Mr. Andy Stewartasked the Chancellor of the Exchequer if he will now publish his proposals for changes to the mines and oil wells allowances.
§ Mr. MooreA consultative document containing these proposals is being published today, and I have arranged for copies to be placed in the Library. The document proposes changes on both the structure and rates of the mines and oil wells allowances. The effect of the proposals is to bring these allowances more closely into line with the general system of capital allowances, following the changes in the 1984 Finance Act and the provisions of this year's Finance Bill. The aim is to simplify and clarify another complex area of the tax system. The main proposals consistent with the wider capital allowances code are
The abolition of the present system of allowances (initial allowances and writing down allowances based on output and royalty value of output formulae).Their replacement by straightforward percentage based annual writing down allowances on a reducing balance basis. The proposed rate is 25 per cent. for qualifying expenditure other than that on the acquisition of minerals or rights over them for which a 10 per cent rate is proposed.Relief to start when the expenditure is incurred provided that a mining trade has begun.The abolition of relief for expenditure on land.It is proposed that legislation on these proposals should be introduced in next year's Finance Bill. The consultative document invites representations on the proposals in the document and these should be sent to the Inland Revenue by the end of October of this year. An Inland Revenue press release issued today gives further details, including the price and the availability of the document.