| Previous Section | Index | Home Page |
Mr. Healey: I, too, welcome the amendment. It improves a clause that is already innovative and an important departure from the past. The amendment loosens and improves the definition for tax-exemption purposes of what counts as bicycle use. My hon. Friend the Economic Secretary will be aware that the all-party cycling group, which is so ably chaired by my hon. Friend the Member for Exeter (Mr. Bradshaw), has pressed this point. I believe that it will very much welcome the amendment, which represents a more realistic reflection of the way in which people use bicycles, and will do much to encourage more people to take advantage of the tax break.
I spent 10 years working in London without ever using the tube. I went everywhere on an old, sit-up-and-beg, single-speed boneshaker with rod brakes, which was worth a tenner, and would therefore not have benefited from the tax relief on capital cost under the clause. I used that bicycle for many non-standard work journeys--from C to D to E to F throughout central London--rather than just for the A to B, home-to-work journey every day. Will such use be covered by the provision as amended?
I shall leave my hon. Friend the Economic Secretary with a point made by my hon. Friend the Member for Wimbledon (Mr. Casale) in Committee. If the measure is to have the intended impact, people must know about it. I urge my hon. Friend the Economic Secretary and her colleagues in government to give serious thought to promoting this important and innovative tax change.
Mr. Nicholas Winterton:
I rise not as a dissenting voice in the harmony across the Chamber, but merely to solicit some information.
My hon. Friend the Member for Arundel and South Downs (Mr. Flight) was, as ever, gracious in the way in which he responded to the Economic Secretary, but he did not ask the question which I thought he was about to ask. I am aware that some pedal bicycles are fitted with a small auxiliary petrol engine, which can be incorporated into the pedal power of the cycle when an adverse gradient is encountered. I do not know whether such a mechanism automatically switches on or whether the rider must activate it.
Mr. Winterton:
I am very happy to give way to the hon. Gentleman, who knows far more about these things than I.
Mr. Healey:
Perhaps I can help the hon. Gentleman. He is referring to what in France is called the velosolex, to which the hon. Member for Arundel and South Downs (Mr. Flight) referred. It is activated with a lever and a clip. When one wants to lower the engine on to the wheel, one does so manually.
Mr. Winterton:
It is at times like this that the House is at its most informative and helpful. I thought that my
Mr. Winterton:
Can the hon. Lady give me an answer to the question whether such cycles will be covered under the amendment which she so articulately and courteously moved? I see that those in the Box have quickly provided the answer--at least I hope they have.
Ms Hewitt:
I must confess that I had not anticipated a debate about the meaning of the word bicycle, but clearly I should have done so. Perhaps it would assist if I drew attention to section 192 of the Road Traffic Act 1988, in which a cycle is defined as
My hon. Friend the Member for Wentworth (Mr. Healey) raised the question of non-standard journeys. Perhaps I can reassure him that, so long as the journey or any combination or element of it is related to work, the benefit from the cycle will not be taxable and the exemption will indeed apply. My hon. Friend also rightly raised the issue of publicising the tax exemptions that we are giving to green transport plans. We shall certainly be working with green organisations and cycling bodies particularly, as well as with employers' and employees' organisations, to ensure that people receive full information and are encouraged to take advantage of the exemptions.
The hon. Member for Arundel and South Downs referred in our earlier debates to the flourishing mushroom factory in his constituency. Perhaps I may be forgiven for saying that we hope that as a result of this package, green transport plans will also mushroom.
Amendment agreed to.
The Financial Secretary to the Treasury (Mrs. Barbara Roche):
I beg to move amendment No. 15, in page 35, line 27, leave out 'sub-paragraph (2)' and insert
Mr. Deputy Speaker:
With this, it will be convenient to discuss Government amendments Nos. 16 to 24.
Mrs. Roche:
Clause 61 is designed to prevent avoidance of tax through an artificial scheme that exploits a feature of the definition of a discounted security. The effect is that a discount on a security which should be taxed as income over the lifetime of the security is charged only as capital gains tax and only when the security is disposed of or redeemed. The clause changes the definition of a discounted security so that it will no longer be possible to use that device.
The Government received a number of representations expressing concern that the clause went too far and would catch securities for which any discount that arises is small in absolute terms and obtainable only in the case of an event that is outside the control of the parties to the security. We listened carefully to the industry and examined the representations. As I said in Committee, we recognise that clause 61 might catch some securities where it would not be appropriate to do so.
We therefore published, during the Bill's passage through the House, draft amendments for consultation, and we have received comments from practitioners. The amendments before the House are slightly different from those published in draft form and take into account our considerations following the representations that we received.
The amendments would target the clause more closely on the objectionable transactions. They deal with the concerns expressed about the current version of the clause, without reopening the possibility of the avoidance at which the clause is aimed. I commend the amendments to the House.
Mr. Flight:
The amendment, which we welcome, is yet another example of the result of over-zealous but somewhat sloppy initial attempts to introduce tax avoidance measures. The original proposals aimed to close a loophole through which bonds had been issued which offered a redemption premium in place of interest payments, and which had previously escaped the relevant discount securities regime. However, the proposals went much further and would trigger what is known as the Spens clause.
I should declare an interest at this point. I have some knowledge of bonds because I ran an investment management business for 25 years. There are unit trusts holding some £12 billion of bonds which, under the original proposals, could have found that their capital gains were assessed under income tax rules, and that would have affected hundreds of thousands of small investors.
As the Financial Secretary pointed out, the amendments serve--as was the original intent--to exempt from the anti-avoidance measure the Spens clause arrangements where redemption premiums can be paid at the issuer's option, in circumstances in which the owner can have no influence over that, except in cases of connected companies.
Mr. St. Aubyn:
I thank Ministers on the Treasury Bench for finally getting their act together on this complicated issue. Why are they prepared to go to such lengths to make sure that these anti-avoidance provisions are sufficiently finely honed to deal with the mischief about which the Government were originally concerned, when last night, in the case of the sale of trust interests for capital gains tax purposes, they introduced a very crude anti-avoidance measure? It was so ill-thought-out--
Mr. Deputy Speaker:
Order. I hope that the hon. Gentleman does not intend to dwell on what happened last night--we have moved on.
"a bicycle, a tricycle, or a cycle having four or more wheels, not being in any case a motor vehicle".
Therefore, I must disappoint the hon. Member for Arundel and South Downs (Mr. Flight) on the issue of velocettes or whatever. A bicycle that is powered by a motor would not qualify under the definition in the 1988 Act. Should the single market in power-driven bicycles take off, this is no doubt a matter to which we will return in a future Finance Bill debate.
'the following provisions of this paragraph'.
| Next Section
| Index | Home Page |