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Tax Reliefs (Small Firms)

Volume 932: debated on Thursday 26 May 1977

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6.

asked the Chancellor of the Exchequer if he will list those tax reliefs which are of specific interest to small firms.

Yes, I shall arrange to have a list circulated in the Official Report.

Does the Minister recognise that, particularly in the case of small firms, it is important to take into account the incidence of local and national tax? In discussions on the review of local government finance, will the Minister bear in mind the effect upon city centre shopping centres and the employment that they provide compared with out-of-town shopping centres?

I presume that the hon. Member is directing that question to some of his right hon. and hon. Friends who have not yet made clear their position on Layfield. I understand that they have in mind the abolition of domestic rates. That would make the rating situation particularly disastrous for local firms.

When my right hon. Friend considers tax relief to small firms, will he take into account the small business man in my constituency who, as reported in the local newspaper last night, has been asked to pay a total of £61 in value added tax on £760 for work that he did for a Leeds firm but for which he has not been paid, because the firm has gone bankrupt? Is my hon. Friend aware that the spokesman for the Bradford VAT office says that the money must be paid on earnings that this man has not received. Is that not the height of stupidity?

If my hon. Friend will let me have details about the case I, or one of my hon. Friends, will be happy to look into it. We have discussed this problem in the Finance Bill Committee. My hon. Friend would find it instructive to spend a little time upstairs with us. If he had done so he would have learned that the Financial Secretary indicated that we are looking at this problem to see whether there is anything that we can do.

Will the Minister encourage small business expansion in rural areas particularly by the extra provision of starter capital? Would the Government be prepared to use a small proportion of the oil revenue for the growth of small firms?

If the hon. Member looks in the Official Report at the list that I have given he will find 11 items describing what we have been doing to help small firms generally. We have done a great deal for small firms, but the source of revenue with which to help them is a different matter. There is no doubt that we have done a considerable amount to help small firms and businesses since we took office.

The list is as follows:

Corporation Tax

1. Small companies' rate of corporation tax (42 per cent. as against the general rate of 52 per cent.)—Section 95 Finance Act 1972 and Section 27 Finance Act 1976.

2. Exemption or abatement of apportionment liability of close companies

Paragraphs 1(3), 9(3) and 10(3), Schedule 16 Finance Act 1972.

Capital Transfer Tax

3. Relief for business property

Schedule 10 Finance Act 1976.

4. Payment by instalments for transfers on death, and for lifetime transfers if the donee bears the tax

(On transfers totalling up to £250,000, the instalments, if paid on time are interest-free)—Paragraphs 13 to 16, Schedule 4 Finance Act 1975.

5. Relief for agricultural property

Schedule 8 Finance Act 1975.

Capital Gains Tax

6. "Rollover Relief" for persons carrying on a trade

Section 33 Finance Act 1965.

7. Retirement Relief for an individual aged 65 or over disposing of his business

Section 34 Finance Act 1965.

8. Payment by instalments for owners of certain businesses

Section 57 Finance (No. 2) Act 1975.

9. Retirement Annuity Relief

Section 226 et seq. Income and Corporation Taxes Act 1970.

10. Cider Duty

Exemption from excise duty on cider and perry in respect of those makers who produce not more than 1,500 gallons a year.

11. Value Added Tax

The current exemption limit for registration for VAT is £5,000 per annum. A Government amendment to the Finance Bill which was carried on 12th May increases the exemption limit for new registrations from £5,000 to £7,500 from 1st October 1977. Small businesses below the exemption limit may register voluntarily if they think that this will be beneficial to them.