Clause 5
Finance Bill
12:45 pm
Stephen Timms (Financial Secretary, HM Treasury; East Ham, Labour)
As you said, Mr. Atkinson, clause 5 introduces schedule 1. It achieves a more consistent treatment in the provision of personal allowances and reliefs from income tax for all non-UK residents and non-European economic area citizens, thereby ensuring that the legislation complies with the Human Rights Act 1998.
The clause removes entitlement to personal allowances and reliefs from those who currently enjoy them solely on the grounds of Commonwealth citizenship. I am confident that the large majority of non-resident Commonwealth citizens who currently claim UK personal allowances and reliefs will still be entitled to do so through other provisions. Those will include double taxation agreements that allow non-resident, non-EEA citizens to claim UK personal allowances and reliefs. Among other things, the agreements provide for Commonwealth citizens who have become or served as members of the British armed forces, to get that entitlement.
The opening paragraph of schedule 1 removes most of the personal allowances and reliefs in question. Those include personal allowances, married couples allowance, blind person’s allowance and life assurance premiums. Having mentioned blind person’s allowances, I should point out that it is unlikely that anyone would be affected by that change, as the current rules for eligibility for that allowance are already predicated on a person living in the UK.
Paragraphs 2 and 3 provide for a number of consequential amendments in relation to life assurance premiums and limits on relief for those premiums. That has the effect of removing entitlement from non-resident individuals who currently claim them solely by virtue of being Commonwealth citizens. The remaining paragraphs make the consequential changes necessary to ensure consistency through all the relevant tax legislation on this matter.
The result of the changes taken together is that non-UK-resident Commonwealth citizens will no longer qualify for personal allowances and reliefs by reference to their citizenship status alone. It does not affect their entitlement to personal allowances and reliefs under other qualifying conditions or double taxation agreements. The amendments in the schedule will take effect in the tax year 2010-11 and subsequent tax years. I commend the clause and schedule to the Committee.