Income and Corporation Taxes Act 1988 (c. 1)

PART IV U.K. PROVISIONS RELATING TO THE SCHEDULE D CHARGE

CHAPTER VIII U.K. MISCELLANEOUS AND SUPPLEMENTAL

119 Rent etc. payable in connection with mines, quarries and similar concerns. U.K.

M1 (1) Where rent is payable in respect of any land or easement, and either—

(a) the land or easement is used, occupied or enjoyed in connection with any of the concerns specified in section 55(2); or

(b) the lease or other agreement under which the rent is payable provides for the recoupment of the rent by way of reduction of royalties or payments of a similar nature in the event of the land or easement being so used, occupied or enjoyed,

the rent shall, subject to section 122 [F1 and section 201 of the 1992 Act], be charged to tax under Schedule D, F2 . . . .

(2) Where the rent is rendered in produce of the concern, it shall, F3 . . . , be charged under Case III of Schedule D, and the value of the produce so rendered shall be taken to be the amount of the profits or income arising therefrom.

(3) For the purposes of this section—

• “easement” includes any right, privilege or benefit in, over or derived from land; and

• “rent” includes a rent service, rentcharge, fee farm rent, feuduty or other rent, toll, duty, royalty or annual or periodical payment in the nature of rent, whether payable in money or money’s worth or otherwise.

Textual Amendments

F1 Words in s. 119(1) inserted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(4) (with ss. 60, 101(1), 171, 201(3)).

F2 Words in s. 119(1) repealed (with effect in accordance with s. 145(3), Sch. 29 Pt. 8(22) Note of the repealing Act) by Finance Act 1995 (c. 4), s. 145(1), Sch. 29 Pt. 8(22)

F3 Words in s. 119(2) repealed (with effect in accordance with Sch. 29 Pt. 8(22) Note of the repealing Act) by Finance Act 1995 (c. 4), Sch. 29 Pt. 8(22)

Modifications etc. (not altering text)

C1 S. 119(1) excluded (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 201(2), 289 (with ss. 60, 101(1), 171, 201(3)).

Marginal Citations

M1 Source—1970 s.156

120 Rent etc. payable in respect of electric line wayleaves. U.K.

M2 (1) [F4 Subject to subsection (1A) below,] where rent is payable in respect of any easement enjoyed in the United Kingdom in connection with any electric, telegraphic or telephonic wire or cable (not being such an easement as is mentioned in section 119(1)), the rent shall be charged to tax under Schedule D F5 . . . .

[F6 (1A) If—

(a) the profits and gains arising to any person for any chargeable period include both rent in respect of any such easement as is mentioned in subsection (1) above and amounts which are charged to tax under Schedule A, and

(b) some or all of the land to which the easement relates is included in the land by reference to which the amounts charged under Schedule A arise,

then, for that period, that rent shall be charged to tax under Schedule A, instead of being charged under Schedule D.]

(2) F7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) F7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) F7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In this section—

(a) “easement” and “rent” have the same meanings as in section 119;

(b) the reference to easements enjoyed in connection with any electric, telegraphic or telephonic wire or cable includes (without prejudice to the generality of that expression) references to easements enjoyed in connection with any pole or pylon supporting any such wire or cable, or with any apparatus (including any transformer) used in connection with any such wire or cable; F8 . . .

(c) F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Words in s. 120(1) inserted (with effect in accordance with s. 60(5) of the amending Act) by Finance Act 1997 (c. 16), s. 60(2)(a)

F5 Words in s. 120(1) repealed (with effect in accordance with s. 60(5), Sch. 18 Pt. 6(2) Note of the repealing Act) by Finance Act 1997 (c. 16), s. 60(2)(b), Sch. 18 Pt. 6(2)

F6 S. 120(1A) inserted (with effect in accordance with s. 60(5) of the amending Act) by Finance Act 1997 (c. 16), s. 60(3)

F7 S. 120(2)-(4) repealed (with effect in accordance with s. 60(5), Sch. 18 Pt. 6(2) Note of the repealing Act) by Finance Act 1997 (c. 16), s. 60(4), Sch. 18 Pt. 6(2)

F8 S. 120(5)(c) and preceding word repealed (with effect in accordance with s. 60(5), Sch. 18 Pt. 6(2) Note of the repealing Act) by Finance Act 1997, (c. 16), s. 60(5), {Sch. 18 Pt. 6(2)}

Marginal Citations

M2 Source—1970 s.157

121 Management expenses of owner of mineral rights. U.K.

[F9 M3 (1) Where for any year of assessment rights to work minerals in the United Kingdom are let, the lessor shall be entitled to deduct, in determining the amount chargeable to income tax in respect of the rents or royalties for that year, any sums wholly, exclusively and necessarily disbursed by him as expenses of management or supervision of those minerals in that year.]

(3) In computing for the purposes of corporation tax the income of a company for any accounting period from the letting of rights to work minerals in the United Kingdom, there may be deducted any sums disbursed by the company wholly, exclusively and necessarily as expenses of management or supervision of those minerals in that period.

Textual Amendments

F9 S. 121(1) substituted for s. 121(1)(2) (with effect in accordance with s.145(3) of the amending Act) by Finance Act 1995 (c. 4), s. 145(2)

Marginal Citations

M3 Source—1970 s.158(1), (2)

122 Relief in respect of mineral royalties. U.K.

(1) M4 Subject to the following provisions of this section, a person resident or ordinarily resident in the United Kingdom who in any year of assessment or accounting period is entitled to receive any mineral royalties under a mineral lease or agreement shall be treated—

(a) for the purposes of income tax, or as the case may be for the purposes of corporation tax on profits exclusive of chargeable gains, as if the total of the mineral royalties receivable by him under that lease or agreement in that year or period and any management expenses available for set-off against those royalties in that year or period were each reduced by one-half; F10 . . .

F10 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and this section shall have effect notwithstanding any provision of section 119(1) making the whole of certain kinds of mineral royalties chargeable to tax under Schedule D F11 . . . .

(2) M5 For the purposes of subsection (1)(a) above, “management expenses available for set-off” against royalties means—

(a) where section 121 applies in respect of the royalties, any sum brought into account under subsection (1) of that section in determining the amount of the repayment of income tax in respect of those royalties or, as the case may be, deductible from those royalties under subsection (2) of that section in computing the income of a company for the purposes of corporation tax; and

(b) if the royalties are chargeable to tax under Schedule A, any sums deductible under Part II as payments made in respect of management of the property concerned;

and if neither paragraph (a) nor paragraph (b) above applies, the reference in subsection (1)(a) above to management expenses available for set-off shall be disregarded.

(3 )F12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) M6 Where subsection (1) above applies in relation to mineral royalties receivable under a mineral lease or agreement by a person not chargeable to corporation tax in respect of those royalties, then, in so far as the amount of income tax paid, by deduction or otherwise, by him in respect of those mineral royalties in any year of assessment exceeds the amount of income tax for which he is liable in respect of those royalties by virtue of subsection (1)(a) above—

(a) the amount of the excess shall in the first instance be set against the tax for which he is chargeable by virtue of [F13 section 201(1) of the 1992 Act]; and

(b) on the making of a claim in that behalf, he shall be entitled to repayment of tax in respect of the balance of that excess.

(5) In this section references to mineral royalties refer only to royalties receivable on or after 6th April 1970, and the expression “mineral royalties” means so much of any rents, tolls, royalties and other periodical payments in the nature of rent payable under a mineral lease or agreement as relates to the winning and working of minerals; and the Board may by regulations—

(a) provide whether, and to what extent, payments made under a mineral lease or agreement and relating both to the winning and working of minerals and to other matters are to be treated as mineral royalties; and

(b) provide for treating the whole of such payments as mineral royalties in cases where the extent to which they relate to matters other than the winning and working of minerals is small.

(6) In this section—

• “minerals” means all minerals and substances in or under land which are ordinarily worked for removal by underground or surface working but excluding water, peat, top-soil and vegetation; and

• “mineral lease or agreement” means—

  (a)

  a lease, profit à prendre, licence or other agreement conferring a right to win and work minerals in the United Kingdom;

  (b)

  a contract for the sale, or a conveyance, of minerals in or under land in the United Kingdom; and

  (c)

  a grant of a right under section 1 of the M7 Mines (Working Facilities and Support) Act 1966, other than an ancillary right within the meaning of that Act.

(7) In the application of this section to Northern Ireland—

(a) references to mineral royalties include references to periodical payments—

(i) of compensation under section 29 or 35 of the M8 Mineral Development Act (Northern Ireland) 1969 (“the 1969 Act”) or under section 4 of the M9 Petroleum (Production) Act (Northern Ireland) 1964 (“the 1964 Act”); and

(ii) made as mentioned in section 37 of the 1969 Act or under section 55(4)(b) of that Act or under section 11 of the 1964 Act (payments in respect of minerals to persons entitled to a share of royalties under section 13(3) of the M10 Irish Land Act 1903); and

(b) in its application to any such payments as are mentioned in paragraph (a) above, references to the mineral lease or agreement under which mineral royalties are payable shall be construed as references to the enactment under which the payments are made.

F12 (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10 S. 122(1)(b) and the word "and" immediately preceding it repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 12 (with ss. 60, 101(1), 171, 201(3), Sch. 11 paras. 20, 22, 26(2), 27).

F11 Words in s. 122(1) repealed (1.5.1995 with effect in accordance with Note to Sch. 29 Pt. 8(22) of the amending act) by Finance Act 1995 (c. 4), Sch. 29 Pt. 8(22)

F12 S. 122(3)(8) repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with ss. 60, 101(1), 171, 201(3), Sch. 11 paras. 20, 22, 26(2), 27).

F13 Words in s. 122(4)(a) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(5) (with ss. 60, 101(1), 171, 201(3)).

Modifications etc. (not altering text)

C2 For regulations see Part III Vol.5.

C3 S. 122(5)-(7) applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 203(1), 289 (with ss. 60, 101(1), 171, 201(3)).

Marginal Citations

M4 Source—1970(F) s.29(1), (3); 1971 Sch.9 4

M5 Source—1970(F) s.29(2)

M6 Source—1970(F) s.29(4), (6)-(9)

M7 1966 c. 4.

M8 1969 c. 35 (N.I.).

M9 1964 c. 28 (N.I.).

M10 1903 c. 37.

123 Foreign dividends. U.K.

F14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F14 S. 123 repealed (with effect in accordance with Sch. 7 para. 32 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 7 para. 13, Sch. 41 Pt. 5(2), Note (with Sch. 7 paras. 33-35)

124 Interest on quoted Eurobonds. U.K.

M11 (1) Section 349(2) shall not apply to interest paid on any quoted Eurobond where—

(a) the person by or through whom the payment is made is not in the United Kingdom; or

(b) the payment is made by or through a person who is in the United Kingdom but either of the conditions mentioned in subsection (2) below is satisfied.

[F15 (2) The conditions are—

(a) that a person who—

(i) is not resident in the United Kingdom, and

(ii) beneficially owns the quoted Eurobond

is beneficially entitled to the interest;

(b) that the quoted Eurobond is held in a recognised clearing system.

(3) The Board may by regulations provide that subsection (1)(b) above shall be taken not to apply to a payment of interest unless—

(a) the person by or through whom the payment is made (the relevant payer) has received a declaration confirming that one of the conditions of subsection (2) above is satisfied, or

(b) they have issued a notice to the relevant payer stating that they consider that one (or both) of those conditions is satisfied.

(4) Regulations under subsection (3) above may—

(a) impose requirements as to—

(i) the contents of any declaration to be made in accordance with regulations under subsection (3)(a) above,

(ii) the form and manner in which any declaration is to be provided in accordance with any such regulations, and

(iii) the keeping and production to, or to an officer of, the Board of any document in which any such declaration is contained;

(b) make provision for any such declaration to be made by the person entitled to the interest (or, as the case may be, the depositary for the recognised clearing system) or by such other person as may be prescribed by the regulations;

(c) require the relevant payer to consider the accuracy of any such declaration;

(d) make provision for notices to be issued by the Board to such persons as may be described in the regulations where the Board consider that

(i) one (or both) of the conditions of subsection (2) above, or

(ii) neither of those conditions

is satisfied in relation to interest paid on any holding of quoted Eurobonds;

(e) make provision with respect to the furnishing of information by relevant payers, including the inspection of books and other records on behalf of the Board;

(f) require relevant payers to deliver returns setting out particulars of payments made by them to which subsection (1)(b) above applies and the names and addresses of the persons entitled to them;

(g) contain such supplementary, incidental, consequential or transitional provisions as appear to the Board to be necessary or expedient.]

(6) In this section—

• “quoted Eurobond” means a security which—

  (a)

  is issued by a company;

  (b)

  is [F16 listed] on a recognised stock exchange;

  (c)

  is in bearer form; and

  (d)

  carries a right to interest; F17 . . .

• F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) F18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F15 S. 124(2)-(4) substituted for s. 124(2)-(5) (29.4.1996) by Finance Act 1996 (c. 8), Sch. 29 Para. 4

F16 Word in s. 124(6) substituted (with effect in accordance with Sch. 38 para. 6(3) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 6(1)(2)(a)

F17 Definitions in s. 124(6) repealed (with effect in accordance with Sch. 7 para. 32 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 7 para. 14(a), Sch. 41 Pt. 5(2), Note (with Sch. 7 paras. 33-35)

F18 S. 124(7) repealed (with effect in accordance with Sch. 7 para. 32 of the repealing Act) by Finance Act 1996 (c. 8), Sch. 7 para. 14(b), Sch. 41 Pt. 5(2), Note (with Sch. 7 paras. 33-35)

Modifications etc. (not altering text)

C4 S. 124(1)(b) excluded (30.7.1996) by The Income Tax (Interest on Quoted Eurobonds) Regulations 1996 (S.I. 1996/1779), regs. 3(1), 4(1) (with reg. 7(1))

Marginal Citations

M11 Source—1984 s.35 (1)-(3), (5)-(8)

125 Annual payments for non-taxable consideration. U.K.

M12 (1) 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.

(2) Subject to the following provisions of this section, subsection (1) above applies to any payment which—

(a) is an annuity or other annual payment charged with tax under Case III of Schedule D, not being interest; and

(b) is made under a liability incurred for consideration in money or money’s worth all or any of which is not required to be brought into account in computing for the purposes of income tax or corporation tax the income of the person making the payment.

(3) Subsection (1) above does not apply to—

(a) any payment which in the hands of the recipient is income falling within [F19 section 660A(8) or (9)(a)];

(b) any payment made to an individual under a liability incurred in consideration of his surrendering, assigning or releasing an interest in settled property to or in favour of a person having a subsequent interest;

(c) any annuity granted in the ordinary course of a business of granting annuities; or

(d) any annuity charged on an interest in settled property and granted at any time before 30th March 1977 by an individual to a company whose business at that time consisted wholly or mainly in the acquisition of interests in settled property or which was at that time carrying on life assurance business in the United Kingdom.

(4) 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.

(5) Subsection (1) above applies to a payment made after 5th April 1988 irrespective of when the liability to make it was incurred.

Textual Amendments

F19 Words in s. 125(3)(a) substituted (with effect in accordance with s. 74 of the amending Act) by Finance Act 1995 (c. 4), Sch. 17 para. 2

Modifications etc. (not altering text)

C5 See 1989 s.59—rights of admission disregarded in the case of certain covenanted subscriptions.

Marginal Citations

M12 Source—1977 s.48

126 Treasury securities issued at a discount. U.K.

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

Textual Amendments

F20 Ss. 126, 126A repealed (with effect in accordance with s. 105(1) of the repealing Act) by Finance Act 1996, Sch. 41 Pt. 5(3), Note

126A Charge to tax on appropriation of securities and bonds. U.K.

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

Textual Amendments

F21 Ss. 126, 126A repealed (with effect in accordance with s. 105(1) of the repealing Act) by Finance Act 1996, Sch. 41 Pt. 5(3), Note

127 Enterprise allowance. U.K.

M13 (1) This section applies to—

(a) payments known as enterprise allowance and made [F22 (whether before or after the coming into force of Section 25 of the M14 Employment Act 1988)] in pursuance of arrangements under section 2(2)(d) of the M15 Employment and Training Act 1973; and

(b) corresponding payments made in Northern Ireland by the Department of Economic Development.

(2) Any such payment which would (apart from this section) be charged to tax under Case I or II of Schedule D shall be charged to tax under Case VI of that Schedule.

(3) Nothing in subsection (2) above shall prevent such a payment—

(a) being treated for the purposes of section 623(2)(c) or 833(4)(c) as immediately derived from the carrying on or exercise of a trade, profession or vocation; or

(b) being treated for the purposes of paragraph 1of Schedule 19as trading incomeF23 .

Textual Amendments

F22 Para.15 Sch.3 Employment Act 1988.Previously

“by the Manpower Services Commission”.

F23 Repealed by 1989 s.187and Sch.17 Part Vin relation to accounting periods beginning after 31March 1989.

Marginal Citations

M13 Source—1986 s.41

M14 1988 c.19

M15 1973 c. 50.

[F24 127A Futures and options: transactions with guaranteed returns. U.K.

Schedule 5AA (which makes provision for the taxation of the profits and gains arising from transactions in futures and options that are designed to produce guaranteed returns) shall have effect.]

Textual Amendments

F24 S. 127A inserted (with effect in accordance with s. 80(6) of the amending Act) by Finance Act 1997 (c. 16), s. 80(1)

128 Commodity and financial futures etc.: losses and gains. U.K.

M16 Any gain arising to any person in the course of dealing in commodity or financial futures or in qualifying options, which [F25 is not chargeable to tax in accordance with Schedule 5AA and] apart from this section would constitute profits or gains chargeable to tax under Schedule D otherwise than as the profits of a trade, shall not be chargeable to tax under [F26 Schedule D].

In this section “commodity or financial futures” and “qualifying options” have the same meaning as in section [F27 143 of the 1992 Act], and the reference to a gain arising in the course of dealing in commodity or financial futures includes any gain which is regarded as arising in the course of such dealing by virtue of subsection [F27 (3)] of that section.

Textual Amendments

F25 Words in s. 128 inserted (with effect in accordance with s. 80(6) of the amending Act) by Finance Act 1997 (c. 16), s. 80(3)(a)

F26 Words in s. 128 substituted (with effect in accordance with s. 80(6) of the amending Act) by Finance Act 1997 (c. 16), s. 80(3)(b)

F27 Words in s. 128 substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 14(7) (with ss. 60, 101(1), 171, 201(3)).

Marginal Citations

M16 Source—1985 s.72(1), (2); 1987 (No.2) s.81(1)

129 Stock lending. U.K.

F28 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F28 Ss. 129, 129A repealed (with effect in accordance with Sch. 10 para. 7(1) of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 1, Sch. 18 Pt. 6(10), Note 1; S.I. 1997/991, art. 2

[F29 129A Stock lending: interest on cash collateral. U.K.

F30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F29 S. 129A inserted (with application in accordance with s. 85(3) of the amending Act) by Finance Act 1995 (c. 4), s. 85(1)

F30 Ss. 129, 129A repealed (with effect in accordance with Sch. 10 para. 7(1) of the repealing Act) by Finance Act 1997 (c. 16), Sch. 10 para. 1, Sch. 18 Pt. 6(10), Note 1; S.I. 1997/991, art. 2

[F31 129B Stock lending fees. U.K.

(1) The income which, as income deriving from investments of a description specified in any of the relevant provisions, is eligible for relief from tax by virtue of that provision shall be taken to include any relevant stock lending fee.

(2) For the purposes of this section the relevant provisions are sections 592(2), 608(2)(a), 613(4), 614(3), 620(6) and 643(2).

(3) In this section “relevant stock lending fee”, in relation to investments of any description, means any amount, in the nature of a fee, which is payable in connection with [F32 any] stock lending arrangement relating to investments which, but for any transfer under the arrangement, would be investments of that description.

[F33 (4) In this section “stock lending arrangement” has the same meaning as in section 263B of the 1992 Act.]]

Textual Amendments

F31 S. 129B inserted (with effect in accordance with s. 157(2) of the amending Act) by Finance Act 1996 (c. 8), s. 157(1)

F32 Word in s. 129B(3) substituted (with effect in accordance with Sch. 10 para. 7(1) of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 2(1); S.I. 1997/991, art. 2

F33 S. 129B(4) substituted (with effect in accordance with Sch. 10 para. 7(1) of the amending Act) by Finance Act 1997 (c. 16), Sch. 10 para. 2(2); S.I. 1997/991, art. 2

130 Meaning of “investment company” for purposes of Part IV. U.K.

M17 In this Part of this Act “investment company”, means any company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings except any which, for the purposes of the M18 Trustee Savings Bank Act 1985, is a successor or a further successor to a trustee savings bank.

Modifications etc. (not altering text)

C6 See—1988 s.338(6)—definition applied for purposes of s.338(3) (charges).1988 s.576(5)—definition applied for purposes of ss.573 to 576 (losses on unquoted shares in trading companies).Trustee Savings Banks Act 1985 (c.58) s.5and Sch.2 para.6(6).

Marginal Citations

M17 Source—1970 s.304(5); 1980 Sch.11

M18 1985 c. 58.