§ Mr. Christopher Hawkinsasked the Chancellor of the Exchequer what would be the cost in a full financial year of introducing a 2 per cent. annual straight-line depreciation allowance for expenditure on new commercial buildings.
§ Mr. MooreIn the first full year the estimated cost would be approximately £25 million, taking the levels of profits, investment and the corporation tax rate for 1984–85, and assuming that sufficient profits are available to absorb the allowances in full. The actual cost would be somewhate lower because of the overhang of tax losses, but it is not possible to give a reliable estimate of it.
However the cost would build up rapidly and the eventual long term cost, assuming present levels of expenditure on commercial buildings and a corporation tax rate of 35 per cent., would be about £1 billion.
§ Mr. Christopher Hawkinsasked the Chancellor of the Exchequer what is his best estimate of the full-year saving in revenue that he will obtain from the phasing-out of capital allowances for buildings in the financial years 1986–87, 1987–88 and 1988–89.
§ Mr. MooreThe precise effect of the changes to building allowances — writing down allowances will remain — will depend, among other things, on future levels of profits and investment in industrial buildings. But they are part of a package of corporation tax changes which are broadly revenue neutral taken over the period to 1988–89.