§ Mr. George Cunninghamasked the Secretary of State for Defence what are the reasons for the practice described in the second last sentence of his reply to the hon. Member for Islington, South and Finsbury's question on 30 October as regards not taking account of income other than from Service sources; and how long the grossing-up method described in that letter has been in use.
§ Mr. WigginGrossing of boarding school allowance for tax was first introduced in 1970 in response to a recommendation in the May 1969 report of the National Board for Prices and Incomes on Armed Forces pay—Cmnd. 4079. The present method has been in use192W since January 1976. The grossing for tax of boarding school allowance is operated by the Ministry of Defence as part of the PAYE system, within which tax adjustments are normally made at the time of payment, or least within the same year. Taxation of other family income is undertaken by the Inland Revenue and only it has access to information on overall financial and tax position of those Service men who have income from non-Service sources.
Even if the Ministry of Defence could be given access to such information, it would not be available until well after the end of the PAYE tax year. The individual assessments required would impose an unacceptable administrative burden on Ministry of Defence pay authorities requiring the employment of significant numbers of additional staff.