(1)Section 505(1) of the Taxes Act 1988 (exemptions for charities) shall be amended as follows.
(2)For paragraph (a) (rents etc.) there shall be substituted the following paragraph—
“(a)exemption from tax under Schedules A and D in respect of any profits or gains arising in respect of rents or other receipts from an estate, interest or right in or over any land (whether situated in the United Kingdom or elsewhere) to the extent that the profits or gains—
(i)arise in respect of rents or receipts from an estate, interest or right vested in any person for charitable purposes; and
(ii)are applied to charitable purposes only;”.
(3)For sub-paragraph (ii) of paragraph (c) (yearly interest and annual payments) there shall be substituted the following sub-paragraphs—
“(ii)from tax under Case III of Schedule D,
(iia)from tax under Case IV or V of Schedule D in respect of income equivalent to income chargeable under Case III of that Schedule but arising from securities or other possessions outside the United Kingdom,
(iib)from tax under Case V of Schedule D in respect of income consisting in any such dividend or other distribution of a company not resident in the United Kingdom as would be chargeable to tax under Schedule F if the company were so resident, and”.
(4)In paragraph (e) (trading profits), after “by a charity” there shall be inserted “ (whether in the United Kingdom or elsewhere) ”.
(5)This section has effect—
(a)for the purposes of income tax, for the year 1996-97 and subsequent years of assessment; and
(b)for the purposes of corporation tax, in relation to accounting periods ending after 31st March 1996.