Schedule 21 - Capital allowances: minor amendments
Finance Bill
6:30 pm
Mr Richard Ottaway (Croydon South, Conservative)
Thank you, Mr. O'Hara. I will not detain the Committee for long. This relates to the £12,000 restriction on the use of a business car. If a business buys a car costing more than £12,000, capital allowances are restricted to £3,000 per annum if the car is used wholly for business. However, the whole cost of the car will eventually be allowed to the business. The limit was raised in 1992 from £8,000, and has not been increased since then. It would result in considerable simplification of tax computations if full tax relief were available on the purchase or hiring of cars. Alternatively, as suggested in our probing amendment, the £12,000 limit could be adjusted in line with inflation. The Economic Secretary will no doubt say that it might cause difficulties for accounting. It has not been adjusted since 1992, so the previous Government must accept equal responsibility, but I look forward to hearing what the Economic Secretary has to say.