, but there were many other amendments in my hon. Friends' names which I also supported.