§ The Chancellor of the Exchequer (Mr. James Callaghan)I have also considered the treatment of gains realised on the sale of business assets, such as a factory building, where the proceeds are re-invested in new assets of the same kind. Here, I propose that no tax shall be charged on gains realised on the sale of the assets, but that the gain shall be treated as reducing the price paid for the new asset. If the new asset is eventually sold without being replaced, then the gain on both the old and the new asset will, in effect, be taxable at that time. I believe that by this means I shall secure that the tax will not impede desirable industrial and commercial development and the transfer of businesses out of congested areas.
The types of business asset that I have in mind here are land, buildings and fixed machinery or plant, and also ships and aircraft.