HC Deb 08 September 1909 vol 10 cc1451-2W

asked the Chancellor of the Exchequer whether he will state the reason for the difference of practice in the collection of Income Tax upon unearned incomes from Foreign and Colonial Government securities and Foreign and Colonial companies, and from dividends paid out of the profits or gains of public companies in the United Kingdom; and whether he is aware that this difference of practice results in the investor in many cases paying the 1s. 2d. Income Tax on his income of a past year?


At present the broad principles regulating the rate of Income Tax to be deducted from rent, interest, dividends, and other annual payments may be said generally to be: (1) Where the payment is made out of income which has already been taxed, and where consequently the interest is not in itself subject to a separate charge, the person liable to the payment may recoup himself a proportionate part of the Income Tax he has paid by deducting tax from the payment at the rate, or a proportionate part of the several rates, of duty in force during the period through which the payment was accruing (Section 15, 27, and 28 Vic. c 18. See also Section 54, 5 and 6 Vic. c 35). This applies to dividends paid out of profits of public companies in the United Kingdom. (2) Where, however, the payment is not made out of taxed income, but constitutes in itself a separate subject matter of assessment, the statutory provisions under which the duty is made chargeable on the person who makes the payment generally ignore the period through which the payment was accruing, and charge the payment at the rate in force when it becomes payable to or obtainable by the person entitled to it. Thus, income chargeable under Schedule C of the Income Tax Acts from interest, annuities, etc., payable in the United Kingdom out of any public revenue, British, Colonial, or foreign, is assessable at the rate in force for the year in which it is payable, or in which it is entrusted to an agent in this country for payment here. The agent must pay the duty to the Exchequer on behalf of the persons entitled to the interest. The latter are required on receipt of the residue of the interest, over and above the duty assessed, to allow the amount of duty paid by the agent; and the agent is acquitted and discharged of the amount of the duty as if it had actually been paid to the person entitled to the interest (Sections 93 and 96, 5 and 6 Vic, c. 35; Section 2, 5 and 6 Vic, c. 80). These provisions were extended by Section 10, 16 and 17 Vic, c. 34, and Section 36, 24 and 25 Vic, c. 91, to dividends and interest payable out of or in respect of the stocks, funds, shares or securities of any foreign or colonial company, society, adventure or concern, entrusted for payment to an agent in this country; and by Section 26, 48 and 49 Vic, c 51, to foreign or colonial dividends which, although not entrusted to an agent for payment in this country, are, in fact, realised here through bankers or coupon dealers.