Part II Income Tax, Corporation Tax and Capital Gains Tax
CHAPTER I General
Income tax rates and allowances
F9930 Charge and rates of income tax for 1989-90.
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F9931 Age allowance.
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F9932 Operative date for PAYE.
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33 Married couples. C1
1
Sections 257 to 257F and 265 of the M1Taxes Act 1988,as inserted for the year 1990-91 and subsequent years by the Finance Act 1988,shall be amended as follows.
2
In section 257(1) for “£2,605” there shall be substituted “£2,785”.
3
In section 257(2) for “£3,180” there shall be substituted “£3,400”.
4
In section 257(3)—
F116a
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b
for “£3,310” there shall be substituted “£3,540”.
5
In section 257(5)—
a
for “£10,600” there shall be substituted “£11,400”,and
F117b
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F16
In section 257A(1) for “£1,490” there shall be substituted “£1,590”.
7
In section 257A(2) for “£1,855” there shall be substituted “£1,985”.
8
In section 257A(3)—
F118a
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b
for “£1,895” there shall be substituted “£2,025”.
9
In section 257A(5)—
a
for “£10,600” there shall be substituted “£11,400”,and
F119b
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10
F411
In section 257E(1)(b) for “80” there shall be substituted “75”.
F412
In section 257E(2)(a) for “£3,180” there shall be substituted “£3,400”.
F413
In section 257E(2)(b) for “£3,310” there shall be substituted “£3,540”.
Corporation tax rates etc.
34 Charge and rate of corporation tax for financial year 1989. C2
Corporation tax shall be charged for the financial year 1989 at the rate of 35 per cent.
F12135 Corporation tax: small companies.
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Receipts basis etc.
F6136 Schedule E: revised Cases.
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F6137 Schedule E: assessment on receipts basis.
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F6138 Schedule E: unpaid emoluments.
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F6139 Schedule E: unremitted emoluments.
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F6140 Schedule E: emoluments already paid.
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F61C341 Schedule E: pensions etc.
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F6142 Schedule E: supplementary.
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F112 43 Schedule D: computation
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F113 44 Companies with investment business and insurance companies: computation
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F6345PAYE: meaning of payment.
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Interest
46 Relief for interest.
For the year 1989-90 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be£30,000.
F9647 Close company loans: business expansion scheme.
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F9848 Close company loans: material interest.
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Benefits in kind
49 Car benefits.
1
In Schedule 6 to the Taxes Act 1988 (taxation of directors and others in respect of cars) for Part I (tables of flat rate cash equivalents) there shall be substituted—
Part I Tables of Flat Rate Cash Equivalents
table Acars with an original market value up to £19,250 and having a cylinder capacity
Cylinder capacity of car in cubic centimetres
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
1400 or less
£1,400
£950
More than 1400 but not more than 2000
£1,850
£1,250
More than 2000
£2,950
£1,950
table BCars with an original market value up to £19,250 and not having a cylinder capacity
Original market value of car
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
Less than £6,000
£1,400
£950
£6,000 or more but less than £8,500
£1,850
£1,250
£8,500 or more but not more than £19,250
£2,950
£1,950
table BCars with an original market value of more than £19,250
Original market value of car
Age of car at end of relevant year of assessment
Under 4 years
4 years or more
More than £19,250 but not more than £29,000
£3,850
£2,600
More than £29,000
£6,150
£4,100
2
This section shall have effect for the year 1989-90 and subsequent years of assessment.
F6250 Security assets and services.
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F6251 Assets used partly for security.
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F6252 Security: supplementary.
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53 Employees earning £8,500 or more and directors.
F641
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F642
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F64a
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F64b
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F64c
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F64d
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F64e
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f
the words “
employment to which Chapter II of Part V applies
”
shall be substituted for the words from “director’s” to “section167)” in F65section 418(3)(a) of that Act;
F64g
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Medical insurance
C454F5 Relief.
1
This section applies where—
a
on or after 6th April 1990 an individual makes a payment in respect of a premium under a contract of private medical insurance (whenever issued),
b
the contract meets the requirement in subsection (2) below as to the person or persons insured,
c
at the time the payment is made the contract is an eligible contract,
d
the individual making the payment does not make it out of resources provided by another person for the purpose of enabling it to be made, and
e
the individual making the payment is not entitled to claim any relief or deduction in respect of it under any other provision of the Tax Acts.
2
The requirement mentioned in subsection (1)(b) above is that the contract insures—
a
an individual who at the time the payment is made is aged 60 or over and resident in the United Kingdom,
b
individuals each of whom at that time is aged 60 or over and resident in the United Kingdom, or
c
two individuals who are married to each other at that time, at least one of whom is aged 60 or over at that time, and each of whom is resident in the United Kingdom at that time.
F62A
In a case where—
a
a payment is made in respect of a premium under a contract at a time when the contract meets the requirement in subsection (2) above by virtue of paragraph (c) of that subsection, and
b
a payment is made under the same contract at a time after one of the individuals has died and when the contract does not (apart from this subsection) meet the requirement in subsection (2) above by virtue only of the fact that the surviving spouse is not aged 60 or over at the time,
for the purposes of subsection (2) above in its application to the contract the surviving spouse shall be deemed to be aged 60 or over at the time mentioned in paragraph (b) above.
3
If the payment is made by an individual who at the time it is made is resident in the United Kingdom (whether or not he is the individual or one of the individuals insured by the contract) F7the individual shall be entitled to relief under this subsection in respect of the payment; and (except where subsections (4) to (6) below apply) relief under this subsection shall be given—
a
in accordance with subsections (3A) to (3C) below, and
b
only on a claim made for the purpose.
F83A
Where an individual is entitled to relief under subsection (3) above in respect of one or more payments made in a given year of assessment, the amount of his liability for that year of assessment to income tax on his total income shall be the amount to which he would be liable apart from this section less whichever is the smaller of—
a
the amount found under subsection (3B) below, and
b
the amount which reduces his liability to nil.
3B
The amount referred to in subsection (3A)(a) above is an amount found by—
a
taking the amount of the payment referred to in subsection (3A) above or (as the case may be) the aggregate amount of the payments there referred to, and
b
finding an amount equal to tax on the amount taken under paragraph (a) above at the basic rate for the year of assessment concerned.
3C
In determining for the purposes of subsection (3A) above the amount of incomers on would be liable apart from this section, no account shall be taken of—
a
any income tax reduction under Chapter I of Part VII of the Taxes Act 1988 or under section 347B of that Act;
b
any income tax reduction under section 353(1A) of the Taxes Act 1988;
c
any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 of the Taxes Act 1988 or by way of a credit under section 790(1) of that Act;
d
any tax at the basic rate on so much of that person’s income as is income the income tax on which he is entitled to charge against any other person or to deduct, retain or satisfy out of any payment.
C54
In such cases and subject to such conditions as the Board may specify in regulations, relief under subsection (3) above shall be given in accordance with subsections (5) and (6) below.
5
An individual who is entitled to such relief in respect of a payment may deduct and retain out of it an amount equal to income tax on it at the basic rate for the year of assessment in which it is made.
6
The person to whom the payment is made—
a
shall accept the amount paid after deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made, and
b
may, on making a claim F9in accordance with regulations, recover from the Board an amount equal to the amount deducted.
7
The Treasury may make regulations providing that in circumstances prescribed in the regulations—
a
an individual who has made a payment in respect of a premium under a contract of private medical insurance shall cease to be and be treated as not having been entitled to relief under subsection (3) above; and
C5b
he or the person to whom the payment was made (depending on the terms of the regulations) shall account to the Board for tax from which relief has been given on the basis that the individual was so entitled.
8
Regulations under subsection (7) above may include provision adapting or modifying the effect of any enactment relating to income tax in order to secure the performance of any obligation imposed under paragraph (b) of that subsection.
9
In this section—
a
references to a premium, in relation to a contract of insurance, are to any amount payable under the contract to the insurer, and
b
references to an individual who is resident in the United Kingdom at anytime include references to an individual who is at that time performing duties which are treated by virtue of section 132(4)(a) of the Taxes Act 1988 as performed in the United Kingdom.
55F10 Eligible contracts.
1
This section has effect to determine whether a contract is at a particular time (the relevant time) an eligible contract for the purposes of section 54 above.
2
A contract is an eligible contract at the relevant time if—
a
it was entered into by an insurer who at the time it was entered into was a qualifying insurer and was approved by the Board for the purposes of this section,
b
the period of insurance under the contract does not exceed one year(commencing with the date it was entered into),
F11ba
at the relevant time the contract satisfies the conditions set out in subsection (2A) below,
bb
the contract is not one in the case of which subsection (2D) below applies,
c
the contract is not connected with any other contract at the relevant time and has not been connected with any other contract at any time since it was entered into, F12and
d
no benefit has been provided by virtue of the contract other than an approved benefit, F13and
e
the contract meets one or more of the three conditions set out below.
F142A
The conditions referred to in subsection (2)(ba) above are that—
a
the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,
b
the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,
c
the premium under the contract is reasonable, and
d
the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.
2B
In a case where—
a
at the relevant time the contract confers a material right, or more than one such right, but
b
the total cost to the insurer of providing benefits in pursuance of the material right or (as the case may be) in pursuance of all the material rights would not exceed the prescribed sum,
the contract shall not thereby be regarded as failing to satisfy at the relevant time the condition set out in subsection (2A)(b) above.
2C
For the purposes of subsection (2B) above a material right is a right which—
a
is not a right such as is mentioned in subsection (2A)(a) above or such as is for the time being specified in regulations made under subsection (2A)(b) above, and
b
is not a right to a cash benefit.
2D
This subsection applies in the case of a contract (the main contract) if—
a
at least one other contract is entered into which is a contract (a collateral contract) under which a benefit is provided in consideration of the insured’s entering into the main contract, and
b
the cost to the insurer of fulfilling his obligations under the collateral contract (or, if there is more than one collateral contract, of fulfilling his obligations under all of them) exceeds the prescribed sum.
F153
The first condition is that the contract is certified by the Board under section 56 below at the relevant time.
F154
The second condition is that, at the time the contract was entered into, it conformed with a standard form certified by the Board as a standard form of eligible contract.
F155
The third condition is that, at the time the contract was entered into, it conformed with a form varying from a standard form so certified in no other respect than by making additions—
a
which were (at the time the contract was entered into) certified by the Board as compatible with an eligible contract when made to that standard form, and
b
which (at that time) satisfied any conditions subject to which the additions were so certified.
F156
Where a contract is varied, and the relevant time falls after the time the variation takes effect, subsections (1) to (5) above shall have effect as if “entered into” read “varied” in each place where it occurs in subsections (4) and (5) above.
7
For the purposes of this section a contract is connected with another contract at any time if—
a
they are simultaneously in force at that time,
b
either of them was entered into with reference to the other, or with a view to enabling the other to be entered into on particular terms, or with a view to facilitating the other being entered into on particular terms, and
c
the terms on which either of them was entered into would have been significantly less favourable to the insured if the other had not been entered into.
8
For the purposes of this section each of the following is a qualifying insurer—
a
an insurer lawfully carrying on in the United Kingdom business of any of the classes specified in Part I of Schedule 2 to the M2Insurance Companies Act 1982;
b
an insurer not carrying on business in the United Kingdom but carrying on business in another member State and being either a national of a member State or a company or partnership formed under the law of any part of the United Kingdom or another member State and having its registered office, central administration or principal place of business in a member State.
9
For the purposes of this section a benefit is an approved benefit if it is provided in pursuance of a right of a description
F16a
mentioned in subsection (2A)(a) above, or
b
for the time being specified in regulations made under subsection (2A)(b) above.
F1710
For the purposes of this section a benefit is also an approved benefit if it is not a cash benefit and—
a
it is a single benefit provided otherwise than as mentioned in subsection (9) above and the cost to the insurer of providing it does not exceed the prescribed sum, or
b
it is one of a number of benefits provided otherwise than as mentioned in subsection (9) above and the total cost to the insurer of providing the benefits does not exceed the prescribed sum.
11
In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.
12
For the purposes of this section the prescribed sum is £30.
13
The Treasury may by order substitute for the sum for the time being specified in subsection (12) above such sum as may be specified in the order; and any such substitution shall have effect in relation to cases where the relevant time falls on or after such date as is specified in the order.
56F18 Certification of contracts.
1
The Board shall certify a contract under this section if it satisfies the conditions set out in subsection (3) below; and the certification shall be expressed to take effect from the time the conditions are satisfied, and shall take effect accordingly.
2
The Board shall revoke a certification of a contract under this section if it comes to their notice that the contract has ceased to satisfy the conditions set out in subsection (3) below; and the revocation shall be expressed to take effect from the time the conditions ceased to be satisfied, and shall take effect accordingly.
3
The conditions referred to above are that—
C6a
the contract either provides indemnity in respect of all or any of the costs of all or any of the treatments, medical services and other matters for the time being specified in regulations made by the Treasury, or in addition to providing indemnity of that description provides cash benefits falling within rules for the time being so specified,
b
the contract does not confer any right other than such a right as is mentioned in paragraph (a) above or is for the time being specified in regulations made by the Treasury,
c
the premium under the contract is in the Board’s opinion reasonable, and
d
the contract satisfies such other requirements as are for the time being specified in regulations made by the Treasury.
4
The certification of a contract by the Board under this section shall cease to have effect if the contract is varied; but this is without prejudice to the application of the preceding provisions of this section to the contract as varied.
5
Where the Board refuse to certify a contract under this section, or they revoke a certification, an appeal may be made to the Special Commissioners by—
a
the insurer, or
b
any person who (if the policy were certified) would be entitled to relief under section 54 above.
6
Where a contract is certified under this section, or a certification is revoked or otherwise ceases to have effect, any adjustments resulting from the certification or from its revocation or ceasing to have effect shall be made.
7
Subsection (6) above applies where a certification or revocation takes place on appeal as it applies in the case of any other certification or revocation.
8
In this section the reference to a premium, in relation to a contract of insurance, is to any amount payable under the contract to the insurer.
57F19 Medical insurance: supplementary.
C71
The Board may by regulations—
a
provide that a claim under section 54(3) or (6)(b) above shall be made in such form and manner, shall be made at such time, and shall be accompanied by such documents, as may be prescribed;
F20aa
make provision for and with respect to appeals against a decision of an officer of the Board or the Board with respect to a claim under section 54(6)(b) above;
b
make provision, in relation to payments in respect of which a person is entitled to relief under section 54 above, for the giving by insurers in such circumstances as may be prescribed of certificates of payment in such form as may be prescribed to such persons as may be prescribed;
c
provide that a person who provides (or has at any time provided) insurance under contracts of private medical insurance shall comply with any notice which is served on him by the Board and which requires him within a prescribed period to make available for the Board’s inspection documents (of a prescribed kind) relating to such contracts;
d
provide that persons of such a description as may be prescribed shall, within a prescribed period of being required to do so by the Board, furnish to the Board information (of a prescribed kind) about contracts of private medical insurance;
e
make provision with respect to the approval of insurers for the purposes of section 55 above and the withdrawal of approval for the purposes of that section;
f
make provision for and with respect to appeals against decisions of the Board with respect to the giving or withdrawal of approval of insurers for the purposes of section 55 above;
g
make provision with respect to the certification by the Board of standard forms of eligible contract and variations from standard forms of eligible contract certified by them;
h
make provision for and with respect to appeals against decisions of the Board with respect to the certification of standard forms of eligible contractor variations from standard forms of eligible contract certified by them;
i
provide that certification, or the revocation of a certification, under section 56 above shall be carried out in such form and manner as may be prescribed;
j
make provision with respect to appeals against decisions of the Board with respect to certification or the revocation of certification under section 56 above;
C7k
make provision generally as to administration in connection with sections 54 to 56 above.
F1202
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3
The following provisions of the Taxes Management Act 1970, namely—
F21a
section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act;
b
section 30 (tax repaid in error etc.) F22apart from subsection (1B),
c
F23section 86 (interest), and
d
section 95 (incorrect return or accounts),
F24shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable by virtue of section 54(6)(b) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.
F253A
In the application of section 86 of the Taxes Management Act 1970 by virtue of subsection (3) above in relation to sums due and payable by virtue of an assessment made under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—
a
in a case where the person falling within section 54(6) above has made any interim claim, within the meaning of regulations made under subsection (1) and section 54(4) above, as respects some part of the year of assessment for which the assessment is made, is 1st January in that year of assessment; and
b
in any other case, is the later of the following dates, that is to say—
i
1st January in the year of assessment for which the assessment is made; or
ii
the date of the making of the payment by the Board which gives rise to the assessment.
4
In sections F26. . . 257D(8) and 265(3) of the Taxes Act 1988 after paragraph (c) there shall be inserted
or
d
on account of any payments to which section 54(5) of the Finance Act 1989 applies
5
In subsection (1) above—
“eligible contract” has the meaning given by section 55 above, and
“prescribed” means prescribed by or, in relation to form, under the regulations.
Charities
58 Payroll deduction scheme.
1
In section 202(7) of the Taxes Act 1988 (which limits to £240 the deductions attracting relief) for “£240” there shall be substituted “£480”.
2
This section shall have effect for the year 1989-90 and subsequent years of assessment.
F2759. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60 British Museum and Natural History Museum.
F1221
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F1222
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F283
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F1234
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Pensions etc.
F8475 Retirement benefits schemes.
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F8476 Non-approved retirement benefits schemes.
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F8477 Personal pension schemes.
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Unit trusts etc.
78. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F46
F4780. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81 Offshore funds operating equalisation arrangements.
1
In section 758 of the Taxes Act 1988 (offshore funds operating equalisation arrangements) in subsection (6) (reference to section 78 of the M4 Capital Gains Tax Act 1979 not to include reference to it as applied by section 82) for the words “but not” there shall be substituted the words “and a reference to section 78”.
2
This section shall apply where a conversion of securities occurs on or after 14th March 1989; and “conversion of securities” here has the same meaning as in section 82 of the Capital Gains Tax Act 1979.
Life assurance
F13082 Calculation of profits: bonuses etc
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F13182ACalculation of profits: policy holders' tax
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F13282BUnappropriated surplus on valuation
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F10782CRelevant financial reinsurance contracts
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F14582DTreatment of profits: life assurance — adjustment consequent on change in Insurance Prudential Sourcebook
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F14582ESection 82D: treatment of transferors under insurance business transfer schemes
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F14582FSection 82D: treatment of transferees under insurance business transfer schemes
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F133 83 Receipts to be F74taken into account.
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F13683XAStructural assets
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F13783YAChanges in value of assets brought into account: non-profit companies
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F13883YBMeaning of “appropriate line 51 amount” for purposes of s.83YA
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F14683YCFAFTS: charge in relevant period of account
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F14683YDFAFTS: deduction in subsequent periods of account
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F14683YERegulations: apportionment and redefining “financial reinsurance arrangement”
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F14683YFFinancial reinsurance arrangements: further provision
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F11083ZAContingent loans
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F134 83A Meaning of “brought into account”.
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F13583BChanges in recognised accounts: attribution of amounts carried forward under s.432F of Taxes Act 1988
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F10883AA Amounts added to long term insurance fund of a company in excess of that company’s loss.
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F10983AB Treatment of surplus where there is a subsequent transfer of business from the company etc.
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84 Interpretation of sections 85 to 89 and further provisions about insurance companies.
F751
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F1002
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F1013
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F1394
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F1025
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F1036
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F14085 Charge of certain receipts of basic life assurance business.
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F14185AExcess adjusted F114life assurance trade profits
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F14286 Spreading of relief for acquisition expenses.
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F10587 Management expenses.
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F14388 Corporation tax: policy holders’ F104share of profits.
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F7688A Lower corporation tax rate on certain insurance company profits.
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F144 89 Policy holders’ share of profits.
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F9289A Modification of sections 82 to 83A, 88 and 89 in relation to overseas life insurance companies.
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F11190 Life policies etc. held by companies.
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F10690AInterpretation
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Underwriters
F14891 Premiums trust funds: stock lending.
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92 Regulations about underwriters etc.
F1491
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F1492
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F483
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F494
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F495
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F496
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F497
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Securities
F5093. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F5194. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F5295. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96 Securities: miscellaneous.
F1511
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F972
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F533
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F1504
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Groups of companies
97F54 Set-off of ACT where companies remain in the same group.
1
In section 240 of the Taxes Act 1988 (set-off of company’s ACT against subsidiary’s liability to corporation tax) at the end of subsection (5)(set-off not to be made against subsidiary’s liability to corporation tax for any accounting period in which, or in any part of which, it was not a subsidiary of the surrendering company) there shall be added the words “unless throughout that period or part both companies were subsidiaries of a third company”.
2
This section shall have effect in relation to accounting periods ending on or after 14th March 1989.
98F55 Restriction on set-off of ACT.
1
After section 245 of the Taxes Act 1988 there shall be inserted—
245A Restriction on application of section 240 in certain circumstances.
1
This section applies if—
a
there is a change in the ownership of a company (“the relevant company”);
b
by virtue of section 240 the relevant company is treated as having paid an amount of advance corporation tax in respect of a distribution made by it at any time before the change; and
c
within the period of six years beginning three years before the change, there is a major change in the nature or conduct of a trade or business of the company which is for the purposes of section 240 the surrendering company in relation to that amount.
2
No advance corporation tax which the relevant company is treated by virtue of section 240 as having paid in respect of a distribution made by it in anaccounting period beginning before the change of ownership shall be treatedunder section 239(4) as paid by it in respect of distributions made in an accounting period ending after the change of ownership; and this subsection shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.
3
Subsections (4) and (5) of section 245 shall apply also for the purposes of this section and as if the reference in subsection (4) of section 245 to the period of three years mentioned in subsection (1)(a) of that section were a reference to the period mentioned in subsection (1)(c) above.
4
Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax.
245B Restriction on set-off where asset transferred after change in ownership of company.
1
Subsection (4) below applies if—
a
there is a change in the ownership of a company (“the relevant company”);
b
any advance corporation tax paid by the relevant company in respect of distributions made by it in an accounting period beginning before the change is treated under section 239(4) as paid by it in respect of distributions made by it in an accounting period ending after the change;
c
after the change the relevant company acquires an asset from another company in such circumstances that section 273(1) of the Taxes Act 1970applies to the acquisition; and
d
a chargeable gain accrues to the relevant company on the disposal of the asset within the period of three years beginning with the change of ownership.
2
Subsection (1)(b) above shall apply to an accounting period in which the change of ownership occurs as if the part ending with the change of ownership, and the part after, were two separate accounting periods.
3
For the purposes of subsection (1)(d) above an asset acquired by the relevant company as mentioned in subsection (1)(c) above shall be treated as the same as an asset owned at a later time by that company if the value of the second asset is derived in whole or in part from the first asset, and in particular where the second asset is a freehold, and the first asset was a leasehold and the lessee has acquired the reversion.
4
In relation to the accounting period in which the chargeable gain accrues to the relevant company (“the relevant period”), section 239 shall have effect as if the limit imposed by subsection (2) of that section on the amount of advance corporation tax to be set against the relevant company’s liability to corporation tax were reduced by whichever is the lesser of—
a
the amount of advance corporation tax that would have been payable (apart from section 241) in respect of a distribution made at the end of the relevant period of an amount which, together with the advance corporation tax so payable in respect of it, is equal to the chargeable gain, and
b
the amount of surplus advance corporation tax in relation to the accounting period which by virtue of subsection (2) above is treated for the purposes of subsection (1)(b) above as ending with the change of ownership.
5
Sections 768(8) and (9) and 769 shall apply also for the purposes of this section and as if in subsection (3) of section 769 the reference to the benefit of losses were a reference to the benefit of advance corporation tax.
2
This section shall have effect where the change in the ownership of the relevant company occurs on or after 14th March 1989.
F5699. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F124100 Change in ownership of company.
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F125101 Treatment of convertible shares or securities for purposes relating togroup relief etc.
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F126102 Surrender of company tax refund etc. within group.
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Close companies
103 Repeal of apportionment provisions.
1
Except as provided by subsection (2) below, Chapter III of Part XI of theTaxes Act 1988 (apportionment of undistributed income etc. of close companies)shall not have effect in relation to accounting periods beginning after 31stMarch 1989.
2
Section 427(4) of the Taxes Act 1988 (which gives relief to an individualwhere income apportioned to him in an earlier accounting period of a closecompany is included in a distribution received by him in a later accountingperiod), and section 427(5) of, and Part I of Schedule 19 to, that Act so faras they relate to section 427(4), shall continue to have effect in any casewhere the subsequent distribution referred to in section 427(4) is made before1st April 1992.
F127104 Meaning of “close company”.
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F128105 Small companies’ rate not available to certain close companies.
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106F57 Restriction on payment of tax credits.
1
In section 231 of the Taxes Act 1988 (tax credits for certain recipientsof qualifying distributions) in subsection (3) after the words “made and”there shall be inserted the words “subject to subsections (3A) to (3D)below” and after that subsection there shall be inserted—
3A
Subject to subsection (3B) below, where it appears to the inspector that,in any accounting period of a company at the end of which it is a closeinvestment-holding company—
a
arrangements relating to the distribution of the profits of the companyexist or have existed the main purpose of which or one of the main purposesof which is to enable payments, or payments of a greater amount, to be madeto any one or more individuals under subsection (3) above in respect of suchan excess as is mentioned in that subsection, and
b
by virtue of those arrangements, any eligible person—
i
receives a qualifying distribution consisting of a payment made by thecompany on the redemption, repayment or purchase of its own shares, or
ii
receives any other qualifying distribution in respect of shares in orsecurities of the company, where the amount or value of the distribution isgreater than might in all the circumstances have been expected but for thearrangements,
the entitlement of the eligible person to have paid to him undersubsection (3) above all or part of a tax credit in respect of anydistribution made by the company in the period shall be restricted to suchextent as appears to the inspector to be just and reasonable.
3B
Subsection (3A) above does not apply in relation to a tax credit inrespect of a dividend paid by a company in any accounting period in respectof its ordinary share capital if—
a
throughout the period, the company’s ordinary share capital consisted ofonly one class of shares, and
b
no person waived his entitlement to any dividend which would have becomepayable by the company in the period or failed to receive any dividend whichhad become due and payable to him by the company in the period.
3C
In subsection (3A) above—
“arrangements” means arrangements of any kind whether inwriting or not,
“close investment-holding company” has the meaning given bysection 13A, and
“eligible person”, in relation to a qualifying distribution,means an individual resident in the United Kingdom who would (apart fromsubsection (3A) above) be entitled to have paid to him under subsection (3)above all or part of a tax credit in respect of the distribution.
3D
In determining under subsection (3) above whether a person is entitled tohave any excess of tax credit paid to him in a case where subsection (3A)above applies, tax credits shall be set against income tax in the order thatresults in the greatest payment in respect of the excess.
2
This section shall have effect in relation to distributions made bycompanies in accounting periods beginning after 31st March 1989.
107 Close companies: consequential amendments.
Schedule 12 to this Act (in which Part I contains administrativeprovisions relating to close companies and Part II makes amendments connectedwith section 103 above) shall have effect.
Settlements etc.
F58108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109 Settlements where settlor retains interest in settled property.
F591
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F592
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F593
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F814
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F91110 Residence of trustees.
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111 Residence of personal representatives.
F931
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F932
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F933
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4
In section 824(9) of the Taxes Act 1988 (repayment supplements), for the words from “or, in” to “section 701)” there shall be substituted the words “or personal representatives (within the meaning of section 111 of the Finance Act 1989)”.
5
F95... this section shall apply for the year 1989-90 and subsequent years of assessment.
F946
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F947
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F948
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Miscellaneous
F82112 Security: trades etc.
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F83113 Security: trades etc. (supplementary).
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F115F147114 Relief for pre-trading expenditure.
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F152115 Double taxation: tax credits.
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