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TREASURY
Pensions (Tax Reliefs)
Mr. Cousins: To ask the Chancellor of the Exchequer what proposals he has to introduce a common system of tax reliefs for different types of pension plan as part of the stakeholder pension proposals; and if he will set out the age-related contribution limits which apply to the existing tax reliefs for pensions. [70013]
Ms Hewitt: A common system of tax reliefs for different types of pension schemes already exists. Where schemes are tax approved, contributions qualify for tax reliefs (within limits), the investment build-up is tax free, and part of the benefits may be paid as a tax free lump sum while pensions are taxable. We propose extending the same system of reliefs to stakeholder pension schemes.
The age related contribution limits that apply to the existing pensions tax reliefs are as follows:
| Age | Personal Pensions | Retirement Annuities |
|---|---|---|
| 35 or less | 17.5 | 17.5 |
| 36-45 | 20 | 17.5 |
| 46-50 | 25 | 17.5 |
| 51-55 | 30 | 20 |
| 56-60 | 35 | 22.5 |
| 61-74 | 40 | 27.5 |
(19) In the case of personal pensions, earnings for limits purposes are capped at £87,600
ECOFIN (Brussels)
Mr. Hood: To ask the Chancellor of the Exchequer what was the outcome of the ECOFIN held in Brussels on 8 February; and if he will make a statement. [70533]
Ms Hewitt: The Chancellor attended the Economic and Finance Council--ECOFIN--of the European Union in Brussels on 8 February 1999.
There was a discussion of both expenditure and resources under Agenda 2000. The goal of budgetary stabilisation by 2006 was widely supported. The Presidency issued Presidency conclusions on Agenda 2000.
The Commission and the Chairman of the Economic and Finance Committee presented draft Opinions on the Stability programmes of Italy and Portugal, and the Convergence programmes of Sweden and the UK. The Council adopted the Opinion on Italy with some minor amendments. The Council also adopted the Opinions on Portugal, Sweden and the UK.
25 Feb 1999 : Column: 417
There was an orientation debate on the Broad Economic Policy Guidelines to inform the full debate scheduled provisionally for the 10 May ECOFIN.
Ministers also discussed four draft directives: the European Company Statute; the Takeovers Directive; the Winding-up of credit institutions; and the Winding-up of insurance companies directive.
Mr. Duncan:
To ask the Chancellor of the Exchequer (1) if he will list all life offices fined by (a) the Life Assurance and Unit Trust Regulatory Authority, (b) the Personal Investment Authority, (c) the Financial Services Authority and (d) other statutory financial regulatory bodies since the Financial Services Act 1986 came into force, stating (i) the nature of the offence, (ii) the amount of the fine, (iii) the date it was imposed and (iv) the value of any costs awarded against the firm; [70928]
Ms Hewitt:
Details of the fines imposed on fund managers and life offices have been placed in the Library. The Financial Services Authority has no power to fine directly regulated firms.
Ms Southworth:
To ask the Chancellor of the Exchequer if he will estimate the expected reduction in total public expenditure on servicing debt for (i) those countries which have reached the completion point and (ii) all countries within, the Heavily Indebted Poor Countries Initiative for (a) 1998, (b) 1999, (c) 2000, (d) 2001 and (e) 2002. [71390]
Ms Hewitt:
Only two countries have reached completion point under the HIPC initiative: Uganda and Bolivia. The IMF has not produced estimates of the expected reduction in total public expenditure on servicing debt for Uganda, or for other countries within the HIPC initiative. Their estimate of the expected reduction in total public expenditure on servicing debt for Bolivia (in $ millions) is as follows:
(2) if he will list all fund management firms fined by (a) the Investment Management Regulatory Organisation, (b) the Financial Services Authority and (c) other statutory financial regulatory bodies since the Financial Services Act 1986 came into force, stating (i) the nature of the offence, (ii) the amount of the fine, (iii) the date it was imposed and (iv) the value of any costs awarded against the firm. [70927]
| Year | £ million |
|---|---|
| 1998 | 4.5 |
| 1999 | 15.4 |
| 2000 | 17.9 |
| 2001 | 20.6 |
| 2002 | 6.8 |
Mr. Goggins:
To ask the Chancellor of the Exchequer if he will press for the inclusion of Malawi in the Heavily Indebted Poor Countries Initiative. [71394]
25 Feb 1999 : Column: 418
Ms Hewitt:
The IMF does not currently consider Malawi to be eligible for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative. However, should Malawi's debt burden become unsustainable, the UK would press strongly for Malawi to be considered for immediate HIPC relief.
Ms Southworth:
To ask the Chancellor of the Exchequer what assessment he has made of the policy of the new Government in Germany towards debt relief for those countries included in the Heavily Indebted Poor Countries Initiative. [71391]
Ms Hewitt:
The UK welcome the German debt initiative, which in many ways reinforces the Chancellor's Mauritius Mandate of September 1997. The UK and new German Governments share similar approaches to the issues of debt relief and development in the world's poorest countries.
Mr. McNamara:
To ask the Chancellor of the Exchequer if the Terms of Reference of the Fundamental Review of the Heavily Indebted Poor Countries Initiative have been agreed; and if Her Majesty's Government will seek the integration of internationally agreed poverty reduction targets in a reformed HIPC Initiative. [72193]
Ms Hewitt:
The IMF have not yet set the Terms of Reference of the forthcoming HIPC Review. The UK has taken the lead in pressing for the link between debt relief and poverty reduction to be a key focus of the review, and to be looked at by an external evaluator.
Mr. Cousins:
To ask the Chancellor of the Exchequer how many staff were employed in Inland Revenue Special Compliance Offices in (a) 1990 and (b) each year since 1993; and what was the turnover of staff in each year. [71787]
Dawn Primarolo:
The information for 1990 is not available from Special Compliance Office records. Special Compliance Office was formed in 1993 when Enquiry Office, Special Office and the Board's Investigation Office were integrated. Staffing figures for the previous sections are not available.
| "Man year usage" | Leavers | Starters | |
|---|---|---|---|
| 1993-94 | 501 | 30 | 33 |
| 1994-95 | 454 | 50 | 74 |
| 1995-96 | 430 | 98 | 85 |
| 1996-97 | 425 | 52 | 52 |
| 1997-98 | 423 | 98 | 94 |
| 1998-99 | (20)426 | (21)90 | (21)90 |
(20) Estimated
(21) To date
"Man year usage" does not equate to staff in post at any one time. The list includes all grades, covering investigators, accountants, managers and clerical support. "Leavers" includes people moving to different jobs in the Revenue, retirements and resignations. "Starters" are mainly recruited from the rest of the department, although we have recruited accountants and clerical staff directly into Special Compliance Office.
25 Feb 1999 : Column: 419
Mr. Radice:
To ask the Chancellor of the Exchequer what steps the Government intend to take (a) to allow firms based in the UK to make VAT payments in euros and (b) to allow Customs and Excise and the Inland Revenue to receive payments in euros; and if he will make a statement. [71951]
Ms Hewitt:
Customs and Excise have accepted payment in euro of VAT and other taxes and duties since the introduction of the euro on 1 January 1999. Both Customs and the Inland Revenue have made the necessary internal accounting arrangements to accept euro payments by any method made available by the banks, and have set up euro accounts with the Bank of England.
Mr. Kidney:
To ask the Chancellor of the Exchequer what assessment he has made of house price inflation since 1997 and the likely trend in 1999-2000. [72316]
Ms Hewitt:
Alternative indices have shown different rates of house price inflation over the past two years, but it seems clear that real house prices have shown significant increases.
Mr. Sayeed:
To ask the Chancellor of the Exchequer when he plans to publish the guidance relating to the clearance procedures and the approach of the Revenue regarding transfer pricing under the legislation brought into effect on 1 July 1998; what advice he has issued to large companies with connected subsidiaries around the world; and if he will make a statement. [72315]
Dawn Primarolo:
The new transfer pricing legislation (Schedule 28AA to the Taxes Act 1988) is specifically allied to the advice on transfer pricing in the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations published by the Organisation for Economic Co-operation and Development. These Guidelines establish internationally accepted rules for transfer pricing and provide multinational taxpayers with considerable assistance in making an accurate return in relation to arrangements with affiliates around the world.
Additional guidance has been provided by the Inland Revenue in two articles in its Tax Bulletin. The first, dated October 1998, gave advice on funding arrangements and confirmed that existing clearance procedures (as described in an article in Tax Bulletin in June 1995) would continue. It also explained record-keeping requirements. The second article, dated December 1998, explained the application of the general penalty provisions in transfer pricing cases.
As announced on Budget Day last year, legislation will be introduced in the forthcoming Finance Bill to govern Advance Pricing Agreements (APAs) between taxpayers and the Inland Revenue. APAs enable taxpayers to agree in advance with the Inland Revenue how complexities in applying the arm's length principle to cross-border transactions which cannot be fully clarified by reference to the published guidance are to be clarified. Draft clauses and a draft Statement of Practice were issued for consultation on 17 December 1998.
25 Feb 1999 : Column: 420
Mr. Maclean:
To ask the Chancellor of the Exchequer what estimate he has made of the number of businesses which will be affected by the new rules on transfer pricing which were announced in the 1998 budget; and what will be the average cost per business. [70688]
Dawn Primarolo
[holding answer 15 February 1999]: The new transfer pricing legislation is designed to ensure that arm's length prices are used in calculating the tax effects of international transactions between associated businesses. It will impact on those businesses at the larger end of the spectrum of UK multinational groups and UK subsidiaries of foreign parents. It is estimated that there are between two and three thousand of these.
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