Clause 61

Finance Bill – in a Public Bill Committee at 9:15 am on 24th May 2007.

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Benefits code: Whether employment is “lower-paid employment”

Question proposed, That the clause stand part of the Bill.

Photo of David Gauke David Gauke Conservative, South West Hertfordshire 9:30 am, 24th May 2007

The clause relates to the benefits code. My understanding is that there are something like 155 sections in the Income Tax (Earnings and Pensions) Act 2003 that apply to the taxation of benefits other than shares. Clearly, this is a hugely complicated area of the law; indeed, that is presumably the cause of the anomaly that the clause seeks to eradicate. Given that, may I ask what consideration the Treasury is giving to simplifying this area of the tax code?

Photo of Edward Balls Edward Balls The Economic Secretary to the Treasury

As the hon. Gentleman says, the purpose of the clause is to legislate an extra-statutory concession that was introduced in 2004 to ensure that an employee who earn less than £8,500 per annum does not incur a treble tax charge when he is provided with a car and car fuel paid for by his employer with a credit card, non-cash voucher or cheque. Such cases are rare, but there should not be a double charge simply because the benefit of a car and fuel has been paid for by those means.

The extra-statutory concession was published by HMRC in July 2004 on the understanding that it would be formalised through legislation at the earliest opportunity. That is what we are doing with the clause. As the hon. Gentleman said, we are repealing subsections 219(5) and (6) of the 2003 Act. The clause removes the value of non-cash vouchers and credit tokens used to provide car or fuel benefits when calculating whether an employee earns less than £8,500 per annum. The clause legislates the concessionary treatment that applies in the circumstances I described.

As the hon. Gentleman said, the issues are complex and the 2003 Act was a complex piece of legislation. The Government do not have a particular process for review of the Act, but we keep all aspects of the tax system under review at all times, and we are always happy to receive representations from hon. Members or outside organisations when they feel that there are issues that need to be addressed. That is what happened in this case. We received representations, and we are acting. I commend the clause to the Committee.

Question put and agreed to.

Clause 61 ordered to stand part of the Bill.

Clause 62 ordered to stand part of the Bill.