EXCEPTIONS FROM RELIEF (Hansard, 14 July 1987)

§ Mr. Blair

I have a couple of brief questions on clause 4. As I understand it, the principal purpose of clause 4 is to ensure that, if an employee has more than one employment and if, in that other employment, he already enjoys the benefits of a profit-related pay scheme, he cannot, in the second employment, also have the same benefits of a profit-related pay scheme. I assume that that is to do with an anti-avoidance measure, but I would welcome the Minister's confirmation of that.

I also assume that there are perfectly genuine cases in which people have two separate employments. I assume that, under clause 4, even though profit-related pay is not able to be enjoyed in both employments, other types of bonus scheme or productivity scheme, running in conjunction with a profit-related pay scheme will be perfectly all right. In subsection (3) of clause 4 there is a statement, the effect of which is to ensure that subsection (2) does not apply to those whose earnings are below the lower earnings limit for class 1 contributions. I assume that the purpose of that is to ensure that those on lower pay with below class I contribution levels can still enjoy profit-related pay. I should be grateful if the Minister would confirm the points that have been put to me.

§ Mr. Brooke

The hon. Member for Sedgefield (Mr. Blair) has stated what he believes to be the proposals. We certainly consider that it is right to encourage the spread of profit-related pay by introducing a measure of relief, but we believe that there should be upper limits to the amount of the relief. To prevent people avoiding such limits by accident or design—I freely acknowledge that it might be either—by arranging to receive profit-related pay from more than one scheme, clause 4 provides that an employee will not be eligible for tax relief on his profit-related pay if he is already receiving such relief on profit-related pay from another scheme.

As to bonuses or any other arrangements, I repeat what I said on the amendment that we have just discussed. We do not intend to interfere with the arrangements that employers may have. It is just that the tax relief will be limited to what is contained within the scheme. On the national insurance contribution point, I confirm that the hon. Gentleman is absolutely right.