Income and Corporation Taxes Act 1988

65 Cases IV and V assessments: general. U.K.

(1) M1 Subject to the provisions of this section F1 . . . , income tax chargeable under Case IV or Case V of Schedule D shall be computed on the full amount of the income arising in F1 . . . the year of assessment, whether the income has been or will be received in the United Kingdom or not, subject in the case of income not received in the United Kingdom—

(a) to the same deductions and allowances as if it had been so received, and

(b) to a deduction on account of any annuity or other annual payment (not being interest) payable out of the income to a person not resident in the United Kingdom.

(2) M2 F2 . . . Income tax chargeable under Case IV or V of Schedule D on income arising from any pension shall be computed on the amount of that income subject to a deduction of one-tenth of the amount of the income.

[F3 (2A) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2B) F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3) M3 Income tax chargeable under Case IV or V of Schedule D on income which is immediately derived by a person from the carrying on by him of any trade, profession or vocation either solely or in partnership shall be computed in accordance with the rules applicable to Cases I and II of Schedule D [F5 (including sections 60 to 63A and 113)]; and subsection (1)(a) above shall not apply.

F6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) [F7 M4 Subsections (1) to (3)] above [F8 and section 65A below] shall not apply to any person who [F9 makes a claim to the Board stating] that he is not domiciled in the United Kingdom, or that, being a Commonwealth citizen or a citizen of the Republic of Ireland, he is not ordinarily resident in the United Kingdom.

(5) M5 Where subsection (4) above applies the tax shall, F10 . . . , be computed—

(a) in the case of tax chargeable under Case IV, on the full amount, so far as the same can be computed, of the sums received in the United Kingdom in F10 . . . the year of assessment, without any deduction or abatement; and

(b) in the case of tax chargeable under Case V, on the full amount of the actual sums received in the United Kingdom in F10 . . . the year of assessment from remittances payable in the United Kingdom, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of any such remittances, property, money or value brought or to be brought into the United Kingdom, without any deduction or abatement other than is allowed under the provisions of the Income Tax Acts in respect of [F11 profits] charged under Case I of Schedule D.

(6) For the purposes of subsection (5) above, any income arising from securities or possessions out of the United Kingdom which is applied outside the United Kingdom by a person ordinarily resident in the United Kingdom in or towards satisfaction of—

(a) any debt for money lent to him in the United Kingdom or for interest on money so lent, or

(b) any debt for money lent to him outside the United Kingdom and received in or brought to the United Kingdom, or

(c) any debt incurred for satisfying in whole or in part a debt falling within paragraph (a) or (b) above,

shall be treated as received by him in the United Kingdom (and, for the purposes of subsection (5)(b) above, as so received from remittances payable in the United Kingdom).

(7) Where a person ordinarily resident in the United Kingdom receives in or brings to the United Kingdom money lent to him outside the United Kingdom, but the debt for that money is wholly or partly satisfied before he does so, subsection (6) above shall apply as if the money had been received in or brought to the United Kingdom before the debt was so satisfied, except that any sums treated by virtue of that subsection as received in the United Kingdom shall be treated as so received at the time when the money so lent is actually received in or brought to the United Kingdom.

(8) Where—

(a) a person (“the borrower”) is indebted for money lent to him, and

(b) income is applied by him in such a way that the money or property representing it is held by the lender on behalf of or to the account of the borrower in such circumstances as to be available to the lender for the purpose of satisfying or reducing the debt by set-off or otherwise,

that income shall be treated as applied by the borrower in or towards satisfaction of the debt if, under any arrangement between the borrower and the lender, the amount for the time being of the borrower’s indebtedness to the lender, or the time at which the debt is to be repaid in whole or in part, depends in any respect directly or indirectly on the amount or value so held by the lender.

(9) For the purposes of subsections (6) to (8) above—

(a) a debt for money lent shall, to the extent to which that money is applied in or towards satisfying another debt, be deemed to be a debt incurred for satisfying that other debt, and a debt incurred for satisfying in whole or in part a debt falling within paragraph (c) of subsection (6) above shall itself be treated as falling within that paragraph; and

(b) “lender” includes, in relation to any money lent, any person for the time being entitled to repayment.

Textual Amendments

F1 Words in s. 65(1) repealed (with effect in accordance with s. 218(1) of the repealing Act) by Finance Act 1994 (c. 9), ss. 207(1), 258, Sch. 26 Pt. 5(24), Note 7 (with Sch. 20)

F2 Words in s. 65(2) repealed (6.4.2003 with effect in accordance with s. 723(1) of the repealing Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 para. 9, Sch. 8 Pt. 1 (with Sch. 7)

F3 S. 65(2A)(2B) inserted (with effect in accordance with s. 41(5)-(10) of the amending Act) by Finance Act 1995 (c. 4), s. 41(1)

F4 S. 65(2A)(2B) repealed (with effect in accordance with s. 38(2)(3) of the repealing Act) by Finance Act 1998 (c. 36), Sch. 5 para. 23(a), Sch. 27 Pt. 3(4), Note (with Sch. 5 para. 73)

F5 Words in s. 65(3) inserted (with effect in accordance with ss. 207(6) and 218 of the amending Act) by Finance Act 1994 (c. 9), s. 207(2)(a) (with Sch. 20)

F6 Words in s. 65(3) repealed (with effect in accordance with ss. 207(6) and 218(1)(b) of the repealing Act) by Finance Act 1994 (c. 9), ss. 207(2)(b), 258, Sch. 26 Pt. 5(24), Note 1 (with Sch. 20)

F7 Words in s. 65(4) substituted (with effect in accordance with s. 41(5)-(10) of the amending Act) by Finance Act 1995 (c. 4), s. 41(1)

F8 Words in s. 65(4) inserted (with effect in accordance with s. 38(2)(3) of the amending Act) by Finance Act 1998 (c. 36), s. 38(1), Sch. 5 para. 23(b) (with Sch. 5 para. 73)

F9 Words in s. 65(4) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), s. 134(1), Sch. 20 para. 3

F10 Words in s. 65(5) repealed (with effect in accordance with s. 218(1) of the repealing Act) by Finance Act 1994 (c. 9), ss. 207(3), 258, Sch. 26 Pt. 5(24), Note 7 (with Sch. 20)

F11 Words in s. 65(5)(b) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b), Sch. 7 para. 1

Modifications etc. (not altering text)

C1 See 1990 s.56and Sch.10 para.12(4)—tax on income in respect of chargeable securities on income of year of assessment.

C2 See—1979(C) s.14(2)—capital gains tax on gains applied outside the United Kingdom in payment of certain debts.1989 s.94and Sch.11 paras.5, 13—deep gain securities.

C3 See 1988(F) s.38(9)—no deduction under s.65(1)(b)on account of a payment to which s.38 (maintenance payments)applies.

C4 S. 65(6)-(9) 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. 12(2), 289 (with ss. 60, 101(1), 171, 201(3)).

Marginal Citations

M1 SOURCE-1970 s. 122(1)(a), (b)

M2 SOURCE-1974 S. 22(1)

M3 SOURCE-1974 s. 23(1), 6(b)

M4 SOURCE-1970 s. 122(2)(a)

M5 SOURCE-1970 s. 122(3)–(7)