§ Question proposed, That the clause stand part of the Bill.
§ Mr. BrittanThis clause proposes a small change in the tax rules to make the cost of an employee seconded to a charity a deductible expense for corporation tax purposes. The general rule is that a company may deduct for tax expenditure incurred wholly and exclusively for the purposes of its trade. Under the present law the salaries and associated costs of an employee whom a company makes available to a charity for a temporary period are not allowable for tax because they do not satisfy the business purpose test.
There have been representations that the law as it stands discourages companies from making staff available to charities as, by doing so, the companies lose tax relief for the salaries which they continue to pay during the period of secondment. The Government recognise the force of these representations and are satisfied that it is right to make an exception to the deduction rules for this very limited case.
832 The Government believe that this modest but useful change will be generally welcomed. It will assist the community to help itself by encouraging business to support the voluntary sector in a practical way. Charities can benefit greatly and in many ways from the expertise that suitably experienced personnel on loan from the business world may bring to their operations. This is another example of the way in which the Government are seeking to assist charities, and I commend the clause to the Committee.
§ Question put and agreed to.
§ Clause 34 ordered to stand part of the Bill.
§ Clause 35 ordered to stand part of the Bill.
§ Clauses 36 and 37 disagreed to.