§ 40. Mr. Cary
asked the Chancellor of the Exchequer whether, in view of the fact that a high percentage of war industrial plant is working at full capacity and that much of it will have to be replaced if the pressure of work is to continue, he will state the special concessions which exist to enable companies to set aside suitable sums to a plant-renewals account; and, further, are any new financial concessions under consideration to enable industry to set aside still larger sums which may be required for this purpose?
§ Sir K. Wood
As the answer is somewhat long, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
Following is the answer:
I assume that my hon. Friend refers to allowances made in respect of plant and machinery in computing profits for taxation purposes. Annual allowances are given in respect of the wear and tear of plant and machinery and where owing to war production there is an abnormal wear and tear by reason of working additional shifts the normal annual allowance can be increased. Where plant or machinery has become obsolete and is replaced before the allowances for wear and tear have amounted to its cost less scrap value, a further allowance may be claimed. For Excess Profits Tax purposes an allowance may be claimed in respect of exceptional depreciation due to the war of buildings, plant and machinery provided for the purposes of a business since the beginning of 1937 and, as I stated on 19th December last, in reply 798 to a Question by my hon. Friend the Member for Aylesbury (Sir S. Reed) I have decided to propose in my next Budget a similar allowance for the purposes of Income Tax and National Defence Contribution. The effect will be to allow for taxation purposes any loss incurred by a trader in providing additional buildings plant and machinery for the War effort.