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Building Societies

Ms Lynne: To ask the Chancellor of the Exchequer what meetings he (a) has held and (b) proposes to hold with organisations of, or representing, disabled people to discuss the impact of building societies converting to banks and issuing bonus shares to members. [2307]

Mrs. Angela Knight: Treasury Ministers have received no requests for meetings from such groups.

Mr. French: To ask the Chancellor of the Exchequer if he will announce the outcome of the consultation on the draft Building Societies Bill. [3219]

Mrs. Knight: Following the publication of the draft Building Societies Bill in March, the Government received responses from societies, from other professionals and from individual customers, all of which helped to highlight the concerns of those involved with societies. I will publish shortly a final version of the Bill, reflecting the outcome of the consultation.

The draft Bill contains three major changes to the existing legislation. It replaces the current prescriptive regime for societies with a modern, permissive framework, which--subject to a few necessary exceptions--allows societies and their members to decide what businesses to engage in. It updates the arrangements for prudential supervision by the Building Societies Commission, and it modernises and enhances societies' accountability to their members. The draft Bill received a general welcome from societies and other respondents.

A number of the comments received were technical, and have helped to produce a better Bill. I am grateful for the work which respondents put into formulating their comments, which demonstrates the value of consulting on draft legislation.

Some attractive ideas have been suggested which will be included in the new Bill. The principal changes are as follows:


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Child Care

Mrs. Roche: To ask the Chancellor of the Exchequer what proportion of the (a) women who are mothers and (b) men who are fathers who are employed by his Department have received assistance from the Department with child care. [1282]

Mrs. Angela Knight [holding answer 4 November 1996]: Although the civil service collects statistical information on staff employed in Government Departments and executive agencies, we do not collect information on the parental status of individual staff. It would be intrusive on people's personal affairs for us to request this information from staff and difficult to justify the collection of such data.

The Treasury offers staff subsidised places on the Westminster holiday play scheme. So far this year, Treasury staff have used a total of 73 places. We also make contributions to additional child care costs where staff are required to work additional or irregular hours, and we offer paid special leave to staff to enable them to care for sick close relatives and children.

Female Staff

Mrs. Roche: To ask the Chancellor of the Exchequer how many women are currently employed by his Department; and what proportion this is of the total. [1249]

Mrs. Angela Knight [holding answer 4 November 1996]: As at 31 October 1996 the Treasury employed 461 women, which was 43 per cent. of total staff.

Leasehold Properties

Mr. Nicholas Winterton: To ask the Chancellor of the Exchequer (1) what recent representations he has received from (a) the House Builders Federation, (b) the Manufacturing and Construction Industries Alliance, (c) individual property owners and (d) others about the implications for housebuilders and other long leaseholders selling properties of the case of LM Tenancies Plcv IRC; and if he will make a statement; [1483]

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Mrs. Angela Knight [holding answer 4 November 1996]: Stamp duty is charged on the grant of a new lease of property by reference to the premium paid for the lease and the average annual rent. Duty on the premium is charged at 1 per cent. but there is no charge on the premium where the premium is £60,000 or less and the average annual rent is £600 or less. Duty is charged on the average annual rent by reference to a sliding scale of rates which depend on the length of the lease. For example, for a lease of over 100 years, the rate of 24 per cent. (£12 per £50 or part of £50 of the average annual rent).

Where an existing lease is sold by the leaseholder to someone else, duty is charged at 1 per cent. on the price paid, in the same way as with the sale of a freehold. No duty is charged on the rent.

I have received representations from the House Builders Federation, the Manufacturing and Construction Industries Alliance, and McCarthy and Stone about the treatment of a grant of a new lease under which the rent is to be adjusted in future in line with changes in the retail prices index.

Where the terms of a lease lay down specific figures for future rent payments, or provide for the rent to be increased by a fixed percentage each year, there is no difficulty in calculating what the average annual rent is for the purpose of the stamp duty charge. The calculation is more difficult where the rent is to depend on the future movement of an index such as the RPI. Decisions of the courts, including the recent case LM Tenancies plc. v Inland Revenue Commissioners, have given some guidance on the calculation of the charge to duty where there is an element which is not ascertainable at the outset.

The Inland Revenue has reviewed its practice on the stamp duty treatment of leases of this type, in the light of the representations which have been made. It accepts that in some cases the calculations which have been made by Stamp Offices produce a figure which is too high.

In the LM tenancies case, the premium paid for a lease was to be calculated by reference to the market price of a Treasury loan stock 25 days after the execution of the lease. The Court decided that duty should be calculated by reference to the value of the stock at the date of execution of the lease.

The Inland Revenue's view, in the light of the court's decision in the LM Tenancies case, is that where the rent under a lease is to be adjusted by reference to changes in the retail prices index, the duty should be calculated by reference to the change in the RPI in the year ending with the date of execution of the lease. The precise method of adjustment may depend on the terms of the lease and on

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the way they provide for the calculation to be made--for example, whether the rent is to be increased annually or only at longer intervals. Generally, where the adjustment is to be made by comparing the value of the RPI at different dates, the difference between the two values over the latest year will be used to measure the rent increase for stamp duty purposes. For example, if the initial rent is £300 a year and is to be adjusted annually, and the RPI has gone up from 150 to 153 (equivalent to 2 per cent.) over the relevant 12 month period, it would be assumed that the rent would go up by £6--2 per cent. of £300--each year. Thus the rent would be taken as £306 in the second year, £312 in the third year, and so on, in order to calculate the average annual rent under the lease.

The Inland Revenue is issuing instructions to stamp Offices accordingly, to ensure that individual cases are dealt with on a consistent basis. A taxpayer who disagrees with the Stamp Office's calculation of the duty in a particular case will of course have the normal rights of appeal.


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