Skip to main content

House Property

Volume 163: debated on Thursday 3 May 1923

The text on this page has been created from Hansard archive content, it may contain typographical errors.


asked the Chancellor of the Exchequer whether, in view of the dissatisfaction amongst the taxpayers who have received notice of considerable increases in their assessments consequent on the new system of valuation for Income Tax, he will give instructions that the increase is to be limited to 15 per cent.?

My hon. Friend is under a misapprehension in thinking that there is a new system of valuation of property for Income Tax purposes. The basis on which the annual values of property are fixed was explained in a reply which I gave yesterday to the hon. Member for Richmond. I am sending my hon. Friend a copy of that reply, from which he will see that it is neither competent nor necessary for me to issue instructions in the sense indicated in his question.

Is the right hon. Gentleman aware that houses have been assessed between 40 and 100 per cent. above their ordinary valuation for Income Tax purposes only and not for local rates; and is he also aware that 25 per cent. of the increase of the 40 per cent. was allowed to cover repairs on these houses for which the new owners are asked to pay?

Is it not a fact that this assessment is being used to bring into operation the Inhabited House Duty on poor property which never paid the tax before?

That seems to be a new question, and there are other questions raising the same point.

The hon. and gallant Member is anticipating a later question on the Paper.


asked the Chancellor of the Exchequer what is the estimated amount of increase in the nett assessment, Schedule A (England and Wales), in consequence of the revaluation under the Finance Act of 1922; and what amount of increased revenue based on such increased assessments he has provided for in the Budget Statement for 1923–4?

Final estimates of the increase in the amount of actual income assessed under Schedule A, in consequence of the revaluation will not be available for about two years, but it has been provisionally forecast that the increase for Great Britain will amount to about £25,000,000. My Budget Estimate of Income Tax for 1923–24 was made after full consideration of all the relevant circumstances, including the revaluation, but I am not prepared to make separate estimates of its constituent factors.


asked the Chancellor of the Exchequer whether instructions were issued by the Inland Revenue to inspectors of taxes to increase assessments on the revaluation of Schedule A by a percentage; and, if so, what percentages were mentioned in such instructions?

The varying conditions governing different classes of property in different localities preclude the possibility of laying down any percentage of increase which could be of general application, and the Inland Revenue authorities have made no attempt to do so. The answer to the first part of my hon. Friend's question is therefore in the negative, and the second part does not arise.

Is it not the custom for the Income Tax Department to increase the assessment of cottage property by an equivalent of 40 per cent. of the net rental for Income Tax purposes?


asked the Chancellor of the Exchequer whether he is aware that assessments under the new Schedule A valuation show increases of from 40 to 100 per cent.; and whether, since such increases are inequitable as being based upon a War-time, and therefore transitory and fictitious, value, he will inform the House upon what basis the officials prepared the new assessments?

With regard to the basis on which the revaluation of property is now being made for Income Tax purposes, I would refer my hon. Friend to the reply which I have to-day given to the hon. Member for East Surrey (Mr. Galbraith) on this subject. I would add that Section 32 of the Finance Act of last year, while providing that the Income Tax assessments for 1923–24 are to be based on the annual values as determined for 1922–23, provides also that any person who can show that the annual, value of any property for 1923–24 is less than the annual value so assessed, is entitled to have the assessment reduced to the value for 1923–24. Moreover, in the event of the annual value of any property decreasing during the period for which the valuations now being made may be continued in force, an appropriate reduction in the amount of the Income Tax assessment on such property would, in accordance with the established practice of the District Commissioners of Taxes, be admitted.

In the light of what I have stated, it will be seen that the broad objective of the present re-assessment is to secure Income Tax in respect of income from property on the basis of the income actually derived from the property, and I think my hon. Friend will appreciate that there is no ground for the suggestion contained in the second part of his question.

Is right hon. Gentleman aware that answer to which he has referred House has not been given?

On a point of Order. Can we have the answer to the question of the Member for East Surrey (Mr. Galbraith)?

The Chancellor of the Exchequer has referred to Question 69, which was not asked. Perhaps he will read the answer?

I am much obliged to the hon. Member for giving me the opportunity to read the answer to No. 69. The question was:


asked the Chancellor of the Exchequer whether he is aware that in many districts in East Surrey the new assessments for Schedule A are on the average from 50 to 100 per cent. over those previously existing; will he say what is the basis upon which the new assessments have been made and, in particular, whether any valuation was made for such purpose; and, if so, when and by whom?

The answer is:

The revaluation for Income Tax purposes which is now proceeding in accordance with the decision reached by Parliament last year, is being made under the old established law which, broadly speaking, provides that the annual value of property is the rack rent at which it is let or is worth to be let by the year. My hon. Friend will appreciate that in these circumstances the assessment is normally governed by the rent actually paid. As regards properties occupied by the owner, it is commonly the case that a fair estimate of the annual value is readily obtainable by reference to the actual rents paid for similar adjacent properties. In cases of special difficulty an expert valuation has been made and placed at the disposal of the Local Commissioners by whom the assessments are made.

Does not the Chancellor think it rather unfair that the assessments should be made at a time of extreme difficulty, when prices are fictitious, and values placed high against those who want places for occupancy?

The short answer to that is that there ought to have been valuations in 1915 and in 1920. It may be that these are times of extreme difficulty, but people for some years have been paying less Income Tax than they ought to have paid.

Can we have the assurance of the right hon. Gentleman that these assessments are made after the actual inspection of the property, or are they made on a flat-rate scale by inspectors who have never actually seen the property which they are assessing?

I think I made it plain in my last answer that the assessments are made principally by the local commissioners who, I think, have ample knowledge for the purpose.