§ Commander BELLAIRSasked the Financial Secretary to the Treasury whether any steps are to be taken to prevent societies which exist solely for the purpose of paying out pensions being taxed with the full Income Tax because they are unable to register under the Friendly Societies Act of 1896; and whether he is aware that this tax has been imposed on the investments of the Drivers, Fireman and Cleaners' Pension Fund Society of the South Eastern Railway Company, though the investments are solely for paying out pensions?
Mr. YOUNGI would refer my hon. and gallant Friend to the reply which the Chancellor of the Exchequer gave on this subject to the hon. Member for the West Houghton Division (Mr. T. Wilson) on the 21st February, 1921. I am sending my hon. and gallant Friend a copy of that reply. The present position is that the income from the investments of a superannuation fund is liable to Income Tax at the standard rate of 6s. in the £ like any other income of this nature. On payment of pensions, however, tax is deductible at a like rate and is therefore not borne by the superannuation fund to the extent that the pensions are paid out of the investment income of the fund. Where Income Tax is deducted from a pension at the standard rate of 6s. in the £, the pensioner is allowed any repayment of tax to which he may be entitled by reference to the amount of his total income. Moreover, in order to avoid the inconvenience of separate claims for repayment by individual pensioners, the Inland Revenue Department has made an arrangement with many pensions funds,60W under which tax is deducted from the pensions only to the extent of the pensioners' net liability. The Department subsequently repays or allows to the fund such amount as may be due in respect of the difference between the tax at the full rate on the amount distributed in pensions and the aggregate liability of the pensioners in respect of their pensions. The attention of the Drivers, Firemen and Cleaners' Pension Fund Society of the South Eastern Railway Company was drawn to this arrangement some time ago.