§ 34. Mr. Beaumont-Darkasked the Chancellor of the Exchequer if he will seek to change company taxation so that industry can take full advantage of raising fixed interest capital on an inflation indexed basis.
§ Mr. WakehamI am not clear exactly what my hon. Friend has in mind. Where a company issues stock with the principal of the interest indexed to take account of inflation, all the interest payable, including any rolled-up until redemption, will be allowable against the company's profits for corporation tax purposes when it is paid. Consistently with this the interest will be taxable as income of the lender. On the other hand, repayment of the principal, whether or not indexed, will normally be a capital transaction for both borrower and lender. In that case the lender may benefit from the Government's proposals for indexing the capital gains tax.