Income and Corporation Taxes Act 1988

Section 506.

SCHEDULE 20 U.K. CHARITIES: QUALIFYING INVESTMENTS AND LOANS M1

Marginal Citations

M1 Source—1986 c. 60 Sch. 7 Pts. II—IV.

PART I U.K. QUALIFYING INVESTMENTS

1 Investments specified in any of the following paragraphs of this Part of this Schedule are qualifying investments for the purposes of section 506.

2 Any investment falling within Part I, Part II, apart from paragraph 13 (mortgages etc.) or Part III of Schedule 1 to the M2 Trustee Investments Act 1961.

Marginal Citations

M2 1961 c. 62.

3 Any investment in a common investment fund established under section 22 of the M3 Charities Act 1960 [F1 , section 24 of the Charities Act 1993] or section 25 of the M4 Charities Act (Northern Ireland) 1964 or in any similar fund established for the exclusive benefit of charities by or under any enactment relating to any particular charities or class of charities.

Textual Amendments

F1 Words in Sch. 20 para. 3 inserted (1.8.1993) by 1993 c. 10, ss. 98(1), 99(1), Sch. 6 para. 25(a)

Marginal Citations

M3 1960 c. 58.

M4 1964 c. 33 (N.I.).

[F2 3A Any investment in a common deposit fund established under section 22A of the Charities Act 1960 [F3 or section 25 of the Charities Act 1993] or in any similar fund established for the exclusive benefit of charities by or under any enactment relating to any particular charities or class of charities.]

Textual Amendments

F2 Sch. 20 para. 3A inserted (1.9.1992) by Charities Act 1992 (c. 41), s. 78(1), Sch. 6 para. 17; S.I. 1992/1900, art. 2(1), Sch. 1

F3 Words in Sch. 20 para. 3A inserted (1.8.1993) by 1993 c. 10, ss. 98(1), 99(1), Sch. 6 para. 25(b)

4 Any interest in land, other than an interest held as security for a debt of any description.

5 Shares in, or securities of, a company which are [F4 listed] on a recognised stock exchange, or which are dealt in on the Unlisted Securities Market.

Textual Amendments

F4 Word in Sch. 20 para. 5 substituted (with effect in accordance with Sch. 38 para. 6(11) of the amending Act) by Finance Act 1996 (c. 8), Sch. 38 para. 6(1)(2)(l)

6 Units, or other shares of the investments subject to the trusts, of a unit trust scheme within the meaning [F5 given by section 237(1) of the Financial Services and Markets Act 2000].

Textual Amendments

F5 Words in Sch. 20 para. 6 substituted (1.12.2001 in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 50

6A Shares in an open-ended investment company.

7 (1) Deposits with [F6 a bank] in respect of which interest is payable at a commercial rate.

(2) A deposit mentioned in sub-paragraph (1) above is not a qualifying investment if it is made as part of an arrangement under which a loan is made by the authorised institution to some other person.

[F7 (3) In this paragraph “bank” has the meaning given by section 840A.]

Textual Amendments

F6 Words in Sch. 20 para. 7(1) substituted (with application in accordance with Sch. 37 para. 10 of the amending Act) by Finance Act 1996 (c. 8), Sch. 37 para. 5)

F7 Sch. 20 para. 7(3) inserted (with application in accordance with Sch. 37 para. 10 of the amending Act) by Finance Act 1996 (c. 8), Sch. 37 para. 2(3)

7A Uncertificated eligible debt security units as defined in section 552(2) of ITTOIA 2005.

8 Certificates of deposit as defined [F8 for corporation tax purposes in section 56(5) above and for income tax purposes in section 552(2) of ITTOIA 2005].

Textual Amendments

F8 Words in Sch. 20 para. 8 substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by virtue of Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 347(3) (with Sch. 2)

9 (1) Any loan or other investment as to which the Board are satisfied, on a claim made to them in that behalf, that the loan or other investment is made for the benefit of the charity and not for the avoidance of tax (whether by the charity or any other person).

(2) The reference in sub-paragraph (1) above to a loan includes a loan which is secured by a mortgage or charge of any kind over land.

PART II U.K. QUALIFYING LOANS

10 [F9 1] For the purposes of section 506, a loan which is not made by way of investment is a qualifying loan if it consists of—

(a) a loan made to another charity for charitable purposes only; or

(b) a loan to a beneficiary of the charity which is made in the course of carrying out the purposes of the charity; or

(c) money placed on current account with [F10 a bank] otherwise than as part of such an arrangement as is mentioned in paragraph 7(2) above; or

(d) any other loan as to which the Board are satisfied, on a claim made to them in that behalf, that the loan is made for the benefit of the charity and not for the avoidance of tax (whether by the charity or by some other person).

[F11 (2) In this paragraph “bank” has the meaning given by section 840A.]

Textual Amendments

F9 Sch. 20 para. 10 renumbered as para. 10(1) (with application in accordance with Sch. 37 para. 10 of the amending Act) by virtue of Finance Act 1996 (c. 8), Sch. 37 para. 2(4)

F10 Words in Sch. 20 para 10 substituted (with application in accordance with Sch. 37 para. 10 of the amending Act) by Finance Act 1996 (c. 8), Sch. 37 para. 5

F11 Sch. 20 para. 10(2) inserted (with application in accordance with Sch. 37 para. 10 of the amending Act) by Finance Act 1996 (c. 8), Sch. 37 para. 2(4)

F12 F12 PART III U.K. ATTRIBUTION OF EXCESS NON-QUALIFYING EXPENDITURE TO EARLIER CHARGEABLE PERIODS

Textual Amendments

F12 Sch. 20 Pt. 3 (paras. 11-14) repealed (with effect in accordance with s. 55(5) of the repealing Act) by Finance Act 2006 (c. 25), s. 55(3), Sch. 26 Pt. 3(5)

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