Clause 48
Finance Bill
6:30 pm
Jane Kennedy (Financial Secretary, HM Treasury; Liverpool, Wavertree, Labour)
I apologise. I acknowledge that it was September when my right hon. Friend the Secretary of State for Defence announced the introduction of the new scheme of tax-free council tax relief for members of the armed forces who are deployed on operations overseas. I do not want to go into the history, but it is clear that from 1 October 2007, the areas that attract operational allowance, namely Afghanistan and Iraq, will give rise to council tax relief, but from 1 February, service in other operational zones has been specified—that is, as I understand it, overseas operations, including British Forces South Atlantic Islands, Bahrain, Bosnia, Diego Garcia, Kosovo, Kuwait, Oman, Qatar, and deployed Royal Navy ships in receipt of the overseas deployment welfare package, and UN operations. The Ministry of Defence has the power to amend the specified areas from time to time.
The NICs changes will take effect from April this year, and secondary legislation was introduced with that effect to ensure that the relief is disregarded for NICs. I do not agree with the hon. Gentleman’s description of the reasons why the proposal was introduced. We have a compact with the British Army, and certainly British soldiers whom I meet from my constituency acknowledge the genuine commitment that the Government have made to British armed forces. They believe to some degree that we do not receive fair acknowledgement for our work to ensure that our armed forces are supported in every way.
The payment of the council tax relief and what we are discussing today are important steps to ensure that our armed forces receive council tax relief as intended. Many of them endure danger in difficult circumstances, and we believe that the relief should not be taxed, thereby ensuring that they receive the maximum benefit. The clause will cover all payments of council tax relief to the armed forces from April this year, and I hope that the clause will stand part of the Bill.