Income and Corporation Taxes Act 1988

18 Schedule D. U.K.

(1) M1 The Schedule referred to as Schedule D is as follows:—

• SCHEDULE D

• Tax under this Schedule shall be charged in respect of—

  (a)

  the annual profits or gains arising or accruing—

  (i)

  to any person residing in the United Kingdom from any kind of property whatever, whether situated in the United Kingdom or elsewhere, and

  (ii)

  to any person residing in the United Kingdom from any trade, profession or vocation, whether carried on in the United Kingdom or elsewhere, and

  (iii)

  to any person, whether a Commonwealth citizen or not, although not resident in the United Kingdom from any property whatever in the United Kingdom or from any trade, profession or vocation exercised within the United Kingdom, and

  (b)

  all interest of money, annuities and other annual profits or gains [F1 not charged under Schedule A or E], and not specially exempted from tax.

(2) M2 Tax under Schedule D shall be charged under the Cases set out in subsection (3) below, and subject to and in accordance with the provisions of the Tax Acts applicable to those Cases respectively.

(3) The Cases are—

Case I:	tax in respect of any trade carried on in the United Kingdom or elsewhere [F2 but not contained in Schedule A];
Case II:	tax in respect of any profession or vocation not contained in any other Schedule;
Case III:	tax in respect of—
	(a) any interest of money, whether yearly or otherwise, or any annuity or other annual payment, whether such payment is payable within or out of the United Kingdom, either as a charge on any property of the person paying the same by virtue of any deed or will or otherwise, or as a reservation out of it, or as a personal debt or obligation by virtue of any contract, or whether the same is received and payable half-yearly or at any shorter or more distant periods, but not including any payment chargeable under Schedule A, and
	(b) all discounts, and
	(c) income [F3 from securities which is payable out of the public revenue of the United Kingdom or Northern Ireland];
Case IV:	tax in respect of income arising from securities out of the United Kingdom F4 . . . ;
Case V:	tax in respect of income arising from possessions out of the United Kingdom not being income consisting of emoluments of any office or employment;
Case VI:	tax in respect of any annual profits or gains not falling under any other Case of Schedule D and not charged by virtue of [F5 Schedule A or E].

[F6 (3A) For the purposes of corporation tax subsection (3) above shall have effect as if the following Case were substituted for Cases III and IV, that is to say—

Case III:

tax in respect of— (a) profits and gains which, as profits and gains arising from loan relationships, are to be treated as chargeable under this Case by virtue of Chapter II of Part IV of the Finance Act 1996; (b) any annuity or other annual payment which— (i) is payable (whether inside or outside the United Kingdom and whether annually or at shorter or longer intervals) in respect of anything other than a loan relationship; and (ii) is not a payment chargeable under Schedule A; (c) any discount arising otherwise than in respect of a loan relationship;

and as if Case V did not include tax in respect of any income falling within paragraph (a) of the substituted Case III.]

[F7 (3B) The references in Case IV of Schedule D to income arising from securities out of the United Kingdom, and in Case V of Schedule D to income arising from possessions out of the United Kingdom, shall be taken, in the case of relevant foreign holdings, to include references to the following—

(a) any proceeds of such a sale or other realisation of coupons for foreign dividends as is effected by a bank in the United Kingdom which pays the proceeds over or carries them into an account;

(b) any proceeds of a sale of such coupons to a dealer in coupons in the United Kingdom by a person who is not a bank or another dealer in coupons.

(3C) In this section “relevant foreign holdings” means—

(a) any securities issued by or on behalf of a government or a public or local authority in a country outside the United Kingdom; or

(b) any shares or securities issued by or on behalf of a body of persons not resident in the United Kingdom;

and “securities” here includes loan stock and similar securities.

(3D) In this section “foreign dividends” means—

(a) in relation to relevant foreign holdings falling within subsection (3C)(a) above, interest or annual payments payable out of the revenue of the government or authority in question; and

(b) in relation to relevant foreign holdings falling within subsection (3C)(b) above, any dividends, interest or annual payments payable in respect of the holdings in question.

(3E) In this section—

(a) “bank” has the meaning given by section 840A; and

(b) references to coupons include, in relation to any foreign dividends, warrants for and bills of exchange purporting to be drawn or made in payment of those dividends.]

(4) M3 The provisions of Schedule D and of subsection (2) above are without prejudice to any other provision of the Tax Acts directing tax to be charged under Schedule D or under one or other of the Cases set out in subsection (3) above, and tax directed to be so charged shall be charged accordingly.

(5) [F8 Parts III and IV contain] further provisions relating to the charge to tax under Schedule D.

Textual Amendments

F1 S. 18(1): words in Sch. D para. (b) substituted (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), s. 79, Sch. 7 para. 4(1) (with Sch. 7 paras. 33-35)

F2 S. 18(3): words in Sch. D Case I inserted (with effect in accordance with s. 39(4)(5) of the amending Act) by Finance Act 1995 (c. 4), s. 39(3), Sch. 6 para. 2

F3 S. 18(3): words in Sch. D Case III para. (c) substituted (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), s. 79, Sch. 7 para. 4(2)(a) (with Sch. 7 paras. 33-35)

F4 S. 18(3): words in Sch. D Case IV repealed (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), ss. 79, 205, Sch. 7 para. 4(2)(b), Sch. 41 Pt. V(2), Note (with Sch. 7 paras. 33-35)

F5 S. 18(3): words in Sch. D Case VI substituted (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), s. 79, Sch. 7 para. 4(2)(c) (with Sch. 7 paras. 33-35)

F6 S. 18(3A) inserted (with effect as mentioned in s. 105 of the amending Act) by Finance Act 1996 (c. 8), s. 104, Sch. 14 para. 5 (with Sch. 15)

F7 S. 18(3B)-(3E) inserted (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), s. 79, Sch. 7 para. 4(3) (with Sch. 7 paras. 33-35)

F8 Words in s. 18(5) substituted (with effect as mentioned in Sch. 7 para. 32 of the amending Act) by Finance Act 1996 (c. 8), s. 79, Sch. 7 para. 4(4) (with Sch. 7 paras. 33-35)

Modifications etc. (not altering text)

C1 See, as regards exemption, the following provisions of this Act:—s.320—Commonwealth Agents—General and official agents etc.s.322—certain consular officers and employees.s.323—visiting forces and staffs of allied headquarters.s.325—certain savings bank interest.s.326—sums payable under certified contractual saving schemes.s.327—interest on damages for personal injuries.s.328—funds in court.s.330—German annuities in compensation for National Socialist persecution.s.438—annuity funds of insurance companies doing pension business.s.459to 461—certain friendly societies.s.467—certain trade unionss.476—certain dividends and interest payable by building societies (Repealed by 1990 s.30and Sch.5 para.2for 1991-92and subsequent years.).s.484—savings banks.s.505and 506—charities.s.507—British Museum.s.508—scientific research associations.s.510—agricultural societies.s.514—funds for reducing National Debt.s.517—issue departments of Reserve Bank of India and State Bank of Pakistan.s.519—local authorities.s.578—housing grants.s.581—interest on certain local authority borrowing in foreign currency.s.613(4)—Parliamentary pension funds.s.614—national insurance supplementary schemes etc; and certain Indian family pension funds.s.614(3)—certain pension funds for Crown service abroad.s.614and 615—certain pension funds for overseas employees.s.620(5)and (6)—approved retirement annuity trust schemes.s.656and 657—certain purchased life annuities.s.688—certain interest received by trustees of schemes for directors and employees to acquire shares.

See also—1989 s.43for periods of account ending after 5April 1989involving emoluments.Income Tax (Repayment of Post-War Credits) Act 1959 s.2(4) (see Part II Vol.5)—interest on post-war credits.Diplomatic Privileges Act 1964 (c.81).Commonwealth Secretariat Act 1966 (c.10), s.1(2)and Sch. Part I para.3—the Commonwealth Secretariat.International Organisations Act 1968 (c.48)—certain international organisations and persons connected therewith.Double taxation agreements (listed in Part III Vol.5)in force under ss.788-799of this Act as to certain persons resident abroad.

C2 S. 18: Sch. D excluded (with effect in accordance with s. 39(4)(5) of the excluding Act) by Income and Corporation Taxes Act 1988 (c. 1), s. 588(4A) (as inserted by Finance Act 1995 (c. 4), s. 39(3), Sch. 6 para. 24)

C3 See 1970(M) Part VIIIas to charges on non-residents.

C4 See—1988 s.79A(4)—charge on contributor to training and enterprise councils and local enterprise companies who receives benefits in return.S.I. 1987 No.530 (in Part III Vol.5) regn.8—computation of profits and gains in respect of payments attributable to non-resident entertainers and sportsmen.

C5 See—1989 s.94and Sch.11 para.5—deep gain securities transferred on or after 14March 1989.S.I. 1986 No. 1948 (in Part III Vol.5) regn.8(2)(d)—interest on cash deposits which are plan investments under personal equity plans.1990 s.56and Sch.10 para.12(4)—treatment of chargeable events in relation to convertible securities.Housing Act 1957 (c.56) Sch.8 para.4and Housing (Scotland) Act 1966 (c.49) Sch.7 para.4—interest on certain small holdings of housing bonds.Housing Subsidies Act 1967 (c.29) s.24(2)(c) (reproduced in Part II Vol.5)—payment received by lender from Minister in respect of subsidised loan.

C6 See—1989 s.94and Sch.11 para.5—deep gain securities transferred on or after 14March 1989.1990 s.56and Sch.10 paras.12(4)and 20—treatment of chargeable events in relation to income received in the U.K. from convertible securities.

C7 See also—1990 ss.9(5)and 15—certain balancing charges on lessors and others in respect of industrial buildings, machinery, etc.1970(M) s.30—recovery of overpayment of tax, etc.1988 s.79A(4)—charge on contributor to training and enterprise councils and local enterprise companies who receives benefit in return.1989 ss.68, 71—charge on certain profits or gains of employee share ownership trusts.1990(C) s.92(2)—balancing charge in respect of dwelling houses let on assured tenancies.S.I. 1956 No.1230 (in Part III Vol. 5) regns. 4and 15—additional liabilities in respect of purchased life annuities in certain contingencies.S.I. 1989 No.469 (in Part III Vol. 5) regn.22(3)—assessments to recover tax in respect of income under personal equity plans.

C8 S. 18: Sch. D Case I extended (with effect for the year 1992-93 and subsequent years of assessment) by Finance Act 1993 (c. 34), s. 171(2)(a)(4), 184(3)

S. 18: Sch. D Case I restricted (with effect for the year 1992-93 and subsequent years of assessment) by Finance Act 1993 (c. 34), ss. 171(2)(b)(4), 184(3)

S. 18: Sch. D Case 1 extended (with application in accordance with s. 219(4) of the extending Act) by Finance Act 1994 (c. 9), s. 219(2)(a) (with s. 220)

S. 18: Sch. D Case I modified (29.7.1996) by Broadcasting Act 1996 (c. 55), ss. 135, 149(1)(f), Sch. 7 para. 19 (with s. 43(6))

S. 18: Sch. D Cases I, II, VI extended (31.7.1998) by Finance Act 1998 (c. 36), s. 47(4)

S. 18: Sch. D Cases I, II restricted (with application in accordance with s. 42(3) of the restricting Act) by Finance Act 1998 (c. 36), s. 42(1)(2) (with s. 42(4)(5))

S. 18: Sch. D Cases I, III, V modified (with effect in accordance with s. 117(4)(5) of the modifying Act) by Finance Act 1998 (c. 36), s. 117(1), Sch. 18 para. 84 (with Sch. 18 para. 59(2))

S. 18: Sch. D Cases I, VI restricted (with application in accordance with s. 46(7) of the restricting Act) by Finance Act 2000 (c. 17), s. 46(1)-(6)

C9 S. 18: Sch. D Cases II-VI excluded (with effect in accordance with s. 230(3) of the excluding Act) by Finance Act 1994 (c. 9), s. 219(2)(b)(4) (with s. 220)

C10 S. 18: Sch. D Case III extended (1.5.1995) by Finance Act 1995 (c. 4), s. 157(7)

S. 18: Sch. D Case III applied (with effect as mentioned in s. 105(1) of the affecting Act) by Finance Act 1996 (c. 8), s. 83(9), Sch. 8 para. 3(4), Sch. 15

S. 18: Sch. D Case III modified (with effect as mentioned in s. 105(1) of the modifying Act) by Finance Act 1996 (c. 8), s. 83(9), Sch. 8 para. 3(5), Sch. 15

S. 18: Sch. D Cases III, IV extended (with effect in accordance with s. 105(1) of the extending Act) by Finance Act 1996 (c. 8), s. 102, Sch. 13 para. 1(1) (with Sch. 13 para. 16, Sch. 15)

C11 S. 18: Sch. D Case V extended (27.7.1999) by Commonwealth Development Corporation Act 1999 (c. 20), s. 20, Sch. 3 para. 6(3) (with Sch. 3 para. 1)

C12 S. 18: Sch. D Case VI extended (16.7.1992 with effect in relation to chargeable periods ending after 10.3.1992) by Finance (No. 2) Act 1992 (c. 48), s. 66, Sch. 12 paras. 1, 3(1), 7.

S. 18: Sch. D Case VI extended (27.7.1993 with effect as mentioned in s. 165 of the amending Act) by Finance Act 1993 (c. 34), ss. 130(2)(4), 165

S. 18: Sch. D Case VI restricted (27.7.1993) by Agriculture Act 1993 (c. 37), s. 12, Sch. 2 paras. 19(2), 20(2)

S. 18: Sch. D Case VI extended (with application in accordance with Sch. 20 para. 11(1)(2) of the extending Act) by Finance Act 1994 (c. 9), s. 218, Sch. 20 para. 11(3) (with Sch. 20 para. 12(2))

S. 18: Sch. D Case VI extended (with effect in accordance with s. 117(4)(5) of the extending Act) by Finance Act 1998 (c. 36), s. 117(1), Sch. 18 para. 52(4) (with Sch. 18 para. 59(2))

S. 18: Sch. D Case VI extended (with effect in accordance with s. 579 of the extending Act) by Capital Allowances Act 2001 (c. 2), ss. 256(2)(b)(4) (with Sch. 3 paras. 54, 55)

Marginal Citations

M1 SOURCE-1970 s. 108(1)

M2 SOURCE-1970 s. 109(1), (2)

M3 SOURCE-1970 ss. 108(3), 109(3)