Part III Income Tax, Corporation Tax and Capital Gains Tax

Chapter I General

Tax rates and personal reliefs

F123 Charge and basic rate of income tax for 1988-89.

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F124 Higher and additional rates of income tax.

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F125 Personal reliefs.

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26 Charge and rate of corporation tax for financial year 1988.

Corporation tax shall be charged for the financial year 1988 at the rate of 35 per cent.

27 Corporation tax: small companies.

(1)

For the financial year 1988 the small companies rate shall be 25 per cent.

(2)

For the financial year 1988 the fraction mentioned in section 13(2) of the Taxes Act 1988, and in section 95(2) of the M1Finance Act 1972, (marginal relief for small companies) shall be one fortieth.

F228. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

29 Life assurance premium relief.

(1)

In sections 266(5)(a) and 274(3)(a) of the Taxes Act 1988, and in paragraph 3(3)(a) of Schedule 14 to that Act, (rate of relief on premiums on life policies etc.) for the words “15 per cent.” wherever they occur there shall be substituted the words “ 12.5 per cent. ”.

(2)

This section shall have effect on and after 6th April 1989.

F330. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31 Non-residents’ personal reliefs.

(1)

For the year 1990-91 and subsequent years of assessment section 278 of the Taxes Act 1988 (which with certain exceptions denies relief under Chapter I of Part VII to non-residents) shall have effect with the following amendments.

F4(2)

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(3)

After subsection (2) there shall be inserted—

“(2A)

Notwithstanding subsection (2) above, no relief shall be given under section 257D in a case where the husband is not resident in the United Kingdom.”

(4)

Subsections (3) to (7) shall be omitted.

Married couples

32 Abolition of aggregation of income.

Section 279 of the Taxes Act 1988 (which treats the income of a woman living with her husband as his income for income tax purposes) shall not have effect for the year 1990-91 or any subsequent year of assessment.

33 Personal allowance and married couple’s allowance.

The Taxes Act 1988 shall have effect for the year 1990-91 and subsequent years of assessment with the substitution of the following sections for section 257—

“257 Personal allowance.

(1)

The claimant shall be entitled to a deduction from his total income of £2,605.

(2)

If the claimant proves that he is at any time within the year of assessment of the age of 65 or upwards, he shall be entitled to a deduction from his total income of £3,180 (instead of the deduction provided for by subsection (1) above).

(3)

If the claimant proves that he is at any time within the year of assessment of the age of 80 or upwards, he shall be entitled to a deduction from his total income of £3,310 (instead of the deduction provided for by subsection (1) or (2) above).

(4)

For the purposes of subsections (2) and (3) above a person who would have been of or over a specified age within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.

(5)

In relation to a claimant whose total income for the year of assessment exceeds £10,600, subsections (2) and (3) above shall apply as if the amounts specified in them were reduced by two-thirds of the excess (but not so as to reduce those amounts below that specified in subsection (1) above).

257A Married couple’s allowance.

(1)

If the claimant proves that for the whole or any part of the year of assessment he is a married man whose wife is living with him, he shall be entitled to a deduction from his total income of £1,490.

(2)

If the claimant proves that for the whole or any part of the year of assessment he is a married man whose wife is living with him, and that either of them is at any time within that year of the age of 65 or upwards, he shall be entitled to a deduction from his total income of £1,855 (instead of the deduction provided for by subsection (1) above).

(3)

If the claimant proves that for the whole or any part of the year of assessment he is a married man whose wife is living with him, and that either of them is at any time within that year of the age of 80 or upwards, he shall be entitled to a deduction from his total income of £1,895 (instead of the deduction provided for by subsection (1) or (2) above).

(4)

For the purposes of subsections (2) and (3) above a person who would have been of or over a specified age within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year.

(5)

In relation to a claimant whose total income for the year of assessment exceeds £10,600, subsections (2) and (3) above shall apply as if the amounts specified in them were reduced by—

(a)

two-thirds of the excess, less

(b)

any reduction made in his allowance under section 257 by virtue of subsection (5) of that section,

(but not so as to reduce the amounts so specified below the amount specified in subsection (1) above).

(6)

A man shall not be entitled by virtue of this section to more than one deduction for any year of assessment; and in relation to a claim by a man who becomes married in the year of assessment and has not previously in the year been entitled to relief under this section, this section shall have effect as if the amounts specified in subsections (1) to (3) above were reduced by one twelfth for each month of the year ending before the date of the marriage.

In this subsection “month” means a month beginning with the 6th day of a month of the calendar year.

257B Transfer of relief under section 257A.

(1)

Where —

(a)

a man is entitled to relief under section 257A, but

(b)

the amount which he is entitled to deduct from his total income by virtue of that section exceeds what is left of his total income after all other deductions have been made from it,

his wife shall be entitled to a deduction from her total income of an amount equal to the excess.

(2)

In determining for the purposes of subsection (1)(b) above the amount that is left of a person’s total income for a year of assessment after other deductions have been made from it, there shall be disregarded any deduction made—

(a)

on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or

(b)

under section 289.

(3)

This section shall not apply for a year of assessment unless the claimant’s husband has given to the inspector written notice that it is to apply; and any such notice—

(a)

shall be given not later than six years after the end of the year of assessment to which it relates,

(b)

shall be in such form as the Board may determine, and

(c)

shall be irrevocable.

257C Indexation of amounts in sections 257 and 257A.

(1)

If the retail prices index for the month of December preceding a year of assessment is higher than it was for the previous December, then, unless Parliament otherwise determines, sections 257 and 257A shall apply for that year as if for each amount specified in them as they applied for the previous year (whether by virtue of this section or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index, and—

(a)

if in the case of an amount specified in sections 257(5) and 257A(5) the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple;

(b)

if in the case of any other amount the increase is not a multiple of £10, rounding the increase up to the nearest amount which is such a multiple.

(2)

Subsection (1) above shall not require any change to be made in the amounts deductible or repayable under section 203 between the beginning of a year of assessment and 5th May in that year.

(3)

The Treasury shall in each year of assessment make an order specifying the amounts which by virtue of subsection (1) above will be treated as specified for the following year of assessment in sections 257 and 257A.

(4)

This section shall have effect in relation to reliefs for the year 1990-91 (as well as for later years); and for that purpose it shall be assumed that sections 257 and 257A applied for the year 1989-90 as they apply, apart from this section, for the year 1990-91.

257D Transitional relief: husband with excess allowances.

(1)

Where—

(a)

a husband and wife are living together for the whole or any part of the year 1990-91 and section 279 (but not section 287) applied in relation to them for the whole or any part of the year 1989-90, and

(b)

the deductions which the husband was entitled to make from his total income for the year 1989-90 under this Chapter exceed the aggregate mentioned in subsection (2) below,

the wife shall be entitled to a deduction from her total income for the year 1990-91 of an amount equal to the excess.

(2)

The aggregate referred to in subsection (1) above is the aggregate of—

(a)

the husband’s total income for the year 1990-91, and

(b)

the deductions which the wife is entitled to make from her total income for that year under this Chapter (apart from this section).

(3)

Where—

(a)

a husband and wife are living together for the whole or any part of the year 1990-91 and for part of the year 1989-90 but section 279 did not apply in relation to them for any part of the year 1989-90, and

(b)

the deductions which the husband was entitled to make from his total income for the year 1989-90 under this Chapter, apart from section 257(6), exceed his total income for the year 1990-91,

then, subject to subsection (4) below, the wife shall be entitled to a deduction from her total income for the year 1990-91 of an amount equal to the excess.

(4)

If the deductions which the wife is entitled to make from her total income for the year 1990-91 under this Chapter (apart from this section) exceed the lesser of—

(a)

her total income for the year 1989-90, and

(b)

the deductions which she was entitled to make from her total income for that year under this Chapter, apart from section 259, section 262 and section 280,

the deduction provided for by subsection (3) above shall be reduced by an amount equal to the excess.

(5)

Where—

(a)

a husband and wife are living together for the whole or any part of the year 1991-92 or any subsequent year of assessment (“the year in question”), and

(b)

they were also living together throughout the immediately preceding year of assessment and the wife made a deduction from her total income for that year under this section, and

(c)

the deductions which the wife is entitled to make from her total income under this Chapter (apart from this section) are either no greater for the year in question than for the immediately preceding year, or greater by a margin which does not exceed the deduction referred to in paragraph (b) above, and

(d)

the deductions which the husband is entitled to make from his total income for the year in question under this Chapter, apart from section 257A and section 265, exceed his total income for that year,

the wife shall be entitled to a deduction from her total income for that year.

(6)

The amount of that deduction shall be equal to—

(a)

the deduction referred to in subsection (5)(b) above, reduced where applicable by an amount equal to the margin referred to in subsection (5)(c), or

(b)

the excess referred to in subsection (5)(d),

whichever is less.

(7)

In determining for the purposes of subsection (5)(b) above whether the wife made a deduction from her total income for the immediately preceding year of assessment under this section, and the amount of any such deduction, it shall be assumed that a deduction under this section is made after all other deductions (except any deduction under section 289).

(8)

In determining for the purposes of this section a person’s total income for a year of assessment there shall be disregarded any deduction made—

(a)

on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or

(b)

under this Chapter or under section 289;

and in determining for the purposes of subsection (1)(b) above the deductions which a man was entitled to make under this Chapter for the year 1989-90, any application under section 283 shall be disregarded.

(9)

This section shall not apply for a year of assessment unless the claimant’s husband has given to the inspector written notice that it is to apply; and any such notice—

(a)

shall be given not later than six years after the end of the year of assessment to which it relates,

(b)

shall be in such form as the Board may determine, and

(c)

shall be irrevocable.

(10)

A notice given under subsection (9) above in relation to a year of assessment shall have effect also as a notice under section 257B(3) (and, where it is relevant, under section 265(5)).

257E Transitional relief: the elderly.

(1)

This section shall apply in relation to a claimant for any year of assessment for the whole or any part of which he has his wife living with him if he proves—

(a)

that for the year 1989-90 he was entitled to relief by virtue of section 257(2)(a) of this Act (as it had effect for that year) and that his entitlement was due to her age and not to his (he being under the age of 65 throughout that year), or

(b)

that for the year 1989-90 he was entitled to relief by virtue of section 257(3)(a) of this Act (as it had effect for that year) and that his entitlement was due to her age and not to his (he being under the age of 80 throughout that year),

and, in either case, that the amount of that relief exceeded the aggregate amount of any relief to which he would be entitled for the year 1990-91 under sections 257 and 257A (apart from this section).

(2)

Where this section applies, section 257 shall have effect—

(a)

in a case within subsection (1)(a) above, as if for the amount specified in subsection (1) of that section there were substituted £3,180, and

(b)

in a case within subsection (1)(b) above, as if for the amounts specified in subsections (1) and (2) of that section there were substituted £3,310.

(3)

Section 257(5) shall have effect in relation to section 257(1) as modified by this section as it has effect in relation to section 257(2) and (3); and in all cases the reference in section 257(5) to the amount specified in section 257(1) is a reference to the amount specified apart from this section.

(4)

The references in section 257C to the amounts specified in section 257 are references to the amounts specified apart from this section.

(5)

In determining for the purposes of this section the amount of any reliefs to which a person was entitled for the year 1989-90, any application under section 283 shall be disregarded.

257F Transitional relief: separated couples.

If the claimant proves—

(a)

that he and his wife ceased to live together before 6th April 1990 but that ever since they ceased to live together they have continued to be married to one another and she has been wholly maintained by him, and

(b)

that he is not entitled to make any deduction in respect of the sums paid for her maintenance in computing for income tax purposes the amount of his income for the year to which the claim relates, and

(c)

that he was entitled to a deduction for the year 1989-90 by virtue of section 257(1)(a) of this Act (as it had effect for that year) and, if the claim relates to a year later than 1990-91, that he has been entitled by virtue of this section to a deduction under section 257A for each intervening year,

sections 257A and 257E (but not section 257B or section 257D) shall have effect for the year to which the claim relates as if his wife were living with him.”

F534 Jointly held property.

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35 Minor and consequential provisions.

Schedule 3 to this Act (which makes provision consequential on sections 32 and 33 above and other minor amendments relating to the treatment for income tax purposes of husbands, wives, widowers and widows) shall have effect.

Annual payments

36 Annual payments.

F6(1)

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F7(2)

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F7(3)

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F7(4)

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F7(5)

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F7(5A)

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F7(6)

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F837 Maintenance payments under existing obligations:

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F938 Maintenance payments under existing obligations:

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F1039. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1140 Provisions supplementary to sections 37 to 39.

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Relief for interest

41 Qualifying maximum for loans.

For the year 1988-89 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.

F1242. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1343. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1444. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefits in kind

45 Car benefits.

(1)

In Schedule 6 to the Taxes Act 1988 (taxation of directors and others in respect of cars) for Part I (tables of flat rate cash equivalents) there shall be substituted—

“Part I

Tables of Flat Rate Cash Equivalents

Table A Cars with an original market value up to £19,250 and having a cylinder capacity

Cylinder capacity of car in cubic centimetres

Age of car at end of relevant year of assessment

Under 4 years

4 years or more

1400 or less

£1,050

£700

More than 1400 but not more than 2000

£1,400

£940

More than 2000

£2,200

£1,450

Table B Cars with an original market value up to £19,250 and not having a cylinder capacity

Original market value of car

Age of car at end of relevant year of assessment

Under 4 years

4 years or more

Less than £6,000

£1,050

£700

£6,000 or more but less than £8,500

£1,400

£940

£8,500 or more but not more than £19,250

£2,200

£1,450

Table C Cars with an original market value of more than £19,250

Original market value of car

Age of car at end of relevant year of assessment

Under 4 years

4 years or more

More than £19,250 but not more than £29,000

£2,900

£1,940

More than £29,000

£4,600

£3,060”

(2)

This section shall have effect for the year 1988-89 and subsequent years of assessment.

F1546 Car parking facilities.

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47 Entertainment: non-cash vouchers.

F16(1)

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(2)

In subsection (1) of section 36 of the M2Finance (No. 2) Act 1975 (vouchers other than cash vouchers), for the words “Subject to subsection (2) below” there shall be substituted the words “ Subject to the provisions of this section ”.

(3)

The provision set out in subsection (1) above shall be inserted after subsection (3A) of that section as subsection (3B) with the substitution—

(a)

for the reference to section 839 of the Taxes Act 1988 of a reference to section 533 of the Taxes Act 1970; and

(b)

for any reference to a non-cash voucher of a reference to a voucher.

(4)

The amendment made by subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and the amendments made by subsections (2) and (3) above shall have effect for the year 1987-88.

48 Entertainment: credit-tokens.

F17(1)

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(2)

The provision set out in subsection (1) above shall be inserted after subsection (3) of section 36A of the M3Finance (No. 2) Act 1975 (credit-tokens) as subsection (3A) with the substitution for the reference to section 839 of the Taxes Act 1988 of a reference to section 533 of the Taxes Act 1970.

(3)

The amendment made by subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and the amendment made by subsection (2) above shall have effect for the year 1987-88.

49 Entertainment of directors and higher-paid employees.

F18(1)

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(2)

The provision set out in subsection (1) above shall be added at the end of section 62 of the M4Finance Act 1976 as subsection (9) with the substitution—

(a)

for the reference to section 154 of the Taxes Act 1988 of a reference to section 61 of the 1976 Act; and

(b)

for the reference to section 839 of the Taxes Act 1988 of a reference to section 533 of the Taxes Act 1970.

(3)

The amendment made by subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and the amendment made by subsection (2) above shall have effect for the year 1987-88.

Business expansion scheme

F1950. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51 Restriction of relief.

(1)

The Taxes Act 1988 shall have effect, and be deemed always to have had effect, with the following amendments, namely—

(a)

in section 289(12)(b), the substitution of the words “sections 290A, 293” for the words “ sections 293 ”; and

(b)

the insertion after section 290 of the following section—

“290A Restriction of relief where amounts raised exceed permitted maximum.

(1)

Where—

(a)

a company raises any amount through the issue of eligible shares after 15th March 1988; and

(b)

the aggregate of that amount and of all other amounts (if any) so raised within the period mentioned in subsection (2) below exceeds £500,000,

the relief shall not be given in respect of the excess.

(2)

The period referred to in subsection (1) above is—

(a)

the period of 6 months ending with the date of the issue of the shares; or

(b)

the period beginning with the preceding 6th April and ending with the date of that issue,

whichever is the longer.

(3)

In determining the aggregate mentioned in subsection (1) above, no account shall be taken of any amount—

(a)

which is subscribed by a person other than an individual who qualifies for relief; or

(b)

as respects which relief is precluded by section 290 or this section.

(4)

Where—

(a)

at any time within the relevant period, the company in question or any of its subsidiaries carries on any trade or part of a trade in partnership, or as a party to a joint venture, with one or more other persons; and

(b)

that other person, or at least one of those other persons, is a company,

the reference to £500,000 in subsection (1) above shall have effect as if it were a reference to—

£500,000 1+A,math

where A is the total number of companies (apart from the company in question or any of its subsidiaries) which, during the relevant period, are members of any such partnership or parties to any such joint venture.

(5)

Where this section precludes the giving of relief on claims in respect of shares issued to two or more individuals, the available relief shall be divided between them in proportion to the amounts which have been respectively subscribed by them for the shares to which their claims relate and which would, apart from this section, be eligible for relief.

(6)

Where—

(a)

in the case of a company falling within subsection (2)(a) of section 293, the qualifying trade or each of the qualifying trades is a trade to which subsection (7) below applies;

(b)

in the case of a company falling within subsection (2)(b)(i) of that section, the subsidiary or each of the subsidiaries is a dormant subsidiary or exists wholly, or substantially wholly, for the purpose of carrying on one or more qualifying trades which or each of which is a trade to which subsection (7) below applies; or

(c)

in the case of a company falling within subsection (2)(b)(ii) of that section, the requirements mentioned in each of paragraphs (a) and (b) above are satisfied,

subsections (1) and (4) above shall have effect as if for the amount there specified there were substituted £5 million.

(7)

This subsection applies to a trade if it consists, wholly or substantially wholly, of operating or letting ships, other than oil rigs or pleasure craft, and—

(a)

every ship operated or let by the company carrying on the trade is beneficially owned by the company;

(b)

every ship beneficially owned by the company is registered in the United Kingdom;

(c)

throughout the relevant period the company is solely responsible for arranging the marketing of the services of its ships; and

(d)

the conditions mentioned in section 297(7) are satisfied in relation to every letting by the company.

(8)

Where—

(a)

any of the requirements mentioned in paragraphs (a) to (c) of subsection (7) above are not satisfied in relation to any ships; or

(b)

any of the conditions referred to in paragraph (d) of that subsection are not satisfied in relation to any lettings,

the trade shall not thereby be precluded from being a trade to which that subsection applies if the operation or letting of those ships, or, as the case may be, those lettings do not amount to a substantial part of the trade.

(9)

The Treasury may by order amend any of the foregoing provisions of this section by substituting a different amount for the amount for the time being specified there.

(10)

Where—

(a)

the issue of the eligible shares is made in pursuance of a prospectus published, or an offer in writing made, before 15th March 1988;

(b)

the shares are issued after that date and before 6th April 1988; and

(c)

subsection (6) above does not apply,

subsections (1) and (4) above shall have effect as if for the amount there specified there were substituted £1 million.

(11)

In this section—

let” means let on charter and “letting” shall be construed accordingly;

oil rig” and “pleasure craft” have the same meanings as in section 297;

prospectus” has the meaning given by section 744 of the Companies Act 1985 or Article 2(3) of the Companies (Northern Ireland) Order 1986.”

(2)

Schedule 5 to the M5Finance Act 1983 shall be deemed always to have had effect as if—

(a)

in paragraph 2(7), for the words “paragraphs 5” there had been substituted the words “ paragraphs 3A, 5 ”; and

(b)

the provisions set out in subsection (1)(b) above had been inserted, with any necessary modifications, after paragraph 3 as paragraph 3A.

52 Valuation of interests in land.

(1)

In section 294 of the Taxes Act 1988 (companies with interests in land), after subsection (5) there shall be inserted—

“(5A)

For the purposes of this section, the value of an interest in any building or other land shall be adjusted by deducting the market value of any machinery or plant which is so installed or otherwise fixed in or to the building or other land as to become, in law, part of it.”

(2)

This section shall have effect in relation to valuations which fall to be made after the passing of this Act.

F2053 Approved investment funds.

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Pensions etc.

F2154 Personal pension schemes: commencement.

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F2155 Personal pension schemes: other amendments.

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F2156 Occupational pension schemes.

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F2257 Lump sum benefits paid otherwise than on retirement.

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Underwriters

58 Assessment and collection.

(1)

For subsection (2) of section 450 of the Taxes Act 1988 (underwriters) there shall be substituted—

“(2)

The aggregate for any year of assessment of—

(a)

the profits or gains arising to a member from his underwriting business; and

(b)

the profits or gains arising to him from assets forming part of a premiums trust fund,

shall be chargeable to tax under Case I of Schedule D; but nothing in this subsection shall affect the manner in which the amount of those profits or gains is to be computed.

(2A)

Schedule 19A shall have effect with respect to the assessment and collection of tax charged under Case I of Schedule D in accordance with this section.”

(2)

Section 39 of the M6Finance Act 1973 shall be renumbered as subsection (1) of that section and after that provision as so renumbered there shall be inserted—

“(2)

Schedule 16A to this Act shall have effect with respect to the assessment and collection of tax charged under Case I of Schedule D in accordance with Schedule 16 to this Act.”

(3)

In Schedule 16 to that Act (underwriters)—

(a)

the subsection (2) set out in subsection (1) above shall be inserted after paragraph 2 as paragraph 2A; and

(b)

paragraph 16 (assessment on agent) shall cease to have effect.

(4)

The provisions set out in Schedule 5 to this Act shall be inserted—

(a)

after Schedule 19 to the Taxes Act 1988 as Schedule 19A; and

(b)

after Schedule 16 to the Finance Act 1973 as Schedule 16A.

(5)

Subsections (1) and (4)(a) above shall have effect for the year1988-89 and subsequent years of assessment; and subsections (2), (3) and (4)(b) above shall have effect for the years 1986-87 and 1987-88.

59 Reinsurance: general.

(1)

In subsection (4) of section 450 of the Taxes Act 1988 (underwriters), for paragraph (b) there shall be substituted—

“(b)

any insurance money payable to him under that insurance in respect of a loss shall be taken into account as a trading receipt in computing those profits or gains for the year of assessment which corresponds to the underwriting year in which the loss arose;”

(2)

The amendment set out in subsection (1) above shall also be made in paragraph 4 of Schedule 16 to the Finance Act 1973 (underwriters).

(3)

Subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and subsection (2) above shall have effect for the years 1985-86, 1986-87 and 1987-88.

60 Reinsurance to close.

(1)

For subsection (5) of section 450 of the Taxes Act 1988 (underwriters) there shall be substituted—

“(5)

Subsection (5A) below applies where—

(a)

in accordance with the rules or practice of Lloyd’s and in consideration of the payment of a premium, one member agrees with another to meet liabilities arising from the latter’s business for an underwriting year so that the accounts of the business for that year may be closed; and

(b)

the member by whom the premium is payable is a continuing member, that is, a member not only of the syndicate as a member of which he is liable to pay the premium (“the reinsured syndicate”) but also of the syndicate as a member of which the other member is entitled to receive it (“the reinsurer syndicate”).

(5A)

In any case where this subsection applies—

(a)

in computing for the purposes of income tax the profits or gains of the continuing member’s business as a member of the reinsured syndicate, the amount of the premium shall be deductible as an expense of his only to the extent that it is shown not to exceed a fair and reasonable assessment of the value of the liabilities in respect of which it is payable; and

(b)

in computing for those purposes the profits or gains of his business as a member of the reinsurer syndicate, those profits or gains shall be reduced by an amount equal to any part of a premium which, by virtue of paragraph (a) above, is not deductible as an expense of his as a member of the reinsured syndicate;

and the assessment referred to above shall be taken to be fair and reasonable only if it is arrived at with a view to producing the result that a profit does not accrue to the member to whom the premium is payable but that he does not suffer a loss.”

(2)

The provisions set out in subsection (1) above, but renumbered as subsections (1) and (2) and with the substitution, in the provision renumbered as subsection (1), of the words “subsection (2)” for the words “subsection (5A)”, shall also be substituted for subsections (1) to (4) of section 70 of the M7Finance (No. 2) Act 1987 (underwriters); and in subsection (5) of that section, for the word “underwriter” there shall be substituted the word “ member ”.

(3)

In this section—

(a)

subsection (1) shall have effect in relation to premiums payable in connection with the closing of accounts of a member’s business for an underwriting year ending in the year 1988-89 or any subsequent year of assessment; and

(b)

subsection (2) shall have effect in relation to premiums payable in connection with the closing of accounts of a member’s business for an underwriting year ending in the year 1985-86, 1986-87 or 1987-88.

61 Minor and consequential amendments.

(1)

In the Taxes Act 1988—

F23(a)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)

in section 451, in subsection (1), for paragraph (a) there shall be substituted—

“(a)

for the assessment and collection of tax charged in accordance with section 450 (so far as not provided for by Schedule 19A);

(aa)

for making, in the event of any changes in the rules or practice of Lloyd’s, such amendments of that Schedule as appear to the Board to be expedient having regard to those changes;”

(c)

after that subsection there shall be inserted—

“(1A)

Regulations under subsection (1) above may make provision with respect to the year of assessment next but one preceding the year of assessment in which they are made.”; and

(d)

in section 452(8), for the words “Case I of Schedule D” there shall be substituted the words “ in accordance with section 450 ” and the words “the investments forming part of the premiums trust fund of the underwriter” shall cease to have effect.

(2)

In Schedule 10 to the Taxes Act 1970, in paragraph 7(3), for the words “Case I of Schedule D” there shall be substituted the words “ in accordance with Schedule 16 to M8Finance Act 1973 ” and the words “the investments forming part of the premiums trust fund of the underwriter” shall cease to have effect.

(3)

In section 87 of the M9Finance Act 1972, at the beginning of subsection (3) there shall be inserted the words “ Except as provided by Schedule 16 to Finance Act 1973 (underwriters) ”.

(4)

In Schedule 16 to the M10Finance Act 1973—

(a)

in sub-paragraph (1) of paragraph 17, for paragraph (a) there shall be substituted—

“(a)

for the assessment and collection of tax charged in accordance with the preceding provisions of this Schedule (so far as not provided for by Schedule 16A to this Act);

(aa)

for making, in the event of any changes in the rules or practice of Lloyd’s, such amendments of that Schedule as appear to the Board to be expedient having regard to those changes;”

(b)

after that sub-paragraph, there shall be inserted—

“(1A)

Regulations under this paragraph may make provision with respect to the year of assessment next but one preceding the year of assessment in which they are made.”

(5)

Subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and subsections (2) to (4) above shall have effect for the years 1986-87 and 1987-88.

Oil licences

F2462. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2563. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2664. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

65 Commercial woodlands.

Schedule 6 to this Act (which abolishes the charge to tax under Schedule B and makes other provision with respect to the occupation of commercial woodlands) shall have effect.

66 Company residence.

(1)

Subject to the provisions of Schedule 7 to this Act, a company which is incorporated in the United Kingdom shall be regarded for the purposes of the Taxes Acts as resident there; and accordingly, if a different place of residence is given by any rule of law, that place shall no longer be taken into account for those purposes.

(2)

For the purposes of the Taxes Acts, a company which—

(a)

is no longer carrying on any business; or

(b)

is being wound up outside the United Kingdom,

shall be regarded as continuing to be resident in the United Kingdom if it was so regarded for those purposes immediately before it ceased to carry on business or, as the case may be, before any of its activities came under the control of a person exercising functions which, in the United Kingdom, would be exercisable by a liquidator.

(3)

In this section “the Taxes Acts” has the same meaning as in the M11Taxes Management Act 1970.

(4)

This section and Schedule 7 to this Act shall be deemed to have come into force on 15th March 1988.

F2766AF28Residence of SE or SCE

F29(1)

This section applies in relation to—

(a)

an SE which transfers its registered office to the United Kingdom (in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)), and

(b)

an SCE which transfers its registered office to the United Kingdom (in accordance with Article 7 of Council Regulation (EC) 1435/2003 on the Statute for a European Cooperative Society (SCE)).

(2)

Upon registration in the United Kingdom the SE F30or SCE shall be regarded for the purposes of the Taxes Acts as resident in the United Kingdom; and accordingly, if a different place of residence is given by any rule of law, that place shall not be taken into account for those purposes.

(3)

The SE F31or SCE shall not cease to be regarded as resident in the United Kingdom by reason only of the subsequent transfer from the United Kingdom of its registered office.

(4)

In this section “the Taxes Acts” has the same meaning as in the Taxes Management Act 1970.

F3267. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3368 Priority share allocations for employees etc.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3469 Share options: loans.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

70 Charities: payroll deduction scheme.

(1)

In section 202(7) of the Taxes Act 1988 (which limits to £120 the deductions attracting relief) for “ £120” there shall be substituted “ £240 ”.

(2)

This section shall have effect for the year 1988-89 and subsequent years of assessment.

F3571 Unit trusts: relief on certain payments.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72 Entertainment of overseas customers.

(1)

Subsection (2) of section 577 of the Taxes Act 1988 (which excepts the entertainment of overseas customers from the general rule that entertainment expenses are not deductible for tax purposes) shall not have effect in relation to entertainment provided on or after 15th March 1988.

(2)

Subsection (1) above shall not apply where the expenses incurred or the assets used in providing the entertainment were incurred or used under a contract entered into before 15th March 1988.

73 Consideration for certain restrictive undertakings.

F36(1)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)

Notwithstanding anything in section 74 of the Taxes Act 1988, F37any payment which is treated as earnings of an employee by virtue of section 225 of the Income Tax (Earnings and Pensions) Act 2003 (payments for restrictive undertakings) , and which is paid or treated as paid by a F38company carrying on a trade, profession or vocation, may be deducted as an expense in computing the profits or gains of the trade, profession or vocation for the purposes of F39corporation tax .

F40(3)

Any payment which is treated as earnings of an employee by virtue of section 225 of the Income Tax (Earning and Pensions) Act 2003—

(a)

if paid or treated as paid by company with investment business, shall be treated for the purposes of section 75 of the Taxes Act 1988 as an expense of management to the extent that it otherwise would not be;

(b)

if paid or treated as paid by a company in relation to which section 76 of that Act applies, shall be treated as expenses payable falling to be brought into account at Step 1 in subsection (7) of that section to the extent that it otherwise would not be.

(4)

This section has effect in relation to sums paid or treated as paid in respect of the giving of, or the total or partial fulfilment of, undertakings given on or after 9th June 1988.

F4174. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75 Premiums for leases etc.

Sections 39(3) and 780(5) of, and Schedule 2 to, the Taxes Act 1988 (top-slicing relief where premiums for leases etc. chargeable to income tax) shall not have effect for the year 1988-89 or any subsequent year of assessment.

F4276

  • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .