HC Deb 02 July 1975 vol 894 cc454-5W
Mr. Donald Stewart

asked the Chancellor of the Exchequer what estimate he has made of investment in plant and machinery for the first quarter of 1975; and what was the comparable figure for 1970.

Mr. Denzil Davies

Gross domestic fixed capital formation in plant and machinery in the first quarters of 1970 and 1975 is estimated as follows in £ million:

posal is chargeable to capital gains tax, and any loss qualifies for relief, at the time of the disposal. Where compensation is paid by the issue of Government stock, paragraph 5, Schedule 7, Finance Act 1965, provides that shareholders shall not be liable to tax on capital gains nor entitled to relief in respect of any losses arising on the occasion when they exchange their existing holdings for Government stock; instead, they are deemed to have acquired the stock at the same time and at the same cost as their existing holdings. Gains and losses accruing on the disposal of Government stock are outside the scope of capital gains tax unless a disposal takes place within 12 months of acquisition. Under the existing rules, therefore, where a shareholder is compensated by the issue of Government stock and subsequently sells the stock, any net gain or net loss on the shares and stock would be left out of account for capital gains tax unless the combined period of ownership of the shares and the Government stock was less than 12 months.

My right hon. Friend intends to introduce amending legislation in the 1976 Finance Bill to provide that where the compensation is paid by the issue of Government stock, any gains which have accrued on an existing holding of shares will be assessed when the Government stock is disposed of and any losses will similarly be available for relief. It is also my right hon. Friend's intention to provide that any gain or loss on the Government stock itself will be within the scope of capital gains tax until that stock has itself been held for more than 12 months. Further, my right hon. Friend will propose that the legislation should apply to a vesting following the enactment of the Industry Bill or of the Aircraft and Shipbuilding Industries Bill, notwithstanding that the date of such a vesting preceded the 1976 Finance Bill.