§ Baroness Youngasked Her Majesty's Government:
What changes are to be made to the Memorandum of Understanding of 5th February 1993, under which the Queen and the Prince of Wales pay income, capital gains and inheritance tax on a voluntary basis, to take account of the introduction of the new system of self assessment for income tax and capital gains tax.
The Lord Privy Seal (Viscount Cranborne)Changes are required to reflect the new tax payment dates under self assessment. The Memorandum of Understanding has been amended, and I am placing a copy of the amendment in the Library.
212WAThe Memorandum of Understanding provided that income tax and capital gains tax would be payable on 1st December following the end of the tax year. However, under self assessment 1st December will no longer be a tax payment date, and instead income tax will be payable on 31st January and 31st July and capital gains tax on 31st January. The Memorandum of Understanding has therefore been amended to make income tax and capital gains tax for 1996/97 (the transitional year) payable on 31st January 1998; and income tax and capital gains tax for 1997/98 and subsequent years will be payable on 31st January and 31st July in accordance with the normal rules of self assessment.
These new arrangements mean tax will be paid under the Memorandum of Understanding several months earlier on average than at present.
Changes have also been made to the provisions relating to payments on account, and interest on tax underpaid or overpaid, to bring them into line with the new self assessment rules.