Clause 1 - Amendment of the Income and Corporation Taxes Act 1988

Part of Retirement Income Reform Bill – in a Public Bill Committee at 3:30 pm on 2 July 2003.

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Photo of John Healey John Healey The Economic Secretary to the Treasury 3:30, 2 July 2003

I beg to move amendment No. 41, in

clause 1, page 2, line 38, leave out from 'be' to end of line and insert

'assessable to tax under Schedule E (and section 203 shall apply accordingly) and shall be treated as earned income of the member'.

I hope that the hon. and learned Member for Harborough will see this as helpful. Clause 1(7) inserts into the Income and Corporation Taxes Act a new section 637B that defines retirement income fund. In doing so, it provides that any withdrawal from the fund should be regarded as income within section 1 of the Taxes Act. I assume that the intention is for the withdrawals to be taxable as income, but the words in the Bill are insufficient to enable the proper tax treatment to be determined. The amendment, therefore, brings the taxation of withdrawals from the retirement income fund in line with income withdrawals under section 634A of that Act. It provides that withdrawals from the retirement income fund shall be treated as earned income assessable to income tax under schedule E, and that tax will be collected under the PAYE system. I hope that the Committee will support the amendment.