asked the Minister for Finance (i) the gross cost and (ii) the net cost to the Revenue (a) in 1986 and (b) in a full year of increasing the capital allowance for motor vehicles proposed in the Finance Bill, 1986, from £4,000 to (i) £5,000 and (ii) £6,000.
Written Answers. - Capital Allowance for Motor Vehicles.
48.
The amount which could qualify for tax relief in respect of the capital cost of a car was limited to £2,500 by virtue of sections 25 to 30 of the Finance Act, 1973. The limit applied in general to expenditure incurred on or after 16 May 1973.
The restriction was subsequently eased so that at present the allowance is limited to £3,500 by virtue of section 31 of the Finance Act, 1976, in respect of expenditure incurred after 28 January 1976. A new restriction, also based on £3,500, was introduced by section 32 of that Act to limit the amount of car running expenses which could qualify for tax relief.
The only relevant information available as to cost is in regard to the direct cost to the Exchequer in income tax and corporation tax foregone if the limits mentioned in the question were substituted for the £4,000 limits in relation to capital cost and running expenses proposed in this year's Finance Bill. The extra cost to the Exchequer is estimated as follows:
|
Proposed new limits |
Cost to the Exchequer |
|
|
1986 |
Full year |
|
|
£ |
£ million |
£ million |
|
5,000 |
0.3 |
7.8 |
|
6,000 |
0.6 |
14.5 |