Tories fuel likelihood of capital allowances reform
Business has not benefited from capital allowances, claim Tories
The Tory party has heightened expectations that a major reform could be on
the way for capital allowances after a spokesman said that they only added to
the complexity of the tax system.
In comments to Accountancy Age‘s sister publication
BusinessGreen,
the Tories laid out its plans for reforming support for renewable energy, but
took the opportunity to criticise the system of capital allowances it believes
are not helping business.
In a written statement the spokesman said: “Gordon Brown’s reliefs and
allowances were meant to encourage investment by businesses. Instead his
tinkering has added to the complexity of the tax system without increasing
business investment. The amount manufacturers invest in their businesses has
fallen by 44 per cent under Labour, by far the largest ever fall under any
government.”
The spokesman went on to quote Anita Monteith, of the ICAEW’s Tax Faculty,
from an article for the Daily Telegraph last week in which she is reported
saying the constant change to capital allowances had undermined business
confidence in the system.
It has been suggested that Tory’s pledge to cut corporation tax by three
percentage points to 25% would be paid for by doing away with capital allowances
.
Some business leaders suggested that doing away with capital allowances would
be counter productive.
The Tories confirmed cuts to corporation tax in March when it was announced
by shadow chancellor George Osborne.
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