http://www.legislation.gov.uk/id/ukpga/1988/1

PART IV PROVISIONS RELATING TO THE SCHEDULE D CHARGE

CHAPTER I SUPPLEMENTARY CHARGING PROVISIONS

53 Farming and other commercial occupation of land (except woodlands).

F1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F254 Woodlands managed on a commercial basis.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55 Mines, quarries and other concerns.

F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

56 Transactions in deposits with and without certificates or in debts.

1

M1 M2Subsection (2) below applies to the following rights—

a

the right to receive the amount, with or without interest, stated in a certificate of deposit;

b

the right to receive an amount payable with interest—

i

in a transaction in which no certificate of deposit or security is issued, and

ii

which is payable by a bank or similar institution or a person regularly engaging in similar transactions;

and the right to receive that interest.

C12

M3Profits or gains arising to a F4company from the disposal of a right to which this subsection applies or, except so far as it is a right to receive interest, from the exercise of any such right (whether by the person to whom the certificate was issued or by some other person, or, as the case may be, by the person who acquired the right in the transaction referred to in subsection (1) above or by some person acquiring it directly or indirectly from that person), shall, if not falling to be taken into account as a trading receipt, be treated as F5an amount to which the charge to corporation tax on income applies.

3

M4Subsection (2) above F6and section 551 of ITTOIA 2005 (charge to income tax on profits from disposal of deposit rights) do not apply in the case of the disposal or exercise of a right to receive an amount stated in a certificate of deposit or interest on such an amount—

a

if the F7company disposing of the right acquired it before 7th March 1973;

b

to any profits or gains arising to a fund or scheme in the case of which provision is made by section F8613(4) or 614(2) or (3) or section 186 of the Finance Act 2004 for exempting the whole or part of its income from income tax;

c

F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F103A

F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3B

F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3C

F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3D

F11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

F12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F134A

This section and section 56A shall not apply for the purposes of corporation tax except in relation to rights in existence before 1st April 1996.

4B

For the purposes of corporation tax, where any profits or gains arising from the disposal or exercise of a right in existence before 1st April 1996 are, or (if there were any) would be, chargeable under this section, nothing in F14Part 5 of CTA 2009 (loan relationships) shall require any amount relating to that disposal, or to the exercise of that right, to be brought into account for the purposes of F14that Part.

5

M5 In this section—

“certificate of deposit” means a document relating to money, in any currency, which has been deposited with the issuer or some other person, being a document which recognises an obligation to pay a stated amount to bearer or to order, with or without interest, and being a document by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable; and
“security” has the same meaning as in section F15132 of the 1992 Act.

56AF16 Disposal or exercise of rights in pursuance of deposits.

1

This section applies where there is an arrangement under which—

a

there is a right to receive an amount (with or without interest)

in pursuance of a deposit of money,

b

when the right comes into existence there is no certificate of deposit in respect of the right, and

c

the person for the time being entitled to the right is entitled to call for the issue of a certificate of deposit in respect of the right.

2

In such a case—

a

the right shall be treated as not falling within section 56(1)(b), and

b

if there is a disposal or exercise of the right before such time (if any) as a certificate of deposit is issued in respect of it, section 56(2) shall apply to it by virtue of this paragraph.

3

In the application of section 56 by virtue of this section—

a

subsection (2) shall have effect as if the words from “(whether” to “person)” read “(whether by the person originally entitled to the right or by some other person)”, and

b

subsection (3) shall have effect as if the words “stated in a certificate of deposit” read “under an arrangement”.

4

In this section “certificate of deposit” has the meaning given by section 56(5).

57 Deep discount securities.

F17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58 Foreign pensions.

F18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

59 Persons chargeable.

1

F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

F19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

F20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II INCOME TAX: BASIS OF ASSESSMENT ETC.

Cases I and II

60 Assessment on current year basis.

F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61 Basis of assessment at commencement.

F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62 Change of basis period.

F23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62AF27 Conditions for such a change.

F24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63 Basis of assessment on discontinuance.

F25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63AF28 Overlap profits and overlap losses.

F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cases III, IV and V

64 Case III assessments.

F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65 Cases IV and V assessments: general.

F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65AF38 Case V income from land outside UK: income tax.

F31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66 Special rules for fresh income.

F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67 Special rules where source of income disposed of or yield ceases.

F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68 Special rules where property etc. situated in Republic of Ireland.

F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68AF39Share incentive plans: application of section 68B

F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68BShare incentive plans: cash dividends and dividend shares

F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68CShare incentive plans: interpretation

F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Case VI

69 Case VI assessments.

F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III CORPORATION TAX: BASIS OF ASSESSMENT ETC

70 Basis of assessment etc.

F41. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

70AF43 Case V income from land outside UK: corporation tax.

F42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV PROVISIONS SUPPLEMENTARY TO CHAPTERS II AND III

71 Computation of income tax where no profits in year of assessment.

F44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72 Apportionments etc. for purposes of Cases I, II and VI.

F45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73 Single assessments for purposes of Cases III, IV and V.

F46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V COMPUTATIONAL PROVISIONS

Deductions

74 General rules as to deductions not allowable.

F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75Expenses of management: companies with investment business

F48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75AF51Accounting period to which expenses of management are referable

F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75BF52Amounts reversing expenses of management deducted: charge to tax

F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C2 C3 C5 C6 C776F226Expenses of insurance companies

1

In computing for the purposes of corporation tax the profits for any accounting period of a company—

a

which carries on life assurance business, and

b

which is F230charged to tax in respect of that business under the I minus E basis,

F247sections 1219 to 1223 of CTA 2009 (expenses of management of a company's investment business) do not apply in computing the profits of that business, but a deduction for expenses payable (the “expenses deduction”) is to be allowed in accordance with the following provisions of this section.

F231. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

The expenses deduction is to be made from so much of the income and gains of the accounting period referable to basic life assurance and general annuity business as remains after any deduction falling to be made by virtue of F248section 388 of CTA 2009 (basic rule: deficit set off against income and gains of deficit period).

3

For the purposes of this section “expenses payable” means expenses brought into account in line 12, 22 or 25 of Form 40 (the revenue account) in the periodical return of the company for a period of account, but does not include any of the amounts falling within subsection (4), (5) or (6) below.

4

The amounts falling within this subsection are the following—

a

reinsurance premiums,

b

refunds of premiums,

c

profit commissions and profit participations (however described),

d

expenses or other amounts payable, to the extent that the company’s purpose in incurring the liability to make the payment is not a business or other commercial purpose of the company.

For the purposes of paragraph (d) above, it is not one of the business or commercial purposes of a company to incur a liability to pay an amount of commission or other expenses which exceeds the amount which it could reasonably be expected to pay if the company were charged to tax under F249section 35 of CTA 2009 (charge on trade profits) in respect of its life assurance business.

5

The amounts falling within this subsection are any amounts payable in connection with a policy or contract to—

a

a policy holder or annuitant under the policy or contract (except where the policy holder is an insurance company),

b

any other person who is entitled to receive benefits under the policy or contract,

c

any person acting on behalf of a person falling within paragraph (a) or (b) above,

d

the personal representatives of a deceased person who fell within paragraphs (a) to (c) above.

6

The amounts falling within this subsection are expenses of a capital nature.

But this subsection does not apply in the case of an amount which, by virtue of any provision of the Tax Acts other than this section, falls to be treated for the purposes of this section as expenses payable which fall to be brought into account at Step 1 in subsection (7) below (the reference to Step 1 being express in the provision).

C47

The amount of the expenses deduction for an accounting period is found by taking the following steps—

Step 1
Find so much of the expenses payable as are—
1. a
  attributable to basic life assurance and general annuity business (see subsection (8) below), and
2. b
  referable to the accounting period (see subsection (9) below).
Step 2
Reduce each of the amounts found at Step 1 by excluding so much of the amount as is—
1. a
  deductible F250in computing, for corporation tax purposes, the profits of a UK property business,
2. b
  deductible by virtue of section 85(2B) of the Finance Act 1989, F244. . .
3. c
  deductible by virtue of F251section 272 of CTA 2009 in computing income from the letting of rights to work minerals in the United Kingdom, F245or
4. d
  required to be deducted by subsection (9A) below.
Step 3
Find the amounts (so far as not included at Step 1) which fall to be treated for the purposes of this section as expenses payable for the accounting period by virtue of any of the following provisions—

section 432AB(3) (Schedule A loss or an overseas property business loss referable to basic life assurance and general annuity business);
section 437(1A) (relief for income element of new annuities);
F232. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
paragraph 16(1) of Schedule 7 to the Finance Act 1991 (transitional relief for old annuities);
F252. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
section 256(2)(a) of the Capital Allowances Act (capital allowances on plant and machinery used in the management of life assurance business);
F252. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F252. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F232. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F252. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F253section 391(3)(b) of CTA 2009 (carried forward non-trading deficit on loan relationships);
section 1080(2) of CTA 2009 (30% additional deduction for qualifying R&D expenditure of company carrying on life assurance business);
section F2541162 of CTA 2009 (F25550% additional relief for remediation expenditure on contaminated F256or derelict land owned by company carrying on life assurance business).

Step 4
Give effect to the provisions specified in Step 3 by adding together—
1. a
  so much of the amounts found at Step 1 as remains after making any reductions at Step 2, and
2. b
  the amounts found at Step 3,
and then deduct the amount of any reversal (wherever brought into account) of an expense included at Step 1 in a previous period,
to give Subtotal 1.
Step 5
If the whole or any part of a loss arising to the company in respect of its life assurance business in the accounting period is F257relieved under section 37 of CTA 2010 or under Chapter 4 of Part 5 of that Act—
1. a
  find the amount (“amount L”) that is equal to so much of the loss as, in the aggregate, is so set off,
2. b
  find the F233 amount (“amount S”) by which any losses for that period under section F234436A fall to be reduced under section 434A(2)(b),
3. c
  from amount L deduct amount S, to give the adjusted loss deduction,
then reduce Subtotal 1 by deducting from it the adjusted loss deduction,
to give Subtotal 2.
Step 6
Give effect to subsection (6) of section 86 of the Finance Act 1989 (spreading of acquisition expenses) by—
1. a
  finding the amount that is equal to six-sevenths of the adjusted amount of the acquisition expenses (within the meaning of that section) for the accounting period, and
2. b
  deducting that amount from Subtotal 2,
to give Subtotal 3.
Step 7
Add together the following amounts—
1. a
  Subtotal 3, and
2. b
  any amounts carried forward to the accounting period under subsection (12) or (13) below (unrelieved excesses from earlier accounting periods),
to give Subtotal 4.
Step 8
Give effect to subsections (8) and (9) of section 86 of the Finance Act 1989 (fraction of adjusted amount of acquisition expenses for earlier accounting periods) by adding together—
1. a
  Subtotal 4, and
2. b
  any amounts which are to be relieved under this section by virtue of those subsections,
to give the F235expenses deduction.
Step 9
F236. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Step 10: the amount of the expenses deduction
F236. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

For the purposes of Step 1, the expenses that are attributable to basic life assurance and general annuity business are the expenses which are attributable to that business in accordance with proper internal accounting practice.

In this subsection “proper internal accounting practice” means the practice of insurance companies in allocating all the expenses of the company to particular categories of business in accordance with any applicable requirements of—

a

generally accepted accounting practice, F227. . .

b

the Prudential Sourcebook (Insurers)F228, or

c

the F229Insurance Prudential Sourcebook.

9

The following rules have effect for determining for the purposes of Step 1 the expenses that are referable to an accounting period.

Rule A

Where a period of account coincides with an accounting period, the expenses brought into account for the period of account are the expenses referable to the accounting period.

Rule B

Where—

a

two or more accounting periods fall within the same period of account, and

b

that period of account is longer than 12 months,

F258section 1172 of CTA 2010 (apportionment to different periods) is to apply.

Rule C

In any other case where two or more accounting periods fall within the same period of account, the expenses referable to any of those accounting periods are the expenses that would have been referable to that accounting period if—

a

the accounting period had coincided with a period of account, and

b

a separate periodical return had been made for that period of account,

and F259section 1172 of CTA 2010 (apportionment to different periods) is not to apply.

Rule D

Rules A to C are subject to any provision of the Corporation Tax Acts which provides for an amount to be treated as expenses payable for, or referable to, a particular period.

F2469A

The amount required to be deducted at paragraph (d) of Step 2 is the total of the amounts (if any) arrived at under subsection (9C) below in relation to the fronting reinsurance contracts (if any) made by the company.

9B

A fronting reinsurance contract is a contract of reinsurance forming part of a fronting reinsurance arrangement; and a fronting reinsurance arrangement is an arrangement under which the company—

a

enters into a contract constituting term assurance with a person, and

b

reinsures all, or substantially all, of the liabilities under that contract with a reinsurer which—

i

does not meet the BLAGAB group reinsurance conditions in paragraph 1(3) of Schedule 19ABA to this Act, and

ii

is connected with that person or with a person entitled to commission from the company in respect of the contract.

9C

The amount referred to in subsection (9A) above in relation to any fronting reinsurance contract made by the company is the relevant reinsurance fraction of so much of the amount found at Step 1 as relates to policies and contracts which are relevant reinsured policies and contracts in relation to the fronting reinsurance contract.

9D

For the purposes of subsection (9C) above “the relevant reinsurance fraction” is—

\frac{RL}{TL}

where—

RL is so much of TL as is reinsured under the fronting reinsurance contract, and

TL is the amount of the total liabilities under the relevant reinsured policies and contracts at the end of the accounting period.

9E

For the purposes of subsections (9B) and (9C) above policies and contracts are relevant reinsured policies and contracts in relation to a fronting reinsurance contract if—

a

they are attributable to the company's basic life assurance and general annuity business, and

b

any or all of the risks under them are reinsured under the fronting reinsurance contract.

10

F237. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11

F237. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Where for any accounting period—

a

the amount of the expenses deduction (see F238Step 8), exceeds

b

the amount from which that deduction is to be made (see subsection (2) above),

the excess is to be carried forward to the next accounting period F239 for which the company is charged to tax in respect of its life assurance business under the I minus E basis and brought into account for that period in accordance with Step 7.

F24013

Where for any accounting period excess adjusted Case I profits are charged to tax under section 85A of the Finance Act 1989, an amount equal to the profits is to be carried forward to the next accounting period for which the company is charged to tax in respect of its life assurance business under the I minus E basis and brought into account for that period in accordance with Step 7.

14

F241. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

In this section—

F242. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“expenses payable” has the meaning given by subsection (3) above;
F260“profits” means income and chargeable gains.

F243. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F134Payments for restrictive undertakings

Annotations:

Amendments (Textual)

F134

S. 76ZA and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 31 (with Sch. 2 Pts. 1, 2)

76ZAPayments for restrictive undertakings

1

This section applies if a payment—

a

is treated as earnings of an employee by virtue of section 225 of ITEPA 2003 (payments for restrictive undertakings), and

b

is made, or treated as made for the purposes of section 226 of that Act (valuable consideration given for restrictive undertakings), by a company in relation to which section 76 applies.

2

The payment is treated as expenses payable which fall to be brought into account at Step 1 in section 76(7), so far as it otherwise would not be.

F135Seconded employees

Annotations:

Amendments (Textual)

F135

S. 76ZB and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 32 (with Sch. 2 Pts. 1, 2)

76ZBEmployees seconded to charities and educational establishments

1

This section applies if a company to which section 76 applies makes the services of a person employed for the purposes of the company's life assurance business available to—

a

a charity, or

b

an educational establishment,

on a basis that is stated and intended to be temporary.

2

Expenses of the employer that are attributable to the employee's employment during the period of the secondment are treated as expenses payable which fall to be brought into account at Step 1 in section 76(7).

3

In this section—

“educational establishment” has the same meaning as in section 70 of CTA 2009, and
“the period of the secondment” means the period for which the employee's services are made available to the charity or educational establishment.

F136Counselling and retraining expenses

Annotations:

Amendments (Textual)

F136

S. 76ZC and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 33 (with Sch. 2 Pts. 1, 2)

76ZCCounselling and other outplacement services

1

This section applies if—

a

a company carrying on life assurance business (“the employer”) incurs counselling expenses,

b

the expenses are incurred in relation to a person (“the employee”) who holds or has held an office or employment under the employer, and

c

the relevant conditions are met.

2

The expenses are brought into account under section 76 as expenses payable (so far as they otherwise would not be).

3

In this section “counselling expenses” means expenses incurred—

a

in the provision of services to the employee in connection with the cessation of the office or employment,

b

in the payment or reimbursement of fees for such provision, or

c

in the payment or reimbursement of travelling expenses in connection with such provision.

4

In this section “the relevant conditions” means—

a

conditions A to D for the purposes of section 310 of ITEPA 2003 (employment income exemptions: counselling and other outplacement services), and

b

in the case of travel expenses, condition E for those purposes.

F5376ZDRetraining courses

1

This section applies if—

a

a company carrying on life assurance business (“the employer”) incurs training course expenses,

b

they are incurred in relation to a person (“the employee”) who holds or has held an office or employment under the employer, and

c

the relevant conditions are met.

2

The expenses are brought into account under section 76 as expenses payable (so far as they otherwise would not be).

3

In this section—

“retraining course expenses” means expenses incurred in the payment or reimbursement of retraining course expenses within the meaning given by section 311(2) of ITEPA 2003, and
“the relevant conditions” means—
1. a
  the conditions in subsections (3) and (4) of section 311 of ITEPA 2003 (employment income exemptions: retraining courses), and
2. b
  in the case of travel expenses, the conditions in subsection (5) of that section.

F54 C876ZERetraining courses: recovery of tax

1

This section applies if—

a

an employer's liability to corporation tax for an accounting period is determined on the assumption that it is entitled by virtue of section 76ZD to bring an amount into account in determining the amount of a deduction to be made under section 76, and

b

without section 76ZD the employer would not have been so entitled.

2

If, subsequently—

a

the condition in section 311(4)(a) of ITEPA 2003 is not met because of the employee's failure to begin the course within the period of one year after ceasing to be employed, or

b

the condition in section 311(4)(b) of ITEPA 2003 is not met because of the employee's continued employment or re-employment,

an assessment of an amount or further amount of corporation tax due as a result of the condition not being met may be made under paragraph 41 of Schedule 18 to FA 1998.

3

Such an assessment must be made before the end of the period of 6 years immediately following the end of the accounting period in which the failure to meet the condition occurred.

4

If subsection (2) applies, the employer must give an officer of Revenue and Customs a notice containing particulars of—

a

the employee's failure to begin the course,

b

the employee's continued employment, or

c

the employee's re-employment,

within 60 days of coming to know of it.

5

F261. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

F261. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F137Redundancy payments etc

Annotations:

Amendments (Textual)

F137

S. 76ZF and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 36 (with Sch. 2 Pts. 1, 2)

76ZFRedundancy payments and approved contractual payments

1

Sections 76ZG to 76ZI apply if—

a

a company to which section 76 applies (“the employer”) makes a redundancy payment or an approved contractual payment to another person (“the employee”), and

b

the payment is in respect of the employee's employment wholly in the employer's life assurance business or partly in the employer's life assurance business and partly in one or more other capacities.

2

For the purposes of this section and sections 76ZG to 76ZH “redundancy payment” means a redundancy payment payable under—

a

Part 11 of the Employment Rights Act 1996, or

b

Part 12 of the Employment Rights (Northern Ireland) Order 1996.

3

For the purposes of this section and those sections—

“contractual payment” means a payment which, under an agreement, an employer is liable to make to an employee on the termination of the employee's contract of employment, and
a contractual payment is “approved” if, in respect of that agreement, an order is in force under—
1. a
  section 157 of the Employment Rights Act 1996, or
2. b
  Article 192 of the Employment Rights (Northern Ireland) Order 1996.

F5576ZGPayments in respect of employment wholly in employer's business

1

This section applies if the payment is in respect of the employee's employment wholly in the employer's life assurance business.

2

The payment is treated as expenses payable which fall to be brought into account at Step 1 in section 76(7), so far as it otherwise would not be.

3

The amount brought into account by virtue of this section for an approved contractual payment must not exceed the amount which would have been due to the employee if a redundancy payment had been payable.

4

If the payment is referable to an accounting period beginning after the business has permanently ceased to be carried on, it is treated as referable to the last accounting period in which the business was carried on.

F5676ZHPayments in respect of employment in more than one capacity

1

This section applies if the payment is in respect of the employee's employment with the employer—

a

partly in the employer's life assurance business, and

b

partly in one or more other capacities.

2

The amount of the redundancy payment, or the amount which would have been due if a redundancy payment had been payable, is to be apportioned on a just and reasonable basis between—

a

the employment in the life assurance business, and

b

the employment in the other capacities.

3

The part of the payment apportioned to the employment in the life assurance business is treated as a payment in respect of the employee's employment wholly in the life assurance business for the purposes of section 76ZG.

F5776ZIAdditional payments

1

This section applies if the employer's business, or part of it, ceases (permanently) to be carried on and the employer makes a payment to the employee in addition to—

a

the redundancy payment, or

b

if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.

2

If—

a

the additional payment would not otherwise be regarded as expenses payable for the purposes of section 76, but

b

that is only because the business, or the part of the business, has ceased to be carried on,

the additional payment is regarded as expenses payable for the purposes of section 76.

3

So far as the additional payment would, apart from this subsection, be regarded as expenses payable for the purposes of Step 5 in subsection (7) of section 76, it is not to be so regarded for the purposes of that subsection (or of subsection (2) above so far as relating to section 76).

4

The amount treated under this section as expenses payable for the purposes of section 76 is limited to 3 times the amount of—

a

the redundancy payment, or

b

if an approved contractual payment is made, the amount that would have been due if a redundancy payment had been payable.

5

If the payment is referable to an accounting period beginning after the business or the part of the business has ceased to be carried on, it is treated as referable to the last accounting period in which the business, or the part concerned, was carried on.

F5876ZJPayments by the Government

1

This section applies if—

a

a redundancy payment or an approved contractual payment is payable by a company to which section 76 applies (“the employer”), and

b

a payment to which subsection (2) applies is made in respect of the payment.

2

This subsection applies to—

a

payments made by the Secretary of State under section 167 of the Employment Rights Act 1996, and

b

payments made by the Department for Employment and Learning under Article 202 of the Employment Rights (Northern Ireland) Order 1996.

3

So far as the employer reimburses the Secretary of State or Department for the payment, sections 76ZG to 76ZI apply as if the payment were—

a

a redundancy payment, or

b

an approved contractual payment,

made by the employer.

F138Contributions to local enterprise organisations or urban regeneration companies

Annotations:

Amendments (Textual)

F138

S. 76ZK and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 41 (with Sch. 2 Pts. 1, 2)

76ZKContributions to local enterprise organisations or urban regeneration companies

1

This section applies if a company to which section 76 applies (“the contributor”) incurs expenses in making a contribution (whether in cash or in kind)—

a

to a local enterprise organisation, or

b

to an urban regeneration company.

2

The expenses are treated for the purposes of section 76 as expenses payable which fall to be brought into account at Step 1 in section 76(7).

3

But if, in connection with the making of the contribution, the contributor or a connected person—

a

receives a disqualifying benefit of any kind, or

b

is entitled to receive such a benefit,

the amount treated in accordance with subsection (2) is restricted to the amount of the expenses less the value of the benefit.

4

For this purpose it does not matter whether a person receives, or is entitled to receive, the benefit—

a

from the local enterprise organisation or urban regeneration company concerned, or

b

from anyone else.

5

Subsection (6) applies if—

a

an amount has been brought into account in accordance with subsection (2), and

b

the contributor or a connected person receives a disqualifying benefit that is in any way attributable to the contribution.

6

The contributor is to be treated as receiving, when the benefit is received, an amount—

a

which is equal to the value of the benefit (so far as not brought into account in determining the amount of the deduction), and

b

to which the charge to corporation tax on income applies.

7

In this section—

“disqualifying benefit” means a benefit the expenses of obtaining which, if incurred by the contributor directly in a transaction at arm's length, would not be expenses payable for the purposes of section 76,
“local enterprise organisation” has the meaning given by section 83 of CTA 2009,
“urban regeneration company” has the meaning given by section 86 of CTA 2009.

8

F262Section 1122 of CTA 2010 (connected persons) applies for the purposes of subsections (3) and (5).

F139Unpaid remuneration

Annotations:

Amendments (Textual)

F139

S. 76ZL and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 42 (with Sch. 2 Pts. 1, 2)

76ZLUnpaid remuneration

1

This section applies if—

a

an amount is charged in respect of employees' remuneration in the accounts for a period of a company to which section 76 applies,

b

the amount would apart from this section be brought into account under section 76 as expenses payable, and

c

the remuneration is not paid before the end of the period of 9 months immediately following the end of the period of account.

2

If the remuneration is paid after the end of that period of 9 months, the amount is brought into account for the period of account in which it is paid.

3

But—

a

subsection (2) is subject to section 86 of FA 1989 (spreading of relief for acquisition expenses), and

b

in interpreting that section the remuneration is treated as expenses payable which fall to be included at Step 1 in section 76(7) for the period of account in which the remuneration is paid.

4

The amount is not brought into account under section 76 as expenses payable if it is not paid.

F5976ZMUnpaid remuneration: supplementary

1

For the purposes of section 76ZL an amount charged in the accounts in respect of employees' remuneration includes an amount for which provision is made in the accounts with a view to its becoming employees' remuneration.

2

For the purposes of section 76ZL it does not matter whether an amount is charged for—

a

particular employments, or

b

employments generally.

3

If the profits of the company are calculated before the end of the 9 month period mentioned in section 76ZL(1)(c)—

a

it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but

b

if the remuneration is subsequently paid before the end of that period, nothing in this subsection prevents the calculation being revised and any tax return being amended accordingly.

4

For the purposes of this section and section 76ZL remuneration is paid when it—

a

is treated as received by an employee for the purposes of ITEPA 2003 by section 18 or 19 of that Act (receipt of money and non-money earnings), or

b

would be so treated if it were not exempt income.

5

In this section and section 76ZL—

“employee” includes an office-holder and “employment” therefore includes an office, and
“remuneration” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of ITEPA 2003.

F116Car or motor cycle hire

Annotations:

Amendments (Textual)

F116

S. 76ZN and cross-heading inserted (1.4.2009 with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), Sch. 1 para. 44 (with Sch. 2 Pts. 1, 2)

F26376ZNCar or motor cycle hire

1

Subsection (2) applies if—

a

in calculating the corporation tax to which a company is liable for an accounting period, an amount representing expenses incurred on the hiring of a car F264. . . can be brought into account under section 76 as expenses payable, and

F265b

the car is not—

i

a car that is first registered before 1 March 2001,

ii

a car that has low CO₂ emissions (as defined in section 104AA of the Capital Allowances Act),

iii

a car that is electrically propelled (as defined in section 268B of that Act), or

iv

a qualifying hire car.

F2661A

Subsection (2) does not apply if condition A or condition B in section 58A of CTA 2009 (short-term hiring in and long-term hiring out) is met.

2

The amount that would otherwise be capable of being brought into account as expenses payable is reduced by F26715%.

3

Subsection (4) applies if an amount is reduced as a result of subsection (2), or a corresponding provision, and—

a

subsequently—

i

there is a rebate (however described) of the hire charges, or

ii

a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency agreement, and

b

an amount is brought into account in respect of the rebate or release.

4

For the purposes of subsection (3)(b) an amount is brought into account in respect of a rebate of hire charges or the release of a debt if—

a

the amount of a reversal representing the rebate or release falls to be deducted under Step 4 in section 76(7), or

b

(in the case of a rebate of hire charges) an amount representing the rebate is chargeable under section 85(1) of the Finance Act 1989 (c. 26).

5

The amount that would otherwise be deductible as mentioned in subsection (4)(a) or chargeable as mentioned in subsection (4)(b) is reduced by F26815%.

6

In this section “corresponding provision” means—

a

section 56(2) of CTA 2009 (car F269. . . hire: trade profits and property income),

b

section 1251(2) of CTA 2009 (car F269. . . hire: companies with investment business), and

c

section 48(2) of ITTOIA 2005 (car F269. . . hire: trade profits and property income).

7

F270. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

In this section “car F271. . . ” and “qualifying hire car F271. . . ” have the meanings given by section 57 of CTA 2009.

F2729

For the purposes of section 50B of ITTOIA 2005 and section 58B of CTA 2009 (connected persons: application of restrictions), this section is to be treated as if it were part of section 56 of CTA 2009.

76ZOF117Hiring cars (but not motor cycles) with low CO₂ emissions before 1 April 2013

F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F6176A Levies and repayments under the Financial Services and Markets Act 2000.

F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F6376B Levies and repayments under the Financial Services and Markets Act 2000: investment companies.

F64. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77 Incidental costs of obtaining loan finance.

F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78 Discounted bills of exchange.

F66. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

79 Contributions to local enterprise agencies.

F67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F6879A Contributions to training and enterprise councils and local enterprise companies.

F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7079BContributions to urban regeneration companies

F71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

80 Expenses connected with foreign trades etc.

F72. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

81 Travel between trades etc.

F73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82 Interest paid to non-residents.

F74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7582A Expenditure on research and development.

F76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7782B Payments to research associations, universities etc.

F78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83 Patent fees etc. and expenses.

F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8083A Gifts in kind to charities etc.

F81. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84 Gifts to educational establishments.

F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8384A Costs of establishing share option or profit sharing schemes: relief.

F84. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

85 Payments to trustees of approved profit sharing schemes.

F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8685A Costs of establishing employee share ownership trusts: relief.

F87. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F8885BApproved share incentive plans

F89. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

86 Employees seconded to charities and educational establishments.

F90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9186A Charitable donations: contributions to agent’s expenses.

F92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

87 Taxable premiums etc.

F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9487ASection 87(2) and (3) and reductions in receipts under ITTOIA 2005

F95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

88 Payments to Export Credit Guarantee Department.

F96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9788A Debts of overseas governments etc.

F98. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9988B Section 88A debts: restriction on deductions under section 74(j).

F100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10188C Section 88A debts: restriction on other deductions.

F102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10388DRestriction of deductions in respect of certain debts

F104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

89Debts proving to be irrecoverable after discontinuance etc

F105. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

90 Additional payments to redundant employees.

F106. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91 Cemeteries.

F107. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10891A Waste disposal: restoration payments.

F109. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11091B Waste disposal: preparation expenditure.

F111. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11291BA Waste disposal: entitlement of successor to allowances.

F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F11491C Mineral exploration and access.

F115. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treatment of regional development and other grants and debts released etc.

92 Regional development grants.

F118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93 Other grants under Industrial Development Act 1982 etc.

F119. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

94 Debts deducted and subsequently released.

F120. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

95F121Taxation of dealers in respect of distributions etc.

F122. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F12695ZATaxation of UK distributions received by insurance companies

1

If the total amount of relevant distributions received by a company in an accounting period exceeds £50,000, those distributions are to be taken into account in calculating for corporation tax purposes the profits of the company in that period (and accordingly F123F124section 130(2) of CTA 2009 does not apply in relation to those distributions).

2

A company (“company A”) receives a “relevant distribution” if—

a

it receives a distribution made by a company F125. . . (“company B”),

b

the value of the shares or stock in respect of which the distribution is made (“the holding”) is materially reduced by reason of the distribution,

c

a profit on the sale of the holding (to anyone other than company B) would be taken into account in calculating company A's profits in respect of relevant insurance business, and

d

either—

i

the holding amounts to, or is an ingredient in a holding amounting to, 10% of all holdings of the same class in company B, or

ii

the period between the acquisition by company A of the holding and that company first taking steps to dispose of the holding does not exceed 30 days.

3

In this section “relevant insurance business” means any kind of insurance business other than life assurance business.

4

Section 177(7) of TCGA 1992 (provision supplementing provision corresponding to subsection (2)(d)(i) above) applies for the purposes of subsection (2)(d)(i).

5

Section 731(4) below (interpretation of “taking steps to dispose of securities”) applies for the purposes of subsection (2)(d)(ii) as if the reference to the securities were to the holding.

Special provisions

95AF133 Creative artists: relief for fluctuating profits

F127. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

96 Farming and market gardening: relief for fluctuating profits.

F128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

97 Treatment of farm animals etc.

F129. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F13098 Tied premises: receipts and expenses treated as those of trade.

F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

99 Dealers in land.

F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VI DISCONTINUANCE F155. . .

Annotations:

Amendments (Textual)

F155

Words in Pt. 4 Ch. 6 heading repealed (with application in accordance with Sch. 27 Pt. 3(6) Note of the repealing Act) by Finance Act 1998 (c. 36), Sch. 27 Pt. 3(6)

Valuation of trading stock etc.

100 Valuation of trading stock at discontinuance of trade.

F140. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101 Valuation of work in progress at discontinuance of profession or vocation.

F141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102 Provisions supplementary to sections 100 and 101.

F142. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Case VI charges on receipts

103 Receipts after discontinuance: earnings basis charge and related charge affecting conventional basis.

F143. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

104 Conventional basis: general charge on receipts after discontinuance F144. . . .

F145. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105 Allowable deductions.

F146. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

106 Application of charges where rights to payments transferred.

F147. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reliefs

107 Treatment of receipts as earned income.

F148. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

108 Election for carry-back.

F149. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

109 Charge under section 104: relief for individuals born before 6th April 1917.

F150. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F156 Relief for post-cessation expenditure

Annotations:

Amendments (Textual)

F156

S. 109A and preceding cross-heading inserted (with effect in accordance with s. 90(7) of the amending Act) by Finance Act 1995 (c. 4), s. 90(1)

109A Relief for post-cessation expenditure.

F151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental

110 Interpretation etc.

F152. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F157F154 Change of residence

Annotations:

Amendments (Textual)

F157

S. 110A and preceding cross-heading inserted (with effect in accordance with s. 124(2) of the amending Act) by Finance Act 1995 (c. 4), s. 124(1)

F154

S. 110A and preceding cross-heading repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 91, Sch. 3 (with Sch. 2)

110A Change of residence.

F153. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VII PARTNERSHIPS AND SUCCESSIONS

General