PART IIIF11GOVERNMENT SECURITIES
General
44 Income tax: mode of charge.
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45 Interpretation of Part III.
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Government securities: exemptions from tax
46 Savings certificates and tax reserve certificates. C1
1
M1Subject to subsections (3) to (6) below, income arising from savings certificates shall not be liable to tax.
2
M2Tax shall not be chargeable in respect of the interest on tax reserve certificates issued by the Treasury.
3
M3Subsection (1) above does not apply to any savings certificates which are purchased by or on behalf of a person in excess of the amount which a person is for the time being authorised to purchase under regulations made by the Treasury or, as respects Ulster Savings Certificates, by the Department of Finance and Personnel.
4
Subsection (1) above does not apply to Ulster Savings Certificates unless—
a
the holder is resident and ordinarily resident in Northern Ireland when the certificates are repaid; or
b
the certificates were purchased by him and he was so resident and ordinarily resident when they were purchased.
5
A claim under this section in respect of Ulster Savings Certificates shall be made to the Board.
6
In this section “sa00vings certificates” means savings certificates issued under section 12 of the M4National Loans Act 1968 or section 7 of the M5National Debt Act 1958 or Section 59 of the M6Finance Act 1920 and any war savings certificates as defined in section 9(3) of the M7National Debt Act 1972, together with any savings certificates issued under any corresponding enactment forming part of the law of Northern Ireland.
47 United Kingdom government securities held by non-residents.
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48 Securities of foreign states.
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49 Stock and dividends in name of Treasury etc.
1
M8No tax shall be chargeable in respect of the stock or dividends transferred to accounts in the books of the Bank of England in the name of the Treasury or the National Debt Commissioners in pursuance of any Act of Parliament, but the Bank of England shall transmit to the Board an account of the total amount thereof.
2
No tax shall be chargeable in respect of the stock or dividends belonging to the Crown, in whatever name they may stand in the books of the Bank of England.
F53
In this section “dividends” means any interest, public annuities, dividends or shares of annuities.
Government securities: interest payable without deduction of tax
C250 United Kingdom securities: Treasury directions for payment without deduction of tax.
F13A1
The interest on registered gilt-edged securities (whenever issued and whatever the terms on which they were issued) shall be paid without deduction of income tax.
1
M9The Treasury may direct that any of the following securities F14in so far as they are not gilt-edged securities, that is to say—
a
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
c
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d
F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
shall be issued, or shall be deemed to have been issued, subject to the condition that the interest thereon shall be paid without deduction of income tax; and subject to the provisions of this section the interest shall be so paid accordingly F12. . . .
2
M12The holder of any registered securities the interest on which is by virtue of F16subsection (A1) above or of directions given under subsection (1) above payable without deduction of tax may make an application to the Bank under this subsection requesting that income tax shall be deducted from the interest on those securities before payment thereof.
3
Where any such application is made, income tax in respect of the interest on those securities shall, so long as they remain registered in the name of the applicant and subject to the withdrawal of the application under subsection (5) below, be deducted and charged in the same manner as if they were not securities F17the interest on which is to be paid without deduction of income tax.
4
M13An application under subsection (2) above shall be made in such form as the Bank with the approval of the Treasury may prescribe, and any application made less than F18one month before the date on which a payment of interest falls due shall only have effect as regards any payment of interest subsequent to that payment.
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An application made under subsection (2) above may at any time be withdrawn by notice to the Bank in such form as the Bank may with the approval of the Treasury prescribe, but an application so withdrawn shall, notwithstanding the withdrawal, continue to have effect as regards any interest payable less than F18one month after the date the notice is received at the Bank.
6
Where any securities to which subsection (2) above applies are held on trust, the holders of the securities may make an application under that subsection in respect thereof without the consent of any other person, notwithstanding anything in the instrument creating the trust.
7
In this section—
“the Bank” means the Bank of England or the Bank of Ireland as the case requires,
F19“gilt-edged securities” means any securities which—
- a
are gilt-edged securities for the purposes of the 1992 Act; or
- b
will be such securities on the making of any order under paragraph 1 of Schedule 9 to that Act the making of which is anticipated in the prospectus under which they were issued, and
- a
“registered” means entered in the register of the Bank.
51 Treasury directions as respects Northern Ireland securities.
1
M14The Treasury may, on the application of the Department of Finance and Personnel, as respects any securities to which this section applies, direct that the securities specified in the direction shall be issued, or shall be deemed to have been issued, subject to the condition that the interest thereon shall be paid without deduction of income tax; and in relation to any securities so specified and the interest thereon, section 50 shall have effect as if—
a
the securities were securities in respect of which a direction had been given by the Treasury under subsection (1) of that section;
b
references in that section to “the Bank” were (notwithstanding subsection (7) of that section) references to the bank in the books of which the securities are registered or inscribed; and
c
the references in subsections (4) and (5) of that section to the Treasury were references to the Department of Finance and Personnel.
2
The securities to which this section applies are securities issued under section 11(1)(c) of the M15Exchequer and Financial Provisions Act (Northern Ireland) 1950 for money borrowed by the Department of Finance and Personnel for the purposes of making issues from the Consolidated Fund of Northern Ireland.
F851AA Commencement of direction under section 50 or 51.
A direction under section 50 or 51 that any security shall be deemed to have been issued subject to the condition that the interest thereon shall be paid without deduction of tax may provide that the direction is to have effect in relation only to payments of interest made on or after such date as may be specified in the direction.
51AF9 Gilt-edged securities held under authorised arrangements.
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F1051B Periodic accounting for tax on interest on gilt-edged securities.
1
The Treasury may by regulations provide for persons to whom payments of interest on relevant gilt-edged securities are made without deduction of tax to be required to make periodic returns to an officer of the Board of—
a
amounts of any payments of such interest made to that person, and
b
amounts of tax for which, assuming the payments to bear tax at the F20lower rate for the relevant year of assessment, that person is to be accountable under the regulations in respect of those payments;
and any such regulations may further provide for the amounts of tax required to be included in any such return to become due, at the time when the return is required to be made, from the person required to make it.
2
Regulations made by the Treasury for the purposes of this section may—
a
specify such periods as the Treasury may consider appropriate as the periods for which returns are to be made, and in respect of which any person is to account for tax, under the regulations;
b
make provision for enabling returns under the regulations to be combined with returns under Schedule 16 and for requiring particulars of claims and calculations made for the purposes of the regulations to be set out in the returns;
c
provide, in respect of any period for which a return is to be made by any person under the regulations, for that person to be obliged, before the end of the period, to make a payment on account of amounts that may become due from him in respect of that period;
d
impose a requirement for a special return to be made for the purposes of any obligation imposed by virtue of paragraph (c) above;
e
provide for the amount which, under the regulations, is to be due from any person in respect of any period to be reduced by reference to amounts which—
i
are paid by or on behalf of that person under contracts or arrangements relating to transfers of gilt-edged securities; and
ii
are or fall to be treated as representative of interest on those securities;
f
authorise amounts in respect of which there is an obligation to account for tax under the regulations to be treated for specified purposes of the Tax Acts as payments on which a person has borne income tax by deduction;
g
make provision for the assessment of amounts due under the regulations and for the repayment in specified circumstances of amounts paid under the regulations;
h
make provision for interest to be payable, at such rate as may be determined by or under the regulations, on amounts that have become due under the regulations but have not been paid;
i
make provision, where payments of interest on any relevant gilt-edged securities would be comprised in the income of a member of Lloyd’s, for obligations that may be imposed by regulations under this section on the person to whom the interest is paid to be imposed, instead, on such other person as may be described in the regulations.
3
Regulations made by the Treasury for the purposes of this section may—
a
include provision which for the purposes of the regulations makes any provision corresponding, with or without modifications, to any of the provisions of Schedule 16;
b
make provision modifying the operation of Schedule 19AB in relation to cases where payments of interest on relevant gilt-edged securities are made without deduction of tax to companies carrying on pension business;
c
include provision which requires obligations and liabilities under the regulations to be treated as obligations and liabilities to which provisions of Schedule 23 to the Finance Act 1995 (UK representatives) apply; and
d
include provision which, for any of the purposes of the regulations, applies provisions of sections 126 and 127 of, and Schedule 23 to, that Act in relation to times before those provisions otherwise come into force.
4
Regulations made by the Treasury for the purposes of this section may—
a
make different provision for different cases; and
b
contain such supplementary, incidental, consequential and transitional provision as appears to the Treasury to be appropriate;
and subsection (3) of section 178 of the M16Finance Act 1989 (extent of powers to set rates of interest) shall apply for the purposes of the power conferred by virtue of subsection (2)(h) above as it applies for the purposes of the power to make regulations under that section.
F215
In this section “relevant gilt-edged securities” means securities of one of the following descriptions—
a
gilt-edged securities issued before 6th April 1998 other than those in relation to which a direction under section 50(1) was given before that date;
b
gilt-edged securities issued on or after that date in relation to which the Treasury have given a direction that they may be subjected to periodic accounting;
and in this subsection “gilt-edged securities” has the same meaning as in section 50.
5A
Regulations under this section shall not apply to a payment of interest on any relevant gilt-edged securities if that payment is made at any time after the Treasury have given a direction that those securities are to be exempted from periodic accounting.
6
In this section “relevant year of assessment”—
a
in relation to a manufactured payment, means the year of assessment in which it is received by the person to whom it is paid; and
b
in relation to any other payment of interest, means the year of assessment in which the payment is made;
and in this subsection “manufactured payment” means any payment which for the purposes of Schedule 23A is a payment of manufactured interest.
52 Taxation of interest on converted government securities and interest which becomes subject to deduction.
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Pt. 3 heading substituted (with effect in accordance with Sch. 7 para. 32 of the amending Act) by Finance Act 1996, s. 79, Sch. 7 para. 6 (with Sch. 7 paras. 33-35)