§ Mr. Staintonasked the Chancellor of the Exchequer if he will take steps to protect the interests of those persons waiving extra income due under commission agreements, out of respect for the Government's pay restraint policy, who become liable to pay capital transfer tax on the gross amounts surrendered.
§ Mr. Joel BarnettThe statutory position is that if an office holder or employee agrees to take a voluntary cut in future remuneration or indicates that he does not wish to take an increase, this would not effect the value of his estate and consequently capital transfer tax would not be payable. A person who gives up remuneration which he has already earned and to which he is entitled under the present law is within the charge to capital transfer tax. For income tax purposes, however, a person who waives part or all of his remuneration is not normally charged to tax on the amount forgone, provided the assessment is not final and conclusive and that any necessary adjustment to the taxation liability of the payer is accepted. I have under consideration the possibility of amending the capital transfer tax legislation. Meanwhile, the Board of Inland Revenue will not claim capital transfer tax liability in respect of a waiver of remuneration in circumstances where the income is not charged to income tax under Schedule E.