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Vat (Funeral Charges)

Volume 129: debated on Thursday 10 March 1988

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To ask the Chancellor of the Exchequer if he has received any representations seeking zero-rated value added tax on funeral charges.

Is the Minister aware that, on average, about 10,000 people die each week and that the National Association of Funeral Directors has estimated that the present VAT arrangements result in the Treasury receiving between £14 million and £18 million a year, which is, in effect, a tax on death? Will he look at the possibility of giving tax relief on simple insurance schemes, which would give reassurance to many elderly people that their funerals have been paid for, and result in reducing their savings below the £6,000 a year capital limit which prevents them from getting benefit?

I understand the point that the hon. Gentleman makes. The Government recognise the inevitable sadness at the time of bereavement by exempting essential funeral charges from VAT. We do not have the power, however, under our treaty obligations and successive directives on VAT to change that from exemption to zero rating, but I will draw to the attention of my right hon. Friend the point that the hon. Gentleman has made about insurance policies for funerals and the costs of bereavement.