HC Deb 06 May 1981 vol 4 cc60-1W
Mr. Hicks

asked the Chancellor of the Exchequer what is his estimate of the cost of increasing industrial building allowances on hotels and associated buildings from 20 per cent. to 50 per cent. and 75 per cent., respectively.

Mr. Peter Rees

[pursuant to his reply,30 April 1981, c. 454]: The estimated full year cost of increasing the building allowances on hotels to 50 per cent. and 75 per cent. is £10 million and £20 million respectively, on the assumption that sufficient profits are available to absorb the allowances in full.

Mr. Viggers

asked the Chancellor of the Exchequer if he will set out the basis of the estimate in the Financial Statement and Budget Report 1981–82 that the raising of initial building allowances for industrial premises from 50 per cent. to 75 per cent. would cost £10 million the first year and rise to a full year cost of £25 million.

Mr. Peter Rees

[pursuant to his reply,30 April 1981, c. 454]: Expenditure qualifying for industrial building allowances in future years was assumed to be at the estimated 1980 level of £1,000 million per annum. The cost of the additional allowances at this level of expenditure was obtained by comparing the estimated tax yield in the next few years using the total of existing capital allowances with the estimated tax yield at the proposed higher level of capital allowances, taking account of the estimated profits, allowances and other reliefs available to individual companies. The comparison therefore reflects the extent to which sufficient profits are available in this period to absorb the increased allowances. In this it differs from estimates made on the assumption that all the additional allowances are covered by profits.

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