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Personnel (Income Tax Collection)

Volume 400: debated on Tuesday 13 June 1944

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17.

asked the Secretary of State for War the procedure adopted for the collection of Income Tax from Service personnel; and whether they are now being dealt with under the Pay-as-you-Earn scheme.

As regards the first part of the Question, I will, with permission, circulate a statement in the OFFICIAL REPORT. As regards the second part, I would refer my hon. Friend to the reply given to my hon. and gallant Friend the Member for West Leeds (Major Vyvyan Adams) by my right hon. Friend the Chancellor of the Exchequer on 20th January.

Is my right hon. Friend aware that the practice is to set off tax against allowances due, and that requests to have the assessment looked into by the Army authorities are not replied to?

Perhaps the hon. and gallant Member would put a Question down about that. I do not think that can by any means be a universal practice. The statement I am circulating says that the tax is deductible from pay due.

May I ask my right hon. Friend, in view of the fact that Income Tax is now being retained, whether it would not simplify matters, if my right hon. Friend issued a new scale of pay for officers and men free of Income Tax?

May I ask my right hon. Friend whether, in his opinion, the scheme is working satisfactorily or whether, when claims are made for rebate, officers and men have to wait a very long time before they get what is due to them?

Perhaps my hon. Friend will put a Question down, if she wants me to make inquiries into the number of complaints we receive, as I have not the information with me now, judging from my own post bag, however, I do not think there is anything seriously wrong with the system.

Following is the statement:

Army personnel in general continue to pay their tax on the basis of the earnings of the preceding year. The tax on Army emoluments is required to be deducted from the pay as and when it is paid and the Paymaster or Army Agent who issues the pay fixes the initial tax instalment at the beginning of the tax year by reference to last year's tax liability or to tax tables. These tables show the varying amounts of tax to be taken according to rate of pay and the personal and child reliefs to which the individual is entitled. It is necessary in certain cases where the tables are unsuitable to make provisional calculations of liability. The deduction so fixed continues until the officer or soldier renders his Income Tax return and the final assessment is made. The tax instalment is then adjusted. The collection is normally completed by March.

While the majority of commissioned officers of the Army pay tax on their pay, only a small proportion of other ranks do so. In their case the Regimental Paymaster or Army Agent notify the daily rate of deduction for Income Tax to the officer commanding the unit early in the year in order that cash payments to the soldier may be regulated accordingly. The microgram service is used for notification abroad.

Information on Income Tax matters likely to be of interest to the Army and copies of the tax tables employed in fixing the provisional deductions are published in Army Council Instructions from time to time.