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Allowances (Income Tax)

Volume 437: debated on Tuesday 13 May 1947

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asked the Secretary of State for War if he is aware that under the new pay code system by which allowances are taxable, many officers and men now receive less than they did before the system came into operation in spite of the recent increases in pay; and if he will take steps to remedy this matter.

Paragraphs 42–44 of Cmd. Paper 6750 and paragraph 27 of Cmd. Paper 6715 explain why allowances must in future be subjected to Income Tax. It was not possible to make individual adjustments to provide against loss in remuneration in every case, but the arrangements in paragraph 66 (ii) of Cmd. Paper 6750 ease very substantially the position of officers and men of the categories principally affected. As a result, the great majority of those who were serving before 1st July, 1946, and have continued to serve since that date in the same rank or appointment now receive no less than they did before that date. I recognise that many individuals will receive lower net remuneration after 6th April, 1947, than during the preceding nine months. This is because the new allowances, fixed on the basis that they would be taxable, were introduced on 1st July, 1946, but were made liable to tax only from 6th April, 1947.

May we take it that the answer to the first part of the Question is "Yes"?

Will the Minister say how he expects to raise the voluntary element in the Armed Forces if he continues to penalise officers and men like this?

I am not continuing to penalise officers at all. The only condition is that officers and men must be subject, so far as their allowances are concerned, to taxation like any other person.

Is it not a fact that the minority of officers are penalised by the new regulations, and how does the right hon. Gentleman expect to attract officers if they feel that they may be in the minority who are penalised?

I have every confidence, and I have reason to think that my confidence is not misplaced, that we shall get all the officers we want in the coming year.