Baroness VICKERSMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they will explain why members of the Royal Navy who work overseas for more than 30 days in a year will not receive tax relief whereas merchant seamen and those manning the Royal Fleet Auxiliary tankers and supply ships who do so will receive tax relief.
§ Lord WINTERBOTTOMMy Lords, members of the Royal Navy, like other Crown servants, are treated for tax purposes as performing their duties in the United Kingdom wherever they are serving and cannot therefore qualify for tax relief on overseas earnings. Unlike merchant seamen and those manning Royal Fleet Auxiliary vessels, they are entitled to tax-free allowances which represent compensation for the extra cost of having to live outside the United Kingdom.
Baroness VICKERSMy Lords, may I ask the noble Lord whether he will look into this matter again? Does he not consider it rather unfair that the crews of the Admiralty Fleet Auxiliary tankers, civil servants overseas and British merchant seamen should get this credit, which amounts to a great deal of money? For example, merchant seamen have tax relief of between £500 and £1,000 a year; even a cadet in the merchant service gets £200. It is expected, when the Navy goes overseas, that they will visit ports, entertain people and mix with them. At the moment they cannot afford to do this. I understand that only the captain gets a very small entertainment allowance.
§ Lord WINTERBOTTOMMy Lords, although an apparent unfairness exists, and while it is true that the Merchant Navy has benefited very substantially from this concession, the position is not completely one-sided. The situation of serving soldiers, like other civil servants, brings substantial advantages. Although they have been asked, they are not willing to exchange those advantages for the alternative now offered to those serving in the Royal Fleet Auxiliary tankers.
§ Lord MOTTISTONEMy Lords, have they been asked whether they would like to have this privilege? If so, what form did the offer take? This is comparatively new. Would the Government look at the situation much more closely and examine whether they are being wholly fair to the servants of the Crown who are not civil servants but serving officers and men?
§ Lord WINTERBOTTOMMy Lords, I understand that consultations took place prior to the announcement of this new tax concession. It must be remembered that one of the advantages that servants of the Crown possess is that they are not taxed abroad. They receive substantial tax-free foreign service allowances. In a sense, these allowances perform the same purpose as the rebates that are given to merchant seamen.
§ Lord LEATHERLANDMy Lords, if there is any suggestion of giving sailors, members of the Fleet, a tax rebate because they spend 30 days overseas, will the noble Lord make this scheme retroactive, so that those of us who spent four years overseas in the First World War can put in an application for a tax rebate?
§ Lord HARMAR-NICHOLLSMy Lords, the noble Lord said that, on the face of it, an apparent unfairness exists. If, as he said later, consultations took place, and those concerned chose not to take up this offer as an alternative, then no apparent unfairness exists. What consultations took place? This is in order to remove the feeling that there was unfairness.
§ Lord WINTERBOTTOMMy Lords, there were the usual consultations that take place on these occasions.