§ Mr. Crouchasked the Chancellor of the Exchequer if he has any plans to simplify the administration of the capital gains tax indexation provisions.
§ Mr. RidleyI recognise that the new identification rules for shares and securities acquired after the introduction of the indexation allowance, which were introduced in the Finance Act 1982, will be more complicated to administer than the pooling rules they replace. In the Standing Committee which considered the Bill, therefore, I made a proposal about a way in which pooling might be retained alongside all the other provisions relating to that allowance, including the provision that it should be allowed neither to create nor to increase a loss, but I pointed out that such a scheme could be more complicated to operate than what was proposed in the Bill.
I have given further thought to this question, and I have been impressed by the arguments that a scheme for retaining pooling, albeit in a significantly more complicated form, would be much easier to operate for some taxpayers, and in particular certain large institutional investors relying on computers. Accordingly, the Government intend to include provisions in the 1983 Finance Bill to enable an option to be made, in respect of all the holdings of shares and securities held by a taxpayer, to apply a revised form of pooling to those shares and securities. The option will be irrevocable, and once exercised it will apply to all shares and securities acquired after the introduction of the indexation allowance. If the option is not exercised, the provisions introduced in the Finance Act 1982 will continue to apply. Further details will be available when the Finance Bill is published.