Finance Act 1980

PART I Excise Duties

1 Spirits, beer, wine, made-wine and cider

(1) In the Table in section 5 of the [1979 c. 4.] Alcoholic Liquor Duties Act 1979 (excise duty on spirits) for " 10.44 " and " 10.47 " there shall be substituted " 11.87 " and " 11.90 " respectively.

(2) In section 36 of that Act (excise duty on beer) for " £10.65 " and " £0.3550 " there shall be substituted " £13.05 " and " £0.435 " respectively.

(3) For the provisions of Schedule 1 to that Act (rates of excise duty on wine) there shall be substituted the provisions of Schedule 1 to this Act.

(4) For the provisions of Schedule 2 to that Act (rates of excise duty on made-wine) there shall be substituted the provisions of Schedule 2 to this Act

(5) In section 62(1) of that Act (excise duty on cider) for " £5.32 " there shall be substituted " £6.05 ".

(6) This section shall be deemed to have come into force on 27th March 1980.

2 Tobacco products

(1) For the Table in Schedule 1 to the [1979 c. 7.] Tobacco Products Duty Act 1979 there shall be substituted—

“TITLE

1. Cigarettes	An amount equal to 21 per cent, of the retail price plus £13.42 per thousand cigarettes.
2. Cigars	£25.60 per kilogram.
3. Hand-rolling tobacco	£22.60 per kilogram.
4. Other smoking tobacco and chewing tobacco	£17.40 per kilogram."”

(2) This section shall be deemed to have come into force on 29th March 1980

3 Hydrocarbon oil etc.

(1) In section 6(1) of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 for the words " a duty of excise at the rate of £0.0810 a litre in the case of light oil and £0.0920 a litre in the case of heavy oil " there shall be substituted the words " a duty of excise at the rate of £0.10 a litre ".

(2) In section 11(1)(b) of that Act (rebate on aviation turbine fuel and heavy oil other than kerosene at rate of £0.0066 a litre less than the rate at which duty is for the time being chargeable) for " £0.0066 " there shall be substituted " £0.0077 ".

(3) In section 14(1) of that Act (rebate on light oil delivered to approved person for use as furnace fuel at rate of £0.0066 a litre less than the rate at which duty is charged) for " £0.0066 " there shall be substituted " £0.0077 ".

(4) In consequence of subsection (1) above—

(a) for the words " light oil" in sections 7 and 8(3) and (4)(c) of that Act and Article 3 of the [S.I. 1972/567.] Excise Duties (Gas as Road Fuel) Order 1972 ; and

(b) for the words " heavy oil" in section 92(2) of the [1965 c. 25.] Finance Act 1965 and section 14(2) of the [1966 c. 21 (N.I.).] Finance Act (Northern Ireland) 1966,

there shall be substituted the words " hydrocarbon oil ".

(5) This section shall be deemed to have come into force at six o'clock in the evening on 26th March 1980.

4 Vehicles excise duty: Great Britain

(1) The [1971 c. 10.] Vehicles (Excise) Act 1971 shall be amended as follows.

(2) For the provisions of Part II of Schedules 1 to 5 (annual rates of duty) there shall be substituted the provisions set out in Schedule 3 to this Act.

(3) In subsection (5) of section 16 (rates of duty for trade licences), including that subsection as set out in paragraph 12 of Part I of Schedule 7, for " £25 " and " £5 " there shall be substituted respectively " £30 " and " £6 ".

(4) In section 4(1) (vehicles exempt from duty) before paragraph (a) there shall be inserted—

“(aa) electrically propelled vehicles;”.

(5) In section 2A(4) as set out in paragraph 5 of Part I of Schedule 7 (power to modify duration of licences and rates of duty) after the words " by statutory instrument " there shall be inserted the words " subject to annulment in pursuance of a resolution of either House of Parliament " and after the words " shall include power " there shall be inserted the words " to make transitional provisions, ".

(6) In section 7(2) (exemption for disabled persons) after the words " the National Health Service Act 1977 " there shall be inserted the words " or section 46(3) of the National Health Service (Scotland) Act 1978 ".

(7) Subsections (1) to (3) above have effect in relation to licences taken out after 26th March 1980, subsection (4) above has effect from 27th March 1980 and the other provisions of this section from the passing of this Act.

5 Vehicles excise duty: Northern Ireland

(1) The [1972 c. 10 (N.I.).] Vehicles (Excise) Act (Northern Ireland) 1972 shall be amended as follows.

(2) For the provisions of Part II of Schedules 1 to 5 (annual rates of duty) there shall be substituted the provisions set out in Schedule 4 to this Act.

(3) In subsection (6) of section 16 (rates of duty for trade licences), including that subsection as set out in paragraph 12 of Part I of Schedule 9, for " £25 " and " £5 " there shall be substituted respectively " £30 " and " £6 ".

(4) In section 4(1) (vehicles exempt from duty) before paragraph (a) there shall be inserted—

“(aa) electrically propelled vehicles ;”.

(5) Section 2A as set out in paragraph 5 of Part I of Schedule 9 (power to modify duration of licences and rates of duty) shall have effect with the amendments specified in subsections (6), (7) and (8) below, being amendments bringing that section into conformity with the corresponding provisions in the [1971 c. 10.] Vehicles (Excise) Act 1971.

(6) At the end of subsection (1) there shall be inserted the words " or in the case of vehicles of such description, or of such description and used in such circumstances, as may be so specified, periods of less than a month. "

(7) After subsection (4) there shall be inserted—

“(4A) An order under this section may be made so as to apply only to vehicles of specified descriptions and may make different provision for vehicles of different descriptions or for different circumstances.”

(8) In subsection (5) after the words " shall include power " there shall be inserted the words " to make transitional provisions and ".

(9) Subsections (1) to (3) above have effect in relation to licences taken out after 26th March 1980, subsection (4) above has effect from 27th March 1980 and the other provisions of this section from the passing of this Act.

6 Gaming licence duty

(1) Subject to the provisions of this section, the duty charged by section 13 of the [1972 c. 25.] Betting and Gaming Duties Act 1972 on a gaming licence in respect of any premises for any period shall consist of—

(a) £250 payable when applying for the licence; and

(b) a further amount of duty payable after the end of that period and chargeable at the rates specified in the following Table on the gross gaming yield from the premises in that period.

TABLE

Part of gross gaming yield	Rate
The first £250,000	2 ½ per cent.
The next £500,000	5 per cent.
The next £1,750,000	10 per cent.
The remainder	20 per cent.

(2) Subsection (1) above has effect in relation to licences for periods beginning on or after 1st October 1980 but in the case of a licence for a period beginning before 1st October 1981—

(a) the amount payable when applying for the licence shall, instead of being £250, be determined as provided in section 14 of the said Act of 1972; and

(b) the further amount referred to in subsection (1)(b) above shall be payable only to the extent, if any, to which it exceeds the amount paid when applying for the licence.

(3) Subsection (2) above is without prejudice to any liability for additional duty by virtue of the provisions of regulations having effect under paragraph 1 of Schedule 2 to the said Act of 1972 (alteration of rateable value) or of paragraph 5 of that Schedule (amendment of licences); and if—

(a) any payment of additional duty is made by virtue of those provisions; or

(b) there is a repayment of duty by virtue of any such regulations or of paragraph 6 of that Schedule (surrender of licences),

the reference in subsection (2)(b) above to the amount paid when applying for the licence shall be construed as a reference to that amount as increased or, as the case may be, reduced by that payment or repayment.

(4) Schedule 5 to this Act shall have effect for defining " gross gaming yield ", for making new provision as to the duration of gaming licences, for modifying subsections (1) and (2) above in cases where a licence is in force for less than six months and otherwise for supplementing the provisions of this section.

7 Gaming machine licence duty

(1) Sections 21 to 26 of the [1972 c. 25.] Betting and Gaming Duties Act 1972 and Schedule 4 to that Act (gaming machine licence duty) shall have effect with the amendments specified in Part I of Schedule 6 to this Act, being amendments which change the rates of duty payable in respect of licences and dispense with the need for a licence for the provision of penny machines.

(2) Part V of the [1972 c. 11 (N.I.).] Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 and Schedule 3 to that Act (gaming machine licence duty) shall have effect with the amendments specified in Part II of Schedule 6 to this Act, being amendments which change the rates of duty payable in respect of licences and dispense with the need for a licence for the provision of gaming machines the rewards from which do not exceed £0.10.

(3) This section shall have effect from 1st October 1980.

8 Bingo duty

(1) In section 17(2) of the [1972 c. 25.] Betting and Gaming Duties Act 1972 (amount of bingo duty)—

(a) for the words " 5 per cent. ", in both places where they occur, there shall be substituted the words " 7 ½ per cent. "; and

(b) for the words " one-nineteenth" there shall be substituted the words " three thirty-sevenths ".

(2) This section shall have effect from 29th September 1980.

9 Definition of Scotch whisky and Irish whiskey

(1) Paragraph 1 of Schedule 7 to the [1969 c. 32.] Finance Act 1969 (definition of whisky) shall have effect with the following amendments, being amendments which require Scotch whisky to be matured in Scotland and introduce a corresponding definition of Irish whiskey.

(2) In sub-paragraph (a) after the word " ' whisky' " there shall be inserted the words " or ' whiskey ' ".

(3) In sub-paragraph (b) after the word " distilled " there shall be inserted the words " and matured " and at the end there shall be inserted the words " and the expression ' Irish whiskey' shall mean whiskey which has been distilled and matured in the Republic of Ireland or in Northern Ireland or partly in one and partly in the other ".

(4) In sub-paragraph (c) for the words " or ' blended Scotch whisky' " there shall be substituted the words " , ' blended whiskey, '' blended Scotch whisky ' or ' blended Irish whiskey ' " and for the words "or Scotch whisky " there shall be substituted the words " , whiskey, Scotch whisky or Irish whiskey ".

(5) In sub-paragraph (d) for the words " or blended Scotch whisky " there shall be substituted the words " , blended whiskey, blended Scotch whisky or blended Irish whiskey ".

(6) So much of subsection (3) above as relates to maturing shall not apply to whisky or whiskey distilled before 1st August 1980.

10 Regulator powers

(1) The [1979 c. 8.] Excise Duties (Surcharges or Rebates) Act 1979 shall have effect with the following amendments, being amendments which remove the restrictions on the purposes for which and the period within which orders may be made under that Act and alter the provisions of that Act relating to parliamentary control.

(2) In section 1(2) for the words preceding paragraph (a) there shall be substituted the words " The Treasury may, by an order applying to one or more of the groups of duties to which this section applies, provide for an adjustment ".

(3) For section 2(2) there shall be substituted—

“(2) An order shall cease to be in force at the expiration of a period of one year from the date on which it takes effect unless continued in force by a further order.”

(4) For section 2(7), (8) and (9) there shall be substituted—

“(7) A statutory instrument containing an order which, with respect to all or any of the groups of duties—

(a) specifies a percentage by way of addition to duty or increases a percentage so specified; or

(b) withdraws or reduces a percentage specified by way of deduction from duty,

shall be laid before the House of Commons after being made; and unless the order is approved by that House before the expiration of twenty-eight days beginning with the date on which it was made, it shall cease to have effect on the expiration of that period, but without prejudice to anything previously done under it or to the making of a new order.

In reckoning any such period 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.

(8) A statutory instrument containing an order to which subsection (7) above does not apply shall be subject to annulment in pursuance of a resolution of the House of Commons.”.

PART II Value added tax

11 Liability to be registered

(1) Paragraph 1 of Schedule 1 to the [1972 c. 41.] Finance Act 1972 (liability to be registered) shall be amended as provided in subsections (2), (3) and (4) below.

(2) For sub-paragraph (a) there shall be substituted—

“(a) after the end of any quarter, if the value of his taxable supplies—

(i) in that quarter has exceeded £4,000 ; or

(ii) in the four quarters then ending has exceeded £13,500; or”.

(3) In sub-paragraph (b) for " £10,000 " there shall be substituted " £13,500 ".

(4) For the words from " except " to the end of the paragraph there shall be substituted the words " except that a person is not liable to be registered by virtue of sub-paragraph (a)(i) above after the end of any quarter if the Commissioners are satisfied that the value of his taxable supplies in that quarter and the next three quarters will not exceed £13,500. "

(5) In section 20(1) of the said Act of 1972 (registration of local authorities) for " £10,000 ", in both places, there shall be substituted " £13,500 ".

(6) This section shall be deemed to have come into force on 27th March 1980.

12 Termination of liability to be registered

(1) Paragraph 2 of Schedule 1 to the [1972 c. 41.] Finance Act 1972 (termination of liability to be registered) shall be amended as follows.

(2) For sub-paragraph (a) there shall be substituted—

“(a) after the end of any quarter or prescribed accounting period if he has been registered for the whole of the two years then ending and the value of his taxable supplies in each of those years has been £13,500 or less; and”.

(3) In sub-paragraph (b) for " £8,500 " there shall be substituted " £12,500 ".

(4) After paragraph (b) there shall be inserted the words " except that a person shall not at any time cease to be liable to be registered by virtue of sub-paragraph (a) above if there are reasonable grounds for believing that the value of his taxable supplies in the period of one year then beginning will exceed £13,500. ".

(5) This section shall be deemed to have come into force on 1st June 1980.

13 Deemed supply on de-registration

(1) Paragraph 7 of Schedule 2 to the Finance Act 1972 (deemed supply of business assets where person ceases to be taxable) shall be amended as follows.

(2) For paragraph 7(c) and (d) there shall be substituted—

“(c) the tax on the deemed supply would not be more than £250.”.

(3) The existing provisions of paragraph 7 as amended by subsection (2) above shall become sub-paragraph (1) and after those provisions there shall be inserted—

“(2) This paragraph does not apply to any goods in the case of which the taxable person can show to the satisfaction of the Commissioners—

(a) that no credit for input tax in respect of the supply or importation of the goods has been allowed to him;

(b) that the goods were not acquired by him as part of the assets of a business which was transferred to him as a going concern by another taxable person; and

(c) that he has not obtained relief in respect of the goods under section 4 of the Finance Act 1973 (tax- or duty-paid stock held at commencement of VAT).

(3) The Treasury may by order increase or further increase the sum specified in sub-paragraph (1)(c) above.”.

(4) This section shall be deemed to have come into force on 1st June 1980.

14 Penalties and assessments

(1) After section 38(7) of the [1972 c. 41.] Finance Act 1972 (daily penalty of £10 for failure to comply with certain requirements) there shall be inserted—

“(7A) Where the failure referred to in subsection (7) of this section consists—

(a) in not paying the tax due in respect of any period within the time required by regulations under section 3(1) of this Act; or

(b) in not furnishing a return in respect of any period within the time required by regulations under section 30(2) of this Act,

that subsection shall have effect as if for £10 there were substituted (if it is greater) an amount equal to \ per cent, of the tax due in respect of that period; and for that purpose the tax due shall, if the person concerned has furnished a return, be taken to be the tax shown in the return as that for which he is accountable for that period and, in any other case, be taken to be such tax as has been assessed and notified to him under section 31(1) of this Act.”

(2) In section 40(1) of the said Act of 1972 (matters in respect of which there is a right of appeal) for paragraph (b) there shall be substituted—

“(b) an assessment—

(i) under subsection (1) of section 31 of this Act in respect of a period for which the appellant has made a return under this Part of this Act; or

(ii) under subsection (3) of that section, or the amount of such an assessment;”.

15 Registration of clubs etc. and transfers of going concerns

(1) In section 23 of the Finance Act 1972 (business carried on by unincorporated bodies etc.) after subsection (2) there shall be inserted—

“(2A) The registration under this Part of this Act of any such club, association or organisation may be in the name of the club, association or organisation; and in determining whether goods or services are supplied to or by such a club, association or organisation, no account shall be taken of any change in its members.”.

(2) The provisions of section 25 of the said Act of 1972 (transfers of going concerns) shall become subsection (1) and after those provisions there shall be inserted—

“(2) Without prejudice to subsection (1) of this section, the Commissioners may by regulations make provision for securing continuity in the application of this Part of this Act in cases where a business carried on by a taxable person is transferred to another person as a going concern and the transferee is registered under this Part of this Act in substitution for the transferor.

(3) Regulations under subsection (2) of this section may, in particular, provide—

(a) for liabilities and duties under this Part of this Act of the transferor to become, to such extent as may be provided by the regulations, liabilities and duties of the transferee ; and

(b) for any right of either of them to a repayment or credit in respect of tax to be satisfied by making a repayment or allowing a credit to the other;

but no such provision as is mentioned in paragraph (a) or (b) of this subsection shall have effect in relation to any transferor and transferee unless an application in that behalf has been made by them under the regulations.”

(3) This section shall come into force on 1st September 1980.

16 Use of computers

(1) Subject to subsection (2) below, in any provision contained in or having effect under the enactments relating to value added tax " document " , " copy " and " computer " shall have the same meanings—

(a) in relation to England and Wales, as by virtue of section 10 of the [1968 c. 64.] Civil Evidence Act 1968 they have in Part I of that Act;

(b) in relation to Scotland, as by virtue of section 17 of the [1968 c. 70.] Law Reform (Miscellaneous Provisions) (Scotland) Act 1968 they have in Part III of that Act; and

(c) in relation to Northern Ireland, as by virtue of section 6 of the [1971 c. 36 (N.I.).] Civil Evidence Act (Northern Ireland) 1971 they have in Part I of that Act;

and for the purposes of any such provision relating to tax invoices a person shall be treated as issuing, or as providing another person with, a tax invoice if the requisite particulars are recorded in a computer and transmitted by electronic means and without the delivery of any document.

(2) No provision relating to tax invoices shall be treated as complied with by the production by means of a computer of any material other than a document in writing, by delivering any such material so produced or by making any such transmission as is mentioned in subsection (1) above unless the person producing or delivering the material or making the transmission and, in the case of delivered material or a transmission, the person receiving it—

(a) has given the Commisioners at least one month's notice in writing that he proposes to produce or deliver such material or make such transmissions or, as the case may be, receive such material or transmissions ; and

(b) complies with such requirements as may be specified in regulations or as the Commissioners may from time to time impose in his case.

(3) In section 40(1) of the [1972 c. 41.] Finance Act 1972 (appeals to value added tax tribunals) after paragraph (1) there shall be inserted—

“(m) any requirements imposed by the Commissioners in a particular case under section 16(2)(b) of the Finance Act 1980.”

(4) An authorised person—

(a) shall be entitled at any reasonable time to have access to, and to inspect and check the operation of, any computer and any associated apparatus or material which is or has been in use by a taxable person in connection with the production, delivery or receipt of material which is or purports to be a tax invoice or with the transmission as mentioned in subsection (1) above of particulars which are or purport to be particulars of such an invoice ; and

(b) may require the taxable person or any other person having charge of any such computer, apparatus or material to afford him such assistance as he may require for the purposes of paragraph (a) above.

(5) Any person who obstructs an authorised person in the exercise of his powers under paragraph (a) of subsection (4) above or without reasonable excuse fails to comply with a requirement under paragraph (b) of that subsection shall be liable to a penalty of £500.

(6) This section shall be construed as one with Part I of the said Act of 1972.

17 Mutual recovery and disclosure of information between member States

(1) In section 11(1) of the [1977 c. 36.] Finance Act 1977 (recovery of duty etc. due in other member States) the reference to the Directive there mentioned shall include a reference to that Directive as extended to value added tax by the [O.J. No. L 331/10.] Directive of the Council of the European Communities dated 6th December 1979 No. 79/1071 /EEC.

(2) In section 77 of the [1978 c. 42.] Finance Act 1978 (disclosure of information to tax authorities in other member States)—

(a) references to the Directive mentioned in subsection (1) shall include references to that Directive as extended to value added tax by the [O.J. No. L 331/8.] Directive of the Council of the European Communities dated 6th December 1979 No. 79/1070/EEC; and

(b) references to the Commissioners of Inland Revenue and an authorised officer of those Commissioners shall include references to the Commissioners of Customs and Excise and an authorised officer of those Commissioners.

(3) Subsection (1) above shall have effect as respects any request made on or after 1st January 1981 for the recovery of a sum becoming due after the passing of this Act; and subsection (2) above shall come into force on 1st January 1981.

PART III Income Tax, Corporation Tax and Capital Gains Tax

Chapter I General

18 Charge of income tax for 1980-81 and abolition of lower rate

(1) Income tax for the year 1980-81 shall be charged at the basic rate of 30 per cent.; and—

(a) in respect of so much of an individual's total income as exceeds £11,250 at such higher rates as are specified in the Table below ; and

(b) in respect of so much of the investment income included in an individual's total income as exceeds £5,500 at the additional rate of 15 per cent.

TABLE

Part of excess over £11,250	Higher rate
The first £2,000	40 per cent.
The next £3,500	45 per cent.
The next £5,500	50 per cent.
The next £5,500	55 per cent.
The remainder	60 per cent.

(2) Section 32(1)(aa) of the [1971 c. 68.] Finance Act 1971 (lower rate) shall cease to have effect.

19 Charge of corporation tax for financial year 1979

Corporation tax shall be charged for the financial year 1979. at the rate of 52 per cent.

20 Rate of advance corporation tax for financial year 1980

The rate of advance corporation tax for the financial year 1980. shall be three-sevenths.

21 Corporation tax: small companies

(1) The small companies rate for the financial year 1979 shall be 40 per cent., and for that year the fraction mentioned in subsection (2) of section 95 of the [1972 c. 41.] Finance Act 1972 (marginal relief for small companies) shall be seven-fiftieths.

(2) For the financial year 1979 and subsequent financial years subsection (3) of the said section 95 shall have effect with the substitution for any reference to £60,000 of a reference to £70,000 and with the substitution for any reference to £100,000 of a reference to £130,000.

(3) Where by virtue of subsection (2) above the said section 95 has effect with different relevant amounts in relation to different parts of the same accounting period, those parts shall be treated for the purposes of that section as if they were separate accounting periods and the profits and income of the company for that period (as defined in that section) shall be apportioned between those parts.

22 Alteration of personal reliefs

(1) In section 8 of the Taxes Act (personal reliefs)—

(a) in subsection (1)(a) (married) for "£1,815" there shall be substituted " £2,145 ";

(b) in subsection (1)(b) (single) and (2) (wife's earned income relief) for " £1,165 " there shall be substituted " £1,375 ";

(c) in subsection (1A) (age allowance) for " £2,455 " and " £1,540 " there shall be substituted " £2,895 " and " £1,820 " respectively ;

(d) in subsection (1B) (income limit for age allowance) for " £5,000 " there shall be substituted " £5,900 ".

(2) In section 14(2) of that Act (additional relief for widows and others in respect of children) for " £650 " there shall be substituted " £770 ".

23 Widow's bereavement allowance

(1) In Chapter II of Part I of the Taxes Act (personal reliefs) there shall be inserted after section 15—

“15A Widow's bereavement allowance.

Where a man dies in a year of assessment for which he is entitled to the higher (married persons) relief under section 8(1) above, or would be so entitled but for an election under section 15 above or section 23 of the Finance Act 1971 (separate taxation of wife's earnings), his widow shall be entitled for that year to a deduction from her total income of an amount equal to that specified in section 14(2) above.”

(2) This section has effect for the year 1980-81 and subsequent years of assessment.

24 Indexation of income tax thresholds and allowances

(1) Subsection (2) below shall have effect for the year 1980-81 and subsequent years of assessment but subject, in the case of any year of assessment after that year, to subsections (3) and (4) below; and subsections (5), (6) and (7) below shall have effect for the year 1981-82 and subsequent years of assessment.

(2) In subsection (1) of section 32 of the [1971 c. 68.] Finance Act 1971 (income tax charged at basic and other rates)—

(a) for paragraph (b) (higher rate or rates) there shall be substituted—

“(b) in respect of so much of an individual's total income as exceeds £11,250, at such rates respectively as Parliament may determine in relation to the first £2,000, the next £3,500, the next £5,500, the next £5,500 and the remainder ; " (b) in the words following paragraph (b) (investment income surcharge) for the words " such amount as Parliament may determine " there shall be substituted " £5,500 ".”

(3) The amounts up to which income is by virtue of subsection (1) of the said section 32 chargeable for any year at the basic rate, or over which investment income is chargeable at an additional rate, shall be known respectively as the basic rate limit and the investment income threshold; and the parts of income in excess of the basic rate limit which are specified in paragraph (b) of that subsection shall be known respectively as the first, second, third, fourth and fifth higher rate bands.

(4) If the retail prices index for the month of December preceding a year of assessment is higher than it was for the previous December, then, unless Parliament otherwise determines, subsection (1) of the said section 32 shall apply for that year as if for each of the amounts specified in that subsection as it applied for the previous year (whether by virtue of this subsection or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple.

(5) If the retail prices index for the month of December preceding a year of assessment is higher than it was for the previous December, then, unless Parliament otherwise determines, section 8 of the Taxes Act (personal relief) shall apply for that year as if for each amount specified in that section as it applied for the previous year (whether by virtue of this subsection or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index and if—

(a) in the case of the amount specified in subsection (1B) of that section (income limit for age relief), the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple ;

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

(6) In section 14(2) of the Taxes Act (additional relief for widows and others in respect of children) for the words from " a deduction " onwards there shall be substituted the words " a deduction from his total income of an amount equal to the difference between the higher (married persons) relief and the lower (single persons) relief under subsection (1) of section 8 above as it applies to persons not falling within subsection (1A) of that section ";

and in sections 14A(1)(a) and (2) and 15A of that Act for the word " specified " there shall be substituted the words " referred to ".

(7) Subsections (4) and (5) above shall not require any change to be made in the amounts deductible or repayable under section 204 of the Taxes Act (pay as you earn) between the beginning of a year of assessment and 5th May in that year.

(8) References in this section and in any other provision of the Income Tax Acts to the retail prices index are references to the general index of retail prices (for all items) published by the Department of Employment; and if that index is not published for a month for which it is relevant for the purposes of any provision of those Acts, that provision shall be construed as referring to any substituted index or index figures published by that Department.

(9) The Treasury shall before the year 1981-82 and each subsequent year of assessment make an order specifying the amounts which by virtue of this section will be treated as specified for that year in section 32 of the [1971 c. 68.] Finance Act 1971 and section 8 of the Taxes Act; and any such order shall be made by statutory instrument.

25 Child tax allowances for children living abroad

(1) In the case of a child to whom section 25 of the [1977 c. 36.] Finance Act 1977 applies (children living abroad) the appropriate amount to be deducted from the claimant's total income under subsection (1) of section 10 of the Taxes Act for the year 1981-82 shall, instead of being determined as provided in subsection (1) of the said section 25, be determined in accordance with subsection (2) below.

(2) The appropriate amount for the child shall vary according to the age of the child at the commencement of the year of assessment, and, subject to subsection (5) of the said section 10—

(a) for a child shown by the claimant to have been then over the age of sixteen, shall be £165 ;

(b) for a child not so shown, but shown by the claimant to have been then over the age of eleven, shall be £135;

(c) in any other case, shall be £100.

(3) No relief shall be given under the said section 10 for any year of assessment after the year 1981-82 in the case of a child to whom the said section 25 applies.

26 Gallantry awards

(1) In section 368 of the Taxes Act (tax exemption for annuities and additional pensions paid by virtue of holding certain awards for gallantry) after paragraph (c) there shall be inserted—

“(d) additional pensions paid to holders of the Military Cross;

(e) additional pensions paid to holders of the Distinguished Flying Cross;

(f) additional pensions paid to holders of the Distinguished Conduct Medal;

(g) additional pensions paid to holders of the Conspicuous Gallantry Medal;

(h) additional pensions paid to holders of the Distinguished Service Medal;

(i) additional pensions paid to holders of the Military Medal;

(j) additional pensions paid to holders of the Distinguished Flying Medal,”.

(2) In paragraph (b) of that section (annuities paid to holders of the George Cross) after the word " annuities " there shall be inserted the words " and additional pensions ".

27 Relief for interest: limit for 1980-81

In paragraph 5(1) of Schedule 1 to the [1974 c. 30.] Finance Act 1974 (limit on relief for interest on certain loans for the purchase or improvement of land) the references to £25,000 shall have effect for the year 1980-81 as well as for previous years of assessment.

28 Relief for interest: money borrowed for investment in close company

(1) In paragraph 10 of Schedule 1 to the Finance Act 1974 (conditions for interest relief: money borrowed for investment in close companies)—

(a) paragraph (b) (which requires the borrower to have worked in the company) shall be omitted ;

(b) in paragraph (c) for the words " that period " there shall be substituted the words " the period from the application of the proceeds of the loan to the payment of the interest "; and

(c) at the end there shall be inserted the words “and

(d) that, if the company exists wholly or mainly for the purpose of holding investments or other property, no property held by the company is used as a residence by the individual;

but the condition in paragraph (d) above shall not apply in a case where the individual has worked for the greater part of his time in the actual management or conduct of the business of the company, or of an associated company of the company.”

(2) This section has effect in relation to interest paid after 26th March 1980.

29 Life assurance relief

(1) In the provisions specified in subsection (2) below {rate of life assurance relief) for the words " 17 per cent.", wherever they occur, there shall be substituted the words " 15 per cent. ".

(2) The provisions referred to above are—

(a) section 21(4)(a) of the Taxes Act;

(b) paragraph 5(a) of Schedule 4 to the [1976 c. 40.] Finance Act 1976; and

(c) paragraph 13(3)(a) of that Schedule.

(3) This section has effect from 6th April 1981.

30 Disqualification of certain life insurance policies

(1) A policy shall not be a qualifying policy within the meaning of Part I of Schedule 1 to the Taxes Act if the policy is connected with another policy the terms of which provide benefits which are greater than would reasonably be expected if any policy connected with it were disregarded.

(2) For the purposes of this section a policy is connected with another policy if they are at any time simultaneously in force and either of them is issued with reference to the other, or with a view to enabling the other to be issued on particular terms or facilitating its being issued on those terms.

(3) In this section " policy " means a policy effected in the course of ordinary long-term insurance business within the meaning of section 83(2) of the [1974 c. 49.] Insurance Companies Act 1974 and includes any such policy issued outside the United Kingdom.

(4) Where any person issues a policy—

(a) which by virtue of this section is not a qualifying policy, or

(b) the issue of which causes another policy to cease by virtue of this section to be a qualifying policy,

he shall within three months of issuing the policy give written notice of that fact to the Board.

(5) The Board may, by notice in writing, require any person who is, or appears to them to be, concerned in the issue of any such policy as is mentioned in subsection (4) above, to furnish them within such time (not being less than thirty days) as may be specified in the notice with such particulars as they think necessary for the purposes of this section and as the person to whom the notice is addressed has or can reasonably obtain; but no solicitor shall be deemed for the purposes of this subsection to have been concerned in the issue of a policy by reason only that he has given professional advice to a client in connection with that policy.

(6) Subject to subsection (7) below, this section shall not apply to policies issued in respect of insurances made before 26th March 1980.

(7) Where—

(a) a policy is issued in respect of an insurance made before 26th March 1980, and

(b) a policy is issued in respect of an insurance made on or after that date which is connected with it within the meaning of this section,

this section shall apply to the policy issued in respect of an insurance made before that date, but shall not apply in respect of any premium paid in respect of it before that date.

31 Retirement annuities: increase of limits on relief

(1) In subsection (1A) of section 227 of the Taxes Act (annual limit on relief) for paragraphs (a) and (b) there shall be substituted the words " shall not be more than 17 1/2 per cent, of the individual's net relevant earnings for that year ".

(2) In subsection (1B) of that section (annual limit on relief in respect of dependants) for paragraphs (a) and (b) there shall be substituted the words " shall not be more than 5 per cent, of the individual's net relevant earnings for that year ".

(3) For section 228(4) of the Taxes Act (additional relief for persons born in or before 1915) there shall be substituted—

“(4) Subject to subsection (5) below, in the case of an individual born in a year specified in the first column of the Table set out below, section 227(1A) above shall have effect with the substitution for the reference to 17 ½ per cent, of a reference to the percentage specified in his case in the second column of the Table.

TABLE

Year of birth	Percentage
1914 or 1915	20 ½
1912 or 1913	23 ½
1910 or 1911	26 ½
1908 or 1909	29 ½
1907 or any earlier year	32 ½”.

(4) This section has effect for the year 1980-1981 and subsequent years of assessment.

32 Retirement annuities: carry-forward of unused relief

(1) After section 227 of the Taxes Act (relief for retirement annuity premiums) there shall be inserted—

“227A Carry-forward of unused relief under s. 227.

(1) Where the condition in section 226(1)(a) above is satisfied as respects the whole or part of a year of assessment but there is unused relief for that year, that is to say, an amount which could have been deducted from or set off against the individual's relevant earnings for that year under subsection (1) of section 227 above if—

(a) he had paid a qualifying premium in that year; or

(b) the qualifying premium or premiums paid by him in that year had been greater,

relief may be given under section 227 above, up to the amount of the unused relief, in respect of so much of any qualifying premium or premiums paid by the individual in any of the next six years of assessment as exceeds the maximum applying for that year under section 227(1A) above.

(2) Relief by virtue of this section shall be given for an earlier year rather than a later year, the unused relief taken into account in giving relief for any year being deducted from that available for giving relief in subsequent years and unused relief derived from an earlier year being exhausted before unused relief derived from a later year.

(3) Where a relevant assessment to tax in respect of a year of assessment becomes final and conclusive more than six years after the end of that year and there is an amount of unused relief for that year which results from the making of the assessment—

(a) that amount shall not be available for giving relief by virtue of this section for any of the six years following that year; but

(b) the individual may, within the period of six months beginning with the date on which the assessment becomes final and conclusive, elect that relief shall be given under section 227 above, up to that amount, in respect of so much of any qualifying premium or premiums paid by him within that period as exceeds the maximum applying under section 227(1A) above for the year of assessment in which they are paid;

and to the extent to which relief in respect of any premium or premiums is given by virtue of this subsection it shall not be given by virtue of subsection (1) above.

(4) In this section " a relevant assessment to tax " means an assessment on the individual's relevant earnings or on the profits or gains of a partnership from which the individual derives relevant earnings.”

(2) Relief may be given by virtue of subsection (1) above for the year 1980-1981 and any subsequent year of assessment.

(3) No amount shall by virtue of subsection (2) or (2A) of section 227 of the Taxes Act (carry-forward of unrelieved premiums) be carried forward from any year of assessment after the year 1979-80 or to any year of assessment after the year 1981-82 but relief for any amount carried forward from the year 1979-80 may be given under that section in the year 1980-81 or the year 1981-82 or partly in one and partly in the other (as the individual may elect) without regard to the maximum applying for that year under subsection (1A) or (1B) of that section.

(4) Subsection (3) of the said section 227 (relief for qualifying premium paid after assessment becomes final and conclusive) shall not apply to any premium paid on or after 6th April 1981.

33 Retirement annuities: other amendments

(1) In section 226(2)(c) and section 226A (3)(c) and (6) of the Taxes Act (under which a contract or scheme cannot be approved if it provides for a lump sum to be paid on death to anyone other than the individual's personal representatives) the words " to the individual's personal representatives " shall be omitted and in section 226A(1)(b) of that Act (which contains a similar provision) the words " being a lump sum payable to his personal representatives " shall be omitted.

(2) In section 227 of that Act, after subsection (1B) there shall be inserted—

“(1BB) An individual who pays a qualifying premium in a year of assessment (whether or not a year for which he has relevant earnings) may before the end of that year elect that the premium shall be treated as paid—

(a) in the last preceding year of assessment; or

(b) if he had no net relevant earnings in the year referred to in paragraph (a) above, in the last preceding year of assessment but one ;

and where an election is made under this subsection in respect of a premium the other provisions of this Chapter shall have effect as if the premium had been paid in the year specified in the election and not in the year in which it was actually paid.”

but no premium shall by virtue of this subsection be treated for the purposes of section 32(3) above as having been paid in any year of assessment before that in which it was actually paid.

(3) In subsection (5) of the said section 227 (deductions to be made in calculating individual's net relevant earnings for the purposes of relief under that section) for paragraph (a) there shall be substituted—

“(a) deductions which but for section 130(1), (n) or (o) above could be made in computing his profits or gains, or

(aa) deductions in respect of relief under Schedule 5 to the Finance Act 1976 (stock relief), or”;

(4) In subsection (9) of the said section 227 after the words " in respect of payments made by the partnership " there shall be inserted the words " or of relief given to the partnership under Schedule 5 of the Finance Act 1976 ".

(5) This section has effect for the year 1980-81 and subsequent years of assessment.

34 Annuities for former partners

(1) Section 16 of the [1974 c. 30.] Finance Act 1974 shall have effect with the amendments specified in subsections (2) and (3) below.

(2) In subsection (1) for the words " and shall not reduce the income which is chargeable as investment income of any other person " there shall be substituted the words " and, to the extent to which they do not exceed that limit, shall not reduce the income which is chargeable as investment income of any other person ".

(3) After subsection (2) there shall be inserted—

“(3) If the retail prices index for the month of December preceding a year of assessment after that in which the former partner ceased to be a member of the partnership is higher than it was for the month of December in the year of assessment in which he ceased to be such a member, the amount which under subsection (2) above is the limit for the first-mentioned year of assessment shall be treated as increased by the same percentage as the percentage increase in the retail prices index.

(4) Where the former partner ceased to be a member of the partnership before the year 1974-75 subsection (3) above shall have effect as if he had ceased to be a member in that year.”

(4) In section 457 of the Taxes Act (income under settlement treated as the settlor's income except as respects certain payments made for full consideration etc.) after subsection (4) there shall be inserted—

“(4A) Where for any year of assessment there is made to or for the benefit of a former member, or the widow or a dependant of a deceased former member, of a partnership an annual payment which—

(a) is excluded from the operation of subsection (1) above by virtue of paragraph (a) of that subsection or by virtue of subsection (2) above; and

(b) falls short of the limit applying for that year under section 16 of the Finance Act 1974 (amount of partnership retirement annuity treated as earned income),

any additional annual payment made to or for the benefit of that person shall, notwithstanding that it is not made under a liability incurred for full consideration, be excluded from the operation of subsection (1) above to the extent to which it makes good that shortfall.”.

(5) This section has effect in relation to annual payments which are income of the year 1980-81 or a subsequent year of assessment.

35 Pilots' benefit fund

(1) The Board may, if they think fit, and subject to such conditions as they think proper to attach to the approval, approve a pilots' benefit fund for the purposes of Chapter II of Part II of the [1970 c. 24.] Finance Act 1970 as if it were a retirement benefits scheme within the meaning of that Chapter and notwithstanding that it does not satisfy one or more of the conditions set out in section 19(2) and (2A) of that Act.

(2) If a fund is approved by virtue of this section—

(a) section 21 of the said Act of 1970, Schedule 5 to that Act and paragraph 9 of Schedule 3 to the [1971 c. 68.] Finance Act 1971 shall have effect in relation to the fund with the modifications specified in subsection (3) below;

(b) pensions paid out of the fund and any sums chargeable to tax in connection with the fund under the said paragraph 9 shall be treated for the purposes of the Income Tax Acts as earned income ; and

(c) Chapter III of Part IX of the Taxes Act (retirement annuities) shall have effect as if a member of the fund were the holder of a pensionable office or employment and his earnings as a pilot (estimated in accordance with the provisions applicable to Case II of Schedule D) were remuneration from such an office or employment.

(3) The modifications referred to in subsection (2)(a) above are as follows—

(a) in section 21, subsection (3) shall be omitted and in subsection (4) for the references to an employee and Schedule E there shall be substituted respectively references to a member of the fund and Schedule D and the words from " incurred " onwards shall be omitted;

(b) in Schedule 5—

(i) for references to an employee there shall be substituted references to a member or former member of the fund ;

(ii) in paragraph 3(1)(i) for the reference to a year of service there shall be substituted a reference to a year as a pilot licensed by a pilotage authority;

(iii) paragraphs 4 and 9(1) and (3) and so much of any other provision as applies to an employer shall be omitted ; and

(c) in paragraph 9 of Schedule 3 for references to an employee and Schedule E there shall be substituted respectively references to a member or former member of the fund and Case VI of Schedule D.

(4) In this section " pilots' benefit fund" means a fund established under section 17(1)(j) of the [1913 c. 31.] Pilotage Act 1913 or any scheme supplementing or replacing any such fund.

36 Superannuation funds approved under repealed provisions

(1) This section applies to any fund which immediately before 6th April 1980 was an approved superannuation fund for the purposes of section 208 of the Taxes Act if—

(a) it has not been approved and is not being considered for approval under Chapter II of Part II of the [1970 c. 24.] Finance Act 1970; and

(b) no sum has been paid to it by way of contribution since 5th April 1980.

(2) Subject to subsection (4) below, exemption from income tax shall, on a claim being made in that behalf, be allowed to a fund to which this section applies in respect of—

(a) income derived from investments or deposits of the fund;

(b) any underwriting commissions which apart from this subsection would be chargeable to tax under Case VI of Schedule D ; and

(c) any profits or gains which apart from this subsection would be chargeable to tax under Case VI of Schedule D by virtue of section 26 of the [1973 c. 51.] Finance Act 1973 (transactions in certificates of deposit),

if, or to such extent as the Board are satisfied that, the income, commissions, profits, or gains are applied for the purposes of the fund.

(3) Subject to subsection (4) below, where a claim is made in that behalf a gain which accrues to a person on the disposal of investments shall not be a chargeable gain for the purposes of capital gains tax if, or to such extent as the Board are satisfied that, those investments were held by him or on his behalf for the purposes of a fund to which this section applies.

(4) No claim under subsection (2) or (3) above shall be allowed unless the Board are satisfied that the terms on which benefits are payable from the fund have not been altered since 5th April 1980.

(5) Where immediately before 6th April 1980 premiums paid under a contract with the trustees or other persons having the management of a fund to which this section applies fell within section 323(4) of the Taxes Act (premiums referable to the pension business of an insurance company) and the terms on which benefits are payable from the fund have not been altered since that time, those premiums shall be treated as continuing to fall within that section.

(6) An annuity paid out of a fund to which this section applies shall be charged to tax under Schedule E and section 204 of the Taxes Act (pay as you earn) shall apply accordingly.

(7) This section shall be deemed to have come into force on 6th April 1980.

37 Relief for losses on unquoted shares in trading companies

(1) Where an individual who has subscribed for shares in a qualifying trading company incurs an allowable loss (for capital gains tax purposes) on the disposal of the shares in any year of assessment he may, by notice in writing given within two years after that year, make a claim for relief from income tax on an amount of his income equal to the amount of the loss ; and where such relief is given in respect of the amount of a loss no deduction shall be made in respect of that amount under the [1979 c. 14.] Capital Gains Tax Act 1979.

(2) The following provisions shall have effect as respects relief under this section—

(a) relief may, by notice in writing given within two years after a year of assessment, be claimed for that year in respect of a loss incurred in the preceding year of assessment so far as relief under this section in respect of that loss has not already been given in that year, and relief claimed by virtue of this paragraph shall be given in priority to any relief in respect of a loss incurred in the year for which the relief is claimed;

(b) a claim for relief may require it to be given only by reference to the income of the individual without extending to the income of his spouse;

(c) subject to paragraph (b) above, relief shall be given by treating the loss as reducing first the earned income of the individual, then his other income, then the earned income of his spouse and then his spouse's other income;

(d) the relief shall be given in priority to relief under section 168 of the Taxes Act or section 30 of the [1978 c. 42.] Finance Act 1978.

(3) For the purposes of this section an individual subscribes for shares if they are issued to him by the company in consideration of money or money's worth; and where by virtue of subsection (3) of section 19 of the said Act of 1979 that consideration is deemed to be equal to the market value of the shares the amount of any loss on their disposal shall be treated as not exceeding what it would have been if that subsection had not applied to that consideration.

(4) For the purposes of this section an individual shall be treated as having subscribed for shares if his spouse did so and transferred them to him by a transaction inter vivos.

(5) For the purposes of this section a qualifying trading company is a company none of whose shares have at any time in the relevant period been quoted on a recognised stock exchange and which—

(a) either—

(i) is a trading company on the date of the disposal; or

(ii) has ceased to be a trading company at a time which is not more than three years before that date and has not since that time been an excluded company or an investment company; and

(b) either—

(i) has been a trading company for a continuous period of six years ending on that date or at that time; or

(ii) has been a trading company for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company or an investment company; and

(c) has been resident in the United Kingdom throughout the period from its incorporation until that date.

(6) This section does not apply unless the disposal is—

(a) by way of a bargain made at arms' length for full consideration; or

(b) by way of a distribution in the course of dissolving or winding up the company ; or

(c) a deemed disposal under section 22(2) of the said Act of 1979 (claim that value of asset has become negligible).

(7) Where an individual disposes of shares (" the new shares ") which by virtue of section 78 of the said Act of 1979 (reorganisation etc. treated as not involving disposal) are identified with other shares (" the old shares ") previously held by him, relief shall not be given under this section on the disposal of the new shares unless—

(a) relief under this section could (or if this section had been in force could) have been given on a disposal of the old shares if he had incurred an allowable loss in disposing of them as mentioned in subsection (6)(a) above on the occasion of the disposal that would have occurred but for the said section 78 ; or

(b) he gave new consideration for the new shares ;

but in a case within paragraph (b) above the amount of relief under this section on the disposal of the new shares shall not exceed the amount or value of the new consideration taken into account as a deduction in computing the loss incurred on their disposal.

(8) Where the shares are the subject of an exchange or arrangement of the kind mentioned in section 85 or 86 of the said Act of 1979 (company reconstructions etc.) which by reason of section 87 of that Act involves a disposal of the shares, this section shall not apply to any allowable loss incurred on the disposal.

(9) Where an individual holds shares in a company which constitute a holding and comprise—

(a) shares for which he has subscribed ("qualifying shares "); and

(b) shares which he has acquired otherwise than by subscription,

any question whether a disposal by him of shares forming part of the holding is of qualifying shares shall be determined by treating that and any previous disposal by him out of the holding as relating to shares acquired later rather than earlier; and if a disposal by him is of qualifying shares forming part of a holding and he makes a claim under this section in respect of a loss incurred on their disposal, the amount of relief under this section on the disposal shall not exceed the sums that would be allowed as deductions in computing the loss if the shares had not been part of the holding.

(10) Where a claim is made under this section in respect of a loss accruing on the disposal of shares section 26 of the said Act of 1979 (value-shifting) shall have effect in relation to the disposal as if for the references in subsections (1)(b) and (4) to a tax-free benefit there were substituted references to any benefit whether tax-free or not.

(11) There shall be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of relief being given under this section in respect of an allowable loss or in consequence of the whole or part of such a loss in respect of which a claim is made not being relieved under this section.

(12) In this section—

• " excluded company " means a company—

  (a)

  which has a trade which consists wholly or mainly of dealing in shares, securities, land, trades or commodity futures or is not carried on on a commercial basis and in such a way that profits in the trade can reasonably be expected to be realised ; or

  (b)

  which is the holding company of a group other than a trading group ;

• " group " means a company which has one or more 75 per cent, subsidiaries together with that or those subsidiaries;

• " holding " means a holding within the meaning of section 65 of the said Act of 1979 ;

• " holding company " means a company whose business consists wholly or mainly in the holding of shares or securities of one or more companies which are its 75 per cent, subsidiaries ;

• " investment company " has the meaning given by section 304(5) of the Taxes Act;

• " new consideration " means consideration in money or money's worth other than consideration of the kind excluded by the proviso to section 79(1) of the said Act of 1979;

• " recognised stock exchange " has the meaning given by section 535 of the Taxes Act;

• " relevant period " means the period ending with the date on which the shares in question are disposed of and beginning with the incorporation of the company, or, if later, one year before the date on which the shares were subscribed for;

• " shares " includes stock but, except in the definition of " excluded company", does not include shares or stock not forming part of a company's ordinary share capital as defined in section 526(5) of the Taxes Act;

• " spouse " refers to one of two spouses who are living together (construed in accordance with section 155(2) of the said Act of 1979);

• " trading company" means a company, other than an an excluded company, which is—

  (a)

  a trading company within the meaning of paragraph 11 of Schedule 16 to the [1972 c. 41.] Finance Act 1972; or

  (b)

  the holding company of a trading group;

• " trading group" means a group the business of whose members, taken together, consists wholly or mainly in the carrying on of a trade or trades but for the purposes of this definition any trade carried on by a subsidiary which is an excluded company or not resident in the United Kingdom shall be treated as not constituting a trade.

(13) This section has effect in relation to disposals on or after 6th April 1980.

38 Incidental costs of obtaining loan finance

(1) In computing the profits or gains to be charged under Case I or Case II of Schedule D there may be deducted the incidental costs of obtaining finance by means of a qualifying loan or the issue of qualifying loan stock ; and the incidental costs of obtaining finance by those means shall be treated for the purposes of section 304 of the Taxes Act (investment companies etc.) as expenses of management.

(2) Subject to subsection (3) below, in this section " a qualifying loan " and " qualifying loan stock " mean a loan or loan stock the interest on which is deductible—

(a) in computing for tax purposes the profits or gains of the person by whom the incidental costs in question are incurred; or

(b) under section 248 of the Taxes Act against his total profits.

(3) A loan or loan stock which carries a right of conversion into, or to the acquisition of—

(a) shares; or

(b) other securities not being a qualifying loan or qualifying loan stock,

is not a qualifying loan or qualifying loan stock if that right is exercisable before the expiration of three years from the date when the loan was obtained or the stock was issued.

(4) In this section " the incidental costs of obtaining finance " means expenditure on fees, commissions, advertising, printing and other incidental matters (but not including stamp duty), being expenditure wholly and exclusively incurred for the purpose of obtaining the finance (whether or not it is in fact obtained), of providing security for it or of repaying it.

(5) This section shall not be construed as affording relief—

(a) for any sums paid in consequence of or for obtaining protection against, losses resulting from changes in the rate of exchange between different currencies; or

(b) for the cost of repaying a loan or loan stock so far as attributable to its being repayable at a premium or to its having been obtained or issued at a discount.

(6) This section has effect in relation to expenditure incurred on or after 1st April 1980.

39 Relief for pre-trading expenditure

(1) Where a person incurs expenditure for the purposes of a trade before the time when he begins to carry it on and the expenditure—

(a) is incurred not more than one year before that time; and

(b) is not allowable as a deduction in computing his profits or gains from the trade for the purposes of Case I of Schedule D but would have been so allowable if incurred after that time,

the expenditure shall be treated for the purposes of corporation tax as incurred on the day on which the trade is first carried on by him and for the purposes of relief under Chapter I of Part VII of the Taxes Act or section 30 of the [1978 c. 42.] Finance Act 1978 as if it were the amount of a loss sustained by him in the trade in the year of assessment in which it is set up and commenced.

(2) A claim for relief under the Income Tax Acts in respect of an amount treated as a loss by virtue of subsection (1) above shall be made separately from any claim for relief under those Acts in respect of any other loss.

(3) Section 155 of the Taxes Act (partnerships involving companies) shall have effect as if expenditure to which subsection (1) above applies were one of the matters excluded from the computation under subsection (1) of that section by proviso (b) to that subsection.

(4) This section applies in relation to a profession or vocation as it applies to a trade, taking the reference in subsection (1)(b) above to Case I of Schedule D as a reference to Case II of that Schedule.

(5) This section has effect in relation to expenditure incurred on or after 1st April 1980.

40 Stock relief

Schedule 7 to this Act shall have effect—

(a) for enabling recovery charges under Schedule 5 to the [1976 c. 40.] Finance Act 1976 (stock relief) to be deferred to such extent and in such cases as are there specified; and

(b) for excluding certain buildings from the definition of trading stock in the said Schedule 5.

41 Additional payments to redundant employees

(1) Where a payment is made by way of addition to a redundancy payment or to the corresponding amount of any other employer's payment and the additional payment would be—

(a) allowable as a deduction in computing for the purposes of Schedule D the profits or gains or losses of a trade; or

(b) eligible for relief under section 304 or 305 of the Taxes Act as expenses of management of a business,

but for the permanent discontinuance of the trade or business, the additional payment shall, subject to subsection (2) below, be allowable as a deduction or eligible for relief as aforesaid notwithstanding the discontinuance and, if made after the discontinuance, shall be treated as made on the last day on which the trade or business was carried on.

(2) Subsection (1) above applies to an additional payment only so far as it does not exceed three times the amount of the redundancy payment or of the corresponding amount of the other employer's payment.

(3) In this section references to a trade include references to a profession or vocation and references to the permanent discontinuance of a trade include references to any occasion on which it is treated as permanently discontinued by virtue of section 154(1) or 251(1) of the Taxes Act.

(4) In this section references to a redundancy payment or to the corresponding amount of an employer's payment shall be construed as in section 412 of the Taxes Act (relief for redundancy payments etc.).

(5) This section has effect where the additional payment is made on or after 1st April 1980.

42 Grants under Industry Act 1972 etc.

(1) A payment to which this section applies which is made to a person carrying on a trade the profits of which are chargeable under Case I of Schedule D shall be taken into account as a receipt in computing those profits; and any such payment which is made to an investment company as defined in section 304(5) of the Taxes Act shall be taken into account as a receipt in computing its profits under Case VI of Schedule D.

(2) This section applies to any payment made after 26th March 1980 which would not, apart from this section, be taken into account as mentioned in subsection (1) above, being a payment by way of a grant under—

(a) section 7 or 8 of the [1972 c. 63.] Industry Act 1972; or

(b) section 1 of the [1966 c. 36 (N.I.).] Industries Development Act (Northern Ireland) 1966 or section 4 of the [1971 c. 22 (N.I.).] Industries Development Act (Northern Ireland) 1971,

other than a grant designated as made towards the cost of specified capital expenditure or as made by way of compensation for the loss of capital assets.

43 Sub-contractors in the construction industry

The [1975 c. 45.] Finance (No. 2) Act 1975 shall have effect with the amendments specified in Schedule 8 to this Act, being amendments relating to the meaning of " contractor " in section 69 of that Act and to the issue of certificates under section 70 of that Act excepting sub-contractors in the construction industry from the requirements relating to deduction of tax in section 69 of that Act.

44 Close companies: apportionment of income

(1) Schedule 16 to the [1972 c. 41.] Finance Act 1972 (apportionment of income of close companies) shall have effect with the amendments specified in Schedule 9 to this Act, being amendments which abolish the power to apportion the trading income of a trading company or of a company which is a member of a trading group.

(2) Paragraph 10(3)(b) of the said Schedule 16 (calculation of distributable investment income) shall have effect in relation to a company which is a trading company or a member of a trading group as if for " £1,000" there were substituted " £3,000 ".

(3) This section has effect in relation to accounting periods ending after 26th March 1980.

45 Close companies: interest paid to directors

(1) The provisions of section 285 of the Taxes Act (interest paid by close companies to directors and directors' associates above a certain limit treated as a distribution) except the words from " a person " onwards in subsection (6) (which contain a definition of a person having a material interest in a company which is applied elsewhere) shall cease to have effect.

(2) In section 233(1) (matters to be treated as distributions) and in the definition of " distribution " in section 527(1) of that Act for the words " sections 284 and 285 " there shall be substituted the words " section 284 ".

(3) This section has effect in relation to interest paid in accounting periods ending after 26th March 1980.

46 Profit sharing schemes

(1) Chapter III of Part III of the [1978 c. 42.] Finance Act 1978 and Schedule 9 to that Act (profit sharing schemes) shall have effect with the following amendments.

(2) In section 54 (meaning of certain expressions in connection with approval of profit sharing schemes) after subsection (1) there shall be inserted the following—

“(1A) No obligation placed on the participant by virtue of subsection (1)(c) above shall be construed as binding his personal representatives to pay any sum to the trustees.”

(3) In subsection (4) of that section (definition of " the period of retention " as the period beginning on the date on which a participant's shares are appropriated to him and ending on the fifth anniversary of that date or on other dates) for the words " fifth anniversary " there shall be substituted the words " second anniversary ".

(4) In subsection (6) of that section (definition of " the release date" as the tenth anniversary of that date) for the words " tenth anniversary" there shall be substituted the words " seventh anniversary ".

(5) For paragraphs (a), (b) and (c) of subsection (7) of that section (variation of " the appropriate percentage " according to date of event causing charge to tax) there shall be substituted—

“(a) if the event occurs before the fourth anniversary of the date on which the shares were appropriated to the participant and paragraph (c)(i) below does not apply, the appropriate percentage is 100 per cent;

(b) if the event occurs on or after the fourth anniversary and before the fifth anniversary of the date on which the shares were appropriated to the participant and paragraph (c)(i) below does not apply, the appropriate percentage is 75 per cent;

(c) if—

(i) in a case where the participant—

(a) ceases to be an employee or director of a relevant company as mentioned in subsection (4) (a) above, or

(b) reaches pensionable age, as defined in Schedule 20 to the [1975 c. 14.] Social Security Act 1975,

the event occurs before the sixth anniversary of the date on which the shares were appropriated to him, or

(ii) in any other case the event occurs on or after the fifth anniversary of that date and before the sixth anniversary of it,

the appropriate percentage is 50 per cent; and

(d) if the event occurs on or after the sixth anniversary and before the seventh anniversary of the date on which the shares were appropriated to the participant, the appropriate percentage is 25 per cent.”.

(6) At the end of section 56 (capital receipts in respect of scheme shares) there shall be inserted—

“(6) Subsection (1) above does not apply in relation to any receipt the amount or value of which (after any reduction under subsection (4) above) does not exceed £10.”

(7) In section 58 (1) and (2) (shares in excess of initial market value of £500) for " £500 " there shall be substituted " £1,000 '.

(8) In section 59 (P.A.Y.E. deduction of tax) after subsection (1) there shall be inserted—

“(1A) Where a participant disposes of his beneficial interest in any of his shares to the trustees of the scheme and the trustees are deemed by virtue of section 55(7) above to have disposed of the shares in question, this section shall apply as if the consideration payable by the trustees to the participant on the disposal had been received by the trustees as the proceeds of disposal of shares falling within section 55(1) above.”.

(9) In paragraph 1(4) of Schedule 9 (profit sharing schemes to provide that total initial market values of shares appropriated to one participant yearly must not exceed £500) for "£500" there shall be substituted " £1,000 '.

(10) In paragraph 6 of that Schedule (conditions as to shares)—

(a) the word " either " shall be omitted ; and

(b) at the end of paragraph (b) there shall be inserted “or

(c) shares in a company which is under the control of a company (other than a company which is or would if resident in the United Kingdom be a close company within the meaning of section 282 of the Taxes Act) whose shares are quoted on a recognised stock exchange.”

(11) At the end of paragraph 8 of that Schedule (majority of shares of same class to be held by persons unconnected with the scheme) there shall be inserted the words “and

(c) in a case where the shares fall within sub-paragraph (c) and do not fall within sub-paragraph (a) of paragraph 6 above, companies which have control of the company whose shares are in question or of which that company is an associated company within the meaning of section 302 of the Taxes Act.”.

(12) At the end of paragraph 11(3) of that Schedule (individuals ineligible to participate in schemes when they have a material interest in certain companies) there shall be inserted—

“(c) section 303(3) of the Taxes Act (meaning of " associate ") shall have effect—

(i) in a case where the scheme in question is a group scheme, with the substitution of a reference to all the participating companies for the first reference to the company in paragraph (ii) of the proviso to that subsection, and

(ii) with the substitution of a reference to 25 per cent, for the reference in that paragraph to 5 per cent”.

(13) In paragraph 13 of that Schedule—

(a) in sub-paragraph (1) (trust instrument must prohibit trustees from disposing of shares except as mentioned in section 54(2)(a) of that Act during the period of retention) after the words " section 54(2)(a)" there shall be inserted the words " (b) or (c) "; and

(b) in sub-paragraph (2) (trust instrument must prohibit trustees from disposing of shares after end of period of retention except in certain circumstances) after the word " retention " there shall be inserted the words " and before the release date ".

(14) Subsections (3), (4) and (5) above apply in relation to shares appropriated on or after 6th April 1979, subsection (7) above applies in relation to shares appropriated on or after 6th April 1980 and the remaining provisions of this section shall be deemed to have come into force on 6th April 1980.

47 Savings-related share option schemes

(1) Subject to subsection (2) below, where, on or after the appointed day, an individual obtains a right to acquire shares in a body corporate by reason of his office or employment as a director or an employee of that or any other body corporate and in accordance with the provisions of a scheme approved under Schedule 10 to this Act—

(a) tax shall not be chargeable under any provision of the Tax Acts in respect of the receipt of the right; and

(b) if he exercises the right in accordance with the provisions of the scheme at a time when it is so approved—

(i) tax shall not be chargeable under any provision of the Tax Acts in respect of the exercise nor under section 79(4) of the [1972 c. 41.] Finance Act 1972 in respect of an increase in the market value of the shares; and

(ii) section 19(3) of the [1979 c. 14.] Capital Gains Tax Act 1979 (assets deemed to be acquired at market value) shall not apply in calculating the consideration for the acquisition of the shares.

(2) Subsection (1) above shall not apply in respect of a right which is exercised within three years of its being obtained by virtue of a provision included in a scheme pursuant to paragraph 10 of that Schedule.

(3) In this section " the appointed day " means such day as the Treasury may by order made by statutory instrument appoint for the coming into force of this section and Schedule 10 to this Act.

48 Cars available for private use

(1) For section 62(1) and (2) of the [1976 c. 40.] Finance Act 1976 (cars with insubstantial business use) there shall be substituted—

“(1) Where the benefit of a car is taxable under section 64 below, section 61 above does not apply to any benefit in connection with the car other than a benefit in connection with the provision of a driver for the car.”

(2) In paragraph 3(1) and (2) of Part II of Schedule 7 to that Act (reduction of cash equivalent where business use of car accounted for at least 25,000 miles in the relevant year) for " 25,000 " there shall be substituted " 18,000 ".

(3) At the end of Part II of the said Schedule 7 there shall be inserted—

“Cars with insubstantial business use and additional cars

5(1) The cash equivalent derived from Table A, B or C is to be increased by half if in the relevant year—

(a) the car was not used for the employee's business travel; or

(b) its use for such travel did not amount to more than 1,000 miles.

(2) In relation to a car which for part of the year was unavailable in the sense of paragraph 2 above, the figure of 1,000 miles above mentioned is proportionately reduced.

(3) Without prejudice to sub-paragraph (1) above, if in any year a person is taxable under section 64 of this Act in respect of two or more cars which are made available concurrently, there shall be increased by half the cash equivalent derived from Table A, B or C in respect of each of those cars other than the one which in the period for which they are concurrently available is used to the greatest extent for the employee's business travel.

(4) In paragraphs 2 to 4 above references to the cash equivalent which is to be reduced shall be construed as references to the cash equivalent after any increase under this paragraph”.

(4) This section has effect for the year 1981-82 and subsequent years of assessment.

49 Cash equivalent of certain benefits

(1) Section 63 of the [1976 c. 40.] Finance Act 1976 (cash equivalent of certain benefits) shall be amended as follows.

(2) After subsection (3) there shall be inserted—

“(3A) Where the asset referred to in subsection (3) above is not a car and before the transfer a person (whether or not the transferee) has been chargeable to tax in respect of the asset in accordance with subsection (4) below, the amount which under subsection (3) above is deemed to be the cost of the benefit shall (if apart from this subsection it would be less) be deemed to be—

(a) the market value of the asset at the time when it was first applied (by those providing the benefit in question) for the provision of any benefit for a person or for members of his family or household, by reason of his employment, less

(b) the aggregate of the amounts taken into account as the cost of the benefit in charging tax in accordance with subsection (4) below in the year or years up to and including that in which the transfer takes place.”

(3) In subsection (5)(c) for the words " 10 per cent." there shall be substituted the words " 20 per cent. ".

(4) This section has effect in relation to assets first applied after 5th April 1980 by those providing the benefit in question in the provision of any benefit for a person, or for members of his family or household, by reason of his employment.

50 Beneficial loan arrangements

(1) In section 66(2) of the Finance Act 1976 (exemption from charge to tax in respect of beneficial loan arrangements where cash equivalent of the benefit does not exceed £50) for " £50 " there shall be substituted " £200 ".

(2) Where the amount of interest paid on a loan for the year of assessment in which it is made is not less than interest at the official rate applying for that year for the purposes of section 66 of the said Act of 1976 and the loan is made—

(a) for a fixed and unvariable period ; and

(b) at a fixed and unvariable rate of interest,

subsection (1) of that section shall not apply to the loan in any subsequent year by reason only of an increase in the official rate since the year in which the loan was made.

(3) Where a loan was made at any time before 6th April 1978—

(a) for a fixed and unvariable period ; and

(b) at a fixed and unvariable rate of interest,

subsection (1) of the said section 66 shall not apply to the loan if it is shown that the rate of interest is not less than such rate as could have been expected to apply to a loan on the same terms (other than as to the rate of interest) made at that time between persons not connected with each other (within the meaning of section 533 of the Taxes Act) dealing at arm's length.

(4) This section has effect for the year 1980-81 and subsequent years of assessment.

51 Benefits in kind: minor amendments

(1) In section 63 of the [1976 c. 40.] Finance Act 1976 (cash equivalent of certain benefits)—

(a) to the words in brackets in subsection (41(b) there shall be added the words " and excluding also any rent or hire charge payable for the asset by those providing the benefit "; and

(b) in subsection (6) for the words from "the following applies " onwards there shall be substituted the words " the annual amount of which is equal to, or greater than, the annual value of the use of the asset as ascertained under subsection (5) above, that amount is to be substituted for the annual value in subsection (4)(a) above. "

(2) In section 64(4) of that Act (power to alter money sums relating to taxation of cars) after paragraph (b) there shall be inserted—

“(c) increase (or further increase) the money sum specified in paragraph 1(1) of Part II of Schedule 7 to this Act”

(3) In section 72(5)(e) of that Act (market value of car to be retail price inclusive of car tax etc.) for the words " of car tax " there shall be substituted the words " of value added tax and car tax ".

(4) In the proviso to section 284(2) of the Taxes Act (expense in providing certain benefits not to count as distribution to participator in close company) after paragraph (a) there shall be inserted—

“(aa) of living accommodation for any person if the accommodation is (within the meaning of section 33 of the Finance Act 1977) provided by reason of his employment; or”.

(5) In section 44(5) and (6) of the [1971 c. 68.] Finance Act 1971 (writing-down allowances and balancing adjustments) after the words " Part VIII of the Taxes Act" there shall be inserted the words " or Chapter II of Part III of the Finance Act 1976 ".

52 Maintenance funds: charge of income tax

(1) If in the case of a settlement in respect of which the Treasury have given a direction under section 84 of the [1976 c. 40.] Finance Act 1976 (maintenance funds for historic buildings)—

(a) any of the property comprised in the settlement (whether capital or income) is applied otherwise than as mentioned in paragraph (a)(i) or (ii) of subsection (3) of that section; or

(b) any of that property on ceasing to be comprised in the settlement devolves otherwise than on any such body or charity as is mentioned in paragraph (a)(ii) of that subsection,

then, unless subsection (6) below applies, income tax shall be charged under this section in respect of the settlement.

(2) Subject to subsection (3) below, tax chargeable under this section shall be charged at the rate of 30 per cent, on the whole of the income which has arisen in the relevant period from the property comprised in the settlement and has not been applied (or accumulated and then applied) as mentioned in subsection (3)(a)(i) or (ii) of the said section 84.

In this subsection " the relevant period " means, if tax has become chargeable under this section in respect of the settlement on a previous occasion, the period since the last occasion and, in any other case, the period since the settlement took effect.

(3) Tax shall not be chargeable under this section in respect of income which by virtue of Part XVI of the Taxes Act is treated as income of the settlor; but where income arising in any year of assessment is exempted by this subsection any sums applied in that year as mentioned in subsection (3)(a)(i) or (ii) of the said section 84 shall be treated as paid primarily out of that income and only as to the excess, if any, out of income not so exempted.

(4) Tax charged under this section shall be in addition to any tax chargeable apart from this section and—

(a) the persons assessable and chargeable with tax under this section shall be the trustees of the settlement; and

(b) all the provisions of the Income Tax Acts relating to assessments and to the collection and recovery of income tax shall, so far as applicable, apply to the charge, assessment, collection and recovery of tax under this section.

(5) Tax shall also be chargeable in accordance with the foregoing provisions of this section if any of the property comprised in a settlement to which subsection (1) above applies, on ceasing at any time to be comprised in the settlement, devolves on any such body or charity as is referred to in paragraph (b) of that subsection and at or before that time an interest under the settlement is or has been acquired for a consideration in money or money's worth by that or another such body or charity ; but for the purposes of this subsection any acquisition from another such body or charity shall be disregarded.

(6) Tax shall not be chargeable under this section in respect of a settlement on an occasion when the whole of the property comprised in it is transferred tax-free into another settlement; but on the first occasion on which tax becomes chargeable under this section in respect of a settlement (" the current settlement") comprising property which was previously comprised in another settlement or settlements and has become comprised in the current settlement as a result of, or of a series of, tax-free transfers, the relevant period for the purposes of subsection (2) above shall, as respects that property, be treated as having begun—

(a) on the last occasion on which tax became chargeable under this section in respect of the other settlement or any of the other settlements; or

(b) if there has been no such occasion, when the other settlement or the first of the other settlements took effect.

(7) For the purposes of subsection (6) above property is transferred tax-free from one settlement into another if it ceases to be comprised in the first-mentioned settlement and becomes comprised in the other settlement in circumstances such that by virtue of section 89(4)(d) below there is no charge to capital transfer tax by reference to its value.

53 Maintenance funds: one-estate elections

(1) Where a building or land which is qualifying property for the purposes of subsection (3) of section 84 of the [1976 c. 40.] Finance Act 1976 (maintenance funds for historic buildings) forms part of an estate in relation to which an election has effect under section 73 of the Taxes Act (deductions from rents: land managed as one estate)—

(a) the election shall not cease to have effect by reason only of another part of the estate becoming comprised in, and being managed by the trustees of, a settlement in relation to which the Treasury give a direction under the said section 84 ; and

(b) that other part shall be treated as continuing to form part of the estate to which the election relates.

(2) Where a person becomes the owner of any such building or land as is mentioned in subsection (1) above which in the immediately preceding ownership formed part of an estate in relation to which an election under the said section 73 had effect, any other part of that estate which continues to be or becomes comprised in a settlement of the kind mentioned in that subsection shall be treated as part of the estate in relation to which an election may be made by him under that section.

(3) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement—

(a) there may be treated as deductible from the rents arising from that part—

(i) any payments which are made in respect of the other part of the estate by the trustees of the settlement and which would be so deductible under section 72 of the Taxes Act if that part were also comprised in the settlement; and

(ii) any payments made in respect of the other part of the estate by its owner to the extent to which they cannot be deducted by him under that section in the chargeable period in which they become due because of an insufficiency of the rents arising in that period from that part; and

(b) any relief available to the trustees under section 79 of that Act (agricultural relief) in respect of the part of the estate comprised in the settlement shall instead be available to the owner of the other part of the estate.

(4) Where by virtue of this section an election has effect in relation to an estate part of which is comprised in a settlement, the election shall not cease to have effect in relation to any of that part by reason of its ceasing to be comprised in that settlement if within thirty days it becomes comprised in another settlement in relation to which the Treasury give a direction under the said section 84.

(5) The inclusion by virtue of this section in an estate of property comprised in a settlement shall not be construed as requiring it to be treated as the property of the person who owns the remainder of the estate or as affecting any question as to the person entitled to the income arising from that property.

54 Charitable donations by traders

(1) Section 411(8) of the Taxes Act (which disallows expenditure on certain gifts) shall not preclude the deduction, in computing profits or gains under Case I or Case II of Schedule D, of expenditure incurred in making a gift to a body of persons or trust established for charitable purposes only.

(2) This section has effect in relation to expenditure incurred on or after 1st April 1980.

55 Charitable dispositions for periods which cannot exceed three years

(1) In section 434 of the Taxes Act (income payable to another under a disposition for a period which cannot exceed six years deemed to be the disponor's income)—

(a) in subsection (1) after " (1)" there shall be inserted the words " Subject to subsection (1A) below ";

(b) after that subsection there shall be inserted—

“(1A) Subsection (1) above shall have effect in relation to income which is payable as a covenanted payment to charity as if for the words " six years" there were substituted the words " three years "”; and

(c) at the end of subsection (2) of that section there shall be inserted the words " and " a covenanted payment to charity" means a payment made under a covenant made otherwise than for consideration in money or money's worth in favour of a body of persons or trust established for charitable purposes only whereby the like annual payments (of which the payment in question is one) become payable for a period which may exceed three years and is not capable of earlier termination under any power exercisable without the consent of the persons for the time being entitled to the payments ".

(2) After subsection (1) of section 445 of that Act (sums payable by settlor under revocable settlement treated as settlor's income except where power to revoke cannot be exercised within six years from first payment) there shall be inserted—

“(1A) The proviso to subsection (1) above shall have effect in relation to a payment which is a covenanted payment to charity as if for the words " six years " there were substituted the words " three years " ; and in this subsection " covenanted payment to charity" has the same meaning as in section 434(2) above”.

(3) In section 248 of that Act (allowance of charges on income for corporation tax) in subsection (9) (meaning of " covenanted donation to charity ") for the words " six years " there shall be substituted the words " three years ".

(4) This section has effect for the year 1980-81 and subsequent years of assessment in relation to payments made after 5th April 1980.

56 Income under charitable covenant not settlor's for excess tax purposes

(1) In paragraph (b) of subsection (1) of section 457 of the Taxes Act (income under a settlement not treated as the settlor's income for the purposes of his excess liability if excluded by subsection (2) of that section) after the word " subsection" there shall be inserted the words " (1A) or ".

(2) After that subsection there shall be inserted—

“(1A) Subsection (1) above shall not apply to so much of an individual's income as consists of covenanted payments to charity and does not exceed £3,000 in any year of assessment”.

(3) At the end of subsection (5) of that subsection (interpretation) there shall be inserted—

“(c) ' covenanted payments to charity ' shall be construed in accordance with section 434 (2) above.”

(4) In paragraph 3(1) of Schedule 16 to the [1972 c. 41.] Finance Act 1972 (apportionment of amounts which have been deducted by close companies in arriving at their distributable income and which in the case of an individual would have been treated as his income in computing his total income), for the words " would have been treated " there shall be substituted the words " would (apart from section 457(1A) of the Taxes Act) have been treated ".

(5) In paragraph 5 of that Schedule (consequences of apportionment: income tax) after sub-paragraph (5) there shall be inserted:

“(5A) Where as a result of a company or companies making covenanted payments to charity a sum or sums are apportioned by virtue of paragraph 3 above and form part of the total income of an individual for any year of assessment, his total income for that year and the total amount assessable for that year in respect of that sum or those sums shall be reduced by whichever is the lesser of—

(a) the amount of that sum or those sums, and

(b) the amount by which the total amount of all covenanted payments to charity which form part of his income for that year by virtue of section 457 of the Taxes Act, or which would form part of it if subsection (1A) of that section were omitted, falls short of £3,000;

and in this sub-paragraph " covenanted payments to charity " has the same meaning as in the said section 457.”

(6) This section has effect for the year 1981-82 and subsequent years of assessment in relation to payments made after 5th April 1981.

57 Registered friendly societies and trade unions

(1) In subsections (4) and (5) of section 332 of the Taxes Act (exemption of income and gains of a registered friendly society whose rules make no provision for it to carry on life or endowment business consisting of the assurance of gross sums exceeding £1,000 or of the granting of annuities of annual amounts exceeding £208) for " £1,000 " and " £208 " there shall be substituted respectively " £2,000 " and " £416 ".

(2) The [1970 c. 31 (N.I.).] Friendly Societies Act (Northern Ireland) 1970 and the [1974 c. 46.] Friendly Societies Act 1974 shall be amended as follows—

(a) in section 1(3A) of the said Act of 1970 and in section 7(3A) of the said Act of 1974 (registration of societies) for " £1,000 " and " £208 " there shall be substituted respectively " £2,000 " and " £416 " ; and

(b) in section 55(1) of the said Act of 1970 and in section 64(1) of the said Act of 1974 (maximum benefits) in paragraph (a) for "£1,000" there shall be substituted " £2,000 " and in paragraph (b) for " £208 " there shall be substituted " £416 ".

(3) In section 338 of the Taxes Act (income and gains of a trade union precluded by Act or rules from assuring to any person a sum exceeding £1,000 by way of gross sum or £208 a year by way of annuity exempted if applied for purpose of provident benefits) for " £1,000 " and " £208 " there shall be substituted respectively " £2,000 " and " £416 ".

(4) Subsection (1) above has effect in relation to any year of account of a registered friendly society or branch ending on or after 1st June 1980 and subsection (3) above has effect in relation to income or gains which are applicable and applied as mentioned in subsection (1) of the said section 338 on or after that date.

58 Building societies

(1) In determining the reduced rate of tax by reference to which arrangements for any year of assessment are made under subsection (1) of section 343 of the Taxes Act (building societies) the Board shall, notwithstanding anything in the proviso to that subsection, leave out of account any information which is obtained by them after the beginning of that year other than information relating to changes in the rates of tax or personal reliefs for that year or to changes in the general level of incomes.

(2) This section has effect for the year 1980-81 and subsequent years of assessment.

59 Trustee savings banks

(1) Section 414(1) of the Taxes Act (relief from tax on certain savings bank interest) shall not apply to any sums paid or credited in respect of interest for any period after 20th November 1979 on ordinary deposits with a trustee savings bank.

(2) Schedule 11 to this Act shall have effect in relation to the taxation of trustee savings banks in respect of accounting periods beginning after the said 20th November.

60 Authorised unit trusts

(1) Section 354 of the Taxes Act (Tax Acts to have effect in relation to income arising to the trustees of an authorised unit trust as if they were an investment company and the unit holders were shareholders) shall not apply in relation to an authorised unit trust under the terms of which the funds of the trust cannot be invested in such a way that income can arise to the trustees which will be chargeable to tax in the hands of the trustees otherwise than—

(a) under Schedule C as profits arising from United Kingdom public revenue dividends, or

(b) under Case III of Schedule D ;

and in this subsection "United Kingdom public revenue dividends " means public revenue dividends payable in the United Kingdom (whether they are also payable outside the United Kingdom or not) out of the public revenue of the United Kingdom.

(2) This section has effect in relation to income arising after 31st March 1980.

61 Dates for payment of tax

(1) In section 4(3) of the Taxes Act (income tax charged at rates other than the basic rate to be payable on or before 6th July following the end of the year for which it is assessed) for the words "6th July" there shall be substituted the words " 1st December ".

(2) In section 7 of the [1979 c. 14.] Capital Gains Tax Act 1979 (capital gains tax payable at or before expiration of the three months following the year in which the gains accrued) for the words " at or before the expiration of the three months following that year " there shall be substituted the words " on or before 1st December following the end of that year ".

(3) In paragraph 3 in the second column of the Table in section 86(4) of the [1970 c. 9.] Taxes Management Act 1970 (reckonable date for interest on unpaid tax) for the words " The 1st January following the end of the year of assessment" there shall be substituted the words " The 1st June following the 1st December mentioned in section 4(3) of the principal Act " and in paragraph 4 in the second column of that Table for the words " The 1st January following the end of the year of assessment" there shall be substituted the words " The 1st June following the 1st December mentioned in section 7 of the Capital Gains Tax Act 1979. "

(4) In section 88 (5)(c) and (d) of the [1970 c. 9.] Taxes Management Act 1970 (interest on tax recovered to make good loss due to taxpayer's fault) and paragraph 6(2) of Schedule 16 to the [1972 c. 41.] Finance Act 1972 (liability for tax on apportioned income) for the words " 6th July " there shall be substituted the words " 1st December ".

(5) This section has effect in relation to tax for the year 1980-81 and subsequent years of assessment.

62 Interest on unpaid tax

(1) In the provisions mentioned in subsection (2) below (remission of interest on unpaid tax where the amount of interest does not exceed £10) for "£10" there shall be substituted " £30 ".

(2) The provisions referred to above are—

(a) section 86(6) of the Taxes Management Act 1970 (income tax, corporation tax and capital gains tax);

(b) section 87(4) of that Act (advance corporation tax and income tax on company payments); and

(c) section 87(3) of that Act as originally enacted (income tax on company distributions).

(3) This section has effect in relation to interest on tax charged by assessments notice of which is issued after the passing of this Act.

63 International Maritime Satellite Organisation

(1) An overseas signatory to the Operating Agreement made pursuant to the Convention on the International Maritime Satellite Organisation which came into force on 16th July 1979 shall be exempt from income tax, corporation tax and capital gains tax in respect of any payment received by that signatory from the Organisation in accordance with the Agreement.

(2) In this section an " overseas signatory " means a signatory other than one designated for the purposes of the Agreement by the United Kingdom in accordance with the Convention.

Chapter II Capital Allowances

Machinery and plant

64 Exclusion of first-year allowances for certain leased assets

(1) No first-year allowance shall be made in respect of expenditure on the provision of machinery or plant for leasing, whether in the course of a trade or otherwise, unless it appears that the machinery or plant will be used for a qualifying purpose in the requisite period and will not at any time in that period be used for any other purpose.

(2) Machinery or plant is used for a qualifying purpose at any time when—

(a) it is leased to a lessee who uses it for the purposes of a trade, otherwise than for leasing, and the circumstances are such that a first-year allowance could have been made to the lessee if he had bought the machinery or plant at that time and had incurred capital expenditure in doing so; or

(b) the person who incurred the expenditure uses it for short term leasing; or

(c) it is leased to a lessee who uses it for short-term leasing and either is resident in the United Kingdom or so uses it in the course of a trade carried on by him there; or

(d) the person who incurred the expenditure uses it for the purposes of a trade otherwise than for leasing.

(3) In subsection (2)(b) and (c) above " short-term leasing " means leasing the machinery or plant in such a manner—

(a) that—

(i) the number of consecutive days for which it is leased to the same person will normally be less than thirty; and

(ii) the total number of days for which it is leased to the same person in any period of twelve months will normally be less than ninety; or

(b) that—

(i) the number of consecutive days for which it is leased to the same person will not normally exceed three hundred and sixty-five ; and

(ii) the aggregate of the periods for which it is leased in the requisite period to lessees not falling within subsection (2)(a) above will not exceed two years.

(4) For the purposes of subsection (3) above persons who are connected with each other shall be treated as the same person and where any machinery or plant is leased as one of a number of items which form part of a pool of items of the same or a similar description and are not separately identifiable all the items in the pool may be treated as used for short-term leasing within the meaning of that subsection if substantially the whole of the items in the pool are so used.

(5) Without prejudice to subsection (2) above, a ship is also used for a qualifying purpose at any time when it is let on charter in the course of a trade which consists of or includes operating ships if—

(a) the person carrying on the trade is resident in the United Kingdom or carries on the trade there ; and

(b) that person is responsible as principal (or appoints another person to be responsible in his stead) for navigating and managing the ship throughout the period of the charter and for defraying all expenses in connection with the ship throughout that period or substantially all such expenses other than those directly incidental to a particular voyage or to the employment of the ship during that period.

(6) Subsection (5) above shall with the necessary modifications apply also in relation to aircraft.

(7) Without prejudice to subsection (2) above, a transport container is also used for a qualifying purpose at any time when it is leased in the course of a trade which is carried on by a person who is resident in the United Kingdom or who carries on the trade there if—

(a) the trade consists of or includes the operation of ships or aircraft and the container is at other times used by that person in connection with the operation of ships or aircraft; or

(b) the container is leased under a succession of leases to different persons who, or most of whom, are not connected with each other.

(8) The requisite period is the period of four years beginning with the date on which the machinery or plant is first brought into use by the person who incurred the expenditure, except that where the machinery or plant ceases at any time before the end of those four years to belong to that person the requisite period shall end at that time.

(9) For the purposes of subsection (8) above machinery or plant shall be treated as continuing to belong to the person who incurred the expenditure so long as it belongs to—

(a) a person who is connected with him ; or

(b) a person who acquired it from him as a result of one or more disposals on the occasion of which, or each of which, the trade carried on by the person making the disposal was treated as continuing by virtue of section 154(2) or 155(1) of the Taxes Act;

and for any part of the requisite period for which the machinery or plant belongs to a person falling within paragraph (a) or (b) above that person shall be treated for the purposes of subsection (2)(b) and (d) above as the person who incurred the expenditure.

(10) For the purposes of subsection (2)(a) above there shall be disregarded paragraph 2(1) of Schedule 8 to the [1971 c. 68.] Finance Act 1971 and section 50 of the [1968 c. 3.] Capital Allowances Act 1968 as applied by paragraph 2(2) of that Schedule (which preclude the making of a first-year allowance where certain other allowances are available).

(11) This section does not preclude the making of a first-year allowance in respect of expenditure on the provision of machinery or plant if it is fixed to a building or land of which the person who incurs the expenditure is the lessor and the circumstances are such that a transfer of his interest in the building or land would operate to transfer his interest in the machinery or plant; and so much of the proviso to section 48(4) of the said Act of 1971 as relates to section 74(3) of the said Act of 1968 (restriction of relief for leased asset not used for trade) shall not apply to any allowance in respect of such expenditure.

(12) Nothing in this section affects expenditure on the provision of vehicles if they are provided wholly or mainly for the use of persons in receipt of mobility allowance under the [1975 c. 14.] Social Security Act 1975 or the [1975 c. 15.] Social Security (Northern Ireland) Act 1975.

65 Writing-down allowances etc. in case of leased assets

(1) Where section 64 above precludes the making of a first-year allowance in respect of expenditure incurred by a person on the provision of machinery or plant for leasing in the course of a trade, the following provisions shall have effect with respect to the allowances and charges to be made in the case of the trade (" the actual trade ") under section 44 of the Finance Act 1971 (writing-down allowances and balancing adjustments).

(2) It shall be assumed for the purposes of the said section 44—

(a) that, immediately after the beginning of the chargeable period or its basis period in which the machinery or plant is brought into use, the person carrying on the trade brings the machinery or plant into use for the purposes of a trade carried on by him separately from the actual trade and any other trade carried on by him;

(b) that the machinery or plant is used for the purposes of the separate trade from then until it ceases altogether to be used for the purposes of the actual trade; and

(c) that the separate trade is permanently discontinued when the machinery or plant ceases altogether to be used for the purposes of the actual trade,

and the allowance or charge under that section which, on those assumptions and having regard to subsections (3) and (4) below, would fall to be made for any chargeable period in the case of the separate trade shall be made for that period in the case of the actual trade.

(3) If an allowance under the said section 44 falling by virtue of this section to be made for any chargeable period in the case of the actual trade is not claimed, or is reduced in amount in accordance with a requirement under the proviso to subsection (2) of that section, then, in determining the allowance or charge under that section which would fall to be made for any subsequent chargeable period in the case of the separate trade, any allowance falling to be made in the case of that trade for the first-mentioned chargeable period shall be treated as not claimed or, as the case may be, proportionately reduced.

(4) Where in the case of any person the said section 44 applies in accordance with this section to different items of machinery or plant it shall apply as if the separate trade for which each item is treated as used were the same trade, and accordingly that trade shall not by virtue of subsection (2)(c) above be treated as permanently discontinued until all those items cease altogether to be used for the purposes of the actual trade.

(5) Where the said section 44 has effect in accordance with this section in respect of expenditure incurred by a person providing machinery or plant for the purposes of a trade, then, if the machinery or plant is disposed of by him to a person who is connected with him and the disposal is not on an occasion on which the trade is treated as continuing by virtue of section 154(2), 155(1) or 252 of the Taxes Act or paragraph 13 of Schedule 8 to the said Act of 1971—

(a) the disposal value to be brought into account under the said section 44 in the case of the separate trade shall be of an amount equal to the price which the machinery or plant would have fetched on a sale at the same time in the open market or, if less, the capital expenditure incurred or treated as incurred on the provision of the machinery or plant by the person disposing of it; and

(b) the person acquiring it shall be treated for the purposes of Chapter I of Part III of the said Act of 1971 as having incurred on its provision expenditure equal to that disposal value.

(6) This section applies also where section 64 above would have precluded the making of a first-year allowance in respect of any expenditure if the making of such an allowance in respect of the expenditure were not already precluded by paragraph 3 of Schedule 8 to the said Act of 1971 ; but this section does not apply to machinery or plant in relation to which the said section 44 applies in accordance with paragraph 5, 6 or 10 of that Schedule.

66 Recovery of excess relief

(1) Where a first-year allowance has been made in respect of expenditure incurred in providing machinery or plant and the machinery or plant is at any time in the requisite period used otherwise than for a qualifying purpose—

(a) an amount equal to the excess relief shall, in relation to the person to whom the machinery or plant then belongs, be treated as if it were a balancing charge to be made on him for the chargeable period in which, or in the basis period for which, the machinery or plant is first so used ; and

(b) section 44 of the [1971 c. 68.] Finance Act 1971 (as it has effect in accordance with section 65 above) shall apply as if that amount were qualifying expenditure of that person for the next chargeable period and, for the purpose of bringing any disposal value into account, as if the machinery or plant had always been used for the purposes of the separate trade.

(2) The excess relief is the excess, if any, of—

(a) the first-year allowance made in respect of the expenditure and any writing-down allowance or allowances made in respect of it for the chargeable period related to the incurring of the expenditure and any subsequent chargeable period up to and including that mentioned in subsection (1)(a) above, over

(b) the maximum writing-down allowance or allowances that could have been made in respect of it for those chargeable periods if the first-year allowance had not and could not have been made.

(3) Where as a result of a requirement under section 41(3) of the said Act of 1971 (reduction of first-year allowances) an aggregate amount of first-year allowances in respect of different items of machinery or plant is reduced there shall be treated for the purposes of subsection (2) above as having been made in respect of each item a reduction proportionate to the capital expenditure on the provision of that item.

(4) For the purposes of subsection (2) above the writing-down allowance or allowances that were made or would have been made in respect of any item of machinery or plant shall be determined as if that item were the only item of machinery or plant in relation to which the said section 44 had effect.

(5) Where the person to whom any machinery or plant belongs at a time when it is first used otherwise than for a qualifying purpose has acquired it as a result of a transaction which was, or a series of transactions each of which was, between connected persons and a first-year allowance in respect of expenditure on the provision of the machinery or plant has been made to any of those persons—

(a) subsection (2) above shall have effect as if it referred to that first-year allowance and to the expenditure in respect of which it was made ;

(b) for the purposes of that subsection any consideration paid or received on a disposal of the machinery or plant between connected persons shall be disregarded; and

(c) if a balancing allowance or balancing charge is made in respect of the machinery or plant there shall be made such adjustments of the total relief falling to be taken into account under paragraph (a) of that subsection as are just and reasonable in the circumstances ;

but this subsection does not apply where section 154(2), 155(1) or 252(2) of the Taxes Act or paragraph 13(a) and (b) of Schedule 8 to the said Act of 1971 (succession to trades) applied on the occasion of the transaction or transactions in question.

(6) Where the person to whom any machinery or plant belongs at such a time as is mentioned in subsection (5) above acquired it as there mentioned and—

(a) a first-year allowance in respect of expenditure on the provision of the machinery or plant could have been made to any of the connected persons but was not claimed or was disclaimed ; and

(b) a balancing allowance is made to any of those persons in respect of that expenditure,

this section shall with the necessary modifications apply as it applies where a first-year allowance has been made.

(7) If at any time in the requisite period a new ship is used otherwise than for a qualifying purpose, then, without prejudice to the other provisions of this section—

(a) no allowance shall be made in respect of it under subparagraph (2)(c) of paragraph 8 of Schedule 8 to the said Act of 1971 for the chargeable period in which it is first so used or for any subsequent chargeable period; and

(b) section 44 of that Act (as it has effect in accordance with section 65 above) shall apply as if the amount of any allowance in respect of the ship which has been postponed under that paragraph and not made were qualifying expenditure for the next chargeable period after that in which the ship is first so used.

67 Information

(1) A claim by a person other than a company for a first-year allowance in respect of expenditure to which section 64 above applies, and a return by a company of profits in the computation of which a deduction is made on account of such an allowance, shall be accompanied by a certificate—

(a) stating that the machinery or plant in question will be used for a qualifying purpose in the requisite period, will not be used for any other purpose in that period and has not been used for any other purpose in any part of that period which has already elapsed ; and

(b) containing a description of the machinery or plant in question or, if the claim or deduction relates to more than one item of machinery or plant and those items are of different kinds, a description of the different kinds and the amount claimed or deducted in respect of each of them.

(2) Where a person other than a company has claimed a first-year allowance in respect of any expenditure, or a deduction on account of such an allowance has been made in computing profits in respect of which a return has been made by a company, and the machinery or plant in question is at any time in the requisite period used otherwise than for a qualifying purpose, the person to whom it then belongs shall give written notice of that fact to the inspector, specifying the use to which the machinery or plant has been put; and, subject to subsection (3) below, any such notice shall—

(a) be given within three months after the end of the chargeable period or its basis period in which the machinery or plant is first used as aforesaid ; and

(b) relate to all the items of machinery or plant (if more than one) in respect of which that person is required to give a notice under this subsection in respect of that period.

(3) If at the end of the three months mentioned in paragraph (a) of subsection (2) above the person concerned does not know and cannot reasonably be expected to know that any item of machinery or plant in respect of which he is required to give a notice under that subsection has been used otherwise than for a qualifying purpose he shall in respect of that item give the notice within thirty days of his coming to know that it has been so used.

(4) Where a first-year allowance has been made in respect of any expenditure, the inspector may by notice in writing require—

(a) any person to whom the machinery or plant belongs or has belonged, or who is or has been in possession of it under a lease, during the requisite period; and

(b) the personal representatives of any such person,

to furnish him, within such period (not being less than thirty days) as may be specified in the notice, with such information as he may require and the person to whom the notice is addressed has or can reasonably obtain about the leasing of the machinery or plant or the use to which it is being or has been put.

68 Joint lessees

(1) The foregoing provisions of this Chapter shall have effect in accordance with this section where machinery or plant is leased to two or more persons jointly.

(2) Subsection (2)(a) of section 64 above shall not apply at any time when the machinery or plant is leased as aforesaid but if the lessees use the machinery or plant for the purposes of a trade or trades, otherwise than for leasing, it shall be regarded as used for a qualifying purpose if and to the extent to which it appears that the profits or gains of the trade or trades arising throughout the requisite period (or the period of the lease, if shorter) will be chargeable to income tax or corporation tax.

(3) Where by virtue of subsection (2) above a first-year allowance may be made in respect of part only of the expenditure on the provision of any machinery or plant, then, whether or not the machinery or plant continues to be leased as aforesaid, section 44 of the [1971 c. 68.] Finance Act 1971 (writing-down allowances and balancing adjustments) and sections 65 and 66 above shall have effect as if—

(a) that part were expenditure on the provision of a separate item of machinery or plant; and

(b) the remainder were expenditure on the provision of another item of machinery or plant;

and there shall be made all such apportionments as are necessary in consequence of this subsection.

(4) Where by virtue of subsection (2) above a first-year allowance has been made in respect of the whole or part of the expenditure on the provision of any machinery or plant and at any time in the requisite period while it is leased as aforesaid no lessee uses it for the purpose of a trade or trades the profits or gains of which are chargeable to income tax or corporation tax, section 66 above shall have effect as if the machinery or plant or, as the case may be, the separate item referred to in subsection (3) (a) above had at that time been used otherwise than for a qualifying purpose.

(5) Where by virtue of subsection (2) above a first-year allowance has been made in respect of the whole or part of the expenditure on the provision of any machinery or plant and at the end of the requisite period the machinery or plant is leased as aforesaid but subsection (4) above has not had effect, then, if it appears that the extent to which the machinery or plant has been used for the purposes of such trade or trades as aforesaid is less than that by reference to which the amount of the first-year allowance was determined—

(a) section 66 above shall have effect as if a part of the expenditure corresponding to the reduction in the extent of such use were expenditure on the provision of a separate item of machinery or plant used otherwise than for a qualifying purpose on the last day of that period; and

(b) any disposal value subsequently brought into account in respect of the machinery or plant under section 44 of the said Act of 1971 shall, instead of being apportioned in accordance with subsection (3) above, be apportioned by reference to the extent of such use as determined at the end of that period.

(6) Where the claim or deduction referred to in subsection (1) of section 67 above relates to a first-year allowance which by virtue of subsection (2) above is in respect of part only of any expenditure, the certificate required by the said subsection (1) shall include a statement of the extent to which the profits or gains referred to in subsection (2) above will be chargeable to tax as there mentioned.

(7) In subsection (2) of section 67 above the reference to machinery or plant being used otherwise than for a qualifying purpose shall include a reference to machinery or plant being treated as so used by virtue of subsection (4) above.

(8) Where a first-year allowance has been made in respect of expenditure on the provision of machinery or plant otherwise than by virtue of subsection (2) above and the machinery or plant is subsequently leased in the requisite period to two or more persons jointly, subsections (4), (5) and (7) above shall apply as if the first-year allowance had been made by virtue of subsection (2) above and had been so made in respect of the whole of the expenditure.

69 Writing-down allowances etc. for cars

The machinery or plant in relation to which section 44 of the [1971 c. 68.] Finance Act 1971 (writing-down allowances and balancing adjustments) has effect in accordance with section 65 above shall include any vehicle in respect of which the making of a first year allowance is precluded by section 43 of that Act other than a vehicle to which paragraph 10 of Schedule 8 to that Act applies.

70 Leasing by individuals

(1) There shall be disregarded for the purposes of section 169 of the Taxes Act (set-off against general income) any allowances made to an individual under Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 in respect of expenditure incurred on the provision of machinery or plant for leasing in the course of a trade unless—

(a) the trade is carried on by him for a continuous period of at least six months in, or beginning or ending in, the year of loss as defined in that section ; and

(b) he devotes substantially the whole of his time to carrying it on throughout that year or if it is set up or permanently discontinued (or both) in that year, for a continuous period of at least six months beginning or ending in that year.

(2) Subsection (1) above shall apply also to expenditure incurred by an individual on the provision for the purposes of a trade carried on by him of an asset which is not to be leased if payments in the nature of royalties or licence fees are to accrue from rights granted by him in connection with that asset.

(3) In the proviso to section 48(4) of the said Act of 1971 (allowances in respect of expenditure on machinery or plant let otherwise than in the course of a trade)—

(a) after the words " Provided that" there shall be inserted the words " the proviso to subsection (1) of the said section 71 shall not apply to an allowance made by virtue of section 46(1) above and "; and

(b) for the words " the proviso to subsection (1) of the said section 71 or, as the case may be, subsection (4) of the said section 74 " there shall be substituted the words " subsection (3) of the said section 74 ".

(4) Where relief has been given in a case to which this section applies it shall be withdrawn by the making of an assessment under Case VI of Schedule D.

(5) References in this section to the carrying on of a trade by an individual are to his carrying it on either alone or in partnership.

(6) This section is without prejudice to section 41 of the [1976 c. 40.] Finance Act 1976.

71 Quarantine premises

(1) If a person carrying on a trade has on or after 1st September 1972 incurred expenditure for the purposes of the trade in altering or replacing premises which immediately before that date were in use as authorised quarantine premises and—

(a) the expenditure was incurred in order to comply with requirements imposed by law for the use of premises on or after that date as authorised quarantine premises ; and

(b) an allowance or deduction in respect of the expenditure could not, apart from this section, be made in taxing the trade or computing the profits or gains arising from it,

Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 shall apply as if the expenditure were capital expenditure incurred on the provision of machinery or plant for the purposes of the trade, as if the machinery or plant had in consequence of his incurring the expenditure belonged to him and had been in use for the purposes of the trade and as if the disposal value of the machinery or plant were nil.

(2) In subsection (1) above " authorised quarantine premises " means premises authorised under the [1950 c. 36.] Diseases of Animals Act 1950 to be used for the detention and isolation of animals in quarantine.

(3) All such adjustments shall be made by discharge or repayment of tax as may be required for giving effect to the relief available under this section.

(4) Any disclaimer or claim under section 41(3) of the said Act of 1971 in respect of relief available under this section, and any claim for relief (or additional relief) under any other provision of the Tax Acts which is made in consequence of the relief available under this section, shall not be out of time if made within twelve months after the passing of this Act.

72 Commencement and transitional provisions

(1) Subject to subsection (5) below, sections 64 to 69 above apply to expenditure incurred on or after 1st June 1980 except that those sections do not affect expenditure incurred by a person on the provision of machinery or plant if the expenditure consists of the payment of sums payable under a contract entered into by him before 27th March 1980 and the machinery or plant is brought into use not later than 27th March 1982.

(2) Those sections apply also to expenditure incurred by a person before 1st June 1980 if the expenditure—

(a) is on the provision of machinery or plant which does not belong to him before that date ; and

(b) consists of the payment of sums payable under a contract entered into by him on or after 27th March 1980 with a connected person.

(3) Section 70 above applies to expenditure incurred on or after 27th March 1980 except that that section does not affect expenditure incurred by a person on the provision of machinery or plant if the expenditure consists of the payment of sums payable under a contract entered into by him before that date and the machinery or plant is brought into use not later than 27th March 1982.

(4) Part I of Schedule 12 to this Act shall have effect for restricting first-year allowances in respect of certain expenditure incurred on or after 24th October 1979 and before 1st June 1980 but that Part does not affect expenditure incurred by a person on the provision of machinery or plant if the expenditure consists of the payment of sums payable under a contract entered into by him before the said 24th October and the machinery or plant is brought into use not later than 24th October 1981.

(5) Part II of Schedule 12 to this Act shall have effect for excluding from section 64 above certain expenditure incurred before 1st June 1986 and for restricting first-year allowances in respect of that expenditure.

73 Interpretation

(1) The Tax Acts shall have effect as if the foregoing provisions of this Chapter and the provisions of Schedule 12 to this Act were contained in Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 except that expenditure shall not be treated for the purposes of section 72 above as having been incurred after the date on which it was in fact incurred by reason only of so much of section 50(4) of that Act as relates to expenditure incurred before a trade begins.

(2) References in those provisions to a lease include references to a sub-lease and references to a lessor or lessee shall be construed accordingly.

(3) For the purposes of those provisions letting a ship on charter or any other asset on hire shall be regarded as leasing it if, apart from this subsection, it would not be so regarded.

(4) In those provisions " qualifying purpose " and " requisite period " have the meanings given in section 64 above.

(5) Without prejudice to section 47 of the said Act of 1971 (application to activities other than trades) references in those provisions to the use of machinery or plant for the purposes of a trade include references to its use for any purpose in connection with which a first-year allowance can be given by virtue of that section.

(6) Section 533 of the Taxes Act (connected persons) applies for the purposes of those provisions.

Industrial and commercial buildings

74 Enterprise zones

(1) Chapter I of Part I of the [1968 c. 3.] Capital Allowances Act 1968 (industrial buildings allowances)—

(a) shall apply with the modifications specified in Schedule 13 to this Act in relation to capital expenditure on the construction of an industrial building or structure.; and

(b) shall, as so modified, apply in relation to capital expenditure on the construction of a qualifying hotel or of a commercial building or structure as if it were an industrial building or structure,

in any case where the expenditure is incurred, or is incurred under a contract entered into, at a time when the site of the industrial building or structure, the qualifying hotel or the commercial building or structure is in an enterprise zone, being a time not more than ten years after the site was first included in the zone.

(2) In this section " enterprise zone " means an area designated as such by an order made by the Secretary of State under powers in that behalf conferred by any Act passed in the same Session as this Act or, in Northern Ireland, by an order made by the Department of the Environment for Northern Ireland under powers in that behalf conferred by an Order in Council under the [1974 c. 20.] Northern Ireland Act 1974.

(3) In this section " qualifying hotel" has the same meaning as for the purposes of section 38 of the [1978 c. 42.] Finance Act 1978; and Chapter I of Part I of the said Act of 1968 shall not by virtue of that section apply to expenditure to which that Chapter applies by virtue of this section.

(4) In this section " commercial building or structure " means a building or structure, other than an industrial building or structure or a qualifying hotel, which is used for the purposes of a trade, profession or vocation or, whether or not for such a purpose, as an office or offices but does not include any building or structure in use as, or as part of, a dwelling-house.

(5) For the purposes of subsection (1) above expenditure shall not by reason only of section 1(6) or 5(1) of the said Act of 1968 be treated as having been incurred after the date on which it was in fact incurred.

(6) Section 14 of the [1975 c. 7.] Finance Act 1975 (expenditure on thermal insulations) shall not apply to expenditure to which this section applies ; and section 64 above shall not apply to expenditure incurred at any time on the provision of machinery or plant which is to be an integral part of a building or structure if this section would apply to expenditure incurred at that time on the construction of that building or structure.

(7) The Tax Acts shall have effect as if this section and Schedule 13 to this Act were contained in Chapter I of Part I of the said Act of 1968.

75 Small workshops

(1) Chapter I of Part I of the [1968 c. 3.] Capital Allowances Act 1968 (industrial buildings allowances) shall apply with the modifications specified in paragraphs 1 to 3 of Schedule 13 to this Act in relation to capital expenditure on the construction of an industrial building to which this section applies if the expenditure is incurred after 26th March 1980 and before 27th March 1983.

(2) This section applies to an industrial building if the gross internal floor space of the whole building will not exceed 2,500 square feet.

(3) Where the industrial building is part of a larger building the reference in subsection (2) above to the gross internal floor space of the whole of the building shall be construed as a reference to the gross internal floor space of the whole of that part and this section shall not apply unless that part is permanently separated from the remainder of the building, is intended for occupation separately from the remainder of the building and is suitable for being so occupied.

(4) The reference in subsection (1) above to capital expenditure on the construction of a building includes a reference to capital expenditure on the construction of any ancillary works.

(5) For the purposes of subsection (1) above expenditure shall not by reason only of section 1(6) or 5(1) of the said Act of 1968 be treated as having been incurred after the date on which it was in fact incurred.

(6) Section 14 of the [1975 c. 7.] Finance Act 1975 (expenditure on thermal insulation) shall not apply to expenditure to which this section applies; and section 64 above shall not apply to expenditure incurred at any time on the provision of machinery or plant which is to be an integral part of a building if this section would apply to expenditure incurred at that time on the construction of the building.

(7) The Tax Acts shall have effect as if this section were contained in Chapter I of Part I of the said Act of 1968.

76 Tenancies

(1) The proviso to section 1(4) of the Capital Allowances Act 1968 (which defers the making of an initial allowance where the building or structure is first used by a tenant) shall cease to have effect.

(2) This section applies in relation to—

(a) expenditure incurred on or after 27th March 1980; and

(b) expenditure which was incurred before that date but by reason of the said proviso has not before that date become eligible for an initial allowance;

but expenditure to which this section applies by virtue of paragraph (b) above shall be treated for the purposes of the said section 1(4) as if it had been incurred on that date.

Chapter III Capital Gains

77 Exemption for first ó,000 of gains of individuals

(1) Section 5 of the [1979 c. 14.] Capital Gains Tax Act 1979 and Schedule 1 to that Act (relief for gains less than £9,500) shall have effect with the following amendments, being amendments which substitute an exemption from tax in respect of the first £3,000 of the net gains accruing to an individual in a year of assessment.

(2) For subsections (1) to (3) of section 5 there shall be substituted—

“5 Exemption for first £3,000 of gains.

(1) An individual shall not be chargeable to capital gains tax in respect of so much of his taxable amount for any year of assessment as does not exceed £3,000.”

(3) In subsections (4) and (5)(a) of section 5 for " £1,000 wherever it occurs, there shall be substituted " £3,000 ".

(4) In Schedule 1—

(a) the heading shall be changed to " EXEMPTION FOR FIRST £3,000 OF GAINS " ;

(b) in paragraphs 2(1) and (2)(b) for the words " subsections (1) to (4)" there shall be substituted the words " subsections (1) and (4) ";

(c) in paragraphs 4 and 5(1) for the words " subsections (1) to (5)" there shall be substituted the words " subsections (1), (4) and (5) ";

(d) in paragraph 2(1) for the words " the amounts of £1,000, £5,000 and £600 " there shall be substituted the words " the amount of £3,000 " and in paragraph 2(1)(b) for " £1,000 " there shall be substituted " £3,000 ".

(5) This section has effect for the year 1980-81 and subsequent years of assessment.

78 Exemption for first ñ,500 of gains of trusts

(1) Paragraph 6 of Schedule 1 to the [1979 c. 14.] Capital Gains Tax Act 1979 (relief for small gains by trustees) shall have effect with the following amendments, being amendments which extend to trustees, with modifications, the exemption conferred by section 5 of that Act as amended by section 77 above.

(2) In sub-paragraph (1) for the words " subsections (1) to (5)" there shall be substituted the words " subsections (1), (4) and (5) ".

(3) For sub-paragraphs (2) to (5) there shall be substituted—

“(2) In subsections (1) and (4) for ' £3,000' there shall be substituted '£1,500'.

(3) Subsection (5) shall apply only to the trustees of a settlement made before 7th June 1978 and, in relation to such trustees, shall have effect with the substitution for £3,000' and ' £5,000 ' of ' £500 ' and ' £2,500' respectively.

(4) In relation to a settlement which is one of two or more qualifying settlements comprised in a group, sub-paragraph (2) above shall have effect as if for the reference to £1,500 there were substituted a reference to £300 or, if it is more, to such amount as results from dividing £1,500 by the number of settlements in the group.

(5) For the purposes of sub-paragraph (4) above—

(a) a qualifying settlement is any settlement (other than an excluded settlement) which is made after 6th June 1978 and to the trustees of which this paragraph applies for the year of assessment; and

(b) all qualifying settlements in relation to which the same person is the settlor constitute a group.

(6) If, in consequence of two or more persons being settlors in relation to it, a settlement is comprised in two or more groups comprising different numbers of settlements, sub-paragraph (4) above shall apply to it as if the number by which the amount of £1,500 is to be divided were the number of settlements in the largest group.

(7) In this paragraph ' settlor' has the meaning given by section 454(3) of the Taxes Act and includes, in the case of a settlement arising under a will or intestacy, the testator or intestate and ' excluded settlement' means—

(a) any settlement the trustees of which are not for the whole or any part of the year of assessment treated under section 52(1) of this Act as resident and ordinarily resident in the United Kingdom; and

(b) any settlement the property comprised in which—

(i) is held for charitable purposes only and cannot become applicable for other purposes ; or

(ii) is held for the purposes of any such scheme or fund as is mentioned in sub-paragraph (8) below (retirement benefits and compensation funds).

(8) The schemes and funds referred to in sub-paragraph (7)(b)(ii) above are funds to which section 218 of the Taxes Act applies, schemes and funds approved under section 226 or 226A of that Act, sponsored superannuation schemes as defined in section 226(11) of that Act, exempt approved schemes and statutory schemes as defined in Chapter II of Part II of the Finance Act 1970 and any such fund as is mentioned in paragraph 21 of Schedule 5 to the Finance Act 1975.

(9) An inspector may by notice in writing require any person, being a party to a settlement, to furnish him within such time as he may direct (not being less than twenty-eight days) with such particulars as he thinks necessary for the purposes of this paragraph. " (4) This section has effect for the year 1980-81 and subsequent years of assessment.”

79 General relief for gifts

(1) If after 5th April 1980 an individual (in this section referred to as " the transferor ") makes a disposal, otherwise than under a bargain at arm's length, to an individual resident or ordinarily resident in the United Kingdom (in this section referred to as " the transferee ") and the transferor and transferee make a claim for relief under this section—

(a) the amount of any chargeable gain which, apart from this section, would accrue to the transferor on the disposal ; and

(b) the amount of the consideration for which, apart from this section, the transferee would be regarded for the purposes of capital gains tax as having acquired the asset in question,

shall each be reduced by an amount equal to the held-over gain on the disposal.

(2) Subject to subsection (3) below, the reference in subsection (1) above to the held-over gain on a disposal is a reference to the chargeable gain which would have accrued on that disposal apart from this section.

(3) In any case where—

(a) there is actual consideration (as opposed to the consideration equal to the market value which is deemed to be given by virtue of section 19(3) of the [1979 c. 14.] Capital Gains Tax Act 1979) for a disposal in respect of which a claim for relief is made under this section ; and

(b) that actual consideration exceeds the sums allowable as a deduction under section 32 of that Act,

the held-over gain on the disposal shall be reduced by the excess referred to in paragraph (b) above or, if part of the gain on the disposal is relieved under section 124 of the said Act of 1979 (retirement relief), by so much, if any, of that excess as exceeds the part so relieved.

(4) Section 126 of the said Act of 1979 (relief for gifts of business assets) shall not apply to a disposal to an individual; but this subsection shall not be construed as affecting the operation of that section in a case where by virtue of section 46(1) of that Act an individual is treated as acquiring an asset on a disposal under section 54(1) of that Act.

(5) Where a disposal in respect of which a claim is made under this section is a chargeable transfer (for capital transfer tax purposes) there shall be allowed as a deduction in computing (for capital gains tax purposes) the chargeable gain accruing to the transferee on the disposal of the asset in question an amount equal to whichever is the lesser of—

(a) the capital transfer tax chargeable on the value transferred which is attributable to the value of the asset as ascertained for capital transfer tax purposes; and

(b) the amount of the chargeable gain as computed apart from this subsection;

and where the capital transfer tax chargeable on the value transferred which is attributable to the value of the asset is paid by the transferor the reference in paragraph (a) above to the value transferred which is so attributable includes a reference to the value transferred which is attributable to that tax.

(6) Where an amount of capital transfer tax—

(a) falls to be re-determined in consequence of the transferor's death within three years of making the chargeable transfer in question ; or

(b) is otherwise varied,

after it has been taken into account under subsection (5) above, all necessary adjustments shall be made, whether by the making of an assessment to capital gains tax or by the discharge or repayment of such tax.

80 Exemption for private residences

(1) Where a gain to which section 101 of the Capital Gains Tax Act 1979 (disposals of private residences) applies accrues to any individual and the dwelling-house in question or any part of it is or has at any time in his period of ownership been wholly or partly let by him as residential accommodation the part of the gain, if any, which, apart from this section, would be a chargeable gain by reason of the letting, shall be such a gain only to the extent, if any, to which it exceeds whichever is the lesser of—

(a) the part of the gain which is not a chargeable gain by virtue of the provisions of section 102 of that Act or that section as applied by section 104 of that Act; and

(b) £10,000.

(2) In section 102(1) and (2)(a) of that Act (exemption for gain on disposal of dwelling-house which has been an individual's only or main residence throughout the period of ownership or throughout that period except for the last twelve months) for the words " twelve months " there shall be substituted the words " twenty-four months ".

(3) This section has effect in relation to disposals after 5th April 1980.

81 Exemption for authorised unit trusts etc.

(1) Gains accruing to an authorised unit trust, an investment trust or a court investment fund shall not be chargeable gains.

(2) In section 267(3) of the Taxes Act (transfer of assets on company reconstruction etc.), the words " or 97" shall be omitted and at the end there shall be inserted the words " or which is an authorised unit trust within the meaning of Chapter VI of Part XII of this Act or to an investment trust within the meaning of that Chapter. "

(3) In subsection (1) of section 98 of the [1979 c. 14.] Capital Gains Tax Act 1979 (which refers to the said section 267) for the words from " to which at the time of the transfer" to " shall be treated " there shall be substituted the words " or a company which at the time of the transfer was not such a unit trust scheme or investment trust as is mentioned in subsection (3) of that section, then if—

(a) at any time after the transfer—

(i) the unit trust scheme becomes in a year of assessment one which is such as is mentioned in that subsection; or

(ii) the company becomes for an accounting period an investment trust such as is there mentioned, and

(b) at the beginning of that year of assessment or accounting period the unit trust scheme or company still owns any of the assets of the business transferred,

the unit trust scheme or company shall be treated "; and in subsection (2) of that section after the words " year of assessment " and " unit trust scheme " there shall be inserted respectively the words " or accounting period " and " or company ".

(4) In section 273(2) of the Taxes Act (transfers within a group) after paragraph (b) there shall be inserted the words “or

(c) a disposal by or to an investment trust within the meaning of Chapter VI of Part XII of this Act;”.

(5) After section 275(2) of the Taxes Act (disposals outside a group) there shall be inserted—

“(3) Subsection (2) above does not apply where the asset was acquired on a disposal within section 273(2)(c) above.”

(6) Section 94 of the said Act of 1979 (reduction of tax on disposal of shares in unit trust etc.) shall cease to have effect.

(7) Subsections (1), (4) and (5) above have effect in relation to disposals after 31st March 1980, subsections (2) and (3) above have effect where the transfer referred to in section 267(3) is after that date and subsection (6) above has effect in relation to disposals after 5th April 1980.

82 Maintenance funds for historic buildings

In section 148 of the [1979 c. 14.] Capital Gains Tax Act 1979 (maintenance funds for historic buildings) after subsection (1) there shall be inserted—

“(1A) This section applies also where a trustee is deemed by virtue of section 54(1) above to dispose of an asset comprised in a settlement and, as a result of the asset or part of it becoming comprised in another settlement, there is by virtue of section 89(4)(d) or 90(1) of the Finance Act 1980 no charge to capital transfer tax by reference to the value of the asset deemed to be disposed of or a reduced charge to that tax by virtue of section 90(3) of that Act; but—

(a) if part only of the asset becomes comprised in the other settlement this subsection applies only to the deemed disposal of that part; and

(b) if the trustees of the other settlement give any consideration for the asset or part that becomes comprised in it this subsection applies only if the consideration does not exceed the sums that would be allowable as a deduction in computing the gain accruing on the deemed disposal.”

83 Consideration on disposal of assets

(1) In section 31(2) of the [1968 c. 3.] Capital Gains Tax Act 1979 (consideration on disposal of an asset to include money or money's worth which is taken into account in the making of a balancing charge under the Capital Allowances Act 1968) there shall be inserted at the end the words " or which is brought into account as the disposal value of machinery or plant under section 44 of the Finance Act 1971 ".

(2) This section has effect in relation to disposals after 25th March 1980.

84 Traded options

(1) Sections 137 and 138 of the [1979 c. 14.] Capital Gains Tax Act 1979 (options) shall have effect with the following amendments, being amendments which exempt traded options to buy or sell shares in a company from the rule that the abandonment of an option is not a disposal and from the restriction of allowable expenditure which applies to wasting assets.

(2) In subsection (4) of section 137 after paragraph (a) there shall be inserted—

“(aa) a traded option to buy or sell shares in a company, or”.

(3) At the end of subsection (9) of section 137 there shall be inserted the words " and in subsection (4)(aa) above, and in section 138 below, 'traded option' means an option which, at the time of the abandonment or other disposal, is quoted on a recognised stock exchange within the meaning of the said section 535. "

(4) In subsection (1) of section 138 after paragraph (a) there shall be inserted—

“(aa) to a traded option to buy or sell shares in a company, or”.

(5) In subsection (2) of section 138 for the words in brackets there shall be substituted the words " (other than an option falling within subsection (1)(a) or (aa) above) ".

(6) For subsection (4)(a) of section 138 there shall be substituted—

“(a) ' quoted option ' and ' traded option' have the meanings given by section 137(9) above,”.

(7) This section has effect in relation to any abandonment or other disposal on or after 6th April 1980.

PART IV Capital Transfer Tax

85 Reduction of tax

(1) For the Tables in section 37(3) of the [1975 c. 7.] Finance Act 1975 (rates of tax) there shall be substituted the Tables in Schedule 14 to this Act.

(2) Subsection (1) above applies to any chargeable transfer made on or after 26th March 1980.

(3) The transitional provisions in Schedule 15 to this Act shall have effect in relation to this section and also in relation to any subsequent enactment which reduces tax by substituting new Tables in the said section 37(3).

86 Exemptions

(1) Schedule 6 to the [1975 c. 7.] Finance Act 1975 (exempt transfers) shall be amended as follows.

(2) In paragraph 1(2) and (3) (exemption limit for transfers to non-domiciled spouse) for "£25,000" there shall be substituted " £50,000 ".

(3) In paragraph 4(1) (small gifts to same person) for " £100 " there shall be substituted " £250 ".

(4) In paragraph 10(1)(b) and (4) (limit on exempt gifts to charities) for " £100,000 " there shall be substituted " £200,000 ".

(5) Subsections (2) and (4) above apply to any transfer of value made on or after 26th March 1980 and subsection (3) above applies to any transfer of value made on or after 6th April 1980.

87 Mutual transfers

(1) Sections 86 and 87 of the [1976 c. 40.] Finance Act 1976 (mutual transfers) shall be amended as follows.

(2) After section 86(5) there shall be inserted—

“(6) The extent to which the donee's transfer is an exempt transfer by virtue of subsection (2) above shall be determined without regard to Schedule 10 to this Act, and that Schedule shall not apply to that transfer to the extent to which it is an exempt transfer by virtue of that subsection.

(7) Paragraph 11(1) of Schedule 10 to the said Act of 1975 (valuation of life policies etc.) shall not apply in determining the amount mentioned in subsection (2)(a) above.”

(3) For paragraph (a) of subsection (5) of section 87 there shall be substituted—

“(a) whichever is the smaller of—

(i) the amount by which the donee's estate was increased by the donor's transfer; or

(ii) the amount by which the donor's estate was increased by the donee's transfer; or”;

and in paragraph (b) of that subsection for the words " that amount" there shall be substituted the words " the amount applying under paragraph (a) above ".

(4) After section 87(5) there shall be inserted—

“(5A) Where the value transferred by the donor's transfer fell to be calculated in accordance with the provisions of Schedule 8 to the Finance Act 1975 (agricultural relief) or Schedule 10 to this Act, the value restored by the donee's transfer as determined under subsection (5) above shall be treated as reduced to such part of it as bears to the whole the same proportion as the value transferred by the donor's transfer after applying those provisions bears to the value transferred by it before applying those provisions.

(5B) Paragraph 11(1) of Schedule 10 to the said Act of 1975 (valuation of life policies etc.) shall not apply in determining the amount mentioned in subsection (5)(a)(ii) above.”

(5) This section shall be deemed to have come into force on 27th March 1980.

88 Maintenance funds: requirements and eligible property

(1) Section 84 of the [1976 c. 40.] Finance Act 1976 (maintenance funds for historic buildings) shall have effect with the amendments in subsections (2) to (6) below which—

(a) relax the requirements with which a settlement must comply in order to benefit from the provisions of that section;

(b) add land of outstanding scenic, historic or scientific interest and objects historically associated with certain buildings to the kinds of property that can be maintained by means of a settlement benefiting from those provisions; and

(c) alter the extent to which that section is subject to the exceptions specified in paragraph 15 of Schedule 6 to the [1975 c. 7.] Finance Act 1975.

(2) For subsection (3)(a) and (b) (requirements to be complied with by settlement) there shall be substituted—

“(a) that none of the property comprised in the settlement can at any time in the period of six years beginning with the date on which it became comprised in the settlement be applied otherwise than—

(i) for the maintenance, repair or preservation of, or making provision for public access to, property which is for the time being qualifying property as defined in subsection (5) below, for the maintenance, repair or preservation of property comprised in the settlement or for defraying the expenses of the trustees ; or

(ii) as respects income not so applied and not accumulated, for the benefit of a body mentioned in paragraph 12 of Schedule 6 to the said Act of 1975 (museums etc.) or of a qualifying charity as defined in subsection (7) below ; and

(b) that none of the property can, on ceasing at any time in that period to be comprised in the settlement, devolve otherwise than on any such body or charity as aforesaid; and

(c) that income arising from property comprised in the settlement cannot at any time after the end of that period be applied except as mentioned in paragraph (a) (i) or (ii) above.”

(3) After subsection (3) there shall be inserted—

“(3A) Paragraphs (a) and (b) of subsection (3) above do not apply to property which—

(a) was previously comprised in another settlement; and

(b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of section 89(4)(d) of the Finance Act 1980 there was no charge to tax by reference to its value ;

and in relation to any such property paragraph (c) of that subsection shall apply with the omission of the words ' at any time after the end of that period '”

(4) In subsection (5) for the words from the beginning to the end of paragraph (a) there shall be substituted—

“(5) Property is qualifying property for the purposes of subsection (3) above if—

(a) it has been designated under section 34(1) of the Finance Act 1975 or section 77(1)(b), (c), (d) or (e) above; and”.

(5) In subsection (6) for the words " subsection (1)(c) or (d)" there shall be substituted the words " subsection (1)(b), (c), (d) or (e), ".

(6) For subsection (8) there shall be substituted—

“(8) Sub-paragraphs (1), (2), (3)(a), (b) and (ba) and (4B) of paragraph 15 of Schedule 6 to the said Act of 1975 shall apply to this section as they apply to paragraphs 10 to 13 of that Schedule and for the purposes of the said sub-paragraph (4B) the trustees of a settlement in relation to which the Treasury have given a direction under this section shall be treated as a body within paragraph 13 of that Schedule.”.

(7) In section 38(2)(b) of the [1977 c. 36.] Finance Act 1977 (which refers to the provisions amended by subsections (2) and (4) above) for the words " a building or land " and " the building or land in question" there shall be substituted respectively the words " qualifying property " and "the qualifying property in question ".

89 Maintenance funds: charge of tax

(1) If in the case of a settlement in respect of which the Treasury have given a direction under section 84 of the [1976 c. 40.] Finance Act 1976 (maintenance funds for historic buildings)—

(a) any of the property comprised in the settlement (whether capital or income) is applied otherwise than as mentioned in paragraph (a)(i) or (ii) of subsection (3) of that section; or

(b) any of that property on ceasing to be comprised in the settlement devolves otherwise than on any such body or charity as is mentioned in paragraph (a)(ii) of that subsection,

tax shall be charged in accordance with subsection (2) below.

(2) Tax chargeable under this section shall be charged—

(a) on such an amount as, after deduction of the tax charged on it, is equal to the value of the property which is applied or which devolves as mentioned in subsection (1) above exclusive of so much, if any, of that value as is attributable to property falling within subsection (4) below; and

(b) at a rate or rates determined in accordance with Part I of Schedule 16 to this Act;

and Part II of that Schedule shall have effect with respect to the rate or rates at which tax is chargeable on subsequent occasions where tax has been previously charged under this section.

(3) The tax mentioned in paragraph (a) of subsection (2) above does not include any tax which is payable by a person for whose benefit the property is applied or on whom it devolves or which is payable out of that property; and where tax is chargeable on any occasion in accordance with that subsection the provisions of section 73 of the Finance Act 1976 and Schedule 10 to that Act (relief for business property) shall apply as if the trustees had made a transfer of value and the amount on which tax is chargeable were the value transferred by that transfer.

(4) Subject to subsections (5) and (6) below, the property the value of which is excluded from subsection (2)(a) above is—

(a) property to which the settlor or his spouse becomes beneficially entitled on the occasion on which tax would be chargeable under this section;

(b) property to which the settlor's widow or widower becomes beneficially entitled on that occasion if the settlor has died in the previous two years ;

(c) if the settlor has died after the settlement has taken effect but not more than four years later, property to which the settlor's widow or widower becomes beneficially entitled within thirty days of the expiration of six years from the date on which the settlement took effect;

(d) property which, within thirty days after the occasion on which tax would be chargeable under this section, becomes comprised in another settlement as a result of a transfer of value which is exempt under the said section 84.

(5) Subsection (4) above does not apply to any property if the person who becomes beneficially entitled to it or (in a case within paragraph (d)) makes the transfer of value has acquired it for a consideration in money or money's worth; and for the purposes of this subsection a person shall be treated as acquiring any property for a consideration in money or money's worth if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that or other property.

(6) Paragraphs (a), (b) and (c) of subsection (4) above do not apply unless the person who becomes beneficially entitled to the property is domiciled in the United Kingdom at the time when he becomes so entitled; and where tax is chargeable under this section in the case of a settlement (" the current settlement") those paragraphs do not apply if the property—

(a) was previously comprised in another settlement; and

(b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of paragraph (d) of that subsection or by virtue of the said section 84 or of section 90(1) below there was no charge to tax by reference to its value or there was a reduced charge to tax by virtue of section 90(3) below.

(7) The value to be excluded under subsection (2) (a) above as attributable to property falling within subsection (4)(d) above shall be—

(a) its value at the time when tax would be chargeable under this section; or

(b) its value at the time when it becomes comprised in the other settlement,

whichever is the less reduced, where the trustees of the other settlement give consideration for the property in money or money's worth, by the amount or value of that consideration.

(8) The persons liable for tax charged under subsection (2) above shall be each of the following, that is to say, the trustees of the settlement and, as respects tax on the value of property which devolves on any person or to which a person becomes beneficially entitled on the occasion on which the tax is chargeable, the person on whom it devolves or who becomes beneficially entitled to it; and in paragraphs 2(7), 12(4) and 19(1)(c) of Schedule 4 to the [1975 c. 7.] Finance Act 1975 (duty to deliver accounts and provisions as to payment of tax) after the words " section 78 of the Finance Act 1976 " there shall be inserted the words " or section 89 of the Finance Act 1980 ".

(9) Tax shall also be chargeable in accordance with the foregoing provisions of this section if any of the property comprised in a settlement to which subsection (1) above applies, on ceasing at any time to be comprised in the settlement, devolves on any such body or charity as is referred to in paragraph (b) of that subsection and at or before that time an interest under the settlement is or has been acquired for a consideration in money or money's worth by that or another such body or charity; but for the purposes of this subsection any acquisition from another such body or charity shall be disregarded.

90 Maintenance funds: other amendments

(1) Subject to subsections (2) and (3) below, a transfer of property or other event shall not constitute or give rise to a distribution payment or capital distribution under any provision of Schedule 5 to the Finance Act 1975 (settled property) if not later than thirty days after the date of the transfer or event an individual makes a transfer of value—

(a) which is exempt under section 84 of the [1976 c. 40.] Finance Act 1976 (maintenance funds for historic buildings); and

(b) the value transferred by which is attributable to the property by reference to which the amount of the distribution payment or capital distribution would have fallen to be determined.

(2) Subsection (1) above does not apply if the individual has acquired the property referred to in paragraph (b) for a consideration in money or money's worth; and for the purposes of this subsection an individual shall be treated as acquiring any property for such consideration if he becomes entitled to it as a result of transactions which include a disposition for such consideration (whether to him or another) of that or other property.

(3) Subsection (1) above does not apply if—

(a) the amount of the distribution payment or capital distribution exceeds the value of the property which by virtue of the exempt transfer becomes comprised in the settlement referred to in the said section 84; or

(b) the individual receives any consideration in money or money's worth for that property;

but in a case where that subsection would apply but for the foregoing provisions of this subsection the amount of the distribution payment or capital distribution shall be treated as equal to the excess referred to in paragraph (a) above or, as the case may be, to the consideration referred to in paragraph (b) above or, where both paragraphs apply, to the aggregate of the excess and the consideration.

(4) Where the Treasury have given a direction in respect of a settlement under the said section 84 the trusts of the settlement shall be enforceable at the suit of the Treasury and the Treasury shall, as respects the appointment, removal and retirement of trustees, have the rights and powers of a beneficiary.

91 Discretionary trusts: credit for annual charge

(1) At the end of paragraph 12(3) of Schedule 5 to the [1975 c. 7.] Finance Act 1975 (under which tax charged under paragraph 12(2) is allowed as a credit against the tax chargeable on the next capital distribution out of the settlement) there shall be inserted the words " and if the tax charged exceeds the tax so chargeable the excess shall be allowed as a credit against the tax chargeable on the next subsequent such capital distribution and so on. "

(2) This section shall be deemed always to have had effect.

92 Provision for dependants of deceased persons

In section 122 of the [1976 c. 40.] Finance Act 1976 (Inheritance (Provision for Family and Dependants) Act 1975) after subsection (7) there shall be inserted—

“(7A) Where an order is made staying or dismissing proceedings under the said Act of 1975 on terms set out in or scheduled to the order this section shall have effect as if any of those terms which could have been included in an order under section 2 or 10 of that Act were provisions of such an order.”

93 Proper liferent and fee

(1) In section 51(1) of the [1975 c. 7.] Finance Act 1975 there shall be inserted at the end of the definition of " reversionary interest " the words " and in relation to Scotland includes an interest in the fee of property subject to a proper liferent".

(2) Paragraph 1 of Schedule 5 to that Act shall be amended as follows—

(a) at the end of sub-paragraph (4) (b) there shall be added—

“(c) any deed creating or reserving a proper liferent of any property whether heritable or moveable (the property from time to time subject to the proper liferent being treated as the property comprised in the settlement).”; and

(b) in sub-paragraph (9) after the words " capable of enjoyment " there shall be inserted the words " including an interest of an assignee under an assignation of an interest of any kind (other than a reversionary interest) in property subject to a proper liferent ".

(3) At the end of section 68(4) of the [1978 c. 42.] Finance Act 1978 there shall be added—

“In the application of this subsection to Scotland, property which is subject to a proper liferent shall be deemed to be held in trust for the liferenter.”

(4) This section applies—

(a) to any transfer of value made after 17th April 1980 ;

(b) if any person liable for capital transfer tax on the transfer so elects, to any transfer of value made on or before 17th April 1980 in respect of which payment of capital transfer tax has not been made and accepted in full satisfaction of the hability.

94 Delivery of accounts

(1) The Board may make regulations—

(a) dispensing with the delivery of accounts under paragraph 2 of Schedule 4 to the [1975 c. 7.] Finance Act 1975 in such cases as may be specified in the regulations ;

(b) discharging, subject to such restrictions as may be so specified, property from an Inland Revenue charge under that Schedule and persons from further claims for tax in cases other than those mentioned in paragraph 25 of that Schedule;

(c) requiring information to be furnished to the Board, in such circumstances as may be so specified, by persons who have not delivered accounts under the said paragraph 2 or who have produced documents other than an account or inventory in pursuance of arrangements made under the enactments mentioned in subsection (2) below ;

(d) modifying section 114(6) of the [1976 c. 40.] Finance Act 1976 (transfers reported late) in cases where the delivery of an account has been dispensed with under the regulations.

(2) The enactments referred to in subsection (1)(c) above are section 156A(2) of the [1925 c. 49.] Supreme Court of Judicature (Consolidation) Act 1925, the proviso to section 42 of the [1808 c. 149.] Probate and Legacy Duties Act 1808 and Article 20 of the [S.I. 1979/1575.] Administration of Estates (Northern Ireland) Order 1979.

(3) Regulations under this section may contain such supplementary or incidental provisions as the Board think fit.

(4) In paragraph 2 of the said Schedule 4 after sub-paragraph (2) there shall be inserted—

“(2A) Where in the case of the estate of a deceased person no grant of representation or confirmation has been obtained in the United Kingdom before the expiration of the period of twelve months from the end of the month in which the death occurred—

(a) every person in whom any of the property forming part of the estate vests (whether beneficially or otherwise) on or at any time after the deceased's death or who at any such time is beneficially entitled to an interest in possession in any such property; and

(b) where any of the property is at any such time comprised in a settlement and there is no person beneficially entitled to an interest in possession in that property, every person for whose benefit any of that property (or income from it) is applied at any such time,

shall deliver to the Board an account specifying to the best of his knowledge and belief the relevant property vested in him, in which he has an interest or which (or income from which) is applicable for his benefit and the value of that property.”.

(5) In sub-paragraph (4) of the said paragraph 2 after the word " if " there shall be inserted " , in the case of an account to be delivered by a person falling within sub-paragraph (2A) above, a person falling within that sub-paragraph has satisfied the Board that an account will in due course be delivered by the personal representatives or if, in that or any other case, ".

(6) After sub-paragraph (5)(a) of the said paragraph 2 there shall be inserted—

“(aa) in the case of an account to be delivered by a person falling within sub-paragraph (2A) above, before the expiration of the period of three months from the time when he first has reason to believe that he is required to deliver an account under that sub-paragraph ; and”.

(7) In section 12 of the [1877 c. 13.] Customs, Inland Revenue, and Savings Banks Act 1877 (transmission and custody of inventories in Scotland)—

(a) for the word " All ", where first occurring, there shall be substituted the words " To the extent that the Registrar, Capital Taxes Office at Edinburgh may require, "; and

(b) the words " as often as required " shall cease to have effect.

(8) The provisions of subsections (4), (5) and (6) above shall come into force on the coming into force of the first regulations made under paragraph (a) of subsection (1) above; and if regulations under that paragraph come into force on different dates in respect of different parts of the United Kingdom those provisions shall come into force in each part on the coming into force of the first regulations that come into force in respect of that part.

(9) The power to make regulations under this section shall be exercisable by statutory instrument; and a statutory instrument containing regulations under this section shall be subject to annulment in pursuance of a resolution of the House of Commons.

PART V Stamp Duty

95 Reduction of stamp duty on conveyances and leases

(1) In subsection (1) of section 55 of the [1963 c. 25.] Finance Act 1963 and in the Table in Part I of Schedule 11 to that Act (under which stamp duty is not chargeable on conveyances and transfers certified at £15.000 and is chargeable at reduced rates on those certified at £20.000, £25,000 and £30,000) and in subsection (1) of section 4 of the [1963 c. 22 (N.I.).] Finance Act (Northern Ireland) 1963 and in the Table in Part I of Schedule 1 to that Act (which make similar provision for Northern Ireland) for "£15,000", "£20,000", "£25,000", and "£30,000", wherever occurring, there shall be substituted respectively " £20,000 " , " £25,000 ", " £30,000 " and " £35,000 ".

(2) In subsection (2) of the said section 55 and of the said section 4 (under which the relief afforded by subsection (1) of those sections is not available as respects the duty chargeable in respect of the premium for a lease if the consideration includes rent exceeding £150 a year) for " £150 " there shall be substituted " £250 ".

(3) In the heading "Lease or Tack" in Schedule 1 to the [1891 c. 39.] Stamp Act 1891 as it applies throughout the United Kingdom—

(a) in paragraph (2)(a) (duty where definite term less than a year of furnished dwelling-house and rent exceeds £250) for " £250 " there shall be substituted " £400 " , and

(b) in the Table in paragraph (3) (which provides for duty on rent in the case of any other term and the first column of which indicates the rent, the second column the duty where the term does not exceed 7 years or is indefinite, the third column the duty where the term exceeds 7 years but not 35 years, the fourth column the duty where the term exceeds 35 years but not 100 years and the fifth column the duty where the term exceeds 100 years) for the last entry there shall be substituted—

“Exceeding £250 and not exceeding £300.	Nil	6.00	36.00	72.00
Exceeding £300 and not exceeding £350.	Nil	7.00	42.00	84.00
Exceeding £350 and not exceeding £400.	Nil	8.00	48.00	96.00
Exceeding £400 for any full sum of £50 and also for any fractional part thereof.	0.50	1.00	6.00	12.00”

(4) This section applies to instruments executed on or after 6th April 1980 and shall be deemed to have come into force on that date.

96 Loan capital denominated in sterling

(1) Section 126 of the [1976 c. 40.] Finance Act 1976 (exemption for transfers of loan capital) shall be amended as follows.

(2) In subsection (5)—

(a) after " (5)" there shall be inserted the words " Subject to subsection (5A) below, ";

(b) in paragraph (a) after the words " the United Kingdom " there shall be inserted the words " or elsewhere ";

(c) in paragraph (b) the words " within the commonwealth " shall be omitted.

(3) After subsection (5) there shall be inserted—

“(5A) Subsection (5) above does not apply to loan capital issued or raised by a body formed or established outside the United Kingdom or by the government of any country or territory outside the commonwealth unless it is denominated in sterling.”

(4) This section does not affect any instrument executed before the commencement of this Act.

97 Shared ownership transactions

(1) A lease to which this section applies shall, instead of being chargeable with stamp duty under the heading " Lease or Tack " in Schedule 1 to the [1891 c. 39.] Stamp Act 1891, be chargeable with stamp duty under the heading " Conveyance or Transfer on Sale " in that Schedule as if it were a conveyance for a consideration equal to the value stated in the lease in accordance with subsection (2) id) below; and where stamp duty has been paid on a lease in accordance with this section stamp duty shall not be chargeable under that Act on any instrument executed in pursuance of the lease whereby the reversion is transferred to the lessee.

(2) This section applies to any lease granted by a body mentioned in subsection (3) below, being a lease which—

(a) is of a dwelling for the exclusive use of the lessee or, if there are joint lessees, of those lessees ;

(b) is granted partly in consideration of a premium calculated by reference to the market value of the dwelling at the time of the grant and partly in consideration of rent;

(c) provides for the lessee to acquire the reversion ; and

(d) contains a statement of the market value referred to in paragraph (b) above and a statement to the effect that the parties intend duty to be charged in accordance with this section by reference to that value.

(3) The bodies referred to in subsection (2) above are—

(a) a local authority within the meaning of Part V of the [1957 c. 56.] Housing Act 1957;

(b) a housing association registered under section 13 of the [1974 c. 44.] Housing Act 1974 or Article 13 of the [S.I. 1976/1780.] Housing (Northern Ireland) Order 1976 ;

(c) a development corporation established by an order made, or having effect as if made, under the [1965 c. 59.] New Towns Act 1965 ;

(d) the Commission for the New Towns ;

(e) the Development Board for Rural Wales;

(f) the Northern Ireland Housing Executive ;

(g) the Council of the Isles of Scilly.

(4) For the purposes of subsection (1) above an instrument transferring a reversion shall not be regarded as executed in pursuance of a lease in respect of which duty has been paid in accordance with this section unless it contains a statement to the effect that it has been so executed.

98 Maintenance funds for historic buildings

(1) No stamp duty shall be chargeable on any instrument whereby property ceases to be comprised in a settlement if as a result of the property or part of it becoming comprised in another settlement (otherwise than by virtue of the instrument itself) there is by virtue of section 89(4)(d) or 90(1) above no charge to capital transfer tax by reference to the value of the property ceasing to be comprised in the settlement or a reduced charge to tax by virtue of section 90(3) above; but where only part of the property becomes comprised in the other settlement this subsection shall not affect the stamp duty chargeable on the instrument by reference to the other part.

(2) An instrument in respect of which stamp duty is not chargeable by virtue only of this section or in respect of which the duty chargeable is reduced by virtue of this section shall not be treated as duly stamped unless it is stamped in accordance with section 12 of the [1891 c. 39.] Stamp Act 1891 with a stamp denoting that it is not chargeable with any duty or that it is duly stamped.

99 Charitable covenants for variable amounts

(1) No stamp duty shall be chargeable by virtue of the heading in Schedule 1 of the Stamp Act 1891 " Deed of any kind whatsoever, not described in this Schedule" on any covenant made otherwise than for consideration in money or money's worth in favour of a body of persons or trust established for charitable purposes only whereby annual payments become payable for a period which may exceed three years and is not capable of earlier termination under any power exercisable without the consent of the persons for the time being entitled to the payments.

(2) This section applies to covenants executed on or after 6th April 1980 and shall be deemed to have come into force on that date.

100 Dealers in unlisted securities

(1) Section 42 of the [1920 c. 18.] Finance Act 1920 (reduction of stamp duty on transfers of stocks to jobbers when jobbers transfer stock to bona fide purchasers within two months) shall have effect with the following amendments.

(2) In subsection (1) after the words " jobber or his nominee " there shall be inserted the words " or to a qualified dealer ",

and in the proviso to that subsection after the word " jobber " in each place where it occurs there shall be inserted the words " or qualified dealer ".

(3) In subsection (2) of that section after the words " the jobber to whom or to whose nominee the transfer was made " there shall be inserted the words " or, as the case may be, the qualified dealer to whom the transfer was made ".

(4) At the end of the definition of " stock " in subsection (3) there shall be added the words " but, in the case of a transfer to a qualified dealer, does not include—

(a) stock issued by any body corporate or other body of persons formed or established outside the United Kingdom, or

(b) stock which is listed in the Official List of The Stock Exchange;

The expression " qualified dealer " means a person who—

(a) holds a principal's licence within the meaning of the Prevention of Fraud (Investments) Act 1958 or the Prevention of Fraud (Investments) Act (Northern Ireland 1940, or

(b) is an exempted dealer within the meaning of either of those Acts, or

(c) is a member of a body which is a recognised association of dealers in securities for the purposes of either of those Acts, or

(d) is a Stock Exchange broker, that is to say a member of The Stock Exchange who is recognised by the Council thereof as carrying on the business of a broker and carries on that business in the United Kingdom ".

101 Unit trusts

No stamp duty shall be chargeable on any transfer of any unit in an authorised unit trust to which section 60 above applies and under the terms of which the funds of the trust cannot be invested in any investment on the transfer of which ad valorem stamp duty would be chargeable.

102 Conveyance in consideration of debt

(1) Where—

(a) any property is conveyed to any person wholly or in part in consideration of a debt due to him; and

(b) apart from this section the consideration in respect of which the conveyance would be chargeable with ad valorem duty by virtue of section 57 of the [1891 c. 39.] Stamp Act 1891 (which deems the debt to be the consideration) would exceed the value of the property conveyed,

that consideration shall be treated as reduced to that value.

(2) Where subsection (1) above applies in relation to any conveyance, it shall not be treated as duly stamped unless it is stamped in accordance with section 12 of the said Act of 1891 with a stamp denoting that it is not chargeable with any duty or that it is duly stamped.

103 Admission of Northern Ireland barristers etc.

Section 2 of the [1926 c. 24 (N.I.).] Finance (Stamp Duty) Act (Northern Ireland) 1926 (stamp duty on admission to degree of barrister-at-law or as student of the Inn of Court of Northern Ireland) and section 3 of that Act (payments to the Inn of Court of Northern Ireland out of the proceeds of stamp duty) shall cease to have effect.

PART VI Oil Taxation

104 Increase of petroleum revenue tax

(1) In section 1(2) of the [1975 c. 22.] Oil Taxation Act 1975 (rate of petroleum revenue tax) for the words " 60 per cent." there shall be substituted the words " 70 per cent ".

(2) This section has effect in relation to chargeable periods ending after 31st December 1979.

105 Advance payments of tax

(1) Every participator in an oil field shall when he delivers to the Board the statement which section 1(1)(a) of the [1980 c. 1.] Petroleum Revenue Tax Act 1980 requires him to deliver with his return for a chargeable period—

(a) deliver to the Board a statement showing whether any, and if so what, amount is payable by him under this section as an advance payment of tax in respect of the field for the next chargeable period; and

(b) if any amount is so payable, pay to the Board a sum equal to that amount.

(2) The statement under subsection (1)(a) above shall be in such form as the Board may prescribe.

(3) The amount payable by a participator as an advance payment of tax in respect of a field for a chargeable period shall be equal to 15 per cent, of whichever is the greater of—

(a) the amount of tax, if any, shown in the statement delivered by him under the said section 1(1)(a) as payable by him in respect of the field for the last chargeable period; and

(b) the amount of tax, if any, assessed on him in respect of the field for the last chargeable period but one, less any part of it withheld under paragraph 14 of Schedule 2 to the [1975 c. 22.] Oil Taxation Act 1975 (appeals).

(4) The Treasury may by an order made by statutory instrument alter the percentage for the time being specified in subsection (3) above, but no order increasing that percentage shall be made unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.

(5) The sum paid by a participator as an advance payment of tax in respect of a field for a chargeable period—

(a) shall, to the extent to which it does not exceed the sum which subsection (1)(b) of section 1 of the said Act of 1980 requires him to pay when delivering his return for that period in respect of the field—

(i) discharge his liability to pay the whole or a corresponding part of that sum ; and

(ii) be treated for the purposes of subsection (3) of that section as if it were, or were part of, a sum paid by him under subsection (1)(b) of that section ; and

(b) shall, to the extent to which it exceeds the sum required to be paid by him as aforesaid, be repaid to him.

(6) Any amount payable by a participator as an advance payment of tax in respect of a field for a chargeable period and not paid by him shall carry interest at the rate applying under paragraph 15 of Schedule 2 to the said Act of 1975 from two months after the beginning of that period until—

(a) two months after the end of that period ; or

(b) payment of the sum referred to in subsection (5)(a) above,

whichever is the earlier.

(7) Where the sum paid by a participator as an advance payment of tax in respect of a field for a chargeable period (including any part of it repaid under subsection (5)(b) above) exceeds the amount of the tax assessed on him in respect of the field for that period (less any part of it withheld under paragraph 14 of the said Schedule 2) he shall be entitled to receive from the Board interest at the rate applying under paragraph 16 of that Schedule—

(a) on the excess, from—

(i) two months after the beginning of that period; or

(ii) the date on which that sum was paid,

whichever is the later, until two months after the end of that period ; and

(b) if any of that sum falls to be repaid under subsection (5)(b) above, on the amount repayable (or, if less, the excess mentioned in paragraph (a) above) from—

(i) two months after the end of that period ; or

(ii) the date on which he delivers the statement which section 1(1)(a) of the said Act of 1980 requires him to deliver with his return for that period, whichever is the later, until repayment.

(8) Certificates of tax deposit issued by the Treasury under section 12 of the [1968 c. 13.] National Loans Act 1968 on terms published on or before 14th May 1979 may be used for making advance payments under this section; and for that purpose those terms shall have effect with the necessary modifications and as if the tax in or towards the payment of which a certificate is used were due two months after the beginning of the chargeable period to which it relates.

(9) This section shall be construed as one with Part I of the said Act of 1975 and has effect where the chargeable period referred to in subsection (1)(a) above ends on or after 30th June 1981.

106 Transfers of interests in oil fields

Schedule 17 to this Act shall have effect for supplementing and modifying Part I of the [1975 c. 22.] Oil Taxation Act 1975 where after the passing of this Act a participator in an oil field transfers the whole or part of his interest in the field.

107 Transmedian fields

(1) The Oil Taxation Acts shall have effect in accordance with this section where provision is made by an agreement between the government of the United Kingdom and the government of another country for—

(a) the exploitation as a single unit of oil in strata in the sea bed and subsoil of an area consisting of—

(i) an oil field within the meaning of Part I of the Oil Taxation Act 1975 ; and

(ii) a sector under the jurisdiction of the other country; and

(b) the apportionment of the oil between—

(i) the participators in that field ; and

(ii) the persons who are, or have rights, interests or obligations of, licensees in respect of that sector under the law of the other country.

(2) The share of a participator in the oil won from the oil field shall be determined as if the oil won from the field consisted of so much of the oil won from the area as a whole as is apportioned to the participators in accordance with the agreement; and in section 10(3)(b) of the said Act of 1975 (restriction of allowable expenditure) and paragraphs 5(2)(a) and 7 of Schedule 2 to that Act (returns and information as to oil won from the field) references to oil won from the field shall be construed as references to so much of the oil won from the area as a whole as is so apportioned.

(3) Subject to subsection (2) above—

(a) the oil field shall be deemed to include the sector mentioned in subsection (1)(a)(ii) above ;

(b) that sector shall be deemed to be a designated area; and

(c) references to oil shall include references to any substance that would be oil within the meaning of the Said Act of 1975 if the enactments mentioned in section 1(1) extended to that sector;

but paragraph (a) above does not affect section 10(3) (a) of that Act or paragraph 4 of Schedule 2 to that Act (appointment of responsible person), and paragraph (b) above does not affect section 5(1)(b) of that Act (abortive exploration expenditure) or operate so as to apply section 38(4) of the [1973 c. 51.] Finance Act 1973 (taxation of non-residents engaged in activities in designated areas) to the persons referred to in subsection (1)(b)(ii) above.

(4) Where under the agreement there is a re-determination of the apportionment mentioned in subsection (1)(b) above and in consequence thereof the participators in the field receive a repayment in respect of expenditure which has been allowed for the field under section 3 of the said Act of 1975, the total amount of expenditure allowable under that section and section 4 of that Act for the field in the claim period in which the repayment is received shall be reduced by the amount of the repayment; and paragraph 6 of Schedule 4 to that Act (recovery of deductions from allowable expenditure) shall have effect as if the foregoing provisions of this subsection were relevant provisions within the meaning of that paragraph.

(5) Where there is such a re-determination as is mentioned in subsection (4) above and in consequence thereof the participators in the field receive a repayment in respect of expenditure which—

(a) was incurred in acquiring, bringing into existence or enhancing the value of an asset or an interest in an asset; and

(b) falls to be taken into account for the purposes of a computation under section 4(7) of the said Act of 1975,

then, for the purposes of any such computation for the claim period in which the repayment is received and every subsequent claim period, the amount of that expenditure shall be treated as reduced by the amount of the repayment.

(6) In subsections (4) and (5) above references to a repayment include references to a credit or set-off.

(7) In this section " the Oil Taxation Acts " means the [1975 c. 22.] Oil Taxation Act 1975, any other enactment relating to petroleum revenue tax and the provisions of the Income Tax Acts and Corporation Tax Acts in their application to oil extraction activities and oil rights within the meaning of Part II of the said Act of 1975.

(8) This section has effect whether the agreement mentioned in subsection (1) above is made before or after the passing of this Act and applies in relation to a chargeable period ending before the coming into force of this Act as well as to a chargeable period ending later.

108 Gas banking schemes

(1) Subject to the provisions of this section, the Board may by regulations made by statutory instrument modify the operation of the Oil Taxation Acts in their application to cases where—

(a) a gas banking scheme is in force between the participators in two or more oil fields; and

(b) the participators in those fields elect that the modifications prescribed by the regulations shall apply.

(2) Subject to subsection (3)(a) below, a gas banking scheme for the purposes of this section is any scheme which provides for the transfer of oil consisting of gas won from one of the oil fields to which the scheme applies to or to the order of the participators in another of those fields in consideration wholly or mainly of the subsequent transfer of oil consisting of gas won from the other field to or to the order of the participators in the first-mentioned field.

(3) Regulations under tins section may—

(a) prescribe additional conditions required to be satisfied for a scheme to constitute a gas banking scheme, including conditions requiring the gas to be of a description specified in the regulations;

(b) prescribe conditions subject to which, and the manner in which, an election may be made under this section and the time for which any such election is to continue in force; and

(c) contain such incidental, supplementary or transitional provisions as appear to the Board to be necessary or expedient.

(4) The foregoing provisions of this section shall apply to an international gas banking scheme as they apply to a gas banking scheme within the meaning of those provisions except that only the participators in the oil field or oil fields to which the scheme applies need make the election referred to in subsection (1)(b) above; and for the purposes of this section an international gas banking scheme is any scheme which—

(a) applies to areas that include both one or more oil fields and one or more areas under the jurisdiction of a country other than the United Kingdom; and

(b) would be a gas banking scheme within the meaning of the foregoing provisions if all the areas were oil fields and all the persons who are, or have rights, interests or obligations of, licensees in respect of those areas were participators.

(5) Regulations under this section may be made so as to apply only to gas banking schemes other than international gas banking schemes or so as to apply only to the latter; and regulations applying to a scheme of either description may differ from those applying to the other.

(6) No regulations shall be made under this section unless a draft of the regulations has been laid before, and approved by a resolution of, the House of Commons.

(7) In this section "the Board", "oil", "oil field" and " participator " have the same meaning as in Part I of the [1975 c. 22.] Oil Taxation Act 1975 and " the Oil Taxation Acts " has the same meaning as in section 107 above.

109 Fractionation

(1) The Oil Taxation Act 1975 shall be amended as follows.

(2) In the definition of "initial treatment" in section 12(1) for paragraph (b) there shall be substituted—

“(b) separating oil so won and consisting of gas from other oil so won; or

(c) separating oil so won and consisting of gas of a kind that is transported and sold in normal commercial practice from other oil so won and consisting of gas; or

(d) liquifying oil so won and consisting of gas of such a kind as aforesaid for the purpose of transporting it; or

(e) subjecting oil so won to any process of which the purpose is to secure that oil disposed of crude has the quality that is normal for oil so disposed of from the field,”.

(3) In paragraph (i) of that definition for the words "paragraph (a) or (b) of this definition " there shall be substituted the words " any of paragraphs (a) to (e) of this definition ".

(4) For paragraph (ii) of that definition there shall be substituted—

“(ii) any activity carried on as part of, or in association with, the refining of oil not consisting of gas or any activity the sole or main purpose of which is to achieve a chemical reaction in respect of oil consisting of gas; or”.

(5) After the definition of " production purposes " in section 12(1) there shall be inserted—

• “refining ", in relation to oil, does not include subjecting it to initial treatment and " refined " and " refinery " shall be construed accordingly;”.

(6) In paragraph 2 of Schedule 3 (definition of market value of oil) after sub-paragraph (3) there shall be inserted—

“(3A) Where all or any of the oil whose market value falls to be ascertained in accordance with sub-paragraphs (1) and (2) above has been subjected to initial treatment before being disposed of or relevantly appropriated, the appropriate initial treatment referred to in sub-paragraph (2)(a) above shall, as respects that oil, include the whole of that treatment.”

(7) After the said paragraph 2 there shall be inserted—

“2A (1) Paragraph 2 above shall have effect in accordance with this paragraph where the oil whose market value falls to be ascertained at any time in accordance with subparagraphs (1) and (2) of that paragraph, or in accordance with those sub-paragraphs as modified by sub-paragraph (3) of that paragraph, consists of or includes gas.

(2) Sub-paragraph (2)(a) of paragraph 2 above shall not apply to so much of the oil as consists of gas unless—

(a) it has been subjected to initial treatment before being disposed of or relevantly appropriated; or

(b) it has, after being disposed of or relevantly appropriated, been subjected to initial treatment by or on behalf of the participator in question or by or on behalf of a person who is connected with him within the meaning of section 533 of the Taxes Act;

and where oil consisting of gas has, whether before or after being disposed of or relevantly appropriated, been subjected to initial treatment by or on behalf of the participator in question or by or on behalf of a person who is connected with him as aforesaid the appropriate initial treatment referred to in sub-paragraph (2 (a) of paragraph 2 above shall include the treatment to which it has been so subjected.

(3) Where the initial treatment mentioned in sub-paragraph (2) above includes treatment in order to separate gas of one or more kinds which are transported and sold in normal commercial practice, the market value of the gas of each such kind which is separated shall be ascertained in accordance with sub-paragraphs (1) and (2) of paragraph 2 as if that were the only oil whose market value fell to be ascertained at the time in question (with sub-paragraph (2)(b) of paragraph 2 applying accordingly.)

(4) Where the oil consists of or includes natural gas within the meaning of the [1976 c. 76.] Energy Act 1976, it shall be assumed for the purposes of paragraph 2—

(a) that any consent given under section 8 or 9 of that Act for the supply or use of the gas applies to the supply of the gas under the contract mentioned in sub-paragraph (2) of that paragraph and to the use of the gas supplied under it; and

(b) that no consent is required under those sections for that supply or use if no such consent would be required if that contract were in fact made by the participator in question.”

(8) Subject to the following provisions of this section, this section has effect—

(a) as respects Part I of the [1975 c. 22.] Oil Taxation Act 1975, in relation to chargeable periods (within the meaning of that Part) ending after 31st December 1979 ; and

(b) as respects Part II of that Act, in relation to chargeable periods (within the meaning of that Part) ending after that date.

(9) Expenditure shall not by virtue of this section be allowable under section 3 of the said Act of 1975 unless it was incurred after the said 31st December or would have been allowable under section 4 of that Act but for the proviso to subsection (1) of that section.

(10) For the purposes of section 4 of the said Act of 1975 expenditure incurred in acquiring, bringing into existence or enhancing the value of an asset which before the passing of this Act was used for the purpose of any process which, if this Act had been in force, would by virtue of this section have constituted initial treatment of oil won from an oil field shall be treated as having been incurred on the date when the asset was first so used; and for the purposes of that section (but not of the foregoing provisions of this subsection) the use of the asset in connection with the field shall be treated as having begun—

(a) on 1st January 1980; or

(b) the date on which the asset was first used for that purpose,

whichever is the later.

Subsection (13) of the said section 4 shall apply for the purposes of this subsection.

(11) For the purpose of attributing capital allowances and balancing charges to the part of a trade which by virtue of section 13(1) of the said Act of 1975 is treated as a separate trade the definition of " oil extraction activities " in section 19(1) of that Act shall be deemed always to have had effect as if the reference in it to initial treatment were a reference to initial treatment within the meaning of Part I of that Act as amended by this section.

PART VII Development Land Tax

110 Enterprise zones

(1) Subject to subsection (2) below, development land tax shall not be chargeable on any realised development value accruing on the disposal of an interest in land if and to the extent that the land is in an enterprise zone.

(2) Subsection (1) above does not apply to a disposal made more than ten years after the date on which the land was first included in the zone.

(3) In this section " enterprise zone " means an area designated as such by an order made by the Secretary of State under powers in that behalf conferred by any Act passed in the same Session as this Act or, in Northern Ireland, by an order made by the Department of the Environment for Northern Ireland under powers in that behalf conferred by an Order in Council under the [1974 c. 28.] Northern Ireland Act 1974.

111 Charities

(1) For sections 24 and 25 of the [1976 c. 24.] Development Land Tax Act 1976 (exemption for charities) there shall be substituted—

“24 Charities.

(1) Development land tax shall not be chargeable on any realised development value accruing to a charity on the disposal of an interest in land.

(2) If, at any time after the disposal of an interest in land, the body which made the disposal ceases to be a charity, then, immediately after it so ceases, an amount of realised development value equal, subject to subsection (3) below, to that in respect of which the exemption in subsection (1) above applied on the disposal shall be treated for the purposes of this Act as accruing to that body, as on the disposal of an interest in land.

(3) The amount of realised development value which is treated as accruing to a body under subsection (2) above shall not exceed the market value of the property (if any) which—

(a) is held by that body immediately before the time at which it ceases to be a charity, and

(b) is not immediately after that time held for charitable purposes by another body,

and for the purposes of this subsection section 7(1) above shall apply in relation to the market value of any property other than an interest in land as it applies in relation to the market value of an interest in land.”

(2) This section has effect in relation to any disposal after 25th March 1980.

112 Disposals to exempt bodies

Section 39 of the Development Land Tax Act 1976 (deduction of tax from consideration in case of disposals to exempt bodies) shall not have effect in relation to any disposal after 5th August 1980.

113 Payment by instalments

(1) Paragraph 45 of Schedule 8 to the [1976 c. 24.] Development Land Tax Act 1976 (payment by instalments) shall be amended as follows.

(2) After sub-paragraph (2) there shall be inserted—

“(2A) In any case where the liability referred to in subparagraph (1) above arises on the deemed disposal of an interest in land or on the occurrence of an event to which paragraph 44(1) above applies, sub-paragraph (2)(a) above shall have effect with the substitution for the reference to twelve months of a reference to two years.”.

(3) In sub-paragraph (3)(c) for the words " eight years " there shall be substituted the words " nine years ".

(4) This section has effect where the liability in question arises on a deemed disposal after 25th March 1980 or on the occurrence after that date of an event to which paragraph 44(1) of the said Schedule 8 applies.

114 Advance assessment of tax on deemed disposals

(1) Subject to the provisions of this section, a person who has a major interest in any land and intends to begin a project of material development on that land or any part of it may give a notice to the Board—

(a) specifying the project; and

(b) electing to be assessed and charged with development land tax in accordance with this section in respect of the deemed disposal which will be occasioned by the beginning of that project.

(2) Any notice under this section shall contain such information as the Board may reasonably require for the purposes of this section and shall be in such form as they may prescribe.

(3) Where a person has given a notice under this section in respect of a project—

(a) he may be assessed and charged with development land tax in respect of the deemed disposal referred to in subsection (1)(b) above before the project is begun; and

(b) the tax shall be so assessed and charged by reference to the market value of his interest at the date of the notice; and

(c) section 5 of the Development Land Tax Act 1976 and paragraph 8 of Schedule 1 to that Act shall apply as if the project had been begun on that date.

(4) If a person who has given a notice in respect of a project under this section begins that project within the period of two years beginning with the date of the notice the tax with which he is chargeable in respect of the deemed disposal referred to in subsection (1)(b) above shall be that assessed and charged on him in accordance with subsection (3) above; but if he does not begin that project within that period the notice shall be void.

(5) A notice under this section shall also be void if any information contained in it is not such as to make full and accurate disclosure of all facts and considerations which are material for tax to be assessed and charged in pursuance of the notice ; and a notice under this section may be withdrawn at any time before the project in question is begun.

(6) A notice under this section shall not affect the time when any tax is payable except that where the tax has been assessed and charged in pursuance of such a notice paragraph 45 of Schedule 8 to the said Act of 1976 shall have effect as if—

(a) sub-paragraph (2A) were omitted, and

(b) in sub-paragraph (3)(c) for the words " nine years" there were substituted the words " eight years ".

(7) A person who has given a notice under this section (including a notice which has become void or which has been withdrawn) in respect of a project on any land shall not be entitled to give another notice in respect of that or any other project on that land or any part of it.

(8) Where a notice under this section becomes void or is withdrawn any assessment made in pursuance of it shall be of no effect and where a person has paid any tax as a result of a notice under this section which has become void or which has been withdrawn, the tax shall be repaid to him with interest at the rate for the time being prescribed for the purposes of section 86A of the [1970 c. 9.] Taxes Management Act 1970; and any such interest shall not be income of that person for any tax purposes.

(9) Where a person who has a major interest in land gives a notice under subsection (1) above in respect of a project in respect of which a person having a different interest has given a notice in the previous two years (whether or not the previous notice has become void or been withdrawn), the first-mentioned notice shall be treated for the purposes of subsection (4) above as if given on the date of the previous notice or if there has been more than one previous notice the date of the first of them.

(10) For the purposes of subsections (4) and (7) of this section companies which are members of the same group shall be treated as the same person; and references in this section to a person beginning a project include references to his causing or permitting another person to do so.

(11) Nothing in this section affects the value for which a person is deemed to have reacquired an interest on a deemed disposal of it.

(12) This section shall be construed as one with the said Act of 1976.

115 Administration

(1) In section 70(2) of the [1970 c. 9.] Taxes Management Act 1970 (evidence of payment of interest under section 86 or 87 of that Act) for the words " or 87 " there shall be substituted the words " , 86A or 87 ".

(2) In section 86A of that Act (interest on unpaid tax)—

(a) in subsection (1) the words "then, except as provided by paragraph 12 of Schedule 7 to the Development Land Tax Act 1976" shall be omitted and for the words " that Act " there shall be substituted the words " the Development Land Tax Act 1976 "; and

(b) in subsection (5) for " £10 " there shall be substituted " £30 ".

(3) In paragraph 39(4) of Schedule 8 to the [1976 c. 24.] Development Land Tax Act 1976 (notice of disposals) for the words " section 24(6) of this Act" there shall be substituted the words " section 24(2) of this Act ".

(4) Paragraph (a) of subsection (2) above has effect in relation to tax on disposals after 5th August 1980, paragraph (b) of that subsection has effect in relation to interest on tax charged by assessments notice of which is issued after the passing of this Act and subsection (3) above has effect in relation to disposals after 25th March 1980.

116 Miscellaneous amendments

(1) in section 5(1)(b) and (c) and (6)(ii) of the Development Land Tax Act 1976 (relevant base value calculated by reference to 110 per cent, of current use value or of cost of acquisition) for the words " 110 per cent." there shall be substituted the words " 115 per cent. ".

(2) In section 12(5) of that Act (exclusion of exemption where chargeable person acquired interest from connected person for a consideration less than market value)—

(a) in paragraph (b) before the words " for a consideration " there shall be inserted the words " for no consideration or; " and

(b) in paragraph (c) there shall be inserted at the end the words " being either a part disposal or a disposal of an interest resulting from a part disposal made after the date and within the period mentioned in paragraph (a) above by a person who at the time of the part disposal was connected for the purposes of that Act with the person to whom the part disposal was made ".

(3) In section 19(1)(iii) and (7) and section 23(1)(iii) of that Act (deferment of tax on deemed disposal of industrial land or land of statutory undertakers not terminated by subsequent disposal forming part of a sale and lease-back transaction) for the words " a sale and lease-back transaction " there shall be substituted the words " a lease-back transaction ";

and in section 19(7)(a) of that Act (which defines such a transaction by reference to part disposals falling within paragraph (b) of subsection (1) of section 3 of that Act) for the words " paragraph (b) of subsection (1) of section 3 " there shall be substituted the words " section 3(1) ".

(4) In section 23(1)(ii) of that Act (deferment of tax for statutory undertakers until disposal of relevant interest) after the words " a disposal " there shall be inserted the words " which is to other statutory undertakers and ".

(5) In paragraph 5 of Schedule 4 to that Act (development excluded from material development)—

(a) in sub-paragraph (3) (a) for the words " where any development extends to two or more buildings within the same curtilage, those buildings" there shall be substituted the words " two or more buildings within the same curtilage ";

(b) after sub-paragraph (3) there shall be inserted—

“(4) The rebuilding referred to in paragraph (b) of sub-paragraph (1) above may be on a different site within the same curtilage.”

(6) Subsections (1) and (5) above have effect in relation to disposals after 25th March 1980, subsection (2) above has effect where the acquisition referred to in section 12(5) is after that date and subsections (3) and (4) above have effect where the subsequent disposal referred to in section 19(1) or 23(1) is after that date.

PART VIII Miscellaneous and Supplementary

117 Demergers

Schedule 18 to this Act shall have effect for facilitating certain transactions whereby trading activities carried on by a single company or group are divided so as to be carried on by two or more companies not belonging to the same group or by two or more independent groups.

118 National Heritage Memorial Fund

(1) There shall on a claim in that behalf to the Board be allowed in the case of the Trustees of the National Heritage Memorial Fund (in this section referred to as " the Trustees ") such exemption from tax as falls to be allowed under section 360 of the Taxes Act in the case of a charity the whole income of which is applied to charitable purposes.

(2) The Trustees shall be exempt from tax in respect of all chargeable gains.

(3) The Trustees shall be treated for the purposes of section 434(2) of the Taxes Act (covenanted payments to charities), section 49(2) of the [1974 c. 30.] Finance Act 1974 (relief from stamp duty) and sections 54 and 99 above as a body of persons established for charitable purposes only.

(4) Section 24 of the [1976 c. 24.] Development Land Tax Act 1976 (exemption of charities) and section 57 of the [1977 c. 36.] Finance Act 1977 (exemption of charities from national insurance surcharge) shall have effect as if the Trustees were a charity within the meaning of section 360 of the Taxes Act.

(5) In paragraph 12(1) of Schedule 6 to the [1975 c. 7.] Finance Act 1975 (capital transfer tax exemptions) after the entry relating to the National Art Collections Fund there shall be inserted—

• “The Trustees of the National Heritage Memorial Fund”.

(6) This section shall be deemed to have come into force on 1st April 1980.

119 Transfer of assets of public corporations

(1) Subject to subsection (2) below, the successor company in which the property, rights, liabilities and obligations of the British Airways Board are vested by any Act passed in the same Session as this Act shall be treated for all purposes of corporation tax and development land tax as if it were the same person as the British Airways Board; and the successor company to which the undertaking of the National Freight Corporation is transferred by any such Act shall be treated for those purposes as if it were the same person as the National Freight Corporation.

(2) A successor company shall not by virtue of subsection (1) above be regarded as a body falling within section 272(5) of the Taxes Act (bodies established for carrying on industries or undertakings under national ownership or control) or subsection (10) of section 23 of the [1976 c. 24.] Development Land Tax Act 1976 (statutory undertakers); and subsection (1) above shall not be regarded as preventing the vesting in a successor company of an interest of the British Airways Board or the National Freight Corporation constituting a disposal for the purposes of the said section 23.

(3) The transfer by any such Act as is mentioned in subsection (1) above from the British Airways Board to the successor company of liability for any loan made to the Board shall not affect any direction in respect of the loan which has been given by the Treasury under section 416 of the Taxes Act (income tax exemption for interest on foreign currency securities).

(4) The fact that the Secretary of State has power to give directions to the National Enterprise Board, the Scottish Development Agency or the Welsh Development Agency as to the making of a transfer of securities or other property held by them shall not be regarded as constituting an arrangement within the meaning of section 92(9) of the [1972 c. 41.] Finance Act 1972 or section 29 of the [1973 c. 51.] Finance Act 1973 (which deny relief for advance corporation tax and losses within a group where certain arrangements exist).

120 National Savings Bank

(1) Subject to subsection (2) below, all sums received by the Director of Savings as investment deposits with the National Savings Bank shall from time to time be paid by him into the National Loans Fund in accordance with directions given by the Treasury ; and the sums required for repaying, or paying interest on, investment deposits with the Bank shall be charged on that Fund with recourse to the Consolidated Fund.

(2) There may be retained by the Director of Savings out of the sums received by him as mentioned in subsection (1) above such amounts as may be required by him as a working balance; and there shall be paid to him from time to time out of the National Loans Fund (or, as the case may be, the Consolidated Fund) the sums required for repaying, or paying interest on, investment deposits or for increasing his working balance.

(3) The amounts to be retained by or paid to the Director of Savings under subsection (2) above shall be determined by agreement between him and the Treasury.

(4) The Director of Savings shall keep an account of all sums—

(a) received and paid by him in respect of investment deposits;

(b) paid by him into or received by him out of the National Loans Fund; or

(c) received by him out of the Consolidated Fund,

and shall prepare a statement of that account as respects each year ending with 31st December.

(5) The statement prepared for each year under subsection (4) above shall, before the end of May next following the expiration of the year, be transmitted to the Comptroller and Auditor General who shall examine, certify and report on it and lay copies of it, together with copies of his report, before Parliament.

(6) The expenses of the Director of Savings in connection with investment deposits shall be defrayed out of moneys provided by Parliament.

(7) Sections 21 to 23 of the [1971 c. 29.] National Savings Bank Act 1971 and so much of section 25 of that Act as relates to investment deposits shall cease to have effect; and Schedule 19 to tins Act shall have effect as respects the transition from those provisions to the foregoing provisions of this section.

(8) The rate of interest on investment deposits shall be determined by the Treasury instead of by the Director of Savings with the consent of the Treasury ; and in the case of an alteration in a rate of interest not affecting deposits received before it is made, the notice of the alteration required by section 6 of the said Act of 1971 may be given after the making of the alteration.

(9) Subsections (1) to (7) above have effect from 1st January 1981 and subsection (8) above from the passing of this Act.

(10) This section and Schedule 19 to this Act shall be construed as one with the said Act of 1971.

121 Penalties

(1) The Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 shall be amended as follows.

(2) At the end of the first column there shall be inserted—

“Paragraph 6(9) of Schedule 1 of the Capital Gains Tax Act 1979; Sections 30(5) and 67(4) of the Finance Act 1980 and paragraph 25 of Schedule 10, paragraph 4(3) of Schedule 12 and paragraphs 21 and 22 of Schedule 18 to that Act.”

(3) At the end of the second column there shall be inserted—

“Sections 30(4) and 67(2) of the Finance Act 1980 and paragraph 4(1) of Schedule 12 and paragraphs 19 and 20 of Schedule 18 to that Act.”

122 Short title, interpretation, construction and repeals

(1) This Act may be cited as the Finance Act 1980.

(2) In this Act " the Taxes Act " means the [1970 c. 10.] Income and Corporation Taxes Act 1970.

(3) In this Act—

(a) Part III, so far as it relates to income tax, shall be construed as one with the Income Tax Acts, so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts and, so far as it relates to capital gains tax, shall be construed as one with the [1979 c. 14.] Capital Gains Tax Act 1979 ; and

(b) Part IV shall be construed as one with Part III of the [1975 c. 7.] Finance Act 1975.

(4) The enactments mentioned in Schedule 20 to this Act (which include spent enactments) are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.