Clause 84 - Charge to income tax by reference to enjoyment of property previously owned
Finance Bill
11:15 am
Mr Howard Flight (Shadow Chief Secretary To the Treasury, Economic Affairs; Arundel and South Downs, Conservative)
We oppose the clause on principle. We feel that the Government are going about the objective that the Paymaster General described—of plugging what are identified as holes in the inheritance tax gifts through the reservation of benefits rules—the wrong
way. We think that the correct approach is to change the rules on IHT reservation of benefits and to prevent future gifts that avoid the rules from being made. That hits straight at the principle of retrospection. The Government have instead introduced a new tax on gifts that could apply to any relevant situation going back to 17 March 1986.
The measures are retrospective in their impact on elderly people, many of whom are too old to be able to do anything much about it. More particularly, there is the potential for a much wider range of unintended effect, to which the hon. Member for Torridge and West Devon just referred, and there is scope for unfair and unreasonable impacts on people. Given the wide powers of regulations, there is also the opportunity to misuse in the future what would be put on the statute book now.
There is a wider point. It is an old bit of human nature to want to hand from one generation to another the family home, whether large or small. That is a natural and right thing for people to want to do. Every parent wants to do the best for their children. The problem arises because the enormous increase, or bubble, in house prices from Birmingham southwards, as opposed to other parts of the country, has created a huge distortion between IHT arrangements and house prices. It drags in—
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Two o'clock.