§ Mr. A. SHORTasked the Chancellor of the Exchequer whether a pre-war Army 289W pensioner has to pay Income Tax on his pension and wages which amount to over the limit of £120 or whether the amount of pension is not included in the assessment?
Mr. CHAMBERLAINUnder the provisions of Section 16 of the Finance Act, 1919, exemption from Income Tax is granted in respect o; wounds and disability pensions as described in the Section. These pensions are not required to be reckoned in computing income for Income Tax purposes. As regards other pensions, whether military or civil, the position is that where the taxpayer's total income from all sources exceeds the exemption limit, the full amount of the income is necessarily taken into account in assessing the Income Tax liability. The pension is, in these circumstances, regarded for Income Tax purposes as "earned income," and is charged to tax at the reduced rate applicable to such income.