§ Sir J. WITHERS
asked the Chancellor of the Exchequer whether he can make any statement for the guidance of trustees as to whether the 1 per cent. cash bonus to he received by them on their immediate consent to conversion of War Loan is to be treated as capital or income in dealing with the beneficiaries?
§ Mr. BALDWIN
I am obliged to my hon. Friend for drawing attention to the point. The whole operation is governed by Part III of the Finance (No. 2) Act, 1931. This matter is covered by Section 15 (2) of that Act which makes it clear that the life tenant is entitled to the bonus. The actual words areAs between persons having any beneficial interest in a holding, any cash bonus payable in respect of the holding shall belong to the persons entitled to the income of the holding on the day when the bonus is payable.As my hon. Friend is aware, the bonus will not, in the case of the ordinary investor, be chargeable to Income Tax, and this will equally be the position where the bonus passes to a beneficiary under a trust by virtue of the Section I have just quoted.