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Direct Tax Changes

Volume 929: debated on Tuesday 29 March 1977

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I turn now to direct tax changes. I am proposing no change in the rates of corporation tax. Stability in company taxation is an important part of the industrial strategy, as I pointed out last year, and should not be disturbed without compelling reason. I shall continue to direct the relief I give to companies through the provisions for capital allowances and stock relief which already exist.

However, I believe that small companies deserve special consideration. So for the second year running I propose to increase the profit level by which small companies are defined for the purpose of the preferential rate of corporation tax. This will go up from £30,000 to £40,000. The limit for marginal relief will be increased from £50,000 to £65,000. The cost of these changes, which will benefit the small company sector in real terms, will be about £20 million in a full year.