Finance (No. 2) Act 1992

Section 59.

SCHEDULE 10 Furnished Accommodation

Introduction

1 Paragraphs 2 to 8 below apply for the purposes of this Schedule.

2 (1) An individual is a qualifying individual for a year of assessment if apart from this Schedule he would be chargeable for the year to income tax under Case I or Case VI of Schedule D (or both those Cases) in respect of all relevant sums accruing to him in respect of a qualifying residence or qualifying residences; and it is immaterial whether the sums are treated for income tax purposes as derived from one source or from two or more separate sources.

(2) Relevant sums are sums accruing in respect of the use of furnished accommodation in the residence or any of the residences or in respect of relevant goods or services supplied in connection with that use.

(3) In a case where—

(a) the individual is chargeable for the year to income tax in respect of sums falling within sub-paragraph (4) below, and

(b) any of those sums are treated for income tax purposes as derived from a source mentioned in sub-paragraph (1) above,

the individual is not a qualifying individual for the year (if he would be apart from this sub-paragraph).

(4) Sums fall within this sub-paragraph if they are not relevant sums accruing to the individual in respect of the residence or residences.

3 As regards a year of assessment a period is a basis period for a source mentioned in paragraph 2(1) above if it is a period on whose profits or gains income tax for the year falls to be finally computed in respect of the source.

4 A residence is a qualifying residence if it is the individual’s only or main residence at any time in any period which as regards the year of assessment concerned is a basis period for a source mentioned in paragraph 2(1) above.

5 (1) This paragraph applies to determine an individual’s limit for a year of assessment.

(2) Subject to the following provisions of this paragraph, the limit is the basic amount for the year.

(3) For the purposes of sub-paragraph (4) below a relevant period is—

(a) any period which as regards the year is a basis period for a source mentioned in paragraph 2(1) above;

(b) any period of one year which begins at the same time as any period which is less than one year and falls within paragraph (a) above;

(c) any period of one year which ends at the same time as any period which is less than one year and falls within paragraph (a) above.

(4) In a case where—

(a) at any time in a relevant period sums accrue to a person or persons other than the individual in respect of the use of residential accommodation in the residence or any of the residences, or in respect of relevant goods or services supplied in connection with that use, and

(b) at that time the residence concerned is the individual’s only or main residence,

the limit is the amount equal to half the basic amount for the year.

6 The basic amount for a year of assessment is—

(a) such sum as may be specified for the year by order made by the Treasury;

(b) £3,250 if no sum is so specified.

7 “Residence” means a building, or part of a building, occupied or intended to be occupied as a separate residence, or a caravan or house-boat; but a building, or part of a building, which is designed for permanent use as a single residence shall be treated as a single residence notwithstanding that it is temporarily divided into two or more parts which are occupied or intended to be occupied as separate residences.

8 Relevant goods and services are meals, cleaning, laundry and goods and services of a similar nature.

Exemption etc.

9 (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 does not exceed the individual’s limit for the year, and

(c) no election that this paragraph shall not apply to the individual for the year has effect under paragraph 10 below.

(2) Where this paragraph applies the following shall be treated as nil for the purposes of the Tax Acts—

(a) the profits or gains of any period which as regards the year is a basis period for a source mentioned in paragraph 2(1) above;

(b) the losses of any such period.

(3) Where this paragraph applies no allowance or balancing charge shall be made for the year to or on 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.

(4) In a case where—

(a) apart from this sub-paragraph the preceding provisions of this paragraph would apply, and

(b) the amount of the sums mentioned in paragraph 2(1) above together with the amount of any relevant balancing charges would exceed the individual’s limit for the year,

the preceding provisions of this paragraph shall not apply.

(5) For the purposes of sub-paragraph (4) above a relevant balancing charge is a balancing charge which (apart from this paragraph) would be made for the year on 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.

(6) 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.

10 (1) An individual may elect that paragraph 9 above shall not apply to him for a year of assessment, and (unless withdrawn) the election shall have effect accordingly.

(2) An election under this paragraph shall have effect only for the year of assessment for which it is made.

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

(4) An election, or notice of withdrawal, under this paragraph—

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

(b) must be made or given in writing to the inspector.

(5) 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.

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.

Application of Schedule

13 This Schedule shall apply in relation to the year 1992-93 and subsequent years of assessment (whatever the basis period or periods for the source or sources mentioned in paragraph 2(1) above may be as regards the year of assessment concerned).