Gifts for Purposes of Educational Establishments

National Finance – in the House of Commons at 9:34 pm on 4th June 1991.

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Motion made, and Question proposed,That provision may be made in substitution for section 84 of the Income and Corporation Taxes Act 1988.—[Mr. Maude.]

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I understand that it would be for the convenience of the House to discuss at the same time the other ways and means motions.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 10:17 pm, 4th June 1991

It might help the House if we could encourage the Financial Secretary to the Treasury, who has dragged himself away from the Finance Bill Committee, to tell us what he intends to proceed with in relation to insurance companies and building societies as the reason for tabling ways and means motion No. 4. His explanation so far has been brief to the point of absence, and I hope to encourage him to tell us what he proposes.

In the Finance Bill Committee, we are already dealing with proposals in relation to building societies which are a constitutional and taxation outrage. It would be advantageous to know whether the Financial Secretary has anything similar in mind for insurance companies and friendly societies. In the case of building societies, the Government intend to secure, by retrospective legislation, a piece of blatant double taxation. If that is what they have in mind for other bodies also, we should know about it at this stage. I hope that the Minister will tell us what the ways and means motion is for.

Photo of Peter Bottomley Peter Bottomley , Eltham 10:18 pm, 4th June 1991

That contribution from the hon. Member for Berwick-upon-Tweed (Mr. Beith) should not go totally unchallenged. There is clearly an issue of principle in clause 50. In 1985, the Government said that there would be no extra revenue. I doubt that similar circumstances will apply—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. We are not dealing with clause 50. We are dealing with the ways and means motion.

Photo of Peter Bottomley Peter Bottomley , Eltham

I am dealing with that, Mr. Speaker, if I may develop my sentence. If the paragraph changes and I go wrong, I shall rely on you to intervene.

As I was saying, I cannot believe that the Government would do the same thing twice on insurance companies or anyone else, and I believe that the Government will be thinking again about the previous experience and we shall not have any serious worries. I cannot seriously believe that £90 million could be given to the members of one building society and £250 million withheld from members of other building societies. Therefore, I hope that the House will be reassured, if not today then on some other occasion, by my hon. Friend.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury 10:19 pm, 4th June 1991

I am confident that my hon. Friend the Member for Eltham (Mr. Bottomley) will be wholly reassured when the matters which he has raised come to be considered in detail in Committee.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) asked what the purpose of the resolution is. My explanation of the measures in moving them reflected the desire of the House to deal with the matters with some expedition. The resolution is to cover the new clause that we shall be introducing to change the tax rules for general annuity business and the amendment that we shall table shortly that changes the definition of a friendly society's tax exempt business. Both those proposals were announced on Budget day.

General annuity business will be taxed in broadly the same way as basic life assurance business. The investment return accruing for the benefit of annuitants and prospective annuitants will, after relief for expenses and the income element of annuities in payment, be taxed in the hands of the life office. The resolution is needed to cover that charge. We propose to remove the restrictions preventing friendly societies from issuing small taxable policies because some businesses will be classified as taxable business. The resolution is needed to cover that tax charge.

Question put and agreed to.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I take it that I have the leave of the House to put motions 4 to 9 together.