Finance (No. 2) Act 1992

Adjusted profits etc.

11 (1) This paragraph applies if—

(a) an individual is a qualifying individual for a year of assessment,

(b) the amount of the sums mentioned in paragraph 2(1) above exceeds the individual’s limit for the year, and

(c) an election that this paragraph shall apply to the individual for the year has effect under paragraph 12 below.

(2) In a case where—

(a) this paragraph applies, and

(b) the sums mentioned in paragraph 2(1) above are treated for income tax purposes as derived from a single source,

the profits or gains of any period which as regards the year is a basis period for the source shall be treated for the purposes of the Tax Acts as equal to the amount found by deducting amount B from amount A.

(3) For the purposes of sub-paragraph (2) above—

(a) amount A is the amount of the sums mentioned in paragraph 2(1) above;

(b) amount B is the amount of the individual’s limit for the year.

(4) In a case where—

(a) this paragraph applies, and

(b) the sums mentioned in paragraph 2(1) above are treated for income tax purposes as derived from two or more separate sources,

the profits or gains of any period which as regards the year is a basis period for a separate source shall be treated for the purposes of the Tax Acts as equal to the amount found by deducting amount D from amount C.

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

(a) amount C is the amount of such of the sums mentioned in paragraph 2(1) above as are treated for income tax purposes as derived from the separate source, and

(b) amount D is the amount found by multiplying the amount of the individual’s limit for the year by the appropriate fraction;

and the appropriate fraction is the fraction whose numerator is equal to the number of pounds in amount C and whose denominator is equal to the number of pounds in the sums mentioned in paragraph 2(1) above.

(6) Where this paragraph applies no allowance shall be made for the year to the individual under section 24 of the [1990 c. 1.] Capital Allowances Act 1990 in respect of any machinery or plant provided for the purposes of any trade from which any of the sums mentioned in paragraph 2(1) above are derived.

(7) In ascertaining the amount of sums for the purposes of this paragraph no deduction shall be made in respect of expenses or any other matter.

12 (1) An individual may elect that paragraph 11 above shall apply to him for a year of assessment.

(2) An election under this paragraph—

(a) shall (unless withdrawn) have effect for the year of assessment for which it is made and for subsequent years of assessment,

(b) must be made before the end of the period of one year beginning with the end of the year of assessment for which it is made or such longer period as the Board may in any particular case allow, and

(c) must be made in writing to the inspector.

(3) An individual who has made an election under this paragraph may give a notice to withdraw the election, and if he does so the election shall not have effect for the year of assessment for which the notice is given or any subsequent year.

(4) A notice of withdrawal under this paragraph—

(a) must be given before the end of the period of one year beginning with the end of the year of assessment for which it is given or such longer period as the Board may in any particular case allow,

(b) must be given in writing to the inspector, and

(c) shall not prejudice the making of a fresh election for any subsequent year of assessment.

(5) Sub-paragraph (6) below applies where—

(a) an individual is a qualifying individual for a year of assessment,

(b) the amount of the sums mentioned in paragraph 2(1) above does not exceed the individual’s limit for the year, and

(c) an election under this paragraph has effect (apart from sub-paragraph (6) below) for the year.

(6) In such a case—

(a) the individual shall be deemed to have given notice to withdraw the election for the year of assessment concerned,

(b) the notice shall be deemed to have been given on the last day of the period of one year beginning with the end of the year of assessment concerned, and

(c) sub-paragraphs (3) and (4)(c) above and (7) below shall apply accordingly.

(7) In a case where—

(a) an election is made, or a notice to withdraw an election is given, under this paragraph, and

(b) in order to give effect to the election or its withdrawal it is necessary to make an adjustment by way of an assessment,

the assessment shall not be out of time if it is made before the end of the period of one year beginning with the day when the election was made or (as the case may be) the notice to withdraw was given.