§ 53. Mr. Douglasasked the Chancellor of the Exchequer what are the allowances in respect of depreciation and wear and tear now made in assessing liability to income tax.
§ Sir J. AndersonI assume that my hon. Friend refers to allowances made in computing trading profits for purposes of Income Tax assessment. Under Rule 6 (1) of the Rules applicable to Cases I and II of Schedule D of the Income Tax Act, 1918, annual allowances are given in respect of the wear and tear of plant and machinery, and under Rule 7 of those Rules there is a further allowance where plant or machinery has become obsolete and is replaced before the allowances for wear and tear amounted to its cost less scrap value. Under Section 15 of the Finance Act, 1937, a depreciation allowance is granted in the case of mills, factories and other similar premises. For the year 1939–40 and following years a war-time exceptional depreciation allowance in respect of buildings, machinery or plant provided by the trader after 1st January, 1937, is given by Section 19 of the Finance Act, 1941. The annual allowances for wear and tear have to be fixed at such amount as represents the just and reasonable measure of the diminution in value of the plant or machinery by wear and tear and the rates of allowance therefore vary in the case of different types of plant and machinery.
§ Mr. DouglasIs the formula in the last part of my right hon. Friend's answer the only instruction which was given by the Inland Revenue?
§ Sir J. AndersonNo, Sir. That is the only statutory direction, but there have, of course, been discussions with representative bodies for the purpose of fixing appropriate rates for the different types of plant and machinery.
§ Mr. DouglasDoes my right hon. Friend supply a schedule of those rates?
§ Sir J. AndersonI believe there is a schedule available, and I will see if I can let my hon. Friend have a copy.