Clause 35
Finance Bill
12:00 pm
Stephen Timms (Chief Secretary, HM Treasury; East Ham, Labour)
Let me finish the point.
The hon. Gentleman is right in respect of agricultural buildings, but the picture is different because the tax system recognises depreciation in other ways. It is common to all commercial buildings that deductions against corporation tax are available for the costs of repair and insurance, and the depreciation of business premises is recognised at the point of sale in the capital gains tax system. The system properly takes account of that point.
On hotels, it is interesting that the industrial buildings allowance regime was extended to qualify hotels in 1978—it is a much more recent feature of the regime than most—to assist with the growth of UK tourism. I suggest that the rationale for giving extra help to hotels at that time does not apply today. There is not a good economic case for preserving that selective subsidy. In general, the sector is enjoying high levels of profitability and it will also derive significant benefit from the 2 per cent. cut in the headline rate of corporation tax from 2008. In the case of smaller hoteliers, the annual investment allowance will act as a big incentive for investment as well.