§ '(1) In section 338 of the Taxes Act (which, as amended by section 57(3) of the Finance Act 1980, provides for exemption for income and gains of a trade union precluded by Act or rules from assuring to any person a sum exceeding £2,000 by way of a gross sum or £416 a year by way of annuity if the income or gains is or are applied for purpose of provident benefits) for "£2,000" and "£416" there shall be substituted respectively "£2,400" and "£500".
§ (2) Subsection (1) above has the effect in relation to income or gains which are applicable and applied as mentioned in the said section 338 on or after 1 June 1982.'.—[Mr. Brittan]
§ Brought up, and read the First time.
§ The Chief Secretary to the Treasury (Mr. Leon Brittan)
I beg to move, That the clause be read a Second time.
This clause has been tabled in fulfilment of the promise that I gave in Committee in replying to a new clause that was moved by the hon. Member for Edinburgh, Central (Mr. Cook). I said at that time that the hon. Gentleman's new clause had considerable merit and was justified, although it was technically deficient. This new clause seeks to enact its principle in a proper form.
Trade unions are entitled to relief from corporation tax on as much of their income in capital gains as is applied to the payment of provident benefits to their members. However, to qualify for that relief, the trade union must be precluded by its rules from assuring lump sums or annuities exceeding specified amounts. In other words, the relief is intended to enable the provision of modest lump sums or annuities, and not very large ones. The present limits of £2,000 for the lump sum and £416 a year for the annuity were set in 1980. The Government accept that it is right that those figures should now be uprated to £2,400 and £500 respectively. That is a small but helpful additional relief which will assist trade unions in providing for their members, during sickness following an accident, by way of superannuation, and so on.
I am glad that the matter was brought to our attention by the hon. Member for Edinburgh, Central, that it has 692 been possible to accept what he put forward, and that the Government can now move the new clause implementing his proposal.
§ Mr. Robin F. Cook (Edinburgh, Central)
As the Chief Secretary said, this new clause results from a new clause which the Opposition tabled in Committee. We attempted to achieve the same purpose as the Government's new clause, but we went about it in what proved legally to be a somewhat flatfooted manner. We willingly withdrew our new clause in Committee when the Chief Secretary gave an undertaking to return to the matter on Report, and I now express our appreciation to him for having accepted our proposal and brought forward a less flatfooted and perhaps more elegant way of achieving our objective.
The new clause provides for a modest uprating of what are modest sums. I am certain that both sides of the House agree that the purposes for which these funds are established are eminently worthy, and the new clause will help to assist those who run the funds in maintaining a modern level of benefit.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.