§ 2.48 p.m.
§ LORD JACQUESMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they will encourage property developers to contribute to the costs of infrastructure borne by local authorities by allowing such contributions as an expense in the assessment of capital gains tax.
THE LORD PRIVY SEAL (EARL JELLICOE)My Lords, the profits of a property dealer are normally liable to income tax and surtax if he is an individual, or to corporation tax in the case of a company, not to capital gains tax. Contributions towards expenditure which would add directly to the value of the land being developed would normally be allowed as deductions in computing the profits of that development. Contributions towards expenditure more remote from the development might, however, be disallowable, depending on its precise purpose. It is difficult to deal with the wide variety of cases which could arise within the necessarily constricting limits of a Question and Answer in your Lordships' House, but if the noble Lord has any particular expenditure in mind and will give me details, I shall be happy to consult my right honourable friend the Chancellor of the Exchequer.
§ LORD JACQUESMy Lords, may I thank the noble Earl for that Answer? Is he aware that what I had in mind was an application by a landlord for development? That makes him a developer in the widest sense of the word; he is something more than a landlord. In the circumstances which prevail in some parts of the country, he makes a huge profit. If he agreed to make a contribution to a 2050 local authority's costs of roads and drains, would the Government allow this expenditure for the purposes of capital gains tax?
EARL JELLICOEMy Lords, I was not aware of what precisely the noble Lord had in mind, but I thought that my original Answer in fact dealt with property developers. This is a complicated area where one can go wrong in answers to supplementary questions and I should like to study what the noble Lord has said and, if need be, write to him again. But I think that my original Answer stands.
§ LORD NUGENT OF GUILDFORDMy Lords, is my noble friend aware that it is an attractive thought which has been put before him by the noble Lord opposite? Is he aware that a partnership scheme has been evolved in Buckinghamshire, where the local authority and the private landowners have come together to promote development and together bear the very major costs of infrastructure; and that this thought—that the Government might allow the costs of the infrastructure which are being shared in this scheme between local government and private developers to be offset against capital gains tax—would greatly help this kind of development to take place? Although, obviously, my noble friend cannot give an answer off the cuff, may I join with the noble Lord opposite in asking him to look at the suggestion further?
EARL JELLICOEMy Lords, I am glad that my noble friend is not asking me to give an off-the-cuff answer on this matter, but I gladly concede that attractive thoughts can be conveyed from all quarters of your Lordships' House and I will undertake to see that this one is looked into. I am grateful to both noble Lords for conveying this thought across the Floor of your Lordships' House.
§ LORD JACQUESMy Lords, will the noble Earl bear in mind that, on the face of it, it would appear to be in the public interest for national Government to give up 40 per cent. where local government would gain 100 per cent.? I will write to the noble Earl giving him details of a specific case.
§ LORD JACQUESMy Lords, I should add that I have no personal interest.