Legalize / United Kingdom / Public General Act

Income and Corporation Taxes Act 1988

Type Public General Act

Publication 1988-02-09

Last updated 2022-07-14

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

PART I — THE CHARGE TO TAX

Income tax

Relief for necessary expenses.

1

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Business entertaining expenses.

2

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Payments to unmarried minor children of settlor.

3

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Reduction of United Kingdom taxes by amount of credit due.

4

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5

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Corporation tax

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6

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Employment

7

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Onshore pooling.

8

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9

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Where . . . any enactment applies both to income tax and to corporation tax—

(a) it shall not be affected in its operation by the fact that they are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to income tax and corporation tax as if they were one tax, so that, in particular, a matter which in a case involving two individuals is relevant for both of them in relation to income tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax; and

(b) for that purpose references in any such enactment to a relief from or charge to income tax, or to a specified provision of the Income Tax Acts shall, in the absence of or subject to any express adaptation, be construed as being or including a reference to any corresponding relief from or charge to corporation tax, or to any corresponding provision of the Corporation Tax Acts.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplement in respect of a pre-commencement accounting period

10

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Reduction in chargeable profits: failure to qualify for exemptions

11

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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12

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7ZA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7B) . . .

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(7C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding 12 months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either—

(a) the inspector on further facts coming to his knowledge sees fit to revise it; or

(b) on an appeal against the assessment in respect of some other matter the company shows the true accounting periods;

and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods, the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Small companies’ rate

Qualifying vehicles

13

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Advance corporation tax

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14

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The six Schedules

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15

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Schedule B

16

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Schedule C

17

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Schedule D

18

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Schedule E

19

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Schedule F

20

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PART II — PROVISIONS RELATING TO THE SCHEDULE A CHARGE

General

Persons chargeable

21

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Assessments

22

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Collection from lessees and agents

23

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Construction of Part II

24

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Deductions and other allowances

Deductions from rent: general rules

25

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Deductions from rent: land managed as one estate

26

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Deductions from rent: maintenance funds for historic buildings

27

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Deductions from receipts other than rent

28

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Sporting rights

29

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Expenditure on making sea walls

30

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Provisions supplementary to sections 25 to 30

31

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Capital allowances for machinery and plant used in estate management

32

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Agricultural land: allowance for excess expenditure on maintenance

33

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Premiums, leases at undervalue etc

Treatment of premiums etc. as rent or Schedule D profits

34

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Schedule D charge on assignment of lease granted at an undervalue

35

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Schedule D charge on sale of land with right to reconveyance

36

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Premiums paid etc: deductions from premiums and rent received

37

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Rules for ascertaining duration of leases

38

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Saving for pre-1963 leases, and special relief for individuals

39

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Supplementary provisions

Tax treatment of receipts and outgoings on sale of land

40

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Relief for rent etc. not paid

41

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Appeals against determinations under sections 34 to 36

42

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Non-residents

43

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PART III — GOVERNMENT SECURITIES

General

Income tax: mode of charge

44

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Interpretation of Part III

45

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Government securities: exemptions from tax

Savings certificates and tax reserve certificates

46

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United Kingdom government securities held by non-residents

47

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Securities of foreign states

48

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Stock and dividends in name of Treasury etc

49

(1) No tax shall be chargeable in respect of the stock or dividends—

(a) transferred, in pursuance of any Act of Parliament, to accounts in the books of the Bank of England in the name of the Treasury or the National Debt Commissioners, or

(b) transferred, in pursuance of any Act of Parliament, to the Treasury or the National Debt Commissioners and in respect of which the Treasury or those Commissioners are entered as holder in the registers kept by the Registrar of Government Stock,

but the Bank of England and the Registrar of Government Stock shall each transmit to the Board an account of the total amount thereof in those books or registers as the case may be.

(2) No tax shall be chargeable in respect of the stock or dividends belonging to the Crown, in whatever name they may stand in the books of the Bank of England or in the registers kept by the Registrar of Government Stock.

(3) In this section “dividends” means any interest, public annuities, dividends or shares of annuities.

(4) In this section “Registrar of Government Stock” means the person or persons appointed in accordance with regulations under section 47(1)(b) of the Finance Act 1942 (see regulation 3 of the Government Stock Regulations 2004).

Government securities: interest payable without deduction of tax

United Kingdom securities: Treasury directions for payment without deduction of tax

50

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Treasury directions as respects Northern Ireland securities

51

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Taxation of interest on converted government securities and interest which becomes subject to deduction

52

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PART IV — PROVISIONS RELATING TO THE SCHEDULE D CHARGE

CHAPTER I — SUPPLEMENTARY CHARGING PROVISIONS

Farming and other commercial occupation of land (except woodlands)

53

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Woodlands managed on a commercial basis

54

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Mines, quarries and other concerns

55

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Transactions in deposits with and without certificates or in debts

56

(1) 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) Profits or gains arising to a company 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 an amount to which the charge to corporation tax on income applies.

(3) Subsection (2) above and section 551 of ITTOIA 2005 (charge to income tax on profits from disposal of deposit rights) do 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 company 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 613(4) or 614(2) or (3) or section 186 of the Finance Act 2004 for exempting the whole or part of its income from income tax;

(3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

(3D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 Part 5 of CTA 2009 (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 Part.

(5) 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 132 of the 1992 Act.

Deep discount securities

57

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Foreign pensions

58

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Persons chargeable

59

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — INCOME TAX: BASIS OF ASSESSMENT ETC.

Cases I and II

Assessment on preceding year basis

60

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Special basis at commencement of trade, profession or vocation

61

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Special basis for early years following commencement

62

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Special basis on discontinuance

63

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Cases III, IV and V

Case III assessments: general

64

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Cases IV and V assessments: general

65

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Special rules for fresh income

66

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Special rules where source of income disposed of or yield ceases

67

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Special rules where property etc. situated in Republic of Ireland

68

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Case VI

Assessment on current year basis unless otherwise directed

69

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CHAPTER III — CORPORATION TAX: BASIS OF ASSESSMENT ETC

Basis of assessment etc

70

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CHAPTER IV — PROVISIONS SUPPLEMENTARY TO CHAPTERS II AND III

Computation of income tax where no profits in year of assessment

71

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Apportionments etc. for purposes of Cases I, II and VI

72

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Single assessments for purposes of Cases III, IV and V

73

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CHAPTER V — COMPUTATIONAL PROVISIONS

Deductions

General rules as to deductions not allowable

74

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Expenses of management: investment companies

75

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Expenses of management: insurance companies

76

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Incidental costs of obtaining loan finance

77

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Discounted bills of exchange

78

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Contributions to local enterprise agencies

79

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Expenses connected with foreign trades etc

80

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Travel between trades etc

81

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Interest paid to non-residents

82

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Patent fees etc. and expenses

83

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Payments for technical education

84

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85

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Employees seconded to charities and educational establishments

86

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Taxable premiums etc

87

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Payments to Export Credit Guarantee Department

88

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Debts proving irrecoverable after event treated as discontinuance

89

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Additional payments to redundant employees

90

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Cemeteries

91

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Treatment of regional development and other grants and debts released etc.

Regional development grants

92

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Other grants under Industrial Development Act 1982 etc

93

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Debts deducted and subsequently released

94

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Taxation of dealer’s receipts on purchase by company of own shares

95

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Special provisions

Farming and market gardening: relief for fluctuating profits

96

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Treatment of farm animals etc

97

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Tied premises

98

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Dealers in land

99

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CHAPTER VI — DISCONTINUANCE . . .

Valuation of trading stock etc.

Valuation of trading stock at discontinuance of trade

100

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Valuation of work in progress at discontinuance of profession or vocation

101

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Provisions supplementary to sections 100 and 101

102

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Case VI charges on receipts

103

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Conventional basis: general charge on receipts after discontinuance or change of basis

104

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Allowable deductions

105

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Application of charges where rights to payments transferred

106

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Reliefs

Treatment of receipts as earned income

107

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Election for carry-back

108

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Charge under section 104: relief for individuals born before 6th April 1917

109

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental

Interpretation etc

110

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VII — PARTNERSHIPS AND SUCCESSIONS

General

Partnership assessments to income tax

111

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Partnerships controlled abroad

112

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect, for income tax, of change in ownership of trade, profession or vocation

113

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Partnerships involving companies

Special rules for computing profits and losses

114

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 114

115

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements for transferring relief

116

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limited partners

Restriction on relief: individuals

117

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction on relief: companies

118

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VIII — MISCELLANEOUS AND SUPPLEMENTAL

Rent etc. payable in connection with mines, quarries and similar concerns

119

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rent etc. payable in respect of electric line wayleaves

120

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management expenses of owner of mineral rights

121

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief in respect of mineral royalties

122

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign dividends

123

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interest on quoted Eurobonds

124

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual payments for non-taxable consideration

125

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Treasury securities issued at a discount

126

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Enterprise allowance

127

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commodity and financial futures etc.: losses and gains

128

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock lending

129

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “investment company” for purposes of Part IV

130

In this Part of this Act —

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“investment company”, means any company whose business consists wholly or mainly in the making of investments and the principal part of whose income is derived therefrom, but includes any savings bank or other bank for savings except any which, for the purposes of the Trustee Savings Bank Act 1985, is a successor or a further successor to a trustee savings bank.

PART V — PROVISIONS RELATING TO THE SCHEDULE E CHARGE

CHAPTER I — SUPPLEMENTARY CHARGING PROVISIONS OF GENERAL APPLICATION

Miscellaneous provisions

Chargeable emoluments

131

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Place of performance, and meaning of emoluments received in the U.K

132

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Voluntary pensions

133

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Workers supplied by agencies

134

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Shareholdings, loans etc.

135

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 135

136

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payment of tax under section 135 by instalments

137

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

138

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 138

139

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further interpretation of sections 135 to 139

140

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Vouchers etc.

Non-cash vouchers

141

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Credit-tokens

142

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash vouchers taxable under P.A.Y.E

143

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

144

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Living accommodation

Living accommodation provided for employee

145

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Additional charge in respect of certain living accommodation

146

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Occupation of Chevening House

147

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments on retirement, sick pay etc.

Payments on retirement or removal from office or employment

148

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sick pay

149

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Job release scheme allowances, maternity pay and statutory sick pay

150

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income support etc

151

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notification of amount taxable under section 151

152

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — EMPLOYEES EARNING £8,500 OR MORE AND DIRECTORS

Expenses

Payments in respect of expenses

153

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefits in kind

General charging provision

154

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from the general charge

155

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cash equivalents of benefits charged under section 154

156

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cars available for private use

157

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Car fuel

158

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pooled cars

159

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Beneficial loan arrangements

160

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from section 160

161

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Employee shareholdings

162

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses connected with living accommodation

163

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director’s tax paid by employer

164

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Scholarships

165

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General supplementary provisions

Notice of nil liability under this Chapter

166

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of “director’s or higher-paid employment”

167

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other interpretative provisions

168

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Preliminary

Interpretation

169

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The relief

Relief from tax

171

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exceptions from tax

172

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration

Persons who may apply for registration

173

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Excluded employments

174

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Applications for registration

175

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration

176

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Change of scheme employer

177

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cancellation of registration

178

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Administration

Recovery of tax from scheme employer

179

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual returns etc

180

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other information

181

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeals

182

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary

Partnerships

183

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent accountants

184

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — OTHER EXEMPTIONS AND RELIEFS

185

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

186

(1) The provisions of this section apply where, after 5th April 1979 and before 1st January 2003, the trustees of an approved profit sharing scheme appropriate shares—

(a) which have previously been acquired by the trustees, and

(b) as to which the conditions in Part II of Schedule 9 are fulfilled,

to an individual who participates in the scheme (“the participant”).

(2) Notwithstanding that, by virtue of such an appropriation of shares as is mentioned in subsection (1) above, the beneficial interest in the shares passes to the participant to whom they are appropriated—

(a) the value of the shares at the time of the appropriation shall be treated as not being income of his chargeable to tax under Schedule E; and

(b) he shall not be chargeable to income tax under that Schedule by virtue of section 78 or 79 of the Finance Act 1988 in respect of the shares or by virtue of section 162 in any case where the shares are appropriated to him at an undervalue within the meaning of that section.

(3) Subject to the provisions of this section and paragraph 4 of Schedule 10, if, in respect of or by reference to any of a participant’s shares, the trustees become or the participant becomes entitled, before the release date, to receive any money or money’s worth (“a capital receipt”), . . . the appropriate percentage (determined as at the time the trustees become or the participant becomes so entitled) of so much of the amount or value of the receipt as exceeds the appropriate allowance for that year, as determined under subsection (12) below counts as employment income of the participant for the year of assessment in which the entitlement arises.

(4) If the trustees dispose of any of a participant’s shares at any time before the release date or, if it is earlier, the date of the participant’s death, then, subject to subsections (6) and (7) below, . . . the appropriate percentage of the locked-in value of the shares at the time of the disposal counts as employment income of the participant for the year of assessment in which the disposal takes place.

(5) Subject to paragraphs 5 and 6(6) of Schedule 10, the locked-in value of a participant’s shares at any time is—

(a) if prior to that time he has become entitled to a capital receipt (within the meaning of subsection (3) above) which is referable to those shares and—

(i) an amount calculated by reference to that capital receipt counts as his employment income by virtue of subsection (3) above, or

(ii) if the entitlement to the capital receipt arose before 6th April 2003, he was chargeable to income tax by virtue of that subsection (as it had effect before that date) in respect of that capital receipt,

the amount by which their initial market value exceeds the amount or value of that capital receipt or, if there has been more than one such receipt, the aggregate of them; and

(b) in any other case, their initial market value.

(6) Subject to subsection (7) below, if, on a disposal of shares falling within subsection (4) above, the proceeds of the disposal are less than the locked-in value of the shares at the time of the disposal, subsection (4) above shall have effect as if that locked-in value were reduced to an amount equal to the proceeds of the disposal.

(7) If, at any time prior to the disposal of any of a participant’s shares, a payment was made to the trustees to enable them to exercise rights arising under a rights issue, then, subject to subsection (8) below, subsections (4) and (6) above shall have effect as if the proceeds of the disposal were reduced by an amount equal to that proportion of that payment or, if there was more than one, of the aggregate of those payments which, immediately before the disposal, the market value of the shares disposed of bore to the market value of all the participant’s shares held by the trustees at that time.

(8) For the purposes of subsection (7) above—

(a) no account shall be taken of any payment to the trustees if or to the extent that it consists of the proceeds of a disposal of rights arising under a rights issue; and

(b) in relation to a particular disposal the amount of the payment or, as the case may be, of the aggregate of the payments referred to in that subsection shall be taken to be reduced by an amount equal to the total of the reduction (if any) previously made under that subsection in relation to earlier disposals;

and any reference in subsection (7) or paragraph (a) above to the rights arising under a rights issue is a reference to rights conferred in respect of a participant’s shares, being rights to be allotted, on payment, other shares or securities or rights of any description in the same company.

(9) If at any time the participant’s beneficial interest in any of his shares is disposed of, the shares in question shall be treated for the purposes of the relevant provisions as having been disposed of at that time by the trustees for (subject to subsection (10) below) the like consideration as was obtained for the disposal of the beneficial interest; and for the purposes of this subsection there is no disposal of the participant’s beneficial interest if and at the time when—

(a) in England and Wales or Northern Ireland, that interest becomes vested in any person on the insolvency of the participant or otherwise by operation of law, or

(b) in Scotland, that interest becomes vested in a judicial factor, in a trustee on the participant’s sequestrated estate or in a trustee for the benefit of the participant’s creditors.

(10) If—

(a) a disposal of shares falling within subsection (4) above is a transfer to which paragraph 2(2)(c) of Schedule 9 applies, or

(b) any other disposal falling within that subsection is not at arm’s length,

(c) a disposal of shares falling within that subsection is one which is treated as taking place by virtue of subsection (9) above and takes place within the period of retention,

then for the purposes of the relevant provisions the proceeds of the disposal shall be taken to be equal to the market value of the shares at the time of the disposal.

(11) Where the trustees of an approved scheme acquire any shares as to which the requirements of Part II of Schedule 9 are fulfilled and, within the period of 18 months beginning with the date of their acquisition, those shares are appropriated in accordance with the scheme, section 686 shall not apply to income consisting of dividends on those shares received by the trustees; and, for the purpose of determining whether any shares are appropriated within that period, shares which were acquired at an earlier time shall be taken to be appropriated before shares of the same class which were acquired at a later time.

(12) For the purposes of subsection (3) above, “the appropriate allowance”, in relation to any year of assessment, means a sum which, subject to a maximum of £60, is the product of multiplying £20 by 1 plus the number of years which fall within the period of three years immediately preceding the year in question and in which shares were appropriated to the participant under the scheme; and if in any year (and before the release date) the trustees become or the participant becomes entitled, in respect of or by reference to any of his shares, to more than one capital receipt, the receipts shall be set against the appropriate allowance for that year in the order in which they are received.

(13) Schedule 10 shall have effect with respect to profit sharing schemes.

Interpretation of sections 185 and 186 and Schedules 9 and 10

187

(1) In sections 185 and 186, this section and Schedules 9 and 10 “the relevant provisions” means those sections (including this section) and Schedules.

(2) For the purposes of the relevant provisions, except where the context otherwise requires—

“appropriate percentage” shall be construed in accordance with paragraph 3 of Schedule 10;

“approved”, in relation to a scheme, means approved under Schedule 9;

“associated company” has the same meaning as in section 416, except that, for the purposes of paragraph 23 of Schedule 9, subsection (1) of that section shall have effect with the omission of the words “ or at any time within one year previously ”;

“bonus date” has the meaning given by paragraph 17 of Schedule 9;

“capital receipt” means money or money’s worth to which the trustees of or a participant in a profit sharing scheme become or becomes entitled as mentioned in section 186(3), but subject to paragraph 4 of Schedule 10;

“certified contractual savings scheme” has the meaning given by section 326;

“control” has the same meaning as in section 840;

“grantor”, in relation to any scheme, means the company which has established the scheme;

“group scheme” and, in relation to such a scheme, “participating company” have the meanings given by paragraph 1(3) and (4) of Schedule 9;

“initial market value”, in relation to shares in a profit sharing scheme, has the meaning given by paragraph 30(4) of Schedule 9;

“locked-in value”, in relation to any shares, shall be construed in accordance with section 186(5);

“market value” has the same meaning as in Part VIII of the 1992 Act;

“new holding” has the meaning given by section 126(1)(b) of the 1992 Act;

“participant”, in relation to a profit sharing scheme, means an individual to whom the trustees of the scheme have appropriated shares;

“participant’s shares”, in relation to a participant in a profit sharing scheme, means, subject to paragraph 5(4) of Schedule 10, shares which have been appropriated to the participant by the trustees;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“period of retention” has the meaning given by paragraph 2 of Schedule 10;

“release date”, in relation to any of the shares of a participant in a profit sharing scheme, means the third anniversary of the date on which they were appropriated to him;

“relevant amount”, in relation to a participant in a profit sharing scheme, means an amount which is not less than £3,000 and not more than £8,000 but which, subject to that, is 10 per cent. of his salary (determined under subsection (5) below) for the year of assessment in question or the preceding year of assessment, whichever is the greater;

“relevant requirements” has the meaning given by paragraph 1 of Schedule 9;

“savings-related share option scheme” has the meaning given by paragraph 1 of Schedule 9;

“scheme” means a savings-related share option scheme, a share option scheme which is not a savings-related share option scheme or a profit sharing scheme, as the context may require;

“shares” includes stock;

“specified age”, in relation to a scheme, means the age specified in pursuance of paragraph 8A of Schedule 9 as the specified age for the purposes of the scheme;

“the trustees”, in relation to an approved profit sharing scheme or the shares of a participant in such a scheme, means the body of persons for the establishment of which the scheme must provide as mentioned in paragraph 30 of Schedule 9; and

“just instrument”, in relation to an approved profit sharing scheme, means the instrument referred to in paragraph 30(1)(c) of Schedule 9.

(3) For the purposes of the application of the relevant provisions in relation to any share option scheme or profit sharing scheme, a person has a material interest in a company if he, either on his own or with one or more associates, or if any associate of his with or without such other associates,—

(a) is the beneficial owner of, or able, directly or through the medium of other companies, or by any other indirect means to control, more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the ordinary share capital of the company, or

(b) where the company is a close company, possesses, or is entitled to acquire, such rights as would, in the event of the winding-up of the company or in any other circumstances, give an entitlement to receive more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the assets which would then be available for distribution among the participators.

In this subsection “associate” has the meaning given by section 417(3) and (4) and “participator” has the meaning given by section 417(1).

(4) Subsection (3) above shall have effect subject to the provisions of Part VI of Schedule 9.

(5) For the purposes of subsection (2) above, a participant’s salary for a year of assessment means such of the emoluments of the office or employment by virtue of which he is entitled to participate in a profit sharing scheme as are liable to be paid in that year under deduction of tax pursuant to section 203 after deducting therefrom amounts included by virtue of Chapter II of this Part.

(6) Section 839 shall apply for the purposes of the relevant provisions.

(7) For the purposes of the relevant provisions a company is a member of a consortium owning another company if it is one of a number of companies which between them beneficially own not less than three-quarters of the other company’s ordinary share capital and each of which beneficially owns not less than one-twentieth of that capital.

(8) Where the disposal referred to in section 186(4) is made from a holding of shares which were appropriated to the participant at different times, then, in determining for the purposes of the relevant provisions—

(a) the initial market value and the locked-in value of each of those shares, . . .

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) Any of the relevant provisions with respect to—

(a) the order in which any of a participant’s shares are to be treated as disposed of for the purposes of those provisions, or

(b) the shares in relation to which an event is to be treated as occurring for any such purpose,

shall have effect in relation to a profit sharing scheme notwithstanding any direction given to the trustees with respect to shares of a particular description or to shares appropriated to the participant at a particular time.

(10) In the relevant provisions “workers’ cooperative” means a registered society, as defined in section 1119 of CTA 2010, which is a cooperative society and the rules of which include provisions which secure—

(a) that the only persons who may be members of it are those who are employed by, or by a subsidiary of, the society and those who are the trustees of its profit sharing scheme; and

(b) that, subject to any provision about qualifications for membership which is from time to time made by the members of the society by reference to age, length of service or other factors of any description, all such persons may be members of the society;

and in this subsection “cooperative society” has the same meaning as in section 2 of the Co-operative and Community Benefit Societies Act 2014 or, as the case may be, section 1 of the Industrial and Provident Societies Act (Northern Ireland) 1969.

Retirement benefits etc.

Exemptions from section 148

188

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lump sum benefits on retirement

189

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments to Members of Parliament, Representatives to the European Parliament and others

190

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Job release scheme allowances not to be treated as income

191

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign emoluments and earnings, pensions and certain travel facilities

Relief from tax for foreign emoluments

192

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign earnings and travel expenses

193

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other foreign travel expenses

194

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Travel expenses of employees not domiciled in the United Kingdom

195

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign pensions

196

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Leave travel facilities for the armed forces

197

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other expenses, subscriptions etc.

Relief for necessary expenses

198

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses necessarily incurred and defrayed from official emoluments

199

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Expenses of Members of Parliament

200

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fees and subscriptions to professional bodies, learned societies etc

201

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Donations to charity: payroll deduction scheme

202

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V — ASSESSMENT, COLLECTION, RECOVERY AND APPEALS

Pay as you earn

203

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

P.A.Y.E repayments

204

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Assessments unnecessary in certain circumstances

205

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Additional provision for certain assessments

206

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disputes as to domicile or ordinary residence

207

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART VI — COMPANY DISTRIBUTIONS, TAX CREDITS ETC

CHAPTER I — TAXATION OF COMPANY DISTRIBUTIONS

U.K. company distributions not generally chargeable to corporation tax

208

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — MATTERS WHICH ARE DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS

Meaning of “distribution”

209

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

210

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

211

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — MATTERS WHICH ARE NOT DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS

Payments of interest

Interest etc. paid in respect of certain securities

212

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Demergers

Exempt distributions

213

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chargeable payments connected with exempt distributions

214

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advance clearance by Board of distributions and payments

215

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Returns

216

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information

217

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 213 to 217

218

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Purchase of own shares

Purchase by unquoted trading company of own shares

219

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions as to residence and period of ownership

220

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reduction of vendor’s interest as shareholder

221

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conditions applicable where purchasing company is member of group

222

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other conditions

223

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relaxation of conditions in certain cases

224

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advance clearance of payments by Board

225

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Returns and information

226

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Associated persons

227

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Connected persons

228

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other interpretative provisions

229

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock dividends

Stock dividends: distributions

230

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER IV — TAX CREDITS

Tax credits for certain recipients of qualifying distributions

231

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax credits for non-U.K. residents

232

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Taxation of certain recipients of distributions and in respect of non-qualifying distributions

233

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Information relating to distributions

234

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Distributions of exempt funds etc

235

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 235

236

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disallowance of reliefs in respect of bonus issues

237

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER V — ADVANCE CORPORATION TAX AND FRANKED INVESTMENT INCOME

Interpretation of terms and collection of ACT

238

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set-off of ACT against liability to corporation tax

239

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set-off of company’s surplus ACT against subsidiary’s liability to corporation tax

240

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation of ACT where company receives franked investment income

241

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set-off of losses etc. against surplus of franked investment income

242

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Set-off of loss brought forward, or terminal loss

243

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further provisions relating to claims under section 242 or 243

244

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Calculation etc. of ACT on change of ownership of company

245

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charge of ACT at previous rate until new rate fixed, and changes of rate

246

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER VI — MISCELLANEOUS AND SUPPLEMENTAL

Group income

Dividends etc. paid by one member of a group to another

247

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 247

248

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock dividends

Stock dividends treated as income

249

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Returns

250

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of sections 249 and 250

251

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental

Rectification of excessive set-off etc. of ACT or tax credit

252

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Power to modify or replace section 234(5) to (9) and Schedule 13

253

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation of Part VI

254

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“Gross rate” and “gross amount” of distributions to include ACT

255

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART VII — GENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS

CHAPTER I — PERSONAL RELIEFS

The reliefs

General

256

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Personal relief

257

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Widower’s or widow’s housekeeper

258

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Additional relief in respect of children

259

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Apportionment of relief under section 259

260

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claims under sections 258 and 259 for year of marriage

261

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Widows' bereavement allowance

262

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dependent relatives

263

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Claimant depending on services of a son or daughter

264

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

265

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Life assurance premiums

266

(1) Subject to the provisions of this section, section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004, an eligible individual who pays any such premium as is specified in subsection (2) below . . . shall (without making any claim) be entitled to relief under this section.

(1A) For the purposes of subsection (1) above an individual is an eligible individual if the individual—

(a) is resident in the United Kingdom, or

(b) meets the conditions in section 56(3) of ITA 2007.

(2) The premiums referred to in subsection (1) above are any premiums paid by an individual under a policy of insurance or contract for a deferred annuity, where—

(a) the payments are made to —

(i) a person who has permission under Part 4A of the Financial Services and Markets Act 2000 or under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of long-term insurance; or

(ii) a member of the Society who effects or carries out contracts of long-term insurance in accordance with Part 19 of the Financial Services and Markets Act 2000;

(iv) in the case of a deferred annuity, the National Debt Commissioners; and

(b) the insurance or, as the case may be, the deferred annuity is on the life of the individual or on the life of his spouse or civil partner; and

(3) Subject to subsections . . . (10) and (11) below, no relief under this section shall be given—

(a) except in respect of premiums payable under policies for securing a capital sum on death, whether in conjunction with any other benefit or not;

(b) in respect of premiums payable under any policy issued in respect of an insurance made after 19th March 1968 unless the policy is a qualifying policy;

(d) in respect of premiums payable during the period of deferment in respect of a policy of deferred assurance.

(4) Subject to subsection (8) below, relief under this section in respect of any premiums paid by an individual in a year of assessment shall be given by making good to the person to whom they are paid any deficiency arising from the deductions authorised under subsection (5) below; and this section and Schedule 14 shall have effect in relation to any premium or part of a premium which is paid otherwise than in the year of assessment in which it becomes due and payable as if it were paid in that year.

(5) Subject to the provisions of Schedule 14—

(a) an individual resident in the United Kingdom who is entitled to relief under this section in respect of any premium may deduct from any payment in respect of the premium and retain an amount equal to 12.5 per cent of the payment; and

(b) the person to whom the payment is made shall accept the amount paid after the deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made and may recover the deficiency from the Board.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) Where the individual is not resident in the United Kingdom (but is entitled to relief by virtue of subsection (1A)(b)), subsection (4) above shall not apply but . . . the like relief shall be given to him under paragraph 6 of Schedule 14.

(9) Subsections (5) and (8) above shall apply in relation to an individual who is not resident in the United Kingdom but is a member of the armed forces of the Crown or the spouseor civil partner of such a member as if the individual were so resident.

(10) Subsection (3)(b) above shall not apply—

(a) to any policy of life insurance having as its sole object the provision on an individual’s death or disability of a sum substantially the same as any amount then outstanding under a mortgage of his residence, or of any premises occupied by him for the purposes of a business, being a mortgage the principal amount secured by which is repayable by instalments payable annually or at shorter regular intervals; or

(b) to any policy of life insurance issued in connection with an approved scheme as defined in Chapter I of Part XIV.

(11) Subsection (3)(a) and (d) above shall not affect premiums payable—

(a) under policies or contracts made in connection with any superannuation or bona fide pension scheme for the benefit of the employees of any employer, or of persons engaged in any particular trade, profession, vocation or business, or for the benefit of the spouse, civil partner, widow, widower , surviving civil partner or children or other dependants of any such employee or person, or

(b) under policies taken out by teachers in the schools known in the year 1918 as secondary schools, pending the establishment of a superannuation or pension scheme for those teachers.

(12) Schedule 14 shall have effect for the purpose of modifying, for certain cases, and supplementing the provisions of this section.

(13) In . . . Schedule 14, “friendly society” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act).

(14) In subsection (2)(a)—

“contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and

“member of the society” has the same meaning as in Lloyd’s Act 1982 .

Qualifying policies

267

Schedule 15, Part I of which contains the basic rules for determining whether or not a policy is a qualifying policy, Part II of which makes provision for the certification etc. of policies as qualifying policies and Part III of which modifies Parts I and II in their application to certain policies issued by non-resident companies, shall have effect for the purpose of determining whether or not a policy is a qualifying policy; and, accordingly, any reference in this Act to a qualifying policy shall be construed in accordance with that Schedule.

Early conversion or surrender of life policies

268

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Surrender etc. of policies after four years

269

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 268 and 269

270

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deemed surrender in cases of certain loans

271

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Collection of sums payable under sections 268 and 269

272

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Payments securing widows' and children’s annuities

273

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Limits on relief under sections 266 and 273

274

(1) The aggregate of the premiums . . . in respect of which relief is given to any person under section 266 shall not exceed £1,500 in any year of assessment or one-sixth of that person’s total income, whichever is the greater.

(2) The aggregate of the relief given under section 266 in respect of premiums . . . payable for securing any benefits other than capital sums on death shall not exceed the amount of the income tax calculated at 12.5% on £100.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) War insurance premiums shall not be taken into account in calculating the limits of one-sixth of total income or of £100 mentioned in this section.

Supplemental

Meaning of “relative”

275

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect on relief of charges on income

276

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Partners

277

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Non-residents

278

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER II — TAXATION OF INCOME OF SPOUSES AND CIVIL PARTNERS

General rules

Aggregation of wife’s income with husband's

279

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer of reliefs

280

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tax repayments to wives

281

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Construction of references to married women living with their husbands

282

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Separate assessments

Option for separate assessment

283

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of separate assessment on personal reliefs

284

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Collection from wife of tax assessed on husband but attributable to her income

285

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Right of husband to disclaim liability for tax on deceased wife’s income

286

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Separate taxation

Separate taxation of wife’s earnings

287

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Elections under section 287

288

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER III — ENTERPRISE INVESTMENT SCHEME

The relief

289

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Minimum and maximum subscriptions

290

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Individuals qualifying for relief

291

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Parallel trades

292

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying companies

293

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies with interests in land

294

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Valuation of interests in land for purposes of section 294(1)(b)

295

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 294 disapplied where amounts raised total £50,000 or less

296

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying trades

297

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to sections 293 and 297

298

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disposal of shares

299

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value received from company

300

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 300

301

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Replacement capital

302

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Value received by persons other than claimants

303

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Husband and wife

304

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

305

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