Finance Act 1968

PART I Customs and Excise

1 Spirits, wine, British wine and tobacco

(1) For the following provisions of the [1964 c. 49.] Finance Act 1964, as amended by section 1(2) of the [1967 c. 54.] Finance Act 1967, setting out rates of customs and excise duties, namely—

(a) Table 1 in Schedule 1 (spirits other than imported perfumed spirits);

(b) Schedule 3 (wine);

(c) Schedule 4 (British wine),

there shall be substituted the provisions set out in Schedules 1, 2 and 3 respectively to this Act.

(2) In section 1(2) of the [1965 c. 25.] Finance Act 1965 (which increased each of the rates of customs and excise duty and of drawback in respect of tobacco set out in Schedule 5 to the [1964 c. 49.] Finance Act 1964 by 10s. per pound) for the reference to 10s. there shall be substituted a reference to 14s. 4d.; but this subsection shall not affect the rates of drawback payable in the case of goods in respect of which duty has been paid otherwise than at the rates having effect by virtue of this section.

(3) Section 109(1) of the [1952 c. 44.] Customs and Excise Act 1952 (which provides that no spirits shall be delivered for home use unless they have been warehoused for a period of at least three years) shall not apply to imported compounded spirits of any kind specified for the purposes of this subsection in regulations made by the Commissioners; and section 5 of the [1966 c. 18.] Finance Act 1966 (which contains an exemption from the said section 109(1) confined to imported vodka) shall cease to have effect on the expiration of the period of one month beginning with the day on which this Act is passed.

(4) Subsections (1) and (2) of this section shall have effect as from 20th March 1968.

2 Hydrocarbon oils

(1) As from six o'clock in the evening of 19th March 1968—

(a) section 2 of the [1964 c. 92.] Finance (No. 2) Act 1964 (which, as amended by section 1(3) of the [1967 c. 54.] Finance Act 1967, provides for a duty of customs at the rate of three shillings and sevenpence a gallon to be charged on imported hydrocarbon oils and for a duty of excise at the same rate to be charged on hydrocarbon oils produced in the United Kingdom, on petrol substitutes and on spirits used for power methylated spirits) shall have effect with the substitution for the words " three shillings and sevenpence " of the words " three shillings and elevenpence " ;

(b) subsection (2) of section 92 of the Finance Act 1965 (which, as amended as aforesaid, provides that the amount of a grant under subsection (1) of that section by the Minister of Transport to the operator of a bus service towards defraying customs or excise duties charged on bus fuel shall not exceed tenpence for every gallon of fuel used or estimated to have been used in operating the bus service during the period to which the grant relates) and section 1(1)(b) of the [1966 c. 46.] Bus Fuel Grants Act 1966 (which, as amended as aforesaid, amends the said subsection (2)) shall have effect as if for any reference therein to tenpence there were substituted a reference to one shilling and twopence; and so much of subsection (9) of the said section 92 as enables the Parliament of Northern Ireland to make laws for purposes similar to the purposes of the provisions of that section shall apply to those provisions as amended by this paragraph.

(2) Where in the case of any hydrocarbon oils which have been delivered for home use it is shown to the satisfaction of the Commissioners—

(a) that since they were so delivered the oils have been deposited unused in an oil warehouse ; and

(b) that they have been so deposited by reason of having become contaminated or by reason of their consisting of different descriptions of hydrocarbon oils which have accidentally become mixed ; and

(c) that at the time when they were so deposited they were, or, as the case may be, were a mixture of, oils on which the appropriate duty of customs or excise had been paid and not repaid and on which drawback had not been allowed,

then, subject to any conditions which the Commissioners see fit to impose for the protection of the revenue, the Commissioners may make to the occupier of that warehouse a payment in accordance with the provisions of subsection (3) of this section.

(3) The payment aforesaid shall be a payment of an amount appearing to the Commissioners to be equal to the duty which would have been payable if—

(a) the oils had not become contaminated or mixed; and

(b) they had first been delivered for home use at the time when they were deposited in the warehouse and the duty had first become chargeable on them on that delivery.

(4) In this section the expression " oil warehouse " means a place of security approved by the Commissioners under section 80 of the [1952 c. 44.] Customs and Excise Act 1952 for the deposit, keeping and securing of hydrocarbon oils, and includes a refinery.

3 Reduction in customs duty on goods from Republic of Ireland and abolition of customs duty on hops etc.

(1) As from 1st July 1968, in the case of goods of the Republic of Ireland consigned to the United Kingdom from that country—

(a) the rates at which the duties of customs are charged on matches by section 4 of the [1951 c. 43.] Finance Act 1951 and on mechanical lighters by section 6 of the [1928 c. 17.] Finance Act 1928 shall be the same as the corresponding rates of excise duty under those sections ;

(b) Schedule 3 to the [1964 c. 49.] Finance Act 1964 (rates of customs duty on wine) shall—

(i) in its application to wine exceeding 32 degrees of proof spirit, have effect as if the rate specified in the third column in respect of still wine in bottle were the same as the rate so specified in respect of still wine not in bottle ;

(ii) in its application to wine not exceeding 32 degrees of proof spirit, have effect as if the provisions of that Schedule were the same as those of Schedule 4 to that Act (rates of excise duties on British wine) with the substitution in the latter of " Customs Duties " for " Excise Duties " and the omission of " British " wherever it occurs ;

(c) Table 1 in Schedule 5 to the said Act of 1964 (rates of customs duties on tobacco) shall have effect as if any rate specified in the third column (Commonwealth rates) which exceeds the corresponding rate specified in the fourth column (Convention rates) were the same as that corresponding rate.

(2) Section 3 of the [1957 c. 49.] Finance Act 1957 (which charges a duty of customs on hops, hop oil and any extract, essence or other similar preparation made from hops) shall cease to have effect as from the said 1st July, but without prejudice to any right of drawback in respect of duty paid under that section before that date.

4 Duties relating to betting or gaming

(1) For the purposes of the general betting duty on bets made on or after 25th March 1968, section 12(2)(b) of the [1966 c. 18.] Finance Act 1966 (under which the amount of the duty is an amount equal to two and a half per cent, of the amount staked) shall have effect with the substitution for the words " two and a half per cent. " of the words " five per cent."

(2) For the purposes of the pool betting duty on bets made at any time by reference to any event taking place on or after 25th March 1968, section 1(2) of the [1963 c. 3.] Betting Duties Act 1963 (which, as amended, provides that the duty shall be an amount equal to twenty-five per cent, of the amount of the stake money paid) shall have effect with the substitution for the words from " equal " onwards of the words " equal to thirty-three and a third per cent, of the amount of the stake money paid."

(3) The amount of the duty under section 13 of the Finance Act 1966 on a gaming licence in respect of any premises granted so as to expire on a date later than 30th September 1968 shall be determined with the substitution for the Table set out in subsection (2) of that section of the Table set out in Schedule 4 to this Act.

(4) The provisions of Schedule 5 to this Act shall have effect for the purposes of the enforcement of the duties relating to betting or gaming.

5 Purchase tax

Subject to any new order of the Treasury under section 2 of the [1963 c. 9.] Purchase Tax Act 1963, Part I of Schedule 1 to that Act (chargeable and exempt goods and rates of tax) as amended by section 1(4) of the [1967 c. 54.] Finance Act 1967 shall have effect—

(a) as from 20th March 1968 with the amendments specified in Schedule 6 to this Act; and

(b) as from 30th April 1968 with the amendment of Group 26 by the omission from paragraph (a) and the insertion at the beginning of paragraph (b) of the words " Diaries, calendars and similar articles ; and " ; and

(c) as from 1st July 1968 with the amendment of Group 24 by the addition after paragraph (4) of the exemptions of the following paragraph:—

“(5) The following projectors namely—

(i) cinematograph projectors suitable only for film of 16 mm. width ;

(ii) projectors suitable only for filmstrip ;

(iii) cassette loaded loop projectors,

and parts and accessories suitable only for use with a projector of any of those descriptions.”

6 Customs control of persons entering or leaving the United Kingdom

(1) Any person entering the United Kingdom shall, at such place and in such manner as the Commissioners may direct, declare any thing contained in his baggage or carried with him which—

(a) he has obtained outside the United Kingdom ; or

(b) being dutiable goods or chargeable goods within the meaning of the Purchase Tax Act 1963, he has obtained in the United Kingdom without payment of duty or purchase tax,

and in respect of which he is not entitled to exemption from payment of duty and purchase tax by virtue of any order under section 7 of this Act.

(2) Any person entering or leaving the United Kingdom shall answer such questions as the proper officer may put to him with respect to his baggage and any thing contained therein or carried with him, and shall, if required by the proper officer, produce that baggage and any such thing for examination at such place as the Commissioners may direct.

(3) Any person failing to declare any thing or to produce any baggage or thing as required by this section shall be liable to a penalty of three times the value of the thing not declared or of the baggage or thing not produced, as the case may be, or £100, whichever is the greater; and any thing chargeable with any duty or tax which is found concealed or is not declared, and any thing which is being taken into or out of the United Kingdom contrary to any prohibition or restriction for the time being in force with respect thereto under or by virtue of any enactment, shall be liable to forfeiture.

(4) Section 66 of the [1952 c. 44.] Customs and Excise Act 1952 (which is superseded by this section) shall cease to have effect; and section 67 of that Act (power to require evidence in support of information) shall have effect as if this section were contained in Part II of that Act.

7 Power to provide, in relation to persons entering the United Kingdom, for reliefs from customs duty and purchase tax and for a simplified computation of duty and tax

(1) The Commissioners may by order make provision for conferring on persons entering the United Kingdom reliefs from customs duty and purchase tax; and any such relief may take the form either of an exemption from payment of duty and tax or of a provision whereby the sum payable by way of duty or tax is less than it otherwise would be.

(2) Without prejudice to subsection (1) of this section, the Commissioners may by order make provision whereby, in such cases and to such extent as may be specified in the order, a sum calculated at a rate specified in the order is treated as the aggregate amount payable by way of customs duty and purchase tax in respect of goods imported by a person entering the United Kingdom; but any order making such provision as aforesaid shall enable the person concerned to elect that customs duty and purchase tax shall be charged on the goods in question at the rates which would be applicable apart from that provision.

(3) An order under this section—

(a) may make any relief for which it provides subject to conditions, including conditions which are to be complied with after the importation of the goods to which the relief applies;

(b) may contain such incidental and supplementary provisions as the Commissioners think necessary or expedient, including provisions for the forfeiture of goods in the event of non-compliance with any condition subject to which they have been relieved from duty or tax;

(c) may make different provision for different cases.

(4) The power to make orders under this section shall be exercisable by statutory instrument and shall include power to vary or revoke a previous order thereunder.

(5) Any order under this section which removes, reduces or restricts any relief conferred by any previous order under this section shall cease to have effect at the end of the period of twenty-eight days beginning with the day on which the order is made (but without prejudice to anything previously done under the order or to the making of a new order) unless before the end of that period the order is approved by a resolution of the House of Commons; and any other order under this section shall be subject to annulment in pursuance of a resolution of the House of Commons.

In reckoning the said period of twenty-eight days no account shall be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than four days.

(6) In this section " purchase tax" means purchase tax chargeable by virtue of section 11 of the [1963 c. 9.] Purchase Tax Act 1963 (tax on imported goods) and references to customs duty and to purchase tax include references to any addition thereto by virtue of section 9 of the [1961 c. 36.] Finance Act 1961 (surcharges on revenue duties).

(7) Nothing in any order under this section shall be construed as authorising any person to import any thing in contravention of any prohibition or restriction for the time being in force with respect thereto under or by virtue of any enactment.

8 Vehicles excise duty: increase of rates

(1) For the rates of duty set out in Part II of Schedule 1, of Schedule 3, of Schedule 4 and of Schedule 5 to the [1962 c. 13.] Vehicles (Excise) Act 1962 as amended by section 5(1) of the [1965 c. 25.] Finance Act 1965 (annual rates of duty for licences other than trade licences) there shall be substituted respectively the rates of duty set out in Parts I, II, III and IV of Schedule 7 to this Act.

(2) In section 12(5) of the said Act of 1962 as amended by section 5(2) of the said Act of 1965 (trade licences)—

(a) in paragraph (a) (general trade licences) for the words " forty-five pounds " and " nine pounds " there shall be substituted respectively the words " sixty pounds " and " twelve pounds ";

(b) in paragraph (b) (limited trade licences) for the words " nine pounds " and " two pounds " there shall be substituted respectively the words " twelve pounds " and " two pounds ten shillings ".

(3) In relation to any hackney carriage or goods vehicle which is partly used for private purposes, the duty chargeable by virtue of Schedule 2 or Schedule 4 to the said Act of 1962, as. the case may be, shall (if apart from this subsection it would be less) be equal to the duty which would be chargeable in respect of that hackney carriage or goods vehicle if Schedule 5 to that Act, and not the said Schedule 2 or 4, were applicable thereto.

(4) For the purposes of the said Schedule 4, but without prejudice to the last foregoing subsection, a vehicle shall be treated as a farmer's goods vehicle notwithstanding that it is partly used for private purposes if, apart from that use, it would be a farmer's goods vehicle within the meaning of that Schedule.

(5) In subsections (3) and (4) of this section " used for private purposes " means—

(a) as respects a hackney carriage, used otherwise than for the purpose of carrying passengers for hire or reward or of being let for hire;

(b) as respects a goods vehicle, used otherwise than for the conveyance of goods or burden for hire or reward or for or in connection with a trade or business (including the performance by a local or public authority of its functions).

(6) This section applies to licences taken out after 19th March 1968.

9 Vehicles excise duty: trade licences for vehicle testing

For the purpose of enabling certain persons engaged in the testing of vehicles to take out trade licences under section 12 of the [1962 c. 13.] Vehicles (Excise) Act 1962, that section (which at present applies only to motor traders) shall be amended as follows:—

(a) in subsections (1) and (2) after the words " motor trader " there shall be inserted the words " or vehicle tester " ;

(b) at the end of subsection (10) there shall be added the words " ; and ' vehicle tester' means a person, other than a motor trader, who regularly in the course of his business engages in the testing on roads of mechanically propelled vehicles belonging to other persons. "

10 Continuation of powers under s. 9 of Finance Act 1961

(1) The period after which orders of the Treasury under section 9 of the [1961 c. 36.] Finance Act 1961 may not be made or continue in force (which, by section 1(1)(b) of the [1967 c. 54.] Finance Act 1967, was extended until the end of August 1968) shall extend until the end of August 1969 or such later date as Parliament may hereafter determine.

(2) In consequence of the abolition by section 12(6) of the [1966 c. 18.] Finance Act 1966 of bookmakers' licence duty, the said section 9 shall have effect as if for subsection (3)(b) thereof there were substituted the following:—

“(b) every duty of excise other than a duty payable on a licence; and”.

PART II Income Tax, Corporation Tax and Capital Gains Tax

11 Charge of income tax for 1968-69

Income tax for the year 1968-69 shall be charged at the standard rate of 8s. 3d. in the pound, and in the case of an individual whose total income exceeds £2,000 at such higher rates in respect of the excess as Parliament may hereafter determine.

12 Surtax rates for 1967-68

Income tax for the year 1967-68 shall be charged, in the case of an individual whose total income exceeded £2,000, at the same higher rates in respect of the excess as were charged for the year 1966-67.

13 Charge of corporation tax for financial year 1967

Corporation tax shall be charged for the financial year 1967 at the rate of 42J per cent.

14 Alterations in personal reliefs

(1) For the year 1968-69 and subsequent years of assessment, section 13 of the [1957 c. 49.] Finance Act 1957 (relief for persons over 65 with small incomes), as amended by section 16(1) of the [1967 c. 54.] Finance Act 1967, shall be amended by substituting—

(a) for the references to £401 and £643 (the income limits for exemption from tax), references to £415 and £665, and

(b) for the reference to £180 (the excess over those limits beyond which relief by reduction of tax is excluded), a reference to £230.

(2) Section 210(1) of the [1952 c. 10.] Income Tax Act 1952 (married and single relief) shall for the year 1968-69 and subsequent years of assessment have effect in relation to any claim made by a man who becomes married in the year for which the claim is made, and has not previously in that year been entitled to the higher relief specified in paragraph (a) thereof (married relief), as if the sum specified for that year in that paragraph were reduced, for each month of that year ending before the date of the marriage, by one-twelfth of the amount by which it exceeds the sum specified in paragraph (b) (single relief).

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

(3) A man who becomes married during a year of assessment may by notice in writing to the inspector elect that his marriage be disregarded for the purposes of any claim for that year under section 214 or 215 of the [1952 c. 10.] Income Tax Act 1952 or section 17 of the [1960 c. 44.] Finance Act 1960 (housekeeper etc. relief), and, in that case, the marriage shall also be disregarded for the purposes of any claim for that year under section 210 of the said Act of 1952 (married and single relief).

(4) Where for the year 1968-69 an individual is assessable to income tax in respect of payments on account of an allowance or allowances under the [1965 c. 53.] Family Allowances Act 1965 or the [1966 c. 8 (N.I.).] Family Allowances Act (Northern Ireland) 1966, the total deductions from tax to which, apart from this section, the individual (or, if the individual is a wife assessable in respect of the payments by virtue of an application for separate assessment under section 355 of the Income Tax Act 1952, she and her husband together) would be entitled for the year under sections 210 and 212 to 219 of the said Act of 1952 (certain personal reliefs) shall be reduced, for each allowance if more than one, by an amount equal to tax at the standard rate on £36 or, if the payments in question are payments for a part only of the year, by the following amount or amounts—

(a) so far as the payments consist of or include payments for, or for a period falling within, the first half of the year, by an amount, or a proportionate part of an amount, equal to tax at the standard rate on £15, and

(b) so far as the payments consist of or include payments for, or for a period falling within, the second half of the year, by an amount, or a proportionate part of an amount, equal to tax at the standard rate on £21.

(5) The allowances referred to in subsection (4) above shall be treated as including any allowance payable to an individual in the service of the Crown in lieu of an allowance under either of the enactments there specified.

(6) The said subsection (4) shall not apply in the case of any payments if the individual assessable in respect thereof is entitled in the year—

(a) to a widow's allowance, widowed mother's allowance, retirement pension or child's special allowance under the [1965 c. 51.] National Insurance Act 1965 or the [1966 c. 6 (N.I.).] National Insurance Act (Northern Ireland) 1966, or

(b) to an allowance under section 21 of the [1965 c. 52.] National Insurance (Industrial Injuries) Act 1965 or section 21 of the [1966 c. 9 (N.I.).] National Insurance (Industrial Injuries) Act (Northern Ireland) 1966 (allowances in respect of children of deceased), or

(c) to an allowance granted by the Minister of Social Security under a Royal Warrant, Order in Council or order administered by him to widows of members of the armed forces.

(7) The said subsection (4) shall not affect the construction of any reference in the Income Tax Acts to the deduction allowable under any particular provision of those referred to in that subsection.

(8) The preceding provisions of this section shall not be deemed to have required any change to be made in the amounts deducted or repaid under section 157 of the [1952 c. 10.] Income Tax Act 1952 (pay as you earn) before 27th April 1968.

15 Aggregation with income of parents of investment, etc income of unmarried infants not regularly working

(1) Subject to the following provisions of this section, an infant's income, so far as it is income for a year of assessment or part of a year of assessment during which he or she is unmarried and not regularly working, shall in the circumstances specified in Schedule 8 to this Act be treated in accordance with that Schedule as income of his or her parent or parents, and the supplemental provisions contained in that Schedule shall also have effect.

(2) Subsection (1) above does not apply to—

(a) earned income, or

(b) income derived from any sum, or from assets representing any sum, paid by way of, or in satisfaction of a claim for, damages in respect of personal injury to the infant (including any disease, and any impairment of his or her physical or mental condition),

but, subject to those exclusions and to subsection (3) below, the said subsection applies to all such amounts as would fall to be included in computing the infant's total income apart therefrom, and so applies notwithstanding anything in any other enactment (including, except so far as the contrary is expressly provided, any enactment passed after this Act) requiring any amount not to be treated as income of anyone other than the infant.

(3) Section 397(3) of the Income Tax Act 1952 (settlements on children: income not exceeding £5 not to be treated as income of settlor by virtue of section 397(1) of that Act) shall cease to have effect, but neither the said section 397(1) nor subsection (1) above shall have effect in relation to an infant for any year of assessment for which his aggregate income, so far as it would fall within one or other of those provisions but for this exception, does not exceed £5.

(4) An infant is to be treated for the purposes of this section as working regularly if, and only if, he or she is engaged in a full-time occupation, not being one entered into during an interval not exceeding fifteen months between two periods of full-time education, and intends to be regularly engaged in it or another such occupation.

In this subsection " occupation" means any office, employment, trade, profession or vocation.

(5) Income falling by virtue of this section and the said Schedule 8 to be treated as income of an infant's parent shall not be taken into account for the purposes of section 212(4) of the [1952 c. 10.] Income Tax Act 1952 (reduction in child relief where child entitled in own right to income exceeding £115 per year).

(6) Section 21 of the [1965 c. 25.] Finance Act 1965 (calculation of capital gains tax by reference to liability to income tax) shall have effect as if this section, except so far as it affects the operation of section 397(1) of the Income Tax Act 1952, had not been enacted.

(7) Any tax falling to be assessed in respect of income which is to be treated by virtue of this section and the said Schedule 8 as income of an infant's parent shall, instead of being assessed on the infant, or on the infant's trustee, guardian, curator or committee, or on the infant's executors or administrators, be assessable on the parent, or, in the appropriate cases, on the parent's trustee, guardian, curator or committee, or on the parent's executors or administrators.

(8) This section shall have effect for the year 1969-70 and subsequent years of assessment.

16 Life policies, life annuity contracts and capital redemption policies

(1) Subject to the provisions of this section—

(a) relief from tax under section 219 of the Income Tax Act 1952 shall be granted in respect of the premiums payable under a policy of life insurance only if the policy is a qualifying policy within the meaning of Part I of Schedule 9 to this Act;

(b) Part II of that Schedule shall have effect for the purpose of imposing, in the manner and to the extent therein provided, charges to surtax and to tax under section 77 of the Finance Act 1965 (shortfall in distributions of close company) in respect of gains to be treated in accordance with that Part as arising in connection with policies of life insurance, contracts for life annuities, and capital redemption policies ; and

(c) section 241 of the said Act of 1952 (no surtax deduction for interest etc. on loans used to pay premiums) shall be amended as follows—

(i) subsection (3)(d) of that section (exemption where annual premiums do not exceed one-eighth of capital sum payable on death) shall not apply to any interest or other sum unless it is shown to the satisfaction of the Board that it is exceptional for the individual in question to apply borrowed money to or towards the payment of premiums to which that provision applies, and that no such money has been so applied by him in any of the three years of assessment immediately preceding that in which he so applies the money on or in respect of which the interest or other sum in question is payable, and

(ii) subsection (3)(e) of that section (exemption for interest etc. not exceeding £100 in the case of other premiums each of which is one of a series of equal premiums payable at equal intervals of not more than one year) shall have effect without the exclusion of premiums falling within the said subsection (3)(d), and, in the case of premiums payable under a qualifying policy within the meaning of Part I of the said Schedule 9, with the omission of the words from " each of which " to " one year ".

(2) The supplementary provisions contained in Part III of the said Schedule 9 shall also have effect.

(3) Nothing in this section or the said Schedule 9 shall apply—

(a) to any policy of life insurance having as its sole object the provision on an individual's death or disability of a sum substantially the same as any amount then outstanding under a mortgage of his residence, or of any premises occupied by him for the purposes of a business, being a mortgage the principal amount secured by which is repayable by instalments payable annually or at shorter regular intervals, or

(b) to any policy of life insurance issued in connection with a sponsored superannuation scheme as defined in section 22(10) of the [1956 c. 54.] Finance Act 1956, if one-half at least of the cost of the scheme is borne by the person or persons under whom the relevant offices or employments are held.

In the application of this subsection to Scotland, for the reference to a mortgage there shall be substituted a reference to a heritable security within the meaning of the [1924 c. 27.] Conveyancing (Scotland) Act 1924 (but including a security constituted by ex facie absolute disposition or assignation).

(4) In this section and the said Schedule 9 "life annuity" means any annuity to which section 27 of the [1956 c. 54.] Finance Act 1956 applies, and " capital redemption policy " means any insurance effected in the course of a capital redemption business as defined in section 431(3) of the [1952 c. 10.] Income Tax Act 1952.

(5) Paragraphs (a) and (c) of subsection (1) above shall have effect for the year 1967-68 and subsequent years of assessment, but, in the case of paragraph (a), only as respects policies of life insurance issued in respect of insurances made after 19th March 1968, and, in the case of paragraph (c), only as respects interest on, and other sums payable in respect of, money borrowed after that date ; and paragraph (b) of that subsection shall have effect for the year 1968-69 and subsequent years of assessment, but only as respects policies of life insurance issued as aforesaid, contracts for life annuities entered into after the said 19th March, and capital redemption policies effected after that date.

(6) A policy of life insurance issued in respect of an insurance made on or before 19th March 1968 shall be treated for the purposes of subsection (5) above and the said Schedule 9 as issued in respect of one made after that date if it is varied after that date so as to increase the benefits secured or to extend the term of the insurance:

Provided that a variation effected before the end of the year 1968 shall be disregarded for the purposes of this subsection if its only effect is to bring into conformity with paragraph 2 of that Schedule (qualifying conditions for endowment policies) a policy previously conforming therewith except as respects the amount guaranteed on death, and no increase is made in the premiums payable under the policy.

17 Small maintenance payments

(1) In section 205(1)(i) of the [1952 c. 10.] Income Tax Act 1952 (definition of small maintenance payments) for the words from ' to be made weekly' to ' subsection (3) of this section' there shall be substituted the words ' to be made—

(A) weekly at a rate not exceeding £7 10s. 0d. per week, or

(B) monthly at a rate not exceeding £32 10s. 0d. per month'.

(2) Subsection (1) above shall not affect payments falling due before 6th April 1969 under an order made before the coming into force of this section:

Provided that where an order so made is varied or revived at any time after the coming into force of this section, subsection (1) above shall apply in relation to payments falling due under the order after that time.

(3) Where a court makes an order in consequence of which payments falling due under a previous order which is not already a small maintenance order within the meaning of the said section 205 will be treated as small maintenance payments within the meaning of that section by virtue of the proviso to subsection (2) above, the court shall furnish to the Board, in such form as the Board may prescribe, particulars of those orders, the names of the persons for the time being liable to make, and entitled to, those payments and, so far as known to the court, the addresses of those persons.

(4) The Treasury may from time to time by order increase the amount of £7 10s. 0d. and the amount of £32 10s. 0d. in the said section 205(1)(i) either as respects payments within paragraph (a) of the said subsection (1) (payments to a person who is or has been a party to a marriage), or as respects payments within paragraph (b) of that subsection (payments for children), or as respects both.

(5) An order which increases, or further increases, the said amount of £7 10s. 0d. for a class of payments shall increase, or further increase, the amount of £32 10s. 0d. for that class of payments so that it is 52 twelfths of the weekly amount or, if that does not give a convenient round sum, such other amount as appears to the Treasury to be the nearest convenient round sum.

(6) An order under subsection (4) above may contain provisions corresponding to subsections (2) and (3) above so as to postpone the effect of the order under this section in relation to payments under court orders made before the coming into force, for other purposes, of the order under this section.

(7) An order under subsection (4) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament.

(8) Section 205(3) of the [1952 c. 10.] Income Tax Act 1952 and section 40(1)(c) of the [1960 c. 44.] Finance Act 1960 (which are superseded by this section) shall cease to have effect, so however that the repeal thereof shall not affect payments in relation to which subsection (1) of this section is excluded by subsection (2) of this section.

(9) This section shall come into force on the passing of this Act.

18 Cash basis, etc.: post-cessation and other receipts;

(1) Where any trade, profession or vocation the profits or gains of which are chargeable to tax under Case I or Case II of Schedule D has been permanently discontinued, and the profits or gains for any period before the discontinuance were computed on a conventional basis (that is to say, were computed otherwise than by reference to earnings), tax shall be charged under Case VI of Schedule D in respect of sums to which this subsection applies which are received on or after the discontinuance.

This subsection applies to all sums arising from the carrying on of the trade, profession or vocation during any period before the discontinuance (not being sums otherwise chargeable to tax) in so far as their amount or value was not brought into account in computing the profits or gains for any period before the discontinuance.

(2) Where, in the case of any trade, profession or vocation the profits or gains of which are chargeable to tax under Case I or Case II of Schedule D there has been—

(a) a change from a conventional basis to the earnings basis, or

(b) a change of conventional basis which may result in receipts dropping out of computation,

tax shall be charged under Case VI of Schedule D in respect of sums to which this subsection applies which are received after the change, and before the trade, profession or vocation is permanently discontinued.

This subsection applies to all sums arising from the carrying on of the trade, profession or vocation during any period before the change (not being sums otherwise chargeable to tax) in so far as their amount or value was not brought into account in computing the profits or gains for any period.

(3) Schedule 10 to this Act shall have effect for supplementing and giving effect to this and the next following section, and in that Schedule " the principal section " means this section.

(4) Subsection (1) above shall not apply to sums to which section 32 of the [1960 c. 44.] Finance Act 1960 (post-cessation receipts) applies despite the words " (not being sums otherwise chargeable to tax)" in subsection (2) of the said section 32, and shall not apply to sums to which the said section 32 would have applied but for paragraphs (a) and (b) of subsection (3) of that section (non-residents and copyright).

(5) For the purposes of this and the next following section and the said Schedule—

(a) " by reference to earnings" shall be construed in accordance with section 32(5) of the Finance Act 1960, and " earnings basis " shall be construed accordingly,

(b) " conventional basis" has the meaning given by subsection (1) above, so that profits or gains are computed on a conventional basis if computed otherwise than by reference to earnings,

(c) there is a change from a conventional basis to the earnings basis at the end of a period the profits or gains of which were computed on a conventional basis if the profits or gains of the next succeeding period are computed by reference to earnings,

(d) if the profits or gains of two successive periods are computed on different conventional bases, a change of conventional basis occurs at the end of the earlier period.

(6) For the said purposes any reference to the permanent discontinuance of a trade, profession or vocation includes a reference to the occurring of any event which, under any of the provisions in the Income Tax Acts or the Corporation Tax Acts, is to be treated as equivalent to the permanent discontinuance of a trade, profession or vocation; and the trade, profession or Vocation carried on before a permanent discontinuance shall not be treated for those purposes as the same as any carried on after the discontinuance.

(7) Subsection (1) above shall not apply where the permanent discontinuance fell before 19th March 1968, but, subject to that, has effect as respects sums received at any time on or after that date, whether before or after the passing of this Act, and as respects income tax or corporation tax for years of assessment from the year 1967-68 onwards or any accounting period ending on or after 19th March 1968.

(8) Subsection (2) above shall not apply where the change took place before 19th March 1968 and before that date—

(a) the decision had been taken to prepare accounts reflecting the change, or

(b) the trade, profession or vocation had been permanently discontinued,

but, subject to that, has effect as respects sums received at any time before or after that date, and as respects income tax or corporation tax for any past or future year of assessment or accounting period.

19 Cash basis, etc.: relief for individuals

(1) If an individual born before 6th April 1917, or the personal representative of such an individual, is chargeable to tax under the last preceding section and—

(a) the individual was engaged in carrying on the trade, profession or vocation on 18th March 1968, and

(b) the profits or gains of the trade, profession or vocation were not computed by reference to earnings in the period in which the said 18th March fell, or in any subsequent period ending before or with the relevant date,

the net amount with which he is so chargeable to tax shall be reduced by multiplying that net amount by the fraction given below.

(2) Where subsection (2) of the last preceding section applies in relation to a change of basis taking place on a date before 19th March 1968, then in relation to tax chargeable by reference to that change of basis, that earlier date shall be substituted for the date in paragraph (a) above, and paragraph (b) above shall be omitted.

(3) The said fraction is—

(a) where on 5th April 1968 the individual had not attained the age of fifty-two, nineteen-twentieths,

(b) where on that date he had attained the age of fifty-two, but had not attained the age of fifty-three, eighteen-twentieths, and so on reducing the fraction by one-twentieth for each year he had attained, up to the age of sixty-four,

(c) where on that date he had attained the age of sixty-five or any greater age, five-twentieths.

(4) In this section—

• " the net amount " with which a person is chargeable to tax under the last preceding section means the amount with which he is so chargeable after making any deduction authorised by Schedule 10 to this Act, but before giving any relief under this section,

• " relevant date "—

  (a)

  in relation to tax under subsection (1) of the last preceding section, means the date of the permanent discontinuance,

  (b)

  in relation to tax under subsection (2) of that section, means the date of the change in basis.

20 Partnerships of companies and individuals

(1) Where one or more of the persons engaged throughout all or any part of a year of assessment in carrying on a trade to which section 73 of the [1965 c. 25.] Finance Act 1965 (company partnerships) applies is an individual, this section shall have effect as respects income tax which, in accordance with subsections (3) and (4) of that section, is chargeable for that year.

(2) Notwithstanding any difference between the partners' interests during the basis period and their interests during the year of assessment, the amount of the individual's income from the partnership for the year of assessment, or the total of the amounts of the individuals' incomes from the partnership for that year, shall be deemed to be not less than the profits of the basis period reduced, where any share was apportioned to a company under subsection (2) of the said section 73, by the amount of that company's share.

(3) Where there are two or more individuals, and, but for subsection (2) above, the total of the amounts of the individuals' incomes from the partnership for the year would fall short of the profits of the basis period reduced as aforesaid, that amount shall be apportioned—

(a) according to the individuals' interests during the year of assessment, disregarding any company's interest, and

(b) in so far as that does not determine or fully determine the apportionment, between the individuals in equal shares.

(4) In this section—

(a) " basis period ", in relation to a year of assessment, means any accounting period or part of an accounting period which is, or forms part of, the period on the profits or gains of which income tax for the year of assessment in question falls to be computed under Schedule D in respect of the trade, and

(b) references to an individual's income from the partnership are references to that income before deduction of capital allowances or charges on income.

(5) It is hereby declared that in the said section 73 " profits " does not include chargeable gains.

(6) This section shall be construed as one with the said section 73.

21 Tax consequences of dealings in know-how

(1) Subject to subsections (3) and (6) below, where after 19th March 1968 a person—

(a) acquires know-how for use in a trade carried on by him, or

(b) acquires know-how, and thereafter sets up and commences a trade in which it is used,

writing-down allowances in respect of his expenditure on the acquisition, so far as not otherwise deducted for the purposes of corporation tax or income tax, shall be made in taxing the trade during a writing-down period of six years beginning with the chargeable period related to the expenditure; and if during that period he ceases to carry on the trade, an allowance equal to the amount of that expenditure then unallowed shall be made in taxing the trade for the chargeable period related to the discontinuance.

For the purposes of this subsection, a person incurring expenditure on know-how before the setting up and commencement of the trade in which it is used shall be treated as incurring it on that setting up and commencement.

(2) Subject to the said subsection (6), where after 19th March 1968 a person disposes of know-how which has been used in a trade carried on by him, and continues to carry on the trade after the disposal, the amount or value of any consideration received by him for the disposal shall, so far as it is not chargeable to tax as a revenue or income receipt, be treated for all purposes as a trading receipt.

(3) Where after the said 19th March a person disposes of a trade or part of a trade and, together therewith, of know-how used therein, any consideration received by him for the know-how shall be dealt with, in relation both to him and to the person acquiring the know-how, if that person provided the consideration, and for the purposes of corporation tax, income tax and the capital gains tax, as a payment for goodwill :

Provided that this subsection shall not apply—

(a) to either of the persons concerned if they so elect by notice in writing given jointly to the inspector within two years of the disposal, or

(b) to the person acquiring the know-how if the trade in question was, before the acquisition, carried on wholly outside the United Kingdom ;

and where know-how is disposed of with a trade or part of a trade, but this subsection is excluded in relation to the person acquiring it, subsection (1) above shall apply as if that person had acquired it for use in a trade previously carried on by him.

(4) Subject to subsection (6) below, any consideration received by a person for the disposal of know-how shall, if it is neither chargeable to tax under subsection (2) above, or otherwise as a revenue or income receipt, nor dealt with in relation to him as a payment for goodwill as mentioned in subsection (3) above, be treated as a profit or gain chargeable to tax under Case VI of Schedule D:

Provided that, where the person concerned has incurred expenditure wholly and exclusively in the acquisition or disposal of the know-how, the amount which would apart from this proviso be treated as a profit or gain so chargeable shall be reduced by the amount of that expenditure; but a deduction shall not be twice made in respect of the same expenditure, whether under this proviso or otherwise.

(5) Where subsection (4) above has effect in the case of an individual who devised the know-how in question, whether alone or jointly with any other person, the amount in respect of which he is chargeable to tax by virtue of that subsection shall be treated for all purposes as earned income.

(6) The preceding provisions of this section, except subsection (3), shall not apply on any sale of know-how where the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them; and the said subsection (3) shall apply on any such sale with the omission of the proviso.

In this subsection, references to a body of persons include references to a partnership.

(7) In this section " know-how " means any industrial information and techniques likely to assist in the manufacture or processing of goods or materials, or in the working of a mine, oil-well or other source of mineral deposits (including the searching for, discovery, or testing of deposits or the winning of access thereto), or in the carrying out of any agricultural, forestry or fishing operations.

(8) Where, in connection with any disposal of know-how, a person gives an undertaking (whether absolute or qualified, and whether legally valid or not) the tenor or effect of which is to restrict his or another's activities in any way, any consideration received in respect of the giving of the undertaking or its total or partial fulfilment shall be treated for the purposes of this section as consideration received for the disposal of the know-how.

(9) Part I of the [1968 c. 3.] Capital Allowances Act 1968 shall have effect, and this section shall be construed, as if this section were contained in that Part, with references in that Part to property and its purchase or sale including references to know-how and its acquisition or disposal, with subsection (2) of section 75 (effect of providing for writing-down allowances during a writing-down period of a specified length) applying thereto as it applies to the provisions specified in subsection (1) of that section, and with the omission of section 78 (special provisions as to controlled sales).

22 Interest payable abroad

(1) Subject to subsection (2) below, in section 52(5) of the [1965 c. 25.] Finance Act 1965 (conditions in which payments of interest to non-residents are charges on income for corporation tax) paragraph (b) (under which the liability must have been incurred wholly or mainly for the purposes of activities of the trade carried on outside the United Kingdom) shall apply to interest which is payable in the currency of a territory outside the scheduled territories as if in that paragraph the words " carried on outside the United Kingdom " were omitted.

(2) Subsection (1) above shall not apply where—

(a) the trade is carried on by a body of persons over whom the person entitled to the interest has control, or

(b) the person entitled to the interest is a body of persons over whom the person carrying on the trade has control, or

(c) the person carrying on the trade and the person entitled to the interest are both bodies of persons, and some other person has control over both of them.

In this subsection the references to a body of persons include references to a partnership, and " control" has the meaning assigned to it by section 87(1) of the [1968 c. 3.] Capital Allowances Act 1968.

(3) In section 138(1) of the [1952 c. 10.] Income Tax Act 1952 (income tax provisions comparable to the said section 52(5)(b)) for paragraph (b) (payment of interest to be secured on trading assets abroad) there shall be substituted the following paragraph—

“(b) that either—

(i) the liability to pay the interest was incurred wholly or mainly for the purposes of activities of the trade carried on outside the United Kingdom, or

(ii) the interest is payable in the currency of a territory outside the scheduled territories, and”.

(4) In this section (including the amendments made by this section) " the scheduled territories " means the territories specified in Schedule 1 to the [1947 c. 14.] Exchange Control Act 1947 as for the time being in force.

(5) This section shall apply for income tax purposes for the year 1968-69 and subsequent years of assessment, and for corporation tax purposes to accounting periods ending on or after 6th April 1968.

23 Stock dividend options

(1) Any share capital, other than redeemable share capital, issued by a company (whether before or after the passing of this Act) in consequence of the exercise by any person of an option conferred on him on or after 19th March 1968 to receive in respect of shares in the company either a dividend in cash or additional share capital shall be treated for the purposes of the Corporation Tax Acts as a distribution by the company, and the income tax chargeable in respect of it by virtue of section 47 of the [1965 c. 25.] Finance Act 1965 shall be tax on the sum on which tax would have been chargeable by virtue of that section if the person in question had accepted the cash dividend instead.

(2) For the purposes of paragraphs 1(3) and 2(1) of Schedule 11 to the [1965 c. 25.] Finance Act 1965 (matters to be treated as distributions), share capital issued as mentioned in subsection (1) above shall not be treated as issued as paid up otherwise than by the receipt of new consideration.

(3) In applying—

(a) paragraph 4(3) of Schedule 7 to the Finance Act 1965 (chargeable gains: reorganisation of share capital), and

(b) paragraph 10(3) of Schedule 9 to the [1962 c. 44.] Finance Act 1962 (corresponding provision for tax on short-term gains),

in relation to the issue of the share capital to which subsection (1) above applies, as involving a reorganisation of the company's share capital, there shall be allowed, as consideration given for the new holding which includes that share capital, the sum referred to in subsection (1) above less income tax at the standard rate; and this subsection shall have effect notwithstanding the proviso to the said paragraph 4(3) and the proviso to the said paragraph 10(3).

(4) For the purposes of subsection (1) above, an option to receive either a dividend in cash or additional share capital is conferred on a person not only where he is required to choose one or the other, but also where he is offered the one subject to a right, however expressed, to choose the other instead, and a person's abandonment of, or failure to exercise, such a right is to be treated for those purposes as an exercise of the option.

(5) Part I of Schedule 11 to the said Act of 1965 shall have effect as if this section were contained in that Part.

24 Shortfall in distributions of close company: amendment as respects time limit for dividends

(1) Paragraph 9(1)(a) of Schedule 18 to the Finance Act 1965 (under which, in determining for any accounting period whether there has been a shortfall in the distributions of a close company, dividends may be treated as distributions for that period only if they are paid for the period and during or within twelve months after it) shall be amended so as to read—

“(a) any dividends which are declared in respect of the period, and are paid during the period or within eighteen months after it; and”.

(2) The preceding subsection shall not have effect as respects any accounting period ending before 20th March 1967.

25 Dividends paid out of pre-1966-67 profits

(1) This section has effect as respects the calculation of the three year surplus under section 85 of the Finance Act 1965.

(2) If the company's dividends paid in the years 1966-67, 1967-68 and 1968-69 are related to periods of accounts exceeding three years in total, the amount at which those dividends are brought into the calculation shall not exceed the amount of the company's dividends which are related to the first three years of that total period, and which were paid in the years 1966-67, 1967-68 and 1968-69, or earlier:

Provided that if any of the dividends paid in 1966-67, 1967-68 and 1968-69 are related to any period of account ending before 6th April 1965, this subsection shall apply with the substitution, for the first three years of that total period, of a period of three years beginning with the period of account in which that date falls.

(3) This section shall not apply to a company if before 21st June 1968 a resolution was passed or an order was made for the winding-up of the company, or any other act was done for a like purpose in the case of a winding-up otherwise than under the [1948 c. 38.] Companies Act 1948, and, subject to that, subsection (2) above shall apply where, under subsection (7) of the said section 85, the three year surplus is to be computed by reference to the period ending with the last accounting period of a company which is wound up, as if for references to three years there were substituted references to a period equal in length to the period beginning with the financial year 1966 and ending with its last accounting period.

(4) Any adjustment under the preceding provisions of this section in the amount at which the dividends are brought into the calculation shall be made before taking account, under subsection (6)(a) of the said section 85, of any amount treated under section 83 of the Act as a dividend paid in the year 1966-67, and before applying Part I of Schedule 7 to the [1966 c. 18.] Finance Act 1966 (groups of companies) so, however, that—

(a) this section shall not affect the proportion applicable under paragraph 1 of the said Schedule 7 in reducing a three year surplus as so adjusted,

(b) in paragraph 2 (increase of three year surplus of principal company where three year surplus of a subsidiary is reduced) sub-paragraph (2) (which refers to the reductions under paragraph 1) shall have effect as if the preceding provisions of this section had not been enacted,

(c) in applying sub-paragraph (3) of the said paragraph 2 (which attributes to the principal company its share of the excess of dividends over distributable profits of subsidiaries) the principal company's dividends shall be brought in at the adjusted amount, but a subsidiary's dividends shall be brought in at the unadjusted amount.

(5) For the purposes of this section—

(a) " dividend " does not include a capital dividend,

(b) a dividend is related to the period of account for which it is expressed to be payable and, if not expressed to be payable for any period of account, is related to the period of account in which it is paid,

(c) where under this section it is necessary to ascertain the dividends related to a period of three years which includes part only of a period of account, the two parts of that period of account shall be treated as separate periods of account, and the amount of the dividends related to the entire period of account shall be apportioned to the respective parts on a time basis according to the respective lengths of the parts,

and in the provisions about paragraph 2 of Schedule 7 to the [1966 c. 18.] Finance Act 1966 " the principal company " means the company whose three year surplus is being computed and "subsidiary" means any other member of the group mentioned in that paragraph.

26 Dividends paid out of pre-1966-67 profits: groups of companies

(1) In applying paragraph 2(3)(a) of Schedule 7 to the Finance Act 1966 (which attributes to the principal company its share of the excess of dividends over distributable profits of subsidiaries) where any subsidiary is itself a company having a notional surplus which is a three year surplus which falls to be increased under the said paragraph 2, that subsidiary's excess of dividends over distributable profits shall be the amount produced by the said paragraph 2 (3) (a) in calculating that increase, so that there is attributed to the principal company the appropriate share of the excess of dividends over distributable profits not only of the subsidiary, but also of some one or more other members of the group paying dividends to the subsidiary.

This subsection applies even if the subsidiary's three year surplus as so increased is then reduced or extinguished under paragraph 1 of the said Schedule 7.

(2) In this section " the principal company " means the company whose three year surplus is being computed under the said paragraph 2 and " subsidiary " means any other member of the group mentioned in that paragraph.

27 Dividend stripping: time of acquisition of holding

(1) ' In sub-paragraph (3) of paragraph 4 of Schedule 17 to the [1965 c. 25.] Finance Act 1965 the words " company and that other company " shall be substituted for the words " three companies " in both places where they occur.

(2) This section applies to a distribution made after 10th April 1968.

28 Prevention of double relief in respect of general annuities paid by non-resident assurance companies

(1) A company which is not resident in the United Kingdom but carries on through a branch or agency there any general annuity business within the meaning of section 24 of the [1956 c. 54.] Finance Act 1956 shall not be entitled to treat any part of the annuities paid by it which are referable to that business (annuities, that is to say, which either are deductible in computing the profits of that business for corporation tax purposes or constitute for those purposes charges on income) as paid out of profits or gains brought into charge to income tax.

In this subsection " branch or agency " has the meaning given by section 89(2)(b) of the [1965 c. 25.] Finance Act 1965.

(2) Subsection (1) above shall have effect as respects annuities deductible in computing profits or, as the case may be, constituting charges on income for corporation tax accounting periods ending before or with, as well as after, the passing of this Act.

29 Double taxation relief: credit for foreign tax

(1) Paragraphs 2 and 3 of Schedule 16 to the Finance Act 1965 (computation of income subject to foreign tax, and allowance of credit up to marginal rate of United Kingdom income tax) shall have effect in place of paragraphs 5, 6 and 8 of Schedule 16 to the [1952 c. 10.] Income Tax Act 1952, and shall be construed and have effect as if contained in that Schedule.

(2) Where credit for foreign tax falls to be allowed in respect of any income of a company, then in computing the amount of the income for the purposes of corporation tax paragraph 7 of Schedule 16 to the Income Tax Act 1952 shall not apply, but instead paragraph 2 of Schedule 16 to the Finance Act 1965 shall apply as it applies for the purposes of income tax.

(3) This section has effect as respects relief from income tax or capital gains tax for the year 1968-69 and subsequent years of assessment, and as respects relief from corporation tax for the financial year 1968 and subsequent financial years.

30 Double taxation relief: group investment in overseas company

(1) This section applies to any provision in arrangements having effect by virtue of section 347 of the Income Tax Act 1952 which—

(a) applies to any company which controls, directly or indirectly, not less man a stated fraction of the voting power of a company resident in a specified territory outside the United Kingdom, and

(b) in allowing credit against United Kingdom tax on dividends paid to any such company by the company so resident, authorises account to be taken of tax payable by the company so resident in respect of the profits out of which the dividends were paid.

(2) Credit shall be allowed as if the provision treated the subsidiary of a company which owns, directly or indirectly, the stated fraction of the voting power of a company resident in the specified territory as if that subsidiary also owned that fraction of the voting power of the company so resident.

(3) Credit shall not be allowable both by virtue of this section and under Schedule 17 to the [1952 c. 10.] Income Tax Act 1952 in the case of the same income.

(4) For the purposes of this section a company is a subsidiary of another if the other company controls, directly or indirectly, not less than fifty per cent, of the voting power of the first company, and this section shall be construed as if it formed part of Schedule 16 to the Income Tax Act 1952.

(5) This section has effect as respects dividends paid (in the sense of section 89(4) of the [1965 c. 25.] Finance Act 1965) on or after 1st April 1968.

PART III Capital Gains, Estate Duty and Betterment Levy

Capital gains

31 Capital gains tax: exemption for small amounts

(1) An individual shall not be chargeable to capital gains tax for a year of assessment if his taxable amount for that year does not exceed £50.

(2) If an individual's taxable amount for a year of assessment exceeds £50, the amount of capital gains tax to which he is chargeable for that year shall not be greater than the excess.

(3) For the purposes of this section an individual's taxable amount for a year of assessment is the amount on which he is chargeable under section 20(4) of the Finance Act 1965 for that year (or on which he would be so chargeable but for section 21 of that Act, which affords an alternative charge by reference to income tax).

(4) In the case of an individual dying in the year of assessment, subsection (3) shall apply with the substitution for the reference to the individual of a reference to his personal representatives, and the taxable amount shall be that on which the personal representatives are chargeable in respect of gains accruing on or before the death.

(5) In applying the preceding provisions of this section, and in particular in ascertaining an individual's taxable amount, it shall be assumed that paragraph 3(1) of Schedule 10 to the Finance Act 1965 (married woman: assessment and charge on the husband) applies for all years of assessment but where, by virtue of sub-paragraph (2) of the said paragraph 3, any amount is chargeable and assessable on a married woman, any relief afforded by this section shall be apportioned between the husband and the wife according to the respective amounts on which they are chargeable to capital gains tax for the year of assessment.

(6) This section shall have effect for the year 1967-68 and subsequent years of assessment.

32 Quoted securities held on 6th April 1965

(1) This section has effect subject to the rights of election conferred by Schedule 11 to this Act.

(2) Paragraph 2 of Schedule 7 to the [1965 c. 25.] Finance Act 1965 (pooling of shares) shall not apply to quoted securities held on 6th April 1965.

(3) This section has effect as respects any disposal of quoted securities after 19th March 1968.

(4) This section does not affect the computation of the gain accruing on a disposal on or before 19th March 1968, but if by virtue of the said paragraph 2 such a disposal was made out of quoted securities of which some were acquired before 6th April 1965, and some later, then in computing the gain accruing on any disposal after 19th March 1968 the question of what remained undisposed of on the earlier disposal shall be decided on the footing that this section had effect as respects that earlier disposal.

(5) The rules of identification in paragraph 22(6) of Schedule 6 to the Finance Act 1965 (first in, first out, for quoted securities acquired before 6th April 1965) shall apply for the purposes of this section as they apply for the purposes of sub-paragraph (4) of the said paragraph 22.

(6) In this section and in Schedule 11 to this Act—

• " quoted securities " means assets to which paragraph 22 of Schedule 6 to the Finance Act 1965 applies,

• " fixed interest security " means any security as defined by paragraph 5 of Schedule 7 to that Act,

• " preference share " means any share the holder whereof has a right to a dividend at a fixed rate or a rate fluctuating in accordance with the standard rate of income tax, but has no other right to share in the profits of the company,

• " year of assessment " for corporation tax, as well as for income tax, means a year beginning on 6th April.

(7) This section and the said Schedule to this Act shall be construed as one with Part II of Schedule 6 to the Finance Act 1965, and in the said Schedule to this Act" the principal section " means this section.

33 Government securities issued at a discount

(1) In section 17 of the [1965 c. 25.] Finance Act 1965 subsections (7) and (8) (exemption from tax on short-term gains) shall cease to have effect.

(2) In the case of a disposal by a company—

(a) section 27(3) of the said Act (which, for tax on companies' gains and long-term gains, corresponds to the said subsection (7)) shall not apply unless the disposal of the securities occurs more than twelve months after their acquisition, and

(b) paragraph 5(2) of Schedule 7 to that Act (corresponding to the said subsection (8)) shall not apply to a disposal of, or of part of, the new holding unless the disposal occurs more than twelve months after the acquisition of the converted securities.

(3) The rules of identification in paragraph 8 of Schedule 9 to the [1962 c. 44.] Finance Act 1962 shall apply for the purposes of subsection (2) above and, where that subsection applies in relation to any disposal, paragraph 2(4) of Schedule 7 to the Finance Act 1965 (pooling of securities: exclusion of those subject to tax under Case VII of Schedule D) shall apply as if that disposal had been chargeable to income tax under Case VII of Schedule D (tax on short-term gains).

(4) Where under Schedule 13 to the Finance Act 1965 (groups of companies) the persons disposing of and acquiring an asset are to be treated as if the consideration were of such amount that neither a gain nor a loss accrues on the disposal, the person acquiring the asset shall be treated for the purposes of subsections (2) and (3) above as acquiring it at the time when the other acquired it.

(5) This section applies where the acquisition and the disposal take place after 19th March 1968.

(6) In this section " company " has the same meaning as in Part IV of the Finance Act 1965.

34 Other amendments of enactments relating to capital gains

Schedule 12 to this Act (which makes further provision for amending the enactments relating to chargeable gains) and Schedule 13 to this Act (tax on short-term capital gains) shall have effect.

Estate duty

35 Gifts, etc.: period of charge

(1) In the case of a death after 19th March 1968 " seven years " shall be substituted for " five years " in the enactments listed in paragraph 1 of Schedule 14 to this Act, except as respects a period beginning on or before 19th March 1963.

(2) Where any property is deemed to pass on a death after 19th March 1968 by virtue of a relevant disposition or event (estate duty being chargeable on the property apart from this subsection), and the death takes place in the three last years of the seven-year period, the principal value of the property shall be reduced for estate duty purposes—

(a) by 15 per cent, thereof, if the death takes place in the first of those three years,

(b) by 30 per cent, thereof, if the death takes place in the second of those three years,

(c) by 60 per cent, thereof, if the death takes place in the last of those three years.

In this subsection " the seven-year period " means the period of seven years beginning with the relevant disposition or event.

(3) Subsection (2) above shall have effect in substitution for subsection (1) of section 64 of the [1960 c. 44.] Finance Act 1960, and as if contained in that section, and in subsection (3)(b) of that section " seven-year " and " seven " shall be substituted for " five-year " and " five ".

(4) Subsection (2) above shall not have effect so as to give a lesser percentage reduction in the principal value of any property than the percentage reduction (if any) which, assuming that the deceased had died on 19th March 1968, would have fallen to be made under subsection (1) or subsection (3)(b) of the said section 64 (without the amendments made by this section) as respects the property:

Provided that this subsection shall not apply unless in the period from 19th March 1968 to the death the deceased was entirely excluded from possession and enjoyment of the property, and of any benefit to him by contract or otherwise.

(5) The further transitional and consequential provisions of the said Schedule to this Act shall have effect in the case of a death after 19th March 1968, and in that Schedule " the principal section " means this section.

36 Marriage gifts

(1) Where the deceased made a gift in consideration of marriage, and—

(a) the gift was an outright gift to a child or remoter descendant of the deceased, or

(b) the deceased was the parent or remoter ancestor of either party to the marriage, and either the gift was an outright gift to the other party to the marriage or the property comprised in the gift was settled by the gift, or

(c) the deceased was a party to the marriage, and either the gift was an outright gift to the other party to the marriage or the property comprised in the gift was settled by the gift,

then—

(i) if the principal value of the property comprised in the gift did not exceed £5,000, section 2(1)(c) of the [1894 c. 30.] Finance Act 1894 shall not apply to the gift, and

(ii) if the principal value of the property comprised in the gift exceeded £5,000, the said section 2(1)(c) shall only apply to the excess.

(2) Where the deceased made a gift in consideration of marriage and subsection (1) above does not apply, then—

(a) if the principal value of the property comprised in the gift did not exceed £1,000, the said section 2(1)(c) shall not apply to the gift,

(b) if the principal value of the property comprised in the gift exceeded £1,000, the said section 2(1)(c) shall only apply to the excess.

(3) In the case of any one death—

(a) the total amount of the relief conferred by subsection (1) above in respect of any one marriage shall not exceed £5,000, and

(b) the total amount of the relief conferred by subsection (2) above in respect of any one marriage shall not exceed £1,000,

and the reductions required to give effect to paragraph (a) or paragraph (b) above shall be made rateably according to the respective principal values of the gifts in respect of which relief may be given.

(4) For the purposes of this section the principal value of any property shall be arrived at before making any reduction under section 64 of the [1960 c. 44.] Finance Act 1960 (graduation of charge).

(5) In this section " child" includes an illegitimate child, an adopted child and a step-child, and " parent", " descendant" and " ancestor " shall be construed accordingly.

(6) In section 59(2) of the [1910 c. 8.] Finance (1909-10) Act 1910 the words " which are made in consideration of marriage or" shall cease to have effect, and references to the provision so repealed in section 53 of the [1963 c. 25.] Finance Act 1963 or elsewhere shall be taken as references to this section.

(7) This section has effect as respects a gift made after 19th March 1968, and in the case of a death after that date.

(8) References in this and the next following section to section 2(1)(c) of the [1894 c. 30.] Finance Act 1894 are references to so much of that paragraph as makes gifts inter vivos property which is deemed to pass on the death.

37 Gifts forming part of normal expenditure of deceased

(1) Section 2(1)(c) of the Finance Act 1894 shall not apply to a gift if it is shown to the satisfaction of the Board or, on an appeal under section 10 of the Finance Act 1894, of the court entertaining the appeal that the gift was part of the normal expenditure of the deceased, that the deceased made the gift out of his income and that, after allowing for all gifts forming part of his normal expenditure, the deceased was left with sufficient income to maintain his usual standard of living.

(2) A payment of a premium on a policy of assurance on the life of the deceased, or a gift of money or money's worth applied, directly or indirectly, in payment of such a premium, shall not for the purposes of subsection (1) above be regarded as part of the normal expenditure of the deceased if, when the insurance was made, or at any earlier or later time, an annuity was purchased on the life of the deceased, unless it is shown to the satisfaction of the Board or, on an appeal under section 10 of the Finance Act 1894, of the court entertaining the appeal, that the purchase of the annuity and the making or any variation of the insurance, or of any prior insurance for which the first-mentioned insurance was directly or indirectly substituted, were not associated operations.

In this subsection " associated operations " has the meaning given by section 59 of the [1940 c. 29.] Finance Act 1940.

(3) In section 59(2) of the [1910 c. 8.] Finance (1909-10) Act 1910 the words from " which are proved " to " the circumstances or " (exemption for gifts forming part of normal expenditure) shall cease to have effect.

(4) This section has effect as respects a gift made after 19th March 1968, and in the case of a death after that date.

38 Aggregation

(1) For the purposes of aggregation, any property which under section 2(1)(c) of the Finance Act 1894 (gifts inter vivos and other dispositions in life-time of the deceased) passes on the death shall be property in which the deceased had an interest.

(2) Subsection (1) above applies in particular in relation to—

(a) section 4 of the Finance Act 1894 (non-aggregation of property in which deceased never had an interest), and

(b) section 33(2) of the [1954 c. 44.] Finance Act 1954 (policies of assurance, etc., in which the deceased never had an interest).

(3) If any property passes on a death under the said section 2(1)(c), and all or part of the property also passes, as non-aggregable property, on the death otherwise than under the said section 2(1)(c), estate duty shall be charged and levied on the property as if it passed solely under the said section 2(1)(c).

(4) If part of any property passes on a death under the said section 2(1)(c), and that part is comprised in property which, or part of which, also passes, as non-aggregable property, on the death otherwise than under the said section 2(1)(c), estate duty shall be charged and levied on the part passing under the said section 2(1)(c) as if it passed solely thereunder, and shall be charged and levied separately on any other part of the property.

(5) For the purposes of subsections (3) and (4) above—

(a) property passes as non-aggregable property under any estate duty provision if, on the footing that it so passes, it would be property in which the deceased never had an interest,

(b) the amount or value of any property or part of property shall be ascertained before any reduction under section 64 of the [1960 c. 44.] Finance Act 1960 (graduation of charge) and

(c) references to any property or part of property include references to rights or interests in the property.

(6) This section shall apply in the case of a death after 19th March 1968.

(7) Subject to the following subsections, this section shall not apply to property passing on the death as comprised in a gift of, or of rights under, a policy of assurance on the life of the deceased issued in respect of an insurance made before 20th March 1968.

(8) If the aggregate value of all policies related to the death which were issued in respect of an insurance made before 20th March 1968 exceeds £25,000 the relief given by subsection (7) above shall apply only to a fraction of the said property, and that fraction shall be £25,000 divided by the said aggregate value:

Provided that the rate at which estate duty is to be charged in respect of that fraction of any property shall not be less than the rate at which it would have been charged if the relief given by subsection (7) was not restricted by this subsection.

(9) The relief given by subsection (7) above in respect of a policy which had matured or been surrendered before 20th March 1968 shall not be reduced under subsection (8) above, and the value of all such matured or surrendered policies shall be left out of account under the said subsection (8).

(10) If the terms of a policy are varied after 19th March 1968 in such a way that the value of the policy is greater than it would have been if no variation had been made—

(a) the relief given by subsection (7) above shall apply only to such part of any gift as can justly be attributed to the value the policy would have had if not varied, and

(b) the policy shall be brought into subsection (8) above at that value, and the fraction in that subsection shall be applied to the said part of the gift.

(11) Where by virtue of subsection (8) or subsection (10) above, or of both of those subsections, the relief given by subsection (7) above applies only to a part of any gift, the part of the gift to which the relief does not apply shall in accordance with subsection (1) above be property in which the deceased had an interest and shall be aggregated under section 4 of the [1894 c. 30.] Finance Act 1894 accordingly.

(12) The provisions of this section shall apply to a contract for a deferred annuity becoming payable on the death of the deceased as if it were a policy of assurance on the life of the deceased.

(13) For the purposes of this section—

(a) the value of a policy is the amount or value, as at the death, of the sums payable or other benefits arising under the policy, whether or not the policy continues on foot until the death, except that the value of a policy which has been surrendered at a time before the death is the value at that time of the consideration for the surrender;

(b) a policy is related to the death if it is a policy on the life of the deceased, if property comprised in a gift of, or of rights under, the policy passes on the death, and if that property would, if this section had not been enacted, have been property in which the deceased never had an interest.

39 Discretionary trusts

(1) This section has effect, in the case of a death after 19th March 1968, for all the purposes of the enactments relating to estate duty, and in particular for the purposes of section 2(1)(b) of the [1894 c. 30.] Finance Act 1894 (property in which the deceased or any other person had an interest ceasing on the death of the deceased).

(2) If a discretionary trust is limited to determine on a death then, for the purposes of estate duty leviable on that death, the persons eligible under the discretionary trust to receive the whole or any part of the income of any property shall together be treated as having an interest in the property limited to cease on the death, and as having an interest in the property which is different from any interest which those persons or any of them may have otherwise than under the discretionary trust.

(3) Subsection (2) above applies whether or not there is a discretion or power to accumulate all or any part of the income and accordingly where only one person is eligible to receive all or any part of the income, but there is such discretion or power, he shall be treated as having an interest in the property.

(4) Subsections (2) and (3) above shall not apply to a statutory or other trust for the maintenance of a person under the age of 21 limited to determine on his attaining the age of 21, or at any earlier time, as being a trust which is also limited to determine on his death (that is to say on his death before attaining that age or before that time).

(5) Where in accordance with the preceding provisions of this section any persons are to be treated as having an interest in property, that interest shall be an interest in possession in any period if income of the property arising in that period was or could have been distributed to them or any of them, and references to an interest becoming an interest in possession shall be construed accordingly.

(6) Where in accordance with the preceding provisions of this section any persons are to be treated as having an interest in property, the value of the benefit accruing or arising from the cesser of the interest shall—

(a) if the whole of the income of the property was or could have been given to the persons having the interest, or any of them, be the principal value of the property, and

(b) if less than the whole of the income of the property was or could have been given to the persons having the interest, or any of them, be the principal value of an addition to the property equal to that lesser amount of income.

(7) References in this section to a trust limited to determine on a death include references to a trust limited to cease in the alternative on the happening of some other event or the expiration of some period, and " discretionary trust" includes a trust under which the disposition of any of the trust income is at the discretion of the trustees or of any other person.

Betterment levy

40 Minerals: betterment levy, income tax and corporation tax

(1) This section has effect as respects the power of making regulations under section 74 of the [1967 c. 1.] Land Commission Act 1967 (power to adapt betterment levy for minerals by regulations requiring affirmative resolution of House of Commons) and has effect without prejudice to the generality of that section.

(2) The amount, rate and incidence of betterment levy in respect of mining leases (as defined by the regulations) may be altered by the regulations so that—

(a) betterment levy is charged from time to time by reference to the actual amount of the rents, royalties and other payments (including premiums) which are received or become receivable under the lease,

(b) the rate may be less than that prescribed under section 28 of the Land Commission Act 1967,

(c) the person chargeable in respect of any payment is, or is ascertained by reference to, the person entitled to the payment,

and the regulations may contain such transitional or other consequential provisions, including provisions making exceptions or modifications in Part III of the said Act of 1967, as may appear to the Minister making the regulations to be necessary or expedient.

(3) The regulations shall, as respects every mining lease, confer a right of election as respects the application to the mining lease of all provisions made in accordance with subsection (2) above so that—

(a) in the case of a mining lease granted on or after 6th April 1968, an election may be made in accordance with the regulations excluding the application of those provisions ;

(b) in the case of a mining lease granted before that date, no such provisions shall apply unless an election is made in accordance with the regulations.

(4) Where betterment levy is directly charged on any payment which is charged to tax under section 180 of the [1952 c. 10.] Income Tax Act 1952 (mining rents and royalties), the amount of betterment levy so charged shall be treated—

(a) for the purposes of section 181 of that Act (management expenses of owner of mineral rights) as a sum disbursed as an expense of management in the year of assessment for which the tax is charged, and

(b) for the purposes of section 54(4) of the [1965 c. 25.] Finance Act 1965 (corresponding provision for corporation tax) as a sum so disbursed in the accounting period in which the payment falls to be taken into account for corporation tax.

(5) Where betterment levy is directly charged on a payment which is charged to tax under Case VIII of Schedule D, the amount of betterment levy so charged shall for the purposes of Case VIII be treated as a payment made by the landlord in respect of management of the property in the year of assessment in which he becomes entitled to the payment:

Provided that where the amount of the payment is reduced under section 22 of the [1963 c. 25.] Finance Act 1963 (treatment of premiums and other payments as rent) the amount of the betterment levy charged thereon shall be treated for the purposes of this subsection as reduced in the same proportion.

(6) Paragraph 1 of Schedule 15 to the [1967 c. 54.] Finance Act 1967 (premiums, etc., under leases: allowance of betterment levy) shall not apply to betterment levy which is directly charged on any payment.

(7) For the purposes of this section betterment levy is " directly charged " on a payment if it is charged in accordance with regulations made in accordance with subsection (2) above.

(8) This section—

(a) so far as it relates to betterment levy, applies as respects any payment made before or after the passing of this Act, and shall be construed as one with Part III of the [1967 c. 1.] Land Commission Act 1967,

(b) so far as it relates to income tax, has effect for the year 1967-68 and subsequent years of assessment, and shall be construed as one with the Income Tax Acts,

(c) so far as it relates to corporation tax, has effect for any accounting period ending after 5th April 1967, and shall be construed as one with the Corporation Tax Acts,

and there shall be made all such adjustments, whether by way of discharge or repayment of tax or the making of assessments, as are required to give effect to this subsection.

(9) The Land Commission shall afford to any officer of the Board such information as he may require for the purposes of this section.

PART IV The Special Charge

41 The special charge

(1) In the case of an individual whose aggregate investment income for the year 1967-68 exceeded £3,000 plus the amount of his surtax personal allowances, there shall be made in accordance with the provisions of this Part of this Act a special charge in accordance with the following Table—

TABLE

For every pound of
the first thousand pounds of the excess	2 shillings
the next thousand pounds of the excess	3 shillings
the next three thousand pounds of the excess	6 shillings
the remainder of the excess	9 shillings.

(2) For the purposes of subsection (1) above the amount of an individual's surtax personal allowances is the amount deductible from his total income for the year 1967-68 under section 14(1) of the [1957 c. 49.] Finance Act 1957, without regard to subsection (2) of that section (apportionment between husband and wife).

(3) Subsection (1) above applies—

(a) to any individual domiciled in the United Kingdom in the year 1967-68, and

(b) to any individual not so domiciled, if he was resident and ordinarily resident in the United Kingdom in the year 1967-68, and had been ordinarily resident in the United Kingdom throughout the nine preceding years.

(4) The special charge shall not be made in the case of an individual who died before the end of the year 1967-68, but if a husband or wife died during the year 1967-68, this Part of this Act shall apply to the survivor as if during that year they had not been married.

(5) Schedule 15 to this Act shall have effect as respects trustees, including personal representatives, and income arising under a trust.

(6) Except as otherwise expressly provided expressions used in this Part of this Act have the same meanings as in the Income Tax Acts.

(7) This Part of this Act shall extend to Northern Ireland and the [1920 c. 67.] Government of Ireland Act 1920 shall have effect as if the special charge were included among the taxes mentioned in section 22(1) of that Act (reserved taxes).

42 Investment income

(1) This section shall apply in ascertaining investment income and aggregate investment income for the purposes of this Part of this Act.

(2) Subject to the provisions of this Part of this Act, " investment income " means income from any source other than a source of earned income and other than income chargeable under Case VII of Schedule D (short-term capital gains), and the " aggregate investment income " of an individual shall be taken to be the aggregate of his investment income from all sources.

(3) Subject to the provisions of this Part of this Act, income from any source shall be ascertained as it is ascertained for the purposes of surtax, and income shall be treated as income of an individual if it would be so treated for the purposes of surtax.

(4) Investment income shall not include—

(a) income from investments (including land) which falls to be taken into account as a receipt in computing, in accordance with the provisions of the Income Tax Acts, the profits or gains of a trade, profession or vocation, or which would fall so to be taken into account but for the fact that it has been subjected to tax under other provisions of those Acts,

(b) any other income arising from a trade, profession or vocation carried on by an individual otherwise than in partnership, not being income specified in subsection (5) below.

(5) Investment income shall include income from investments (including land) held by or on behalf of the persons carrying on or exercising a trade, profession or vocation, not being income falling within subsection (4)(a) above.

(6) Investment income shall not include—

(a) any annuity purchased for an individual in pursuance of any direction in a will, or to provide for an annuity payable by virtue of a will or settlement out of income of property disposed of by the will or settlement, or

(b) royalties or other sums paid for or in respect of—

(i) the copyright in a literary, dramatic, musical or artistic work, or

(ii) the use of a patent,

where the copyright or patent or the right to receive such sums has devolved by will or on intestacy on the death of the author or inventor, and the recipient took on that death or after one or more further devolutions on death, or

(c) any amount as being a sum charged to surtax under section 242 of the [1952 c. 10.] Income Tax Act 1952 (consideration for certain restrictive covenants, etc.).

(7) Subject to the following provisions of this section, in ascertaining aggregate investment income any deduction in respect of interest, annuities or other annual payments allowable in computing the individual's total income for the year 1967-68 for surtax shall be allowed as a deduction.

(8) In ascertaining aggregate investment income no deduction shall be allowed in respect of—

(a) payments of any of the descriptions in subsections (1), (2), (3) and (4) of section 23 of the [1966 c. 10.] Finance Act 1966 (whether or not the disposition was made after 6th April 1965),

(b) periodical payments allowable as deductions in ascertaining total income for surtax, being payments—

(i) in pursuance of an order of any court for the payment of maintenance or aliment or in pursuance of an affiliation order or a decree of affiliation and aliment, or

(ii) in pursuance of a disposition not made for full consideration in money or money's worth,

or any other payments constituting income of the description in subsection (5) of section 23 of the Finance Act 1966 (whether or not the disposition was made after 6th April 1965),

(c) payments allowable as deductions in computing profits or gains of any description,

(d) any loss incurred in carrying on a trade, profession, employment or vocation, or in the occupation of woodlands in respect of which the person in question has elected to be charged to tax under Schedule D.

(9) Payments within paragraphs (a) and (b) of subsection (8) above shall not be treated as the income of any person other than the person making the payment.

(10) In ascertaining aggregate investment income the amount of any allowance under Part X of the [1952 c. 10.] Income Tax Act 1952 (capital allowances) available or primarily available against a specified class of income for the year 1967-68 shall be allowed as a deduction, in so far only as the amount of the allowance does not exceed the individual's investment income for that year of that class.

(11) In ascertaining aggregate investment income no deduction shall be allowed in respect of payments which are deemed under paragraph 9(1) of Schedule 21 to the Income Tax Act 1952 (underwriters' payments into special reserve fund) to be annual payments, and the following (also relating to underwriters) shall not be treated as the income of any person, namely—

(a) payments deemed to be annual payments under sub-paragraph (2) or sub-paragraph (3) of the said paragraph 9,

(b) annual payments deemed to have been received under section 3(2) of the [1955 c. 17 (4 & 5 Eliz. 2.).] Finance (No. 2) Act 1955.

43 Due date, interest and administration

(1) Subject to the provisions of this Part of this Act, the special charge in respect of an individual's aggregate investment income shall be made by assessment on that individual, and shall be payable by that individual.

(2) Subject to the provisions of this Part of this Act, the special charge shall be payable on or before 1st January 1969, or on the day next following the making of the assessment, whichever is the later.

(3) If all or any part of the special charge, whether already assessed or not, is not paid by 1st January 1969, it shall carry interest at the rate of four per cent, per annum from that date to the date of payment:

Provided that interest shall not be payable on the special charge made by any assessment unless the total amount of the interest exceeds five pounds.

(4) The interest payable under subsection (3) above shall be paid without any deduction of income tax and shall be recoverable from the like persons as if it were part of the special charge in respect of which it is payable.

(5) So far as all or any part of the special charge carries interest from 1st January 1969 to the date when the special charge, or that part of it, becomes due, the grossed-up amount of that interest shall be allowable as a deduction in computing income for surtax for the year of assessment in which the interest is paid, but, subject to that, interest payable under subsection (3) above for any period shall not be allowable as a deduction for surtax or for any other purpose.

In this subsection the " grossed-up " amount of any interest is such amount as would, after deduction of tax at the standard rate for the year in which it is paid, equal the amount of interest paid.

(6) The special charge shall be under the care and management of the Board.

(7) Subject to the provisions of this Part of this Act, the special charge shall be assessed and recoverable as if it were an amount of surtax, and all enactments applying to the management and administration of income tax, including those relating to incapacitated persons and personal representatives, those relating to assessing, collecting and receiving of income tax and those conferring or regulating a right of appeal, shall apply accordingly.

(8) The Board shall have power by regulations contained in a statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament—

(a) to direct that any of the provisions applied by sub-section (7) above shall have effect as may be prescribed by the regulations, and subject to such exceptions or modifications as may be so prescribed, and

(b) to make further provision for the management, administration and collection of the special charge and interest thereon, including provision for enabling any question which may affect the liability of two or more persons to pay the special charge in respect of any particular investment income to be determined for all those persons in the same proceedings.

(9) Where an assessment, or a decision on a claim, which under the provisions of this Part of this Act may affect the amount of an individual's aggregate investment income has become final and conclusive for the purposes of the Income Tax Acts, it shall be final and conclusive for the purposes of this Part of this Act as to the amount of the income or relief in question.

(10) An assessment to the special charge in respect of an individual's aggregate investment income may be made at any time if an assessment to surtax in respect of that individual's total income for the year 1967-68 could be then made within the time limited by the Income Tax Acts for the making of assessments to surtax.

(11) The Board may, whether an assessment to the special charge has been made or not, by notice in writing require any person in whose case it appears to the Board that the special charge may be payable by, or recoverable from, him, and that he has in his possession any information relevant to the assessment or recovery of the special charge, to furnish to the Board within such time as may be specified in the notice, not being less than thirty days, such particulars as they consider necessary for the purposes of the assessment or recovery of the special charge.

Part III of the [1960 c. 44.] Finance Act 1960 (penalties) shall have effect as if this subsection were referred to in column 2 of Schedule 6 to that Act, and subject to any modifications necessary for applying the said Part III to the special charge as it applies to income tax.

(12) Special Commissioners or other persons who have made declarations in the form in Part I of Schedule 1 to the [1964 c. 37.] Income Tax Management Act 1964, or in the amended form provided for in paragraph 16 of Schedule 10 to the [1965 c. 25.] Finance Act 1965, shall be subject to the same obligations as to secrecy with respect to the special charge as they are subject to with respect to income tax.

44 Husband and wife

(1) In ascertaining aggregate investment income, subsections (1), (2) and (4) of section 354 (wife's income to be treated as that of her husband) and section 361 (separation, etc.) of the [1952 c. 10.] Income Tax Act 1952 shall apply as they apply for the purposes of income tax, but subject to the following provisions of this section.

(2) Subsection (3) below shall apply in the case of a husband and wife—

(a) where application in that behalf is made either by the husband or the wife in such manner and form as may be prescribed by the Board, or

(b) where an application by the husband or wife under section 356 of the Income Tax Act 1952 for separate assessment to surtax has effect as respects the year 1967-68, unless notice in writing requiring that subsection (3) below shall not apply is given both by the husband and by the wife in such manner and form as may be prescribed by the Board:

Provided that no application or notice under this subsection shall be made or given after 5th October 1968 or such later date, not falling after the expiration of thirty days from the giving to the husband of a notice of the assessment to the special charge, as the Board may allow.

(3) Where the provisions of this subsection apply—

(a) the husband and wife shall be assessed under this Part of this Act, and the special charge shall be recoverable, as if they were not married, and this Part of this Act shall apply to each of them accordingly, but

(b) in ascertaining aggregate investment income for the purposes of this Part of this Act the income of the husband and wife shall be treated as the income of one individual, and

(c) the amount of the special charge payable by reference to the aggregate investment income so ascertained shall be divided between the husband and wife in proportion to the amounts of their respective aggregate investment incomes, after deducting the surtax personal allowances (that is to say the amount deductible under section 14(1) of the [1957 c. 49.] Finance Act 1957) apportioned in accordance with paragraph (d) below, and

(d) that apportionment shall be made—

(i) in the case of the allowances within subsection (2)(b)(i) of the said section 14 (allowances for certain children and dependants), according to the apportionment in the said sub-paragraph (i),

(ii) in the case of any other allowances, according to the respective amounts of the aggregate investment incomes of the husband and wife,

but so that, if the amount by which the aggregate investment income of either falls to be reduced under sub-paragraph (i) or (ii) of this paragraph exceeds the amount of that aggregate investment income, the aggregate investment income of the other shall be treated as reduced by the amount of the excess.

(4) Section 359 (collection from wife of tax assessed on husband attributable to her income) and section 360 (disclaimer by husband of liability for tax on deceased wife's income) of the [1952 c. 10.] Income Tax Act 1952 shall apply with any necessary modifications for the purposes of the special charge as they apply for the purposes of income tax.

45 Close companies

(1) It is hereby declared that, subject to subsection (3) below, investment income includes any amount apportioned for purposes of surtax (whether originally or by one or more sub-apportionments) to an individual under section 78 of the [1965 c. 25.] Finance Act 1965.

(2) Subsection (5) of section 249 of the Income Tax Act 1952 as applied by the said section 78 (which, for surtax, prevents undistributed income which has been assessed and charged to surtax in pursuance of the said section 78 from being again assessed when distributed) shall apply for the purposes of computing investment income, but the other provisions of the said section 249 shall not apply for the purposes of this Part of this Act.

(3) The Board may, if they see reason for it, apportion the whole of the income of a close company for the accounting period ending in the year 1967-68, up to the amount of the required standard, among the participators, and any amount apportioned to another close company, whether originally or by one or more sub-apportionments under this subsection, shall be further apportioned among the participators in that company.

Any income apportioned to an individual under this subsection shall be included in his aggregate investment income.

(4) Where the Board have made an apportionment under subsection (3) above, any distribution made by the company and any apportionment of the company's income for surtax shall be left out of account in ascertaining aggregate investment income for the purposes of the special charge.

(5) Subsection (3) above shall not apply in the case of a trading company or of a member of a trading group.

(6) Schedule 16 to this Act shall have effect for supplementing and giving effect to this section.

(7) For the purposes of this section and the said Schedule—

(a) " distribution" shall have the meaning assigned by Schedule 11 to the [1965 c. 25.] Finance Act 1965,

(b) " the required standard" has the meaning given by section 77(2) of the Finance Act 1965,

(c) other expressions shall be construed in accordance with the provisions of the Corporation Tax Acts relating to close companies.

(8) For the said purposes " the accounting period ending in the year 1967-68 ", in relation to a close company—

(a) if there is one, and only one, accounting period of the company ending in the year 1967-68, and it is an accounting period of twelve months, means that accounting period,

(b) if not, means the parts of accounting periods, and any whole accounting periods, falling within the year 1967-68, apportioning income of any accounting period to the respective parts in accordance with section 89(6) of the Finance Act 1965.

46 Relief where income attributable to period of years was received in 1967-68

(1) Where, on a claim being made, the Board are satisfied as respects any assets that the income from the assets represents more than the income which would be attributable to a period of one full year if the income were deemed to have accrued from day to day, the Board shall in ascertaining aggregate investment income for the purposes of this Part of this Act make such reduction, if any, as may be appropriate to secure that there shall be taken as representing the income from the assets an amount equivalent to a full year's income therefrom.

Section 240(1) of the [1952 c. 10.] Income Tax Act 1952 shall apply for the purposes of this subsection as it applies for the purposes of section 238 of that Act (corresponding provision for surtax).

(2) If an individual's investment income includes an amount in respect of which a claim could be made for relief under section 472 of the Income Tax Act 1952 (spreading of patent royalties over several years) a claim may be made under this section requiring that amount to be reduced, in ascertaining the individual's aggregate investment income, by multiplying by the fraction of which—

(a) the numerator is one, and

(b) the denominator is the six or less number of instalments into which that amount would be divided by a claim under the said section 472.

(3) If an individual's investment income includes an amount in respect of which a claim could be made for relief under Schedule 6 to the [1965 c. 25.] Finance Act 1963 (premium, etc. treated as rent) a claim may be made under this section requiring that amount to be reduced, in ascertaining the individual's aggregate investment income, to the yearly equivalent of that amount, as defined in paragraph 1 of the said Schedule 6, less any sums deductible under paragraph 3(1)(a) of the said Schedule 6.

(4) A claim for relief under this or either of the two next following sections—

(a) may be made by any person who has borne or is liable to bear the special charge in respect of the income in question, either by assessment or by a payment under Schedule 15 to this Act,

(b) shall be made to the Board,

(c) shall be made not later than the end of the year 1973-74, except that a claim which could not have been allowed but for the making of an assessment to the special charge in the year 1973-74 or a later year may be made at any time before the end of the year of assessment following that in which the assessment was made,

and section 9 of the [1964 c. 37.] Income Tax Management Act 1964 shall apply to the claim as it applies for the purposes of income tax.

(5) Where in pursuance of a claim for relief under this or either of the two next following sections any amount of the special charge is repaid, there shall also be repaid any interest paid in respect of that amount of the special charge.

47 Relief where capital is subject to estate duty or capital gains tax

(1) If on a claim being made it is shown to the satisfaction of the Board that—

(a) in consequence of a death occurring before the end of the year 1967-68 estate duty or capital gains tax became payable in respect of any assets, and

(b) investment income affecting, whether directly or in directly, the amount of the special charge arose from the assets, and

(c) the amount of that income exceeded what it would have been if all estate duty and capital gains tax payable in consequence of the death had been paid immediately on the occurrence of the death or other event whereby the estate duty or capital gains tax became payable,

the amount of the said investment income shall in ascertaining aggregate investment income for the purposes of this Part of this Act be treated as reduced by such amount as the Board may determine to be appropriate to offset the excess.

(2) In this section " estate duty " includes estate duty payable under the law of Northern Ireland, and references to capital gains tax payable in consequence of a death shall be construed in accordance with subsection (8) and subsection (9)(a) of section 26 of the [1965 c. 25.] Finance Act 1965.

48 Relief in respect of error or mistake

If on a claim being made it is shown to the satisfaction of the Board that—

(a) by reason of an error or mistake in a return or statement made for the purpose of the special charge, or for the purpose of income tax (including surtax), an assessment to the special charge was excessive, or

(b) that after an assessment to the special charge became final, any adjustment was made under the provisions of the Income Tax Acts of any income which affected the ascertainment of aggregate investment income,

the Board shall make any appropriate adjustment.

49 Double taxation relief

(1) Part XIII of the [1952 c. 10.] Income Tax Act 1952 together with any other enactment relating or referring to double taxation relief, and any arrangements made under section 347 of that Act in relation to income tax, shall have effect in relation to the special charge and investment income as they are expressed to have effect in relation to income tax and income subject to income tax.

(2) In paragraph 5(1)(b) of Schedule 16 to the said Act (limit on total credit), as it applies to the total income for the year 1967-68 of an individual whose investment income is subject to the special charge, the sum of the rates there specified (effective income tax rate plus effective surtax rate) shall be increased for the purpose of allowing credit for foreign tax in respect of investment income by adding the rate ascertained by dividing the special charge by the amount of his aggregate investment income.

50 Transactions designed to avoid liability

(1) Where, as a result of any action or decision taken by any person on or after 19th March 1968, an individual's aggregate investment income is, apart from this section, less by any amount than it would have been but for that action or decision, his aggregate investment income shall for the purposes of this Part of this Act be increased by that amount unless it is shown to the satisfaction of the Board that avoidance of, or reduction of liability to, the special charge was not the main object or one of the main objects of the action or decision.

(2) Without prejudice to the generality of subsection (1) above, the following shall be treated for the purposes of that subsection as actions or decisions as a result of which an individual's aggregate investment income is less than it would have been but for the action or decision—

(a) the forgoing of any investment income to which the individual or his wife would otherwise have been entitled as income of the year 1967-68,

(b) the postponement of any entitlement to or receipt of investment income so as to prevent it from being income of the year 1967-68,

(c) the making of a settlement of which the individual or his wife is the settlor in consequence of which investment income becomes payable to any person or persons other than the individual or his wife,

(d) the incurring of any expenditure (including any liability to pay interest) which, but for this section, would affect the amount of the individual's aggregate investment income.

(3) If it appears that the main benefit which might have been expected to accrue from the action or decision was the avoidance or reduction of liability either to the special charge, or to the special charge and surtax together, the avoidance or reduction of liability to special charge shall be deemed for the purposes of this section to have been the main object, or one of the main objects, of the action or decision.

(4) If it appears to the Board that any person has taken or may have taken any action or decision as a result of which an individual's aggregate investment income is less than it would have been but for the action or decision, and that that person has in his possession any information relevant for the purpose of giving effect to this section, the Board may, whether an assessment to the special charge has been made or not, by notice in writing require that person to furnish to the Board within such time as may be specified in the notice, not being less than thirty days, such particulars as they consider necessary for that purpose.

Part III of the [1960 c. 44.] Finance Act 1960 shall have effect as if this subsection were referred to in column 2 of Schedule 6 to that Act, and subject to any modifications necessary for applying the said Part III to the special charge as it applies to income tax.

(5) In this section " settlement" and " settlor" have the meanings given by section 403 of the [1952 c. 10.] Income Tax Act 1952.

PART V Selective Employment Tax

51 Selective employment tax

(1) In relation to any contribution week beginning on or after 2nd September 1968, for paragraphs (a) to (d) of section 44(1) of the [1966 c. 18.] Finance Act 1966 (which specify the weekly amount payable in respect of a person by way of selective employment tax) there shall be substituted the following paragraphs:—

“(a) if that person is a man over the age of 18, 37s. 6d.; or

(b) if that person is a woman over the age of 18, 18s. 9d.; or

(c) if that person is a boy under the age of 18, 18s. 9d.; or

(d) if that person is a girl under the age of 18, 12s.”

(2) Section 1 of the [1968 c. 2.] Provisional Collection of Taxes Act 1968 shall apply to selective employment tax; and accordingly, in subsection (1) of that section, after the words " income tax " there shall be inserted the words " selective employment tax ".

(3) In Schedule 12 to the [1967 c. 54.] Finance Act 1967, the references to Part VI of the Finance Act 1966 in paragraphs 8 and 10 shall be construed as including references to this section.

(4) This section shall be construed as one with Part VI of the Finance Act 1966 and shall extend to Northern Ireland, but for the purposes of section 6 of the [1920 c. 67.] Government of Ireland Act 1920 shall be deemed to be contained in an Act passed before the appointed day.

52 Selective employment payments

(1) With a view to the making by the Secretary of State for Employment and Productivity of payments by way of refund of selective employment tax in respect of persons employed in certain hotels or similar establishments in the areas specified in Schedule 17 to this Act, section 2 of the [1966 c. 32.] Selective Employment Payments Act 1966 shall have effect in respect of any contribution week beginning on or after 2nd September 1968 with the following amendments, namely—

(a) in subsection (2)(a), after the words " paragraphs (a) to (e)" there shall be inserted the words " or, subject to subsection (3A) of this section, in paragraph (f) ";

(b) in subsection (3), at the end there shall be added the following paragraph:—

“(f) subject to subsection (3A) of this section, activities of a hotel, inn, boarding house, guest house or holiday camp”;

(c) after subsection (3) there shall be inserted the following subsection:—

“(3A) Subsection (3)(f) of this section shall have effect only where the establishment in question—

(a) contains not less than four rooms which at all times during the contribution week in question were available for use in return for payment as sleeping accommodation by guests or lodgers at the establishment; and

(b) is situated within an area specified in Schedule 17 to the Finance Act 1968”;

(d) in subsection (5)(a), after the words "paragraphs (a) to (d)" there shall be inserted the words " or under paragraph (f) ".

(2) In relation to any such contribution week as aforesaid, in section 25(1) of the [1967 c. 54.] Finance Act 1967 (which provides for a refund to the employer in respect of certain persons in part-time employment of an amount equal to half the tax paid) for the word " half " there shall be substituted the words " two-thirds of " ; and the said section 25(1) shall have effect subject to subsection (4) of this section.

(3) Where an employer has paid selective employment tax in respect of any person for any such contribution week as aforesaid and throughout that week that person was for the purposes of the [1965 c. 51.] National Insurance Act 1965 over the age of 65, then, subject to subsections (4) and (5) of this section, the Minister of Social Security shall make to that employer in respect of that person and that week a payment of an amount equal to two-thirds of the tax paid.

(4) Where a payment has been made to an employer in respect of any person and any contribution week under the said section 25(1) or under subsection (3) of this section, the employer shall not be entitled to a payment in respect of that person and that contribution week under the other of those provisions.

(5) In Schedule 12 to the [1967 c. 54.] Finance Act 1967—

(a) paragraphs 2, 3 (other than sub-paragraphs (b) and (c)), 5, 6 and 11 shall have effect as if references to the said section 25(1) included references to subsection (3) of this section;

(b) any question arising under the said subsection (3) as to whether a person was or was not over the age of 65 at a particular time shall be deemed to be included among the questions mentioned in paragraph 8;

(c) in paragraphs 8, 12 and 13 references to Part IV of the Finance Act 1967 shall include references to this section.

(6) Where the Minister by whom any register of establishments is maintained under section 7(1) of the [1966 c. 32.] Selective Employment Payments Act 1966—

(a) after having acceded to an application under section 10(3) of that Act by an employer with respect to the treatment of any premises, is at any time satisfied that, by reason of a change in the circumstances of the business of which those premises form part, it is proper so to do ; or

(b) having on acceding to such an application given notice in writing to the employer that he proposes to afford that treatment to those premises only if or for so long as specified conditions are fulfilled, is at any time satisfied that those conditions are not fulfilled,

that Minister may, after giving not less than four weeks notice in writing to the employer of his intention so to do, cease to afford that treatment to those premises.

(7) This section shall be construed as one with the Selective Employment Payments Act 1966.

PART VI Miscellaneous

53 Interest on overdue tax

(1) In section 495(2) of the [1952 c. 10.] Income Tax Act 1952 and in section 8(2) of the [1947 c. 9 (11 & 12 Geo. 6.).] Finance (No. 2) Act 1947 (remission of interest for tax paid not later than three months from the date on which it becomes due and payable) for the words "three months " there shall be substituted the words " two months ".'

(2) Without prejudice to the general interpretative provisions of this Act, this section applies to the enactments mentioned in subsection (1) above as extended by any other enactment, and in particular it applies to section 495(2) of the [1952 c. 10.] Income Tax Act 1952 as extended to capital gains tax and corporation tax.

(3) This section has effect as respects tax becoming due and payable on or after 1st July 1968.

54 Premium savings bonds: increase of prize money

(1) The terms of issue of premium savings bonds shall be altered by substituting for the prospectus relating to the issue of bonds of series B the provisions of Schedule 18 to this Act, being provisions which—

(a) increase the rate of interest at which the prize fund is calculated from 4 ½ per cent, to 4 ⅝ per cent, (but subject, as in the existing prospectus, to a power of varying the rate of interest by giving not less than three months notice), and

(b) give effect to that increase in the rate of interest by providing for—

(i) a weekly draw of one £25,000 prize, and

(ii) an adjustment of the prizes on the monthly draw.

(2) Subsection (1) above shall come into force on 1st September 1968 and have effect as respects all bonds issued before that date, whether before or after the passing of this Act.

(3) If after the coming into force of subsection (1) above the Treasury issue premium savings bonds on the terms set out in the said Schedule to this Act, they may use any stock of forms of bonds which were prepared before the passing of this Act, notwithstanding that the forms refer to the prospectus superseded by subsection (1) above, and bonds issued in that form shall be valid and effectual as if they stated that the bond was issued under the terms in the said Schedule to this

This subsection applies whether or not the bonds are issued after notice has been given, in pursuance of paragraph 15 in the said Schedule, of a variation of its terms.

(4) In this section " bonds of series B " means the second issue of premium savings bonds, and " premium savings bonds " means both those issued under the [1939 c. 119.] National Loans Act 1939 and those issued under the [1968 c. 13.] National Loans Act 1968.

55 Exchange control

(1) The definitions of " securities " and " security " in section 42(1) of the [1947 c. 14.] Exchange Control Act 1947 and in section 2(3) of the [1964 c. 40.] Emergency Laws (Re-enactments and Repeals) Act 1964 (power of Treasury to prohibit action on certain orders as to securities) shall include—

(a) certificates of deposit,

(b) Government bills, and

(c) any description of promissory notes which is for the time being prescribed under this paragraph for the purposes of the [1947 c. 14.] Exchange Control Act 1947, or of the said section 2, or both.

(2) Sections 21 and 22 of the Exchange Control Act 1947 (restrictions on import and on export) shall apply as if the references therein to Treasury bills included references to all Government bills, certificates of deposit and any description of promissory notes which is for the time being prescribed under subsection (1)(c) above for the purposes of the Exchange Control Act 1947.

(3) In this section—

• " certificate of deposit " means a document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable,

• " Government bill " means any bill, note or other obligation of a Government in any part of the world, being a document by the delivery of which, with or without endorsement, title is transferable, and not being an obligation which is or has been legal tender in any part of the world, and " Government bill" includes in particular a Treasury bill,

• " prescribed "—

  (a)

  in relation to the Exchange Control Act 1947, has the same meaning as in that Act,

  (b)

  in relation to the said Act of 1964, means prescribed by the Treasury by order in a statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament,

  and any such order may be varied or revoked by a subsequent order so made.

(4) This section has effect notwithstanding that the said definitions of " securities " and " security " exclude promissory notes.

(5) This section—

(a) so far as it relates to the Exchange Control Act 1947, shall be construed as one with that Act, and

(b) so far as it relates to the said Act of 1964, shall be construed as one with section 2 of that Act,

(6) The amendments made by this section in the [1947 c. 14.] Exchange Control Act 1947 shall take effect also in the provisions of that Act which extend to the Channel Islands by virtue of any Order in Council under section 43(3) of that Act, and this section shall apply outside the United Kingdom in the same way as that Act, or as the case may be, section 2 of the said Act of 1964, so applies.

56 Stamp duties: amendments as respects loan capital duty

(1) Subsections (3) and (4) of section 28 of the [1967 c. 54.] Finance Act 1967 (under which loan capital issued by a company and incapable of being dealt in on a United Kingdom stock exchange is exempt from duty under section 8 of the [1899 c. 9.] Finance Act 1899 if it is repayable within five years of issue, on demand, or after notice not exceeding one year) shall have effect as respects loan capital issued on or after 1st August 1968 as if, for each reference to five years, there were substituted a reference to ten years.

(2) Subsection (2) of the said section 28 (under which payment of duty under the said section 8 franks any trust deed or other instrument securing the loan capital in question) shall have effect in relation to any trust deed or other instrument securing loan capital issued after the passing of this Act by a corporation, company or body of persons formed or established in Northern Ireland as if the references therein to duty under the said section 8 were references to duty under that section as it has effect in Northern Ireland.

57 Stamp duties: further provisions as to composition by bankers

(1) This section applies to the duty chargeable under the heading " Bill of Exchange or Promissory Note" in Schedule 1 to the [1891 c. 39.] Stamp Act 1891.

(2) Section 39(1)(a) of the [1956 c. 54.] Finance Act 1956 (under which the Commissioners may enter into an agreement with any banker for the composition of that duty so far as chargeable on instruments which are drawn on the banker by his customers and on forms supplied by him) shall be amended so as to read—

“(a) drawn either on the banker or on another banker by customers of, and on forms supplied by, the former, or”;

and, in any agreement under the said section 39 made with a banker before the passing of this Act, references to instruments drawn on the banker by his customers on forms supplied by him shall, as respects accounting periods thereunder beginning after 20th July 1968, be construed as references to instruments drawn either on the banker or on another banker by customers of, and on forms supplied by, the former.

(3) The Commissioners may, in accordance with the following provisions of this section, enter into an agreement with any banker for the composition of the duty so far as chargeable on instruments of any description specified in the agreement, being instruments which are drawn on the banker and presented to him for payment.

(4) Any such agreement shall require the banker to deliver to the Commissioners periodical accounts in respect of the instruments to which it relates, giving such particulars with respect thereto as may be specified in the agreement, and may contain such other terms and conditions as the Commissioners think proper.

(5) Where any such agreement has been made with a banker, no instrument to which the agreement relates shall be chargeable with the duty if it contains the statement " Stamp duty (if any) compounded for under section 57 of the Finance Act 1968 ", but the banker shall pay to the Commissioners, on the delivery of any account under the agreement, such sums as would apart from this section have been chargeable by way of the duty on instruments to which the agreement relates so far as presented to him for payment during the period to which the account relates.

(6) Where a banker makes default in delivering any account required by any such agreement, or in paying the duty payable on the delivery of any such account, he shall be liable to a fine not exceeding £50 for any day during which the default continues, and shall also be liable to pay to Her Majesty, in addition to the duty, interest thereon at the rate of 5 per cent, per annum from the date when the default begins.

(7) Any person who—

(a) utters an instrument which is chargeable with the duty, but which contains the statement referred to in subsection (5) above or any other indication that it need not be stamped, or

(b) procures the printing of a form containing the said statement, or any other indication that it need not be stamped, being a form which is capable of being completed as an instrument chargeable with the duty and which he does not reasonably believe will be completed (if at all) as an instrument not so chargeable,

shall be liable on summary conviction to a fine not exceeding £100.

(8) This section shall be construed as one with the [1891 c. 39.] Stamp Act 1891.

58 Reliefs from surcharge under Sugar Act 1956

(1) The Commissioners may remit or repay any surcharge under section 7 of the [1956 c. 48.] Sugar Act 1956 if they are satisfied that the sugar in respect of which it is payable or has been paid will be, or has been, dealt with in either of the following ways, that is to say—

(a) treated in a manner approved by the Minister so as to render it unsuitable for human consumption ; or

(b) used in the manufacture of goods of any description prescribed for the purposes of this paragraph, at the time when the sugar was or is so used, by an order made by the Minister.

(2) In any case in which the Commissioners have power under subsection (1) of this section to remit or repay a surcharge in respect of any sugar if satisfied that it will be, or has been, dealt with as mentioned in that subsection, they shall have the like power if satisfied that a quantity of sugar corresponding to the sugar in question will be, or has been, dealt with as aforesaid.

(3) The goods prescribed by the Minister for the purposes of subsection (1)(b) of this section shall be such as it appears to him to be expedient to prescribe for those purposes in the interests of the national economy.

(4) Any remission or repayment under this section shall be subject to such conditions as the Commissioners may see fit to impose, including, in particular, conditions for securing that relief from surcharge is not obtained more than once (whether under this section or any other enactment) in relation to the same sugar.

(5) For the purposes of this section—

(a) " goods " includes any part or ingredient of any goods and " sugar " includes invert sugar;

(b) in determining whether two quantities of sugar correspond with each other, the Commissioners shall have regard to their respective degrees of polarisation or, in the case of invert sugar, to the amount of sweetening matter which they respectively contain.

(6) This section shall be construed as one with the said Act of 1956; and orders under this section shall be included among the orders to which section 33(2) of that Act (which makes certain orders subject to annulment in pursuance of a resolution of either House of Parliament) applies.

59 Confirmation of social services agreement with Northern Ireland

(1) Confirmation is hereby given to the agreement set out in Schedule 19 to this Act, being an agreement between the Treasury and the Ministry of Finance for Northern Ireland which amends (as from 28th November 1966, but only if confirmed by Acts of the Parliaments of the United Kingdom and Northern Ireland) an agreement scheduled to the [1949 c. 23.] Social Services (Northern Ireland Agreement) Act 1949 and entered into with a view to assimilating the burdens on the Exchequers of the United Kingdom and Northern Ireland in respect of certain social and allied services.

(2) There shall be charged on and paid out of the Consolidated Fund of the United Kingdom any additional sums which, by virtue of the agreement hereby confirmed, are payable under the agreement thereby amended from the Exchequer of the United Kingdom to the Exchequer of Northern Ireland.

(3) This section shall not come into operation unless and until Her Majesty by Order in Council declares that a corresponding provision has been enacted by the Parliament of Northern Ireland.

60 Provisional collection of taxes

In section 1(4) of the [1968 c. 2.] Provisional Collection of Taxes Act 1968 (circumstances in which a resolution ceases to have statutory effect) paragraph (b) (under which a resolution continues in force if a Bill is amended by the House so as to implement the resolution within twenty-five sitting days from the passing of the resolution) shall have effect as if after the words ' is amended by the House' there were added the words ' in Committee or on Report, or by any Standing Committee of the House'.

61 Citation, interpretation, construction and extent

(1) This Act may be cited as the Finance Act 1968.

(2) In this Act, except where the context otherwise requires, " the Board " means the Commissioners of Inland Revenue.

(3) Part I of this Act (except sections 5, 8 and 9) shall be construed as one with the [1952 c. 44.] Customs and Excise Act 1952.

(4) Part II of this Act, so far as it relates to income tax, shall be construed as one with the Income Tax Acts and, so far as it relates to corporation tax shall be construed as one with the Corporation Tax Acts.

(5) Parts II and III of this Act so far as they relate to chargeable gains shall be construed as one with Part III of the [1965 c. 25.] Finance Act 1965.

(6) Part III of this Act so far as it relates to estate duty shall be construed as one with the [1894 c. 33.] Finance Act 1894.

(7) This Act, so far as it relates to the [1956 c. 48.] Sugar Act 1956, shall extend to the Isle of Man.

(8) Any reference in this Act to any other enactment shall, except so far as the context otherwise requires, be construed as a reference to that enactment as amended or applied by or under any other enactment, including this Act.

(9) Except as otherwise expressly provided, such of the provisions of this Act as relate to matters in respect of which the Parliament of Northern Ireland has power to make laws shall not extend to Northern Ireland.

(10) The enactments mentioned in Schedule 20 to this Act are hereby repealed to the extent mentioned in the third column of that Schedule, but subject to any provision in relation thereto made at the end of any Part of that Schedule.