I beg to move Amendment No. 259, in page 30, line 7, to leave out paragraph (b) and to insert: (b) shall not include the granting of any such annuities as are referred to in section 26(1) of the Finance Act 1956 (retirement annuities, etc.).”
With this Amendment can be taken Amendment No. 124 in page 28, line 44, at end insert—
Provided always that nothing in this section shall prevent any society carrying on pension annuity business from availing itself of the provisions of section 24(1)(a) of the Finance 1956 to set up a fund exempt from income tax in respect of that part thereof which is referable to pension annuity business.
I begin by assuring the hon. Member for Belfast, South (Mr. Pounder) that the Government Amendment is designed to achieve what we understand to be the intention of his Amendment, namely, to ensure that the existing tax exemption under the Finance Act, 1956, for retirement annuity policies issued by friendly societies shall continue to remain unaffected by anything in the Clause.
The Financial Secretary has correctly assumed the intention of my Amendment to be that friendly societies should enjoy tax exemption for these annuity policies. All assurance offices and not just friendly societies have enjoyed tax exemption on their pension annuity funds and my Amendment is to ensure that a friendly society should not be deprived of this because, for instance, it does this business by means of single premiums rather than annual premiums.
Amendment agreed to.
Further Amendment made: In page 30, line 34, leave from “if” to end of line 37 and insert:
“at the time of the amalgamation all the friendly societies amalgamated were societies which, subject to satisfying the conditions of Part I of Schedule 7 to this Act, were eligible for the exemption conferred by section 440(1) of the Income Tax Act 1952 in respect of life or endowment business and at least one of them was a society not within subsection (1)(b) of this section.
(b) in determining, as respects a society resulting from an amalgamation and coming within subsection (5) of this section by virtue of proviso (a) above, the questions in that subsection in the period immediately following the amalgamation, the activities of the amalgamated societies in the period [column 504]immediately preceding the amalgamation shall be treated as if they were the activities then being carried on by the society resulting from the amalgamation.—[Mr. MacDermot.]
I beg to move Amendment No. 126, in page 30, line 43, after “made” , to insert:
“or for which valid proposals accompanied by the appropriate premiums were received by the society or its duly accredited agents” .
The object of the Amendment is quite simply to enable friendly societies to honour those proposals which were received together with cheques for premiums by the agents of the societies on 3rd May, but which, because of the intervention of the weekend and the Bank Holiday in Scotland on 2nd May, were not received by the societies until 4th May. It is as simple as that.
In spite of its simplicity, I cannot accept the Amendment. The dividing line has to be drawn somewhere when tax exemption has to stop. As I indicated earlier, there would have been a substantial argument for saying that we would be entitled to levy tax in future upon bonds which had already been issued, but we felt that this was a case in which at least some if not many people who had taken out these bonds had done so in the belief that the tax-exemption would continue for the life of the bond and that in spite of those words in small print in the advertisements which I read to the Committee, the words “under present legislation” , they may not have realised the full effect of those words as a warning that the tax position of the bonds might be changed.
We therefore thought it right that where there were completed contracts before Budget day, the bonds should continue to enjoy tax exemption, but there is where the dividing line is drawn. If it is needed, we have a clear precedent in the action taken in 1956 when investment allowances were suspended generally.
There was an exception for sums paid under contracts entered into not later than 17th February, 1956, which was the date when the decision to suspend was announced, but not for contracts which were under negotiation at that date. I appreciate that it might seem hard on the people who had sent in their application and their money, but I am afraid [column 505]that they did not have completed contract, so they did not qualify.
My hon. Friend the Member for Belfast, South (Mr. Pounder) is right, and Niall MacDermotthe Financial Secretary is wrong, but in view of the hour we can best express our objection by voting in a moment or two against the grant the Clause stand part.[column 506]
Does the hon. Member desire to withdraw the Amendment?
No, Sir Eric.
Question put, That the Clause, as amended, stand part of the Bill:—
The Committee divided: Ayes 153, Noes 102.