Finance Act 1977

In the Table in section 9 of the M1Finance (No. 2) Act 1975 (excise duty on spirits) for " 24.6300 " and " 24.7050 " there shall be substituted " 27.0900 " and "27.1650" respectively.

In section 10(1) of that Act (excise duty on beer) for "£15.8400" and "£0.5280" there shall be substituted " £17.4240 " and " £0.5808 " respectively.

For the provisions of Schedule 4 to that Act (rates of excise duty on wine) there shall be substituted the provisions of Schedule 1 to this Act.

For the provisions of Schedule 5 to that Act (rates of excise duty on made-wine) there shall be substituted the provisions of Schedule 2 to this Act.

In section 2(1) of the M2Finance Act 1976 (excise duty on cider) for " £0.22 " there shall be substituted " £0.242 ".

The rates of the duties of customs and excise chargeable under the provisions of subsection (1) of section 8 of the said Act of 1976 and the provisions mentioned in subsection (2) of that section (customs and excise duties on tobacco) shall each be increased by £0.585 per pound; and as respects tobacco on which there have been paid duties of customs and excise at the said increased rates, the rates of drawback allowable under those provisions shall each be increased by the like amount per pound.

In section 1(4) of the M3Finance Act 1973 (power to make orders before 1st July 1977 for giving effect to Community obligations in respect of tobacco duties) for the words " 1st July 1977 " there shall be substituted the words " 1st January 1978 " ; and subsection (6) above is without prejudice to the powers conferred by the said section 1(4).

The M4Surcharge on Revenue Duties Order 1976 (the effect of which is substantially reproduced by subsections (1) to (6) above) shall cease to have effect.

This section shall be deemed to have come into force on 30th March 1977.

For the purposes of paragraph 1 in the Table in the said section 4(1) any cigarette more than 9cm. long (excluding any filter or mouthpiece) shall be treated as if each 9cm. or part thereof were a separate cigarette ; and for the purposes of section 6 of the said Act of 1976 (power to alter rates of duty) the percentage and the amount per thousand cigarettes in that paragraph shall be treated as separate rates of duty.

The M5Tobacco Products Duty (Increase) Order 1976 shall cease to have effect,

The Treasury may by order provide that in the enactments relating to the duty charged by section 4 of the said Act of 1976 references to cigarettes, cigars, hand-rolling tobacco, other smoking tobacco and chewing tobacco shall or shall not include references to any product of a description specified in the order, being a product manufactured wholly or partly from tobacco or any substance used as a substitute for tobacco but not including products commonly known as herbal cigarettes or herbal smoking mixtures; and any such order may amend or repeal subsection (5) of that section.

The power to make orders under subsection (4) above includes power to vary or revoke a previous order and shall be exercisable by statutory instrument.

Subject to subsection (7) below, any order under subsection (4) above shall be laid before the House of Commons after being made; and unless it 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 thereunder 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.

Subsection (6) above shall not apply to any order containing a statement by the Treasury that the order does not extend the incidence of the duty or involve a greater charge to duty or a reduction of any relief; and any such order shall be subject to annulment in pursuance of a resolution of the House of Commons.

Subsections (1) to (3) above shall be deemed to have come into force on 4th April 1977.

If it is shown to the satisfaction of the Commissioners that any tobacco which has borne duty under section 4 of the said Act of 1964 on or after 10th May 1976 has been or will be used in the manufacture of tobacco products chargeable with duty under section 4 of the said Act of 1976 on or after the said 1st January, they shall make a repayment at the appropriate rate specified in Schedule 3 to this Act in respect of the duty borne by that tobacco as aforesaid; and the rate per pound at which drawback is allowable on tobacco in respect of which a repayment has been made under this subsection shall be reduced by an amount equal to the rate per pound at which the repayment was made.

Part V of the M8Customs and Excise Act 1952 (which contains provisions for the collection and management of the duties charged by section 4 of the said Act of 1964 and for the protection of the revenue arising from them) shall cease to have effect on 1st January 1978 except as respects drawback by virtue of events occurring on or before the date mentioned in subsection (3) above.

In section 12(1) of the said Act of 1971 (rebate on light oil for use as furnace fuel at a rate of 1p a gallon less than the rate at which the duty is charged) for " 1p " there shall be substituted " 2 ½ p ".

This section shall be deemed to have come into force at 6 o'clock in the evening of 29th March 1977 ; but as respects the period beginning at that time and ending at 6 o'clock in the evening of 8th August 1977 the rate of the duty of excise charged by section 11 of the said Act of 1975 shall, notwithstanding subsection (1) above, be £0.3500 a gallon in the case of light oil as well as heavy oil and the provisions mentioned in paragraph (b) of that subsection shall have effect accordingly.

The Commissioners may make repayments of duty at the rate of 5p a gallon under arrangements made by them for avoiding dislocation in the supply of petrol to retailers and distributors at the end of the period mentioned in subsection (5) above.

The M15Vehicles (Excise) Act 1971 shall be amended as follows.

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.

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 " £20 " and " £3.35 " there shall be substituted respectively " £25 " and " £5 ".

In section 2(1)(b) (four month licence for vehicles with annual rate exceeding £8) for " £8 " there shall be substituted " £18 ".

This section has effect in relation to licences taken out after 29th March 1977.

The M16Vehicles (Excise) Act (Northern Ireland) 1972 shall be amended as follows.

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 5 to this Act.

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 " £20 " and " £3.35 " there shall be substituted respectively " £25 " and " £5 ".

In section 2(1)(b) (four month licence for vehicles with annual rate exceeding £8) for " £8 " there shall be substituted " £18 ".

This section has effect in relation to licences taken out after 29th March 1977.

Any amendment of an enactment under this section shall be such as to preserve the effect of the enactment except to such extent as the Treasury consider necessary to enable a substituted unit or method of measurement to be applied in a convenient and suitable manner.

An order under this section may contain such transitional and other supplementary provisions as the Treasury think necessary.

The power to make orders under this section includes power to vary or revoke a previous order and shall be exercisable by statutory instrument.

Subject to subsection (6) below, any order under this section shall be laid before the House of Commons after being made ; and unless it 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 thereunder 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.

Subsection (5) above shall not apply to any order containing a statement by the Treasury that the order does not involve a greater charge to duty or a reduction of any relief, drawback, rebate or allowance; and any such order shall be subject to annulment in pursuance of a resolution of the House of Commons.

The Commissioners may, in accordance with subsection (2) below, make regulations applying in cases where any question as to the duties of customs chargeable on any goods depends on the use to be made of them.

In cases in which a Community instrument makes provision for the purpose of securing that the relevant use is made of the goods, regulations under this section may make provision for any matter which under the instrument is required or authorised to be dealt with by the authorities of member States or which otherwise arises out of the instrument; and in other cases regulations under this section may make such provision for that purpose as appears to the Commissioners to be necessary or expedient.

Section 257 of the Customs and Excise Act 1952 (forfeiture of goods relieved from duty) shall be amended in accordance with subsections (2) and (3) below.

In subsection (2) for the words "the observance of the condition " there shall be substituted the words " compliance with the condition or obligation ".

Section 10(2) of the M18Import Duties Act 1958 and paragraph 1(3)(b) of the Schedule to the M19Agriculture and Horticulture Act 1964 (which become unnecessary in consequence of the above amendments) shall cease to have effect.

Any question whether goods are at any time in free circulation in member States shall be determined in accordance with the Treaties.

The amount of the duty of customs or levy which, in any particular prescribed circumstances, is charged on or in respect of any goods by virtue of this section shall be such as, in accordance with the Treaties, may either be prescribed or determined in a prescribed manner.

Duties of customs charged by virtue of this section shall be treated as Community customs duties charged under subsection (1) of section 5 of the M20European Communities Act 1972 and levies charged by virtue of this section shall be treated as agricultural levies, as denned in subsection (8) of section 6 of that Act; and the provisions of, and of the enactments referred to in, those sections shall apply accordingly.

In this section " prescribed " means prescribed by regulations made by the Commissioners.

This section and, except in so far as any such regulations otherwise provide, any regulations made under it shall have effect in relation to goods imported into the United Kingdom on or after 1st July 1977.

This section applies where, in accordance with the M21Directive of the Council of the European Communities dated 15th March 1976 No. 76/308/EEC, an authority in a member State makes a request for the recovery in the United Kingdom of any sum claimed by that authority in that State.

Subject to the following provisions, where this section applies the Commissioners or the Intervention Board for Agricultural Produce may recover the sum specified in the request as if it were a debt due to the Crown.

Proceedings for the recovery of any sum under this section shall be stayed if the defendant satisfies the court that proceedings relevant to his liability on the claim in relation to which the request has been made are pending, or are about to be instituted, before a court, tribunal or other competent body in the member State in question; but any such stay may be removed if the proceedings in the member State are not prosecuted or instituted with reasonable expedition.

It shall be a defence to proceedings under this section for the defendant to show that a final decision on the claim has been given in his favour by a court, tribunal or other competent body in the member State in question; and if he shows that such a decision has been given in respect of part of the claim it shall be a defence to the proceedings in so far as they relate to that part.

For the purposes of subsection (3) above proceedings shall be regarded as pending so long as an appeal may be brought against any decision in the proceedings; and for the purposes of subsection (4) above a final decision is one against which no appeal lies or against which an appeal lies within a period which has expired without an appeal having been brought.

In proceedings under this section any averment in the pleadings that a request has been made as mentioned in subsection (1) above for the recovery of the sum which is the subject of the proceedings shall be conclusive evidence of that fact; and except as provided in subsection (4) above no question shall be raised in any such proceedings as to the defendant's liability on the claim in relation to which the request has been made.

This section shall not have effect in relation to a request for the recovery of any sum which became due before 15th March 1976.

This section shall be deemed to have come into force on 1st July 1977.

As from 1st January 1978, Part I of the M25Finance Act 1972 (which imposes the charge to value added tax) shall be amended as shown in Part I of Schedule 6 to this Act (these being amendments mainly to give effect to new Community provisions relating to the incidence and operation of the tax).

As from that date, in consequence of subsection (1), that Part of the 1972 Act, and the other enactments and subordinate legislation mentioned in Part II of that Schedule, shall have effect subject to the amendments there specified; and Part III of the Schedule shall have effect for transitional purposes.

Paragraphs 1 and 2 of Schedule 1 to the Finance Act 1972 (liability to be registered) shall be amended as follows.

In paragraph 1, in the provisions before the Table, for " £5,000 " (in both places) there shall be substituted " £7,500 " and in the second column of the Table for " 1,750 ", " 3,000 ", "4,250" and "5,000" there shall be substituted respectively " 2,625 ", " 4,500 ", " 6,375 " and " 7,500 ".

In paragraph 2 for " £4,000 " (in both places) there shall be substituted " £6,000 ", and for "£1,250 " there shall be substituted " £1,875 ".

In section 20(1) of that Act (registration of local authorities) for "£5,000" (in both places) there shall be substituted " £7,500 ".

Subsection (5) above shall not come into force until 5th August 1977, and subsections (1) to (4) not until 1st October 1977.

The Commissioners shall allow the claim if they are satisfied that to disallow it would result, in effect, in a double charge to tax; and where they allow it they shall do so only to the extent necessary to avoid the double charge.

In considering a claim under this section, the Commissioners shall have regard to the circumstances of the importation and, so far as appearing to them to be relevant, things done with, or occurring in relation to, the goods at any subsequent time.

Any amount allowed by the Commissioners on the claim shall be paid by them to the taxable person.

The reference above to a person's private purposes is to purposes which are not those of any business carried on by him.

The small companies rate for the financial year 1976 shall be 42 per cent., and for that year the fraction mentioned in subsection (2) of section 95 of the M27Finance Act 1972 (marginal relief for small companies) shall be four twenty-fifths.

For the financial year 1976 and subsequent financial years subsection (3) of the said section 95 shall have effect with the substitution for any reference to £30,000 of a reference to £40,000 and with the substitution for any reference to £50,000 of a reference to £65,000.

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.

In the year 1978-79 and subsequent years the personal reliefs allowed in this section shall be changed by not less than the same percentage as the increase in the retail price index for the previous calendar year :

Provided that the Treasury may by order, subject to approval before coming into effect by resolution of the House of Commons, prescribe a lesser relief in respect of any financial year, so long as those reliefs are not less than the levels provided for in subsection (1) above.

In section 14(2) and (3) of that Act (additional relief for widows and others in respect of children) for " £350 " there shall be substituted " £450 " ; and in the year 1978-79 and subsequent years the additional relief allowed in this section shall be increased by not less than the same percentage as the increase in the retail price index for the previous calendar year :

Provided that the Treasury may by order, subject to approval before coming into effect by resolution of the House of Commons, prescribe a lesser relief in respect of any financial year, so long as that lesser relief is not less than £420.

In section 219(2) of the Taxes Act (social security benefits exempt from tax) the word " and " shall be omitted and after " 1971 " there shall be inserted the words " and payments of child benefit ".

The amendments of the Income Tax Acts made by section 32(2), (3)(a) and (d), (4), (5) and (6) of the M29Finance Act 1976 shall not have effect.

Where for the year 1977-78 an individual is (or apart from this subsection would be) assessable to income tax in respect of payments in respect of a child, being payments to which this subsection applies, his income shall for the purposes of the Income Tax Acts be deemed to include only so much, if any, of the payments in respect of that child as exceeds £52 or, if the payments in question are payments for a part only of the year, a proportionate part of that amount.

Subsections (1) and (2) above shall be deemed to have come into force on 4th April 1977.

Except in the case of a child to whom section 25 or 26 below applies, the appropriate amount to be deducted from the claimant's total income under subsection (1) of section 10 of the Taxes Act (children) for the year 1977-78 shall, instead of being determined in accordance with subsection (3) of that section, be determined in accordance with subsections (2) and (3) below; and in those subsections " first child " means a child shown by the claimant to be the only or eldest child in respect of whom he is entitled under that section to a deduction of an amount determined in accordance with those subsections.

Where the appropriate amount for a child is required to be apportioned under section 11 of the Taxes Act between two or more individuals and the child is the first child in relation to any but not each of them, that amount shall be determined as if he were the first child in relation to each of them.

If in the case of a child in respect of whom a claim is made under section 10 of the Taxes Act (children) the claimant proves that the conditions in subsection (2) below are fulfilled, the appropriate amount to be deducted from the claimant's income under subsection (1) of that section for the year 1977-78 shall be determined in accordance with subsection (3) of that section as amended for the year 1976-77 by section 29(2) of the M32Finance Act 1976.

The countries and territories referred to in subsection (2)(a) above are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany (Federal Republic), Gibraltar, the Irish Republic, the Isle of Man, Israel, Italy, Jersey, Luxembourg, the Netherlands, New Zealand, Norway, Spain and Sweden.

If in the case of a child in respect of whom a claim is made under section 10 of the Taxes Act (children) the claimant proves that the conditions in subsection (2) below are fulfilled, the appropriate amount to be deducted from the claimant's income under subsection (1) of that section for the year 1977-78 and the three following years of assessment shall be determined in accordance with subsection (3) of that section as amended for the year 1976-77 by section 29(2) of the M35Finance Act 1976.

In the application of subsection (3) above to Scotland and Northern Ireland the Secretary of State and the Department of Education for Northern Ireland shall respectively be substituted for the Secretary of State for Education and Science.

This section does not affect relief for any year of assessment before the year 1977-78.

A payment on account of any allowance to which this section applies shall not be treated as income for any purposes of the Income Tax Acts.

This section applies to any allowance paid since the beginning of 1977 by the Secretary of State or the Department of Manpower Services for Northern Ireland under any scheme of the kind described in the M40Job Release Act 1977, being a scheme which provides for the payment of allowances for periods beginning not earlier than one year before the date on which the recipient attains pensionable age as defined in that Act.

Schedule 7 to this Act shall have effect for affording relief from tax under Case I of Schedule E where the duties of an office or employment are performed wholly or partly outside the United Kingdom.

A deduction shall not be allowed in respect of the same emoluments both under Schedule 7 to this Act and paragraph 3 of Schedule 2 to the M41Finance Act 1974 (foreign emoluments); and paragraph 4 of Schedule 7 to this Act shall, with the necessary modifications, have effect in relation to the amount of emoluments to be excepted under paragraph 4 of the said Schedule 2 as it has effect in relation to the amount of emoluments in respect of which a deduction is allowed under paragraph 1 of the said Schedule 7.

Subsections (2) and (3) below apply where a person (" the employee ") who is resident and ordinarily resident in the United Kingdom holds an office or employment (" the overseas employment") the duties of which are performed wholly outside the United Kingdom and the emoluments from which are not foreign emoluments within the meaning of paragraph 1 of Schedule E.

For the purposes of section 189(1) of the Taxes Act (deduction for certain expenses) there shall be treated as having been necessarily incurred in the performance of the duties of the overseas employment expenses of the employee in travelling from the United Kingdom to take up the overseas employment and in returning to the United Kingdom on its termination; and if travel is partly for a purpose mentioned in this subsection and partly for another purpose this subsection applies only to such part of the expenses as is properly attributable to the former purpose.

For the purposes of section 189(1) of the Taxes Act (deduction for certain expenses) expenses incurred by such a person on such travel shall be treated as having been necessarily incurred in the performance of the duties which he is to perform at his destination ; and if travel is partly for the purpose of performing those duties and partly for another purpose this subsection applies only to such part of the expenses as is properly attributable to the former purpose.

References in the Income Tax Acts to section 189 of the Taxes Act and to deductions allowable under Chapter I of Part VIII of that Act shall be construed as including a reference to subsections (3) and (7) above and to deductions allowable under those subsections.

This section has effect for the year 1977-78 and subsequent years of assessment.

Subject to the provisions of this section, where living accommodation is provided for a person in any period by reason of his employment, and is not otherwise made the subject of any charge to him by way of income tax, he is to be treated for Schedule E purposes as being in receipt of emoluments of an amount equal to the value to him of the accommodation for the period, less so much as is properly attributable to that provision of any sum made good by him to those at whose cost the accommodation is provided.

The value of the accommodation to the employee in any period is the rent which would have been payable for the period if the premises had been let to him at an annual rent equal to their annual value as ascertained under section 531 of the Taxes Act; but for a period in which those at whose cost the accommodation is provided pay rent at an annual rate greater than the annual value as so ascertained, the value of the accommodation to the employee is an amount equal to the rent payable by them for the period.

From any amount to be treated as emoluments under subsection (1) above there are deductible under section 189 or 194(3) of the Taxes Act (necessary expenses etc.) such amounts (if any) as would have been so deductible if the accommodation had been paid for by the employee out of his emoluments.

If by reason of a person's employment accommodation is provided for others being members of his family or household, he is to be treated under subsections (1) to (3) as if it were accommodation provided for him.

This section has effect for the year 1977-78 and subsequent years of assessment.

This section has effect for the year 1977-78 and subsequent years of assessment.

In consequence of sections 33 and 34 above and of this section, the Tax Acts shall be amended as shown in Part I of Schedule 8 to this Act.

Subsections (1) and (2) above have effect for the year 1977-78 and subsequent years of assessment; and, for the year 1978-79 and subsequent years of assessment, " £7,500" shall be substituted for " £5,000 " in subsections (1)(b) and (3)(a) of section 69 of the M45Finance Act 1976.

In Schedule 9 to the M46Finance Act 1976 (consequential amendments of enactments in connection with revised provisions relating to taxation of directors' benefits etc.), paragraph 15 (substitution of new proviso to section 284(2) of the Taxes Act, about close company distributions) shall be deemed to have been so enacted that in paragraph (b) of the substituted proviso, after the word " annuity " there were inserted the words " lump sum, gratuity or other like benefit to be given ".

In consequence of subsection (1) above, other provisions of Part II of Schedule 1 to the M48Finance Act 1974 shall be amended as shown in Part II of Schedule 8 to this Act.

No charge to Schedule E tax shall arise in respect of travel facilities provided for members of the naval, military or air forces of the Crown going on, or returning from, leave.

This section has effect for the year 1976-77 and subsequent years of assessment.

This section applies to any settlement in relation to which the Treasury have given a direction under section 84 of the M51Finance Act 1976 (maintenance funds for historic buildings).

Where income arising from the property comprised in the settlement in a year of assessment for which no election is made under subsection (2) above is treated by virtue of the said Part XVI as income of the settlor, paragraph (b) of that subsection shall have effect in relation to any sums in excess of that income which are applied in that year as mentioned in that paragraph.

Any election under subsection (2) above shall be by notice in writing to the Board in such form as the Board may require and shall be made within two years of the end of the year of assessment to which it relates.

Subject to subsection (3) below, neither the said paragraph 6 nor paragraph 7 of the said Schedule 7 (reconstructions and amalgamations) shall apply to any issue by a company of shares in or debentures of that company in exchange for or in respect of shares in or debentures of another company unless the exchange, reconstruction or amalgamation in question is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes, is avoidance of liability to capital gains tax or corporation tax.

Any application under subsection (3)(b) above shall be in writing and shall contain particulars of the operations that are to be effected and the Board may, within thirty days of the receipt of the application or of any further particulars previously required under this subsection, by notice require the applicant to furnish further particulars for the purpose of enabling the Board to make their decision; and if any such notice is not complied with within thirty days or such longer period as the Board may allow, the Board need not proceed further on the application.

The Board shall notify their decision to the applicant within thirty days of receiving the application or, if they give a notice under subsection (4) above, within thirty days of the notice being complied with.

If the Board notify the applicant that they are not satisfied as mentioned in subsection (3)(b) above or do not notify their decision to the applicant within the time required by subsection (5) above, the applicant may within thirty days of the notification or of that time require the Board to transmit the application, together with any notice given and further particulars furnished under subsection (4) above, to the Special Commissioners ; and in that event any notification by the Special Commissioners shall have effect for the purposes of subsection (3)(b) above as if it were a notification by the Board.

If any particulars furnished under this section do not fully and accurately disclose all facts and considerations material for the decision of the Board or the Special Commissioners, any resulting notification that the Board or Commissioners are satisfied as mentioned in subsection (3)(b) above shall be void.

In this section references to shares or debentures include references to any interests or options to which the provisions mentioned in subsection (2) above apply by virtue of paragraph 15 of Schedule 12 to the M55Finance Act 1968 or section 58(4) of the M56Finance Act 1971; and for the purposes of subsection (3)(a) above shares or debentures held by persons connected with the person there mentioned shall be treated as held by him.

This section applies where the shares or debentures are issued after 19th April 1977 and section 279 of the Taxes Act shall apply only if the earlier occasion mentioned in that section fell on or before that date.

This section applies where the transfer takes effect after 19th April 1977.

This section shall be deemed to have come into force on 29th March 1977.

For the purposes of subsection (1)(b) above a benefit is conferred on a person if he becomes entitled to any money or money's worth or the value of any asset in which he has an interest is increased or he is wholly or partly relieved from any liability to which he is subject; and a benefit is tax-free unless it is required, on the occasion on which it is conferred on the person in question, to be brought into account in computing his income, profits or gains for the purposes of income tax, capital gains tax or corporation tax.

This section shall not apply by virtue of subsection (1)(b)(ii) above if it is shown that avoidance of tax was not the main purpose or one of the main purposes of the scheme or arrangements in question.

Where this section has effect in relation to any disposal, any allowable loss or chargeable gain accruing on the disposal shall be calculated as if the consideration for the disposal were increased by such amount as appears to the inspector, or on appeal the Commissioners concerned, to be just and reasonable having regard to the scheme or arrangements and the tax-free benefit in question.

In relation to a case in which the disposal of an asset precedes its acquisition the reference in subsection (1)(a) above to a reduction shall be read as including a reference to an increase.

This section applies where the disposal and reduction in value mentioned in subsection (1) above (or, in a case within subsection (8) above, the disposal and reduction or increase in value) are after 29th March 1977.

In relation to gains accruing on disposals after 5th April 1977 section 112 of the M59Finance Act 1972 (reduction of tax liability on certain disposals of shares in unit trusts, investment trusts and funds in court) shall have effect as if for the references in paragraphs (b) and (c) of subsection (3) to 17 ½ per cent. there were substituted references to 17 per cent.

Section 113 of that Act (reduced rate of capital gains tax for certain unit trusts and funds in court) shall have effect for the year 1977-78 and subsequent years of assessment as if the rate specified in it were 17 per cent. instead of 17 ½ per cent.

In making any computation in accordance with the provisions of the Taxes Act applicable to Case I of Schedule D of the profits or losses of the transferor company for the accounting period in which the transfer occurs there shall be disregarded any profit or loss in respect of any asset transferred which, apart from this subsection, would fall to be taken into account in making that computation.

Where by virtue of subsection (2) above any profit or loss is disregarded in making any computation otherwise than for the purposes of section 305(2) of the Taxes Act (restriction on relief for expenses of management) the profit or loss shall be treated for the purposes of Part III of the M60Finance Act 1965 as a chargeable gain or allowable loss accruing to the transferor company on the transfer.

Subsections (1) to (3) above apply where the transfer is on or after 29th March 1977 and subsection (4) above applies where the company ceases to be resident in the United Kingdom on or after that date.

Where under the transaction the person concerned receives or becomes entitled to receive any consideration in addition to the new holding, subsection (3) above shall have effect as if references to the original holding were references to the proportion of it which the market value of the new holding at the time of the transaction bears to the aggregate of that value and the market value at that time (or, if it is cash, the amount) of the consideration.

Subsections (3) and (4) above shall have effect with the necessary modifications in relation to any computation made for the purposes of section 305(2) of the Taxes Act (restriction on relief for expenses of management) in a case where securities held by the company concerned are equated with a new holding by virtue of any of the provisions mentioned in paragraph (a) of subsection (2) above or are treated as not disposed of by virtue of the provision mentioned in paragraph (b) of that subsection.

In this section " securities " includes shares, any security within the meaning of paragraph 5 of Schedule 7 to the said Act of 1965 and any rights, interests or options which by virtue of section 45(8) of that Act, paragraph 15 of Schedule 12 to the M63Finance Act 1968 or section 58(4) of the M64Finance Act 1971 are treated as shares for the purposes of the provisions mentioned in subsection (2) above.

In determining for the purposes of subsection (2)(a) above whether a transaction would result in the original holding being equated with a new holding by virtue of paragraph 6 or 7 of Schedule 7 to the said Act of 1965 the reference in section 40(2) above to capital gains tax shall be construed as a reference to income tax.

This section applies where the securities comprised in the new holding are issued after 19th April 1977.

In section 338 of the Taxes Act (exemption of income and gains of certain trade unions if applicable and applied for purpose of provident benefits) references to a registered trade union shall be construed as including references to the Police Federation for England and Wales, the Police Federation for Scotland, the Police Federation for Northern Ireland and any other organisation of persons in police service which has similar functions.

This section shall have effect in relation to income or gains which are applicable and applied as mentioned in subsection (1) of the said section 338 after 30th September 1971.

Any payment to which this subsection applies shall be made without deduction of income tax, shall not be allowed as a deduction in computing the income or total income of the person by whom it is made and shall not be a charge on income for the purposes of corporation tax.

In the application of this section to Scotland the references in subsection (3) above to settled property shall be construed as references to property held in trust.

Subsection (1) above does not apply to any payment made on or before 29th March 1977 but applies to a payment made after that date irrespective of when the liability to make it was incurred.

Paragraph (b)(i) of subsection (2) above does not apply to a person's emoluments from an office or employment in a business of the kind mentioned in subsection (4) below which is carried on by a person with whom he is connected; and paragraph (b)(ii) of subsection (2) above does not apply to profits from the carrying on of a business of the kind mentioned in subsection (4) below.

This section shall be deemed to have come into force on 29th March 1977.

Paragraph 19 of Schedule 5 to the Finance Act 1975 (trusts for mentally disabled persons) shall be amended as follows.

In sub-paragraph (1) after the words " a mentally disabled person " there shall be inserted the words " or of a person in receipt of an attendance allowance ".

In sub-paragraphs (2)(a) and (3) for the words "the mentally disabled person " there shall be substituted the words " the person mentioned in sub-paragraph (1) above ".

In sub-paragraph (2)(b) after the words "for the benefit of the mentally disabled person" there shall be inserted the words " or, as the case may be, for the care or maintenance of the person in receipt of the attendance allowance ".

At the end of sub-paragraph (4) there shall be added the words " and ' attendance allowance ' means an allowance under section 35 of the Social Security Act 1975 or the Social Security (Northern Ireland) Act 1975 ".

In sections 32(2) and 34(4) of the Finance Act 1975 and section 78(3) of the M68Finance Act 1976 (liability of person for whose benefit conditionally exempt property is disposed of) for the words "person for whose benefit" there shall be substituted the words " person by whom or for whose benefit ".

This section applies where the event by reason of which tax is chargeable under the provisions mentioned in subsection (1) above occurs after 19th April 1977.

In the said paragraph 6, in sub-paragraph (1), for the words "another person (in this paragraph referred to as " the owner")" there shall be substituted the words " a person (in this paragraph referred to as " the owner ") who is not a participator and ".

No charity within the meaning of section 360 of the Taxes Act shall be liable to pay the surcharge imposed by the National Insurance Surcharge Act 1976.

This section shall be deemed to have come into force on 6th April 1977.

In subsection (3) of section 30 of the Exchange Control Act 1947 (which restricts the making of loans of money or securities to bodies corporate which are resident in the scheduled territories but controlled by persons not so resident) for the words " any money, securities " there shall be substituted the words " any money or securities or any instrument to which subsection (3 A) of this section applies ".

and there shall be inserted at the appropriate points in alphabetical order the definitions of " certificate of deposit " and " Government bill" set out in section 55(3) of the said Act of 1968.

In sections 21(1)(c) and 22(1)(b) of the said Act of 1947 (which restrict the import and export of certain instruments) after the words " Treasury bills " there shall be inserted the words (which reproduce the effect of section 55(2) of the said Act of 1968) ", Government bills, certificates of deposit or any description of promissory notes which is for the time being prescribed under paragraph (d) of the definition of ' securities' in section 42(1) of this Act ".

Any amendment by this section of a provision which extends to the Channel Islands by virtue of any Order in Council under section 43(3) of the said Act of 1947 extends similarly; and, without prejudice to any further provision made by any such Order, section 30(3A) shall so extend with the substitution for references to the United Kingdom of references to the Channel Islands as defined in any such Order.

Subsections (1) and (2) above, and so much of subsection (5) above as relates to those subsections, shall not come into force until such day as the Treasury may appoint by order made by statutory instrument.

This Act may be cited as the Finance Act 1977.

In this Act "the Taxes Act" means the M72Income and Corporation Taxes Act 1970.

Except so far as the context otherwise requires, any reference in this Act to any enactment shall be construed as a reference to that enactment as amended, and as including a reference to that enactment as applied, by or under any other enactment, including this Act.

The enactments mentioned in Schedule 9 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.