§ 20. Mr. Molloyasked the Chancellor of the Exchequer if he will seek to abolish income tax on State retirement and invalidity pensions.
§ Mr. Denzil DaviesNo, Sir. It would not be justifiable to relieve State retirement pensions from tax regardless of the size of the pensioner's income. The substantial further increase in national insurance pensions we have promised for November, together with the new age allowance for elderly people, are much more effective ways of helping those in need.
With regard to invalidity pensions, my hon. Friend will know that the contributory invalidity pension, which replaces sickness benefit after 28 weeks if an individual continues to be incapable of work, is exempted from income tax until it ceases to be payable after the retirement of the recipient. The non-contributory invalidity pension is not replaced at retirement and continues to be tax free even after the age of 70 is reached.
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§ Mr. D. E. Thomasasked the Chancellor of the Exchequer how he intends to identify those single, widowed and divorced women who are taken above the tax threshold by their national insurance pensilon alone; and how he intends to administer the taxing of their pensions.
§ Mr. Denzil DaviesIn the relatively few cases where such a person is liable to tax, and her only income is a national insurance pension, the tax will generally be payable to the collector of taxes in instalments under the Schedule E direct collection provisions. Information about liability is obtained in various ways, and there is no single method of identification of those concerned.
§ Miss Fookesasked the Chancellor of the Exchequer if he will seek to change the rules whereby a person receiving an invalidity pension is not taxed on that source of income but finds on reaching retirement age that the invalidity pension is converted to a retirement pension which is taxed.
§ Mr. Denzil DaviesNo. To allow retirement pensioners who have been receiving invalidity benefits up to age 70 to draw their retirement pension tax-free could be regarded as unfair by other pensioners whose incomes are not larger.