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Clause 5 is a one-line clause that introduces schedule 1. Both clause and schedule relate to the abolition of personal reliefs for non-residents. It might be more convenient for the Committee to have a general debate as if those two things were being considered together under clause 5, as long as that does not cause any problems.
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 persons allowance and life assurance premiums. Having mentioned blind persons 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.
I thank the Minister for his explanation of what at first does not appear to be a particularly controversial provision. However, there is a lot of controversy embedded in this, and there are a large number of people to whom this country owes something of an obligation who are likely to be affected. I would be grateful to hear what estimate the Minister has of the number of persons likely to be affected.
As the Minister said, this will principally affect 14 different Commonwealth countries with which the UK does not currently have a dual taxation treaty. I understand those 14 countries to be the Bahamas, Cameroon, the Cook Islands, Dominica, the Maldives, Mozambique, Nauru, Niuea country of which I have not heard, for which I must apologise to the citizens of NiueSaint Lucia, Saint Vincent and the Grenadines, Samoa, Tanzania, Tonga and Vanuatu.
Some of the 14 countries involved are pretty mainstream, larger countries, such as Tanzania, Cameroon and the Bahamas. A certain number of residents of those countries will have previously worked in the UK, which I shall come on to in due course, but I would suggest a fair few of my constituents would be among themsome of the Ministers constituents may also be affected. It is worth pointing out that the countries that we talked about cover a pretty vast range of likely income areas, ranging from the BahamasI am not for one moment suggesting that the Bahamas is entirely full of wealthy people seeking to avoid tax, but on a per capita basis it is doing rather wellto Tanzania and Cameroon, which are very much developing countries.
I want to raise a few of the points made by the Low Incomes Tax Reform Group in reference to clause 5. The group is concerned that people who have served the United Kingdom in the past, returned to their home countries and become pensioners will suddenly find themselves liable to UK taxation perhaps for the first time since they were in the UK. It goes on to mention the Ministry of Defence, recruiting for the military, and the NHS, for nurses:
Non-resident individuals will no longer qualify for reliefs and allowances including the basic and age-related personal allowances, married couples allowance, blind persons allowance and relief for life assurance solely by virtue of being a Commonwealth citizen. These allowances are particularly relevant for pensioners.
For the Government to introduce a penalising measure seems slightly bizarre. For example, many from the SS Windrush generation, came over and served in this country in public service in the 1950s and 60s, and will have now returned to islands such as St. Lucia, St. Vincent and the Grenadines. I would be grateful to know whether the Minister has considered that and whether he has had any discussions with either of the Governments involved or, for example, with any of the SS Windrush support groups that are still around in this country. Going back to the LITRG:
It does seem perverse that a supposed action in the name of Human Rights brings a range of low income pensioners in some of the poorest countries of the world into the ' UK tax net out of the blue.
I have a few questions for the Minister. Most obviously, why is he introducing the set of measures now? What specific proposals does he have to negotiate double taxation treaties with the 14 countries that are not covered but which are affected? What discussions has he had with the Governments of the 14 countries? What are his feelings about creating two classes of Commonwealth citizen? Our relations with the Commonwealth are important, but the measure will suddenly create two different classes of Commonwealth citizens. How many people in each of the 14 countries will be affected and what study has he done of the type of people who will be affected? Is the reason why he changed the rules really that the old rules were not compliant with the Human Rights Act, which was what was implied in the guidance notes? Finally, how much will all those measures actually raise? The Minister needs to be ready to answer a large number of questions for the benefit of the Committee.