Saving Gateway Accounts Bill

The noble Baroness began her comments on these amendments by asking a question about the match payment and whether it was liable to income tax or capital gains tax. I am advised that it would be taxable as capital in the absence of legislation relieving it from tax. These amendments relate to the saving gateway accounts being tax-free. It might be helpful for me to start by confirming again, as the Economic Secretary did in the other place, that saving gateway accounts will be free of both income tax and capital gains tax and that we have no intention of changing that position. I am pleased that the noble Baroness agrees with that position. Amendment 43 seeks that regulations concerning tax relief must be made, whereas current Clause 14(1) allows the flexibility for this and future Governments not to make such regulations. We believe it is right that the Bill should allow some flexibility on this matter for this and future Governments and, in any case, the noble Baroness will know from our discussions on previous amendments that it is simply normal drafting practice for legislation to say that regulations "may" do something, rather than that they "shall" do so. Amendments 48 and 49 seek to ensure that all regulations on the tax relief applying to saving gateway accounts should be subject to the affirmative procedure. I can understand the noble Baroness’s point and clearly it would be a major decision for any future Government—it would have to be a future Government as we will not do this—to remove the saving gateway’s tax-free status. However, it is much more likely that regulations will be needed in future to reflect technical changes in the income tax or capital gains tax systems. It would not be an appropriate use of parliamentary time for such regulations to be subject to the affirmative procedure. There are precedents for this approach. For example, Section 13 of the Child Trust Funds Act 2004 provides for regulations subject to the negative resolution procedure to be made for, and in connection with, the tax treatment of investments under child trust funds. I realise that the noble Baroness has tabled other amendments relating to the balance between the affirmative and negative procedures, which my noble friend Lord Davies responded to earlier this month. Specifically, she aimed to make every use of the powers to set the maturity period, the monthly deposit limit and the number of accounts that a person can hold subject to the affirmative procedure. As my noble friend said, we will consider her points on these amendments carefully. However, I believe that the arguments are less strong in this case. It is far more likely that any future legislation that relates to tax relief after the first set of regulations have made saving gateway accounts tax-free, will be required for technical reasons rather than to change the tax-free status of these accounts. I therefore hope that the noble Baroness will seek leave to withdraw these amendments.