Deferred Taxation

HC Deb 21 February 1977 vol 926 cc420-1W

Mr. David Steel

asked the Chancellor of the Exchequer what was the extent of deferred taxation in each financial year since, and including 1972–73.

Mr. Denzil Davies

The reduction in net payments of corporation tax due to stock relief has been estimated as approximately £720 million in 1974–75, £1,465 million in 1975–76 and £815 million in 1976–77. It is not possible to make reliable estimates of other deferred taxation, such as that resulting from the excess of first-year capital allowances over commercial depreciation provisions.

Mr. David Steel

asked the Chancellor of the Exchequer how his Department calculates the amount of deferred taxation allowable to individual companies.

Mr. Denzil Davies

I assume that the right hon. Member has in mind, in particular, the calculation of tax deferred as a result of stock relief. This is determined for each year on the basis of the increase in the value of a company's stock during the year, less 15 per cent. of its trading income for the corresponding period, after deduction of capital allowances.

Mr. Steel

asked the Chancellor of the Exchequer when he expects to collect the deferred taxation due to his Department.

Mr. Denzil Davies

I assume that the right hon. Member has in mind, in particular, tax deferred as a result of stock relief. In particular cases this may be payable when the level of stock and work in progress is reduced. For most companies, where stock levels are maintained or increased, the deferral should extend indefinitely.