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Crown Servants Abroad (Allowances, Taxation)

Volume 387: debated on Tuesday 16 March 1943

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asked the Chancellor of the Exchequer whether he is aware that some foreign service allowances to Crown servants abroad are taxed while some are not; and whether he proposes to take any action in the matter?

I am aware of the position to which my hon. and gallant Friend refers, and I propose to bring forward a Clause in this year's Finance Bill to exclude from the charge to Income Tax all foreign service allowances to Crown servants abroad which are given as compensation for the extra cost of having to live outside the United Kingdom in order to perform their duties. Hitherto there has been included in the computation of foreign service allowances which are subject to tax an amount in respect of the Income Tax payable on the allowance. If the legislation which I propose to submit to the House is approved it will, of course, be necessary to revise the amount of such allowances so as to exclude any provision for Income Tax.

While thanking my right hon. Friend for his very satisfactory reply, may I ask whether he can say on what date this will become effective, assuming, of course, that the legislation is passed?

No, I shall have to consider that between now and the introduction of the Finance Bill.