Income and Corporation Taxes Act 1988

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

(1) M1 M2 Subsection (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.

(2) M3 Profits or gains arising to a person 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 annual profits or gains chargeable to tax under Case VI of Schedule D.

(3) M4 Subsection (2) above does 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 person 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 592(2), 613, 614(1) to (3) or 620(6) for exempting the whole or part of its income from income tax;

(c) in so far as they are applied to charitable purposes only, to any profits or gains arising to a charity within the meaning of section 506.

[F1 (3A) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3B) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3C) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3D) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(4) M5 For the purposes of this section, profits or gains shall not be treated as falling to be taken into account as a trading receipt by reason only that they are included in the computation required [F3 for the purposes of] section 76(2).

[F4 (4A) 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 Chapter II of Part IV of the Finance Act 1996 (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 that Chapter.]

(5) M6 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 [F5 132 of the 1992 Act].

Textual Amendments

F1 S. 56(3A)-(3D) inserted (27.7.1993) by 1993 c. 34, s. 170, Sch. 18 para.2

F2 S. 56(3A)-(3D) repealed (with effect in accordance with s. 79(3) of the repealing Act) by Finance Act 2002 (c. 23), s. 141, Sch. 40 Pt. 3(10), Note

F3 Word in s. 56(4) substituted (with effect in accordance with s. 164(5)(6) of the amending act) by Finance Act 1996 (c. 8), s. 164(4)

F4 S. 56(4A)(4B) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), s. 104, Sch. 14 para. 6 (with Sch. 15)

F5 Words in s. 56(5) 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(3) (with ss. 60, 101(1), 171, 201(3)).

Modifications etc. (not altering text)

C1 See s.608—exemption for certain superannuation funds.

C2 S. 56(2) modified (24.2.2003) by Proceeds of Crime Act 2002 (c. 29), s. 458, Sch. 10 para. 6 (with Sch. 10 para. 10); S.I. 2003/120, art. 2, Sch. (with arts. 3-7 (as amended by S.I. 2003/333, art. 14))

Marginal Citations

M1 SOURCE-1973 s. 26(1)

M2 SOURCE-1974 s. 30(1)

M3 SOURCE-1973 s. 26(1); 1974 s. 30(1)

M4 SOURCE-1973 s. 26(1)(a)(b); 1975 (No. 2) s. 50(1)

M5 SOURCE-1973 s. 26(3); 1974 s. 30(2)

M6 SOURCE-1973 s. 26(4); 1974 s. 30(2), (1); 1968 s. 55(3); 1979(C) Sch. 7