Income and Corporation Taxes Act 1988

CHAPTER IIIU.K. UNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.

Unit trust schemesU.K.

468 Authorised unit trusts.U.K.

(1)M1In respect of income arising to the trustees of an authorised unit trust, and for the purposes of the provisions relating to relief for capital expenditure, the Tax Acts shall have effect as if—

(a)the trustees were a company resident in the United Kingdom; and

(b)the rights of the unit holders were shares in the company;

[F1but paragraph (b) above is without prejudice to the making of distributions which are interest distributions (within the meaning of [F2regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 18(3) of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964))]) to unit holders].

[F3(1A)In relation to any authorised unit trust the rate of corporation tax for the financial year 1996 and subsequent financial years shall be deemed to be the rate at which income tax at the [F4basic rate] is charged for the year of assessment which begins on 6th April in the financial year concerned [F5and section 13 shall not apply].]

(2)F6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)References in the Corporation Tax Acts to a body corporate shall be construed in accordance with [F7subsection (1) above], and section [F8234A] shall apply with any necessary modifications.

(4)F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)[F11 Subject to subsections (7) to (9) below] in this section—

  • authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section [F12 243 of the Financial Services and Markets Act 2000] is in force during the whole or part of that accounting period;

  • F13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme; F14. . .

  • F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F15(7)Each of the parts of an umbrella scheme shall be regarded for the purposes of this Chapter as an authorised unit trust and the scheme as a whole shall not be so regarded.

(8)In this section, “umbrella scheme” means a unit trust scheme—

(a)which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them;

(b)under which the participants are entitled to exchange rights in one pool for rights in another; and

(c)in the case of which an order under section [F12243 of the Financial Services and Markets Act 2000] is in force;

and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.

(9)In relation to a part of an umbrella scheme, any reference—

(a)to investments subject to the trusts of an authorised unit trust, shall have effect as a reference to such of the investments as under the arrangements form part of the separate pool to which the part of the umbrella scheme relates; and

(b)to a unit holder, shall have effect as a reference to a person for the time being having rights in that separate pool.]

Textual Amendments

F1Words in s. 468(1) inserted (with effect in accordance with Sch. 14 para. 7 of the amending Act) by Finance Act 1994 (c. 9), Sch. 14 para. 3(2)

F2Words in s. 468(1) substituted (1.4.2006 with effect in accordance with reg. 1(2) of the amending S.I.) by The Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964), regs. 1(1), 88(2)

F3S. 468(1A) inserted (with effect in accordance with Sch. 6 paras. 10(2), 28 of the amending Act) by Finance Act 1996 (c. 8), Sch. 6 para. 10(1)

F4Words in s. 468(1A) substituted (with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 41

F5Words in s. 468(1A) substituted (with effect in accordance with s. 26(8)-(11) of the amending Act) by Finance Act 2006 (c. 25), s. 26(4)

F6S. 468(2) repealed (with effect in accordance with Sch. 14 para. 7 of the repealing Act) by Finance Act 1994 (c. 9), Sch. 14 para. 3(3), Sch. 25 Pt. 5(13), Note

F7Words in s. 468(3) substituted (with effect in accordance with Sch. 14 para. 7 of the amending Act) by Finance Act 1994 (c. 9), Sch. 14 para. 3(4)

F8Words in s. 468(3) substituted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 32(3)(4)

F9S. 468(4) repealed (28.9.2004 with effect in accordance with art. 1(2) of the repealing S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 2, Sch. para. 20

F11Words in s. 468(6) inserted (with effect in accordance with s. 113(4)-(11) of the amending Act) by Finance Act 1994 (c. 9), s. 113(1)

F13S. 468(6): definition of "distribution period" repealed (with effect in accordance with Sch. 14 para. 7 of the repealing Act) by Finance Act 1994 (c. 9), Sch. 14 para. 3(5), Sch. 26 Pt. 5(13), Note

F14S. 468(6): definition of "unit trust scheme" and preceding word repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 85(3), Sch. 3 Pt. 1 (with Sch. 2)

F15S. 468(7)-(9) added (with effect in accordance with s. 113(4)-(11) of the amending Act) by Finance Act 1994 (c. 9), s. 113(2)

Modifications etc. (not altering text)

C1S. 468 modified (28.4.1997) by The Open-ended Investment Companies (Tax) Regulations 1997 (S.I 1997/1154), regs. 1, 9, 10 (as amended (1.12.2001) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 166)

C3 Definition employed for the purposes of s.46(7)—insurance companies: annual deemed disposal of holdings of unit trusts etc.

Marginal Citations

M1Source—1970 ss.354, 358; 1980 s.60; 1987 s.38, 40(1); 1987 (No.2) s.40(1)

[F16468AA Authorised unit trusts: futures and options.U.K.

F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F17S. 468AA repealed (with effect in accordance with s. 83(3) of the repealing Act) by Finance Act 2002 (c. 23), Sch. 27 para. 6, Sch. 40 Pt. 3(13), Note (with Sch. 28)

[F18468A Certified unit trusts.U.K.

F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F20468AOpen-ended investment companiesU.K.

(1)In relation to an open-ended investment company the rate of corporation tax for the financial year 2005 and subsequent financial years shall be deemed to be the rate at which income tax at the [F21basic rate] is charged for the year of assessment which begins on 6th April in the financial year concerned [F22(and section 13 shall not apply)].

(2)In this section “open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.

(3)Each of the parts of an umbrella company shall be regarded for the purposes of this section as an open-ended investment company and the umbrella company as a whole shall not be so regarded (and shall not, unless an enactment expressly provides otherwise, be regarded as a company for any other purpose of the Tax Acts).

(4)In subsection (3) “umbrella company” means an open-ended investment company—

(a)in respect of which the instrument of incorporation provides arrangements for separate pooling of the contributions of the shareholders and the profits or income out of which payments are to be made to them, and

(b)the shareholders of which are entitled to exchange rights in one pool for rights in another,

and a reference to part of an umbrella company is a reference to a separate pool.]

Textual Amendments

F21Words in s. 468A(1) substituted (with effect in accordance with Sch. 1 para. 65 of the amending Act) by Finance Act 2008 (c. 9), Sch. 1 para. 42

F22Words in s. 468A(1) substituted (with effect in accordance with s. 26(8)-(11) of the amending Act) by Finance Act 2006 (c. 25), s. 26(5)

Modifications etc. (not altering text)

C4S. 468A(2)(3)(4) applied (1.4.2009 with effect in accordance with s. 1329(1) of the affecting Act) by Corporation Tax Act 2009 (c. 4), s. 488 (with Sch. 2 Pts. 1, 2)

F23468B Certified unit trusts: corporation tax.U.K.

F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F25468C Certified unit trusts: distributions.U.K.

F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F27468D Funds of funds: distributions.U.K.

F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F29468E Authorised unit trusts: corporation tax.U.K.

F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F30S. 468E repealed (with effect in accordance with Sch. 6 paras. 10(3), 28 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(1), Note 1

[F31468EE Corporation tax: cases where lower rate applies.U.K.

F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F32S. 468EE repealed (with effect in accordance with Sch. 6 paras. 10(3), 28 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(1), Note 1

F33468F Authorised unit trusts: distributions.U.K.

F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F34S. 468F repealed (with effect in accordance with Sch. 14 para. 7 of the repealing Act) by Finance Act 1994 (c. 9), Sch. 14 para. 4, Sch. 26 Pt. 5(13), Note

F35468G Dividends paid to investment trusts.U.K.

F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F36S. 468G repealed (with effect in accordance with Sch. 14 para. 7 of the repealing Act) by Finance Act 1994 (c. 9), Sch. 14 para. 4, Sch. 26 Pt. 5(13), Note

[F37 Distributions of authorised unit trusts: generalU.K.

Textual Amendments

F37Ss. 468H-468R and cross-headings inserted (with effect in accordance with Sch. 14 para. 7 of the amending Act) by Finance Act 1994 (c. 9), Sch. 14 para. 2

468H Interpretation.U.K.

F38. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

468I Distribution accounts.U.K.

F39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Dividend and foreign income distributionsU.K.

468J Dividend distributions.U.K.

F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

468K Foreign income distributions.U.K.

F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F41S. 468K repealed (with effect in accordance with s. 36, Sch. 6 para. 8(9) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 6 para. 8(4), Sch. 8 Pt. 2(11)

Interest distributionsU.K.

468L Interest distributions.U.K.

F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F43468M Cases where no obligation to deduct taxU.K.

F44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F43S. 468M substituted for ss. 468M, 468N (with effect in accordance with s. 203(14) of the amending Act) by Finance Act 2003 (c. 14), s. 203(3)

468N. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
468O Residence condition [F45and reputable intermediary condition].U.K.

F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F45Words in s. 468O sidenote inserted (with effect in accordance with s. 203(14) of the amending Act) by Finance Act 2003 (c. 14), s. 203(7)

468P Residence declarations.U.K.

F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F48468PASection 468O(1A): consequences of reasonable but incorrect beliefU.K.

F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F48Ss. 468PA, 468PB inserted (with effect in accordance with s. 203(14) of the amending Act) by Finance Act 2003 (c. 14), s. 203(9)

468PBRegulations supplementing sections 468M to 468PAU.K.

F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F48Ss. 468PA, 468PB inserted (with effect in accordance with s. 203(14) of the amending Act) by Finance Act 2003 (c. 14), s. 203(9)

Distributions to corporate unit holderU.K.

468Q Dividend distribution to corporate unit holder.U.K.

F51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

468R Foreign income distribution to corporate unit holder.U.K.

F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F52S. 468R repealed (with effect in accordance with s. 36, Sch. 6 para. 8(9) of the repealing Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 6 para. 8(7), Sch. 8 Pt. 2(11), Note

469 Other unit trusts.U.K.

(1)This section applies to—

(a)M2any unit trust scheme [F53that is [F54an unauthorised unit trust within the meaning of section 989 of ITA 2007]]; F55. . .

(b)F55. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

except where the trustees of the scheme are not resident in the United Kingdom.

(2)Income arising to the trustees of the scheme shall be regarded for the purposes of the [F56Corporation Tax Acts] as income of the trustees (and not as income of the unit holders) [F57; and the trustees (and not the unit holders) shall be regarded as the persons to or on whom allowances or charges are to be made under the provisions of those Acts relating to relief for capital expenditure]F58. . . .

[F59(2A)F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F61(2B)F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]]

(3)F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F62(4A)F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4B)F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4C)F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4D)F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(5)F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F64(5A)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5B)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5C)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5D)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(6)F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F66(6A)F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(7)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10)F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11)This section shall have effect in relation to distribution periods beginning on or after 6th April 1987.

Textual Amendments

F53Words in s. 469(1)(a) substituted (with effect in accordance with s. 113(4)-(11) of the amending Act) by Finance Act 1994 (c. 9), s. 113(3)(a)

F54Words in s. 469(1) substituted (3.2.2009 with effect in accordance with art. 1(2) of the amending S.I.) by The Income Tax Act 2007 (Amendment) Order 2009 (S.I. 2009/23), arts. 1(1), 2(2)

F55S. 469(1)(b) and preceding word repealed (with effect in accordance with Sch. 41 Pt. 5(1) Note 2 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(1)

F56Words in s. 469(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 87(2)(a) (with Sch. 2)

F57Words in s. 469(2) inserted (3.2.2009 with effect in accordance with art. 1(2) of the amending S.I.) by The Income Tax Act 2007 (Amendment) Order 2009 (S.I. 2009/23), arts. 1(1), 2(3)

F58Words in s. 469(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 87(2)(b), Sch. 3 Pt. 1 (with Sch. 2)

F59S. 469(2A)(2B) inserted (with effect in accordance with Sch. 4 para. 12(5) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 12(3)

F60S. 469(2A)-(4) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 87(3), Sch. 3 Pt. 1 (with Sch. 2)

F61S. 469(2B) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 181(3) (with Sch. 2)

F62S. 469(4A)-(4D) inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 87(4) (with Sch. 2)

F63S. 469(4A)-(5)(6) repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 157, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F65S. 469(5A)-(5D)(7)-(10) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 87(6), Sch. 3 Pt. 1 (with Sch. 2)

F66S. 469(6A) inserted (with effect in accordance with s. s. 113(4)-(11) of the amending Act) by Finance Act 1994 (c. 9), s. 113(3)(b)

F67S. 469(6A) omitted (3.2.2009 with effect in accordance with art. 1(2) of the repealing S.I.) by virtue of The Income Tax Act 2007 (Amendment) Order 2009 (S.I. 2009/23), arts. 1(1), 2(4)

Modifications etc. (not altering text)

Marginal Citations

M2Source—1970 s.354A; 1987 s.39; 1987 (No.2) s.40(1)

[F68469A Court common investment funds.U.K.

(1)The Tax Acts shall have effect in relation to any common investment fund established under section 42 of the M3Administration of Justice Act 1982 (common investment funds for money paid into court) as if—

(a)the fund were an authorised unit trust;

(b)the person who is for the time being the investment manager of the fund were the trustee of that authorised unit trust; and

(c)[F69the persons with qualifying interests] were the unit holders in that authorised unit trust.

[F70(1A)For the purposes of subsection (1)(c) above, the persons with qualifying interests are—

(a)in relation to shares in the fund held by the Accountant General, the persons whose interests entitle them, as against him, to share in the fund’s investments;

(b)in relation to shares in the fund held by any other person authorised by the Lord Chancellor to hold such shares on behalf of others (an “authorised person”)—

(i)if there are persons whose interests entitle them, as against the authorised person, to share in the fund’s investments, those persons;

(ii)if not, the authorised person;

(c)in relation to shares in the fund held by persons authorised by the Lord Chancellor to hold such shares on their own behalf, those persons.]

(2)In this section “the Accountant General” means F71. . . the Accountant General of the [F72Senior Courts of] England and Wales or the Accountant General of the [F73Court of Judicature of] Northern Ireland.

(3)F74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F68S. 469A inserted (with effect in accordance with s. 68(3)-(5) of the amending Act) by Finance Act 1999 (c. 16), s. 68(1)

F69Words in s. 469A(1)(c) substituted (with effect in accordance with s. 183(4) of the amending Act) by Finance Act 2003 (c. 14), s. 183(2)

F70S. 469A(1A) inserted (with effect in accordance with s. 183(4) of the amending Act) by Finance Act 2003 (c. 14), s. 183(3)

F71Words in s. 469A(2) repealed (with effect in accordance with Sch. 43 Pt. 3(17) Note of the repealing Act) by Finance Act 2003 (c. 14), Sch. 43 Pt. 3(17)

F74S. 469A(3) repealed (with effect in accordance with Sch. 43 Pt. 3(17) Note of the repealing Act) by Finance Act 2003 (c. 14), Sch. 43 Pt. 3(17)

Marginal Citations

470 Transitional provisions relating to unit trusts.U.K.

(1)F75. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F76(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F75. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F76S. 470(2) ceased to have effect (29.4.1988) by virtue of s. 470(3) below and S.I. 1988/745, art. 2

Dealers in securities, banks and insurance businessesU.K.

471 Exchange of securities in connection with conversion operations, nationalisation etc.U.K.

F77. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F77S. 471 repealed (with effect in accordance with s. 101(3) of the repealing Act) by Finance Act 1998 (c. 36), s. 101(1), Sch. 27 Pt. 3(23), Note 1

472 Distribution of securities issued in connection with nationalisation etc.U.K.

F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F78S. 472 repealed (with effect in accordance with s. 101(4) of the repealing Act) by Finance Act 1998 (c. 36), s. 101(2), Sch. 27 Pt. 3(23), Note 2

[F79472ATrading profits etc. from securities: taxation of amounts taken to reservesU.K.

F80. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F79S. 472A inserted (with effect in accordance with s. 54(2) of the amending Act) by Finance Act 2004 (c. 12), s. 54 (as amended (retrospectively) by Finance Act 2005 (c.7), Sch. 4 para. 50, Sch. 11 Pt. 2(7))

F80S. 472A repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 158, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

473 Conversion etc. of securities held as circulating capital.U.K.

F81. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F81S. 473 repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 159, Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

474 Treatment of tax-free income.U.K.

(1)F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F84(3)F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F82S. 474(1)(3) repealed (with effect in accordance with Sch. 7 para. 32-35, Sch. 41 Pt. 5(2) Note of the repealing Act) by Finance Act 1996 (c. 8). Sch. 7 para. 18, Sch. 41 Pt. 5(2)

F83S. 474(2) repealed (with effect in accordance with s. 154(9) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 28 para. 2, Sch. 41 Pt. 5(18), Note

F84S. 474(3) inserted (with effect in accordance with Sch. 8 para. 55 of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 25(2)

475] Tax-free Treasury securities: exclusion of interest on borrowed money.U.K.

[F85(1)This section has effect where a banking business, an insurance business or a business consisting wholly or partly in dealing in securities—

(a)is carried on in the United Kingdom by a person not ordinarily resident there; and

(b)in computing for any of the purposes of [F86the Income Tax Acts] the profits arising from, or loss sustained, in the business, any amount which would otherwise be brought into account is disregarded by virtue of a condition subject to which any 3½% War Loan 1952 or after was issued;

and for this purpose insurance business includes insurance business of any category.]

(2)Up to the amount determined under this section (“the amount ineligible for relief”), interest on money borrowed for the purposes of the business—

(a)shall be excluded in any computation under [F86the Income Tax Acts] of the profits (or losses) arising from the business F87. . . , F88. . .

[F89(b)F88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3)Subject to subsection (4) below, in determining the amount ineligible for relief, account shall be taken of all money borrowed for the purposes of the business which is outstanding in the accounting or basis period, up to the total cost of the [F903½% War Loan 1952 or after] held for the purpose of the business in that period.

(4)Where the person carrying on the business is a company, account shall not be taken of any borrowed money carrying interest which, apart from subsection (2) above, does not fall to be included in the computations under paragraph (a) of that subsection F91. . . .

(5)F92. . . The amount ineligible for relief shall be equal to a year’s interest on the amount of money borrowed which is to be taken into account under subsection (3) above at a rate equal to the average rate of interest in the accounting or basis period on money borrowed for the purposes of the business, except that in the case of a period of less than 12 months interest shall be taken for that shorter period instead of for a year.

(6)F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7)F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8)For the purposes of this section the cost of a holding of [F903½% War Loan 1952 or after] which has fluctuated in the accounting or basis period shall be the average cost of acquisition of the initial holding, and of any subsequent acquisitions in the accounting or basis period, applied to the average amount of the holding in the accounting or basis period, F94. . . .

(9)In this section “accounting or basis period” means the company’s accounting period or the period by reference to which the profits or gains arising in the year of assessment are to be computed.

Textual Amendments

F85S. 475(1) substituted (with effect in accordance with s. 154(9) of the amending Act) by Finance Act 1996 (c. 8), Sch. 28 para. 3(1)

F86Words in s. 475(1)(b)(2)(a) substituted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 160(a) (with Sch. 2 Pts. 1, 2)

F87Words in s. 475(2)(a) repealed (with effect in accordance with Sch. 8 para. 55 of the repealing Act) by Finance Act 1995 (c. 4), Sch. 8 para. 25(1)(b), Sch. 29 Pt. 8(5), Note 1

F88S. 475(2)(b) and preceding word repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 160(b), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F89S. 475(2)(b) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 27(1) (with Sch. 15)

F90Words in s. 475(3)(8) substituted (with effect in accordance with s. 154(9) of the amending Act) by Finance Act 1996 (c. 8), Sch. 28 para. 3(2)

F91Words in s. 475(4) repealed (1.4.2009 with effect in accordance with s. 1329(1) of the repealing Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 160(c), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F92Words in s. 475(5) repealed (with effect in accordance with s. 154(9) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(18), Note

F93S. 475(6)(7) repealed (with effect in accordance with s. 154(9) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(18), Note

F94Words in s. 475(8) repealed (with effect in accordance with s. 154(9) of the repealing Act) by Finance Act 1996 (c. 8), Sch. 41 Pt. 5(18), Note