Income and Corporation Taxes Act 1988
PART ITHE CHARGE TO TAX
Income tax
1The charge to income tax
2Fractions of a pound, and yearly assessments
3Certain income charged at basic rate
4Construction of references in Income Tax Acts to deduction of tax
5Date for payment
Corporation tax
6The charge to corporation tax and exclusion of income tax and capital gains tax
7Treatment of certain payments and repayment of income tax
8General scheme of corporation tax
9Computation of income: application of income tax principles
10Time for payment of tax
11Companies not resident in United Kingdom
12Basis of, and periods for, assessment
Small companies' rate
13Small companies' relief
Advance corporation tax
14Advance corporation tax and qualifying distributions
The six Schedules
15Schedule A
16Schedule B
17Schedule C
18Schedule D
19Schedule E
20Schedule F
PART IIPROVISIONS RELATING TO THE SCHEDULE A CHARGE AND THE ASSOCIATED SCHEDULE D CHARGES
General
21Persons chargeable
22Assessments
23Collection from lessees and agents
24Construction of Part II
Deductions and other allowances
25Deductions from rent: general rules
26Deductions from rent: land managed as one estate
27Deductions from rent: maintenance funds for historic buildings
28Deductions from receipts other than rent
29Sporting rights
30Expenditure on making sea walls
31Provisions supplementary to sections 25 to 30
32Capital allowances for machinery and plant used in estate management
33Agricultural land: allowance for excess expenditure on maintenance
Premiums, leases at undervalue etc
34Treatment of premiums etc. as rent or Schedule D profits
35Schedule D charge on assignment of lease granted at an undervalue
36Schedule D charge on sale of land with right to reconveyance
37Premiums paid etc: deductions from premiums and rent received
38Rules for ascertaining duration of leases
39Saving for pre-1963 leases, and special relief for individuals
Supplemental: Schedules A and D
40Tax treatment of receipts and outgoings on sale of land
41Relief for rent etc. not paid
42Appeals against determinations under sections 34 to 36
43Non-residents
PART IIIPROVISIONS RELATING TO THE SCHEDULE C CHARGE AND GENERAL PROVISIONS ABOUT GOVERNMENT SECURITIES
General
44Income tax: mode of charge
45Interpretation of Part III
Government securities: exemptions from tax
46Savings certificates and tax reserve certificates
47United Kingdom government securities held by non-residents
48Securities of foreign states
49Stock and dividends in name of Treasury etc
Government securities: interest payable without deduction of tax
50United Kingdom securities: Treasury directions for payment without deduction of tax
51Treasury directions as respects Northern Ireland securities
52Taxation of interest on converted government securities and interest which becomes subject to deduction
PART IVPROVISIONS RELATING TO THE SCHEDULE D CHARGE
CHAPTER ISUPPLEMENTARY CHARGING PROVISIONS
53Farming and other commercial occupation of land (except woodlands)
54Woodlands managed on a commercial basis
55Mines, quarries and other concerns
56Transactions in deposits with and without certificates or in debts
57Deep discount securities
58Foreign pensions
59Persons chargeable
CHAPTER IIINCOME TAX: BASIS OF ASSESSMENT ETC.
Cases I and II
60Assessment on preceding year basis
61Special basis at commencement of trade, profession or vocation
62Special basis for early years following commencement
63Special basis on discontinuance
Cases III, IV and V
64Case III assessments: general
65Cases IV and V assessments: general
66Special rules for fresh income
67Special rules where source of income disposed of or yield ceases
68Special rules where property etc. situated in Republic of Ireland
Case VI
69Assessment on current year basis unless otherwise directed
CHAPTER IIICORPORATION TAX: BASIS OF ASSESSMENT ETC
70Basis of assessment etc
CHAPTER IVPROVISIONS SUPPLEMENTARY TO CHAPTERS II AND III
71Computation of income tax where no profits in year of assessment
72Apportionments etc. for purposes of Cases I, II and VI
73Single assessments for purposes of Cases III, IV and V
CHAPTER VCOMPUTATIONAL PROVISIONS
Deductions
74General rules as to deductions not allowable
75Expenses of management: investment companies
76Expenses of management: insurance companies
77Incidental costs of obtaining loan finance
78Discounted bills of exchange
79Contributions to local enterprise agencies
80Expenses connected with foreign trades etc
81Travel between trades etc
82Interest paid to non-residents
83Patent fees etc. and expenses
84Payments for technical education
85Payments to trustees of approved profit sharing schemes
86Employees seconded to charities and educational establishments
87Taxable premiums etc
88Payments to Export Credit Guarantee Department
89Debts proving irrecoverable after event treated as discontinuance
90Additional payments to redundant employees
91Cemeteries
Treatment of regional development and other grants and debts released etc.
92Regional development grants
93Other grants under Industrial Development Act 1982 etc
94Debts deducted and subsequently released
95Taxation of dealer’s receipts on purchase by company of own shares
Special provisions
96Farming and market gardening: relief for fluctuating profits
97Treatment of farm animals etc
98Tied premises
99Dealers in land
CHAPTER VIDISCONTINUANCE, AND CHANGE OF BASIS OF COMPUTATION
Valuation of trading stock etc.
100Valuation of trading stock at discontinuance of trade
101Valuation of work in progress at discontinuance of profession or vocation
102Provisions supplementary to sections 100 and 101
Case VI charges on receipts
103Receipts after discontinuance: earnings basis charge and related charge affecting conventional basis
104Conventional basis: general charge on receipts after discontinuance or change of basis
105Allowable deductions
106Application of charges where rights to payments transferred
Reliefs
107Treatment of receipts as earned income
108Election for carry-back
109Charge under section 104: relief for individuals born before 6th April 1917
Supplemental
110Interpretation etc
CHAPTER VIIPARTNERSHIPS AND SUCCESSIONS
General
111Partnership assessments to income tax
112Partnerships controlled abroad
113Effect, for income tax, of change in ownership of trade, profession or vocation
Partnerships involving companies
114Special rules for computing profits and losses
115Provisions supplementary to section 114
116Arrangements for transferring relief
Limited partners
117Restriction on relief: individuals
118Restriction on relief: companies
CHAPTER VIIIMISCELLANEOUS AND SUPPLEMENTAL
119Rent etc. payable in connection with mines, quarries and similar concerns
120Rent etc. payable in respect of electric line wayleaves
121Management expenses of owner of mineral rights
122Relief in respect of mineral royalties
123Foreign dividends
124Interest on quoted Eurobonds
125Annual payments for non-taxable consideration
126Treasury securities issued at a discount
127Enterprise allowance
128Commodity and financial futures etc.: losses and gains
129Stock lending
130Meaning of “investment company” for purposes of Part IV
PART VPROVISIONS RELATING TO THE SCHEDULE E CHARGE
CHAPTER ISUPPLEMENTARY CHARGING PROVISIONS OF GENERAL APPLICATION
Miscellaneous provisions
131Chargeable emoluments
132Place of performance, and meaning of emoluments received in the U.K
133Voluntary pensions
134Workers supplied by agencies
Shareholdings, loans etc.
135Gains by directors and employees from share options
136Provisions supplementary to section 135
137Payment of tax under section 135 by instalments
138Share acquisitions by directors and employees
139Provisions supplementary to section 138
140Further interpretation of sections 135 to 139
Vouchers etc.
141Non-cash vouchers
142Credit-tokens
143Cash vouchers taxable under P.A.Y.E
144Supplementary provisions
Living accommodation
145Living accommodation provided for employee
146Additional charge in respect of certain living accommodation
147Occupation of Chevening House
Payments on retirement, sick pay etc.
148Payments on retirement or removal from office or employment
149Sick pay
150Job release scheme allowances, maternity pay and statutory sick pay
151Income support etc
152Notification of amount taxable under section 151
CHAPTER IISUPPLEMENTARY CHARGING PROVISIONS APPLICABLE TO DIRECTORS AND HIGHER-PAID EMPLOYEES AND OFFICE HOLDERS
Expenses
153Payments in respect of expenses
Benefits in kind
154General charging provision
155Exceptions from the general charge
156Cash equivalents of benefits charged under section 154
157Cars available for private use
158Car fuel
159Pooled cars
160Beneficial loan arrangements
161Exceptions from section 160
162Employee shareholdings
163Expenses connected with living accommodation
164Director’s tax paid by employer
165Scholarships
General supplementary provisions
166Notice of nil liability under this Chapter
167Meaning of “director’s or higher-paid employment”
168Other interpretative provisions
CHAPTER IIIPROFIT-RELATED PAY
Preliminary
169Interpretation
170Taxation of profit-related pay
The relief
171Relief from tax
172Exceptions from tax
Registration
173Persons who may apply for registration
174Excluded employments
175Applications for registration
176Registration
177Change of scheme employer
178Cancellation of registration
Administration
179Recovery of tax from scheme employer
180Annual returns etc
181Other information
182Appeals
Supplementary
183Partnerships
184Independent accountants
CHAPTER IVOTHER EXEMPTIONS AND RELIEFS
Share option and profit sharing schemes
185Approved share option schemes
186Approved profit sharing schemes
187Interpretation of sections 185 and 186 and Schedules 9 and 10
Retirement benefits etc.
188Exemptions from section 148
189Lump sum benefits on retirement
190Payments to Members of Parliament, Representatives to the European Parliament and others
191Job release scheme allowances not to be treated as income
Foreign emoluments and earnings, pensions and certain travel facilities
192Relief from tax for foreign emoluments
193Foreign earnings and travel expenses
194Other foreign travel expenses
195Travel expenses of employees not domiciled in the United Kingdom
196Foreign pensions
197Leave travel facilities for the armed forces
Other expenses, subscriptions etc.
198Relief for necessary expenses
199Expenses necessarily incurred and defrayed from official emoluments
200Expenses of Members of Parliament
201Fees and subscriptions to professional bodies, learned societies etc
202Donations to charity: payroll deduction scheme
CHAPTER VASSESSMENT, COLLECTION, RECOVERY AND APPEALS
203Pay as you earn
204P.A.Y.E repayments
205Assessments unnecessary in certain circumstances
206Additional provision for certain assessments
207Disputes as to domicile or ordinary residence
PART VICOMPANY DISTRIBUTIONS, TAX CREDITS ETC
CHAPTER ITAXATION OF COMPANY DISTRIBUTIONS
208U.K. company distributions not generally chargeable to corporation tax
CHAPTER IIMATTERS WHICH ARE DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
209Meaning of “distribution”
210Bonus issue following repayment of share capital
211Matters to be treated or not to be treated as repayments of share capital
CHAPTER IIIMATTERS WHICH ARE NOT DISTRIBUTIONS FOR THE PURPOSES OF THE CORPORATION TAX ACTS
Payments of interest
212Interest etc. paid in respect of certain securities
Demergers
213Exempt distributions
214Chargeable payments connected with exempt distributions
215Advance clearance by Board of distributions and payments
216Returns
217Information
218Interpretation of sections 213 to 217
Purchase of own shares
219Purchase by unquoted trading company of own shares
220Conditions as to residence and period of ownership
221Reduction of vendor’s interest as shareholder
222Conditions applicable where purchasing company is member of group
223Other conditions
224Relaxation of conditions in certain cases
225Advance clearance of payments by Board
226Returns and information
227Associated persons
228Connected persons
229Other interpretative provisions
Stock dividends
230Stock dividends: distributions
CHAPTER IVTAX CREDITS
231Tax credits for certain recipients of qualifying distributions
232Tax credits for non-U.K. residents
233Taxation of certain recipients of distributions and in respect of non-qualifying distributions
234Information relating to distributions
235Distributions of exempt funds etc
236Provisions supplementary to section 235
237Disallowance of reliefs in respect of bonus issues
CHAPTER VADVANCE CORPORATION TAX AND FRANKED INVESTMENT INCOME
238Interpretation of terms and collection of ACT
239Set-off of ACT against liability to corporation tax
240Set-off of company’s surplus ACT against subsidiary’s liability to corporation tax
241Calculation of ACT where company receives franked investment income
242Set-off of losses etc. against surplus of franked investment income
243Set-off of loss brought forward, or terminal loss
244Further provisions relating to claims under section 242 or 243
245Calculation etc. of ACT on change of ownership of company
246Charge of ACT at previous rate until new rate fixed, and changes of rate
CHAPTER VIMISCELLANEOUS AND SUPPLEMENTAL
Group income
247Dividends etc. paid by one member of a group to another
248Provisions supplementary to section 247
Stock dividends
249Stock dividends treated as income
250Returns
251Interpretation of sections 249 and 250
Supplemental
252Rectification of excessive set-off etc. of ACT or tax credit
253Power to modify or replace section 234(5) to (9) and Schedule 13
254Interpretation of Part VI
255“Gross rate” and “gross amount” of distributions to include ACT
PART VIIGENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS
CHAPTER IPERSONAL RELIEFS
The reliefs
256General
257Personal relief
258Widower’s or widow’s housekeeper
259Additional relief in respect of children
260Apportionment of relief under section 259
261Claims under sections 258 and 259 for year of marriage
262Widows' bereavement allowance
263Dependent relatives
264Claimant depending on services of a son or daughter
265Relief for blind persons
266Life assurance premiums
267Qualifying policies
268Early conversion or surrender of life policies
269Surrender etc. of policies after four years
270Provisions supplementary to sections 268 and 269
271Deemed surrender in cases of certain loans
272Collection of sums payable under sections 268 and 269
273Payments securing widows' and children’s annuities
274Limits on relief under sections 266 and 273
Supplemental
275Meaning of “relative”
276Effect on relief of charges on income
277Partners
278Non-residents
CHAPTER IITAXATION OF INCOME OF SPOUSES
General rules
279Aggregation of wife’s income with husband's
280Transfer of reliefs
281Tax repayments to wives
282Construction of references to married women living with their husbands
Separate assessments
283Option for separate assessment
284Effect of separate assessment on personal reliefs
285Collection from wife of tax assessed on husband but attributable to her income
286Right of husband to disclaim liability for tax on deceased wife’s income
Separate taxation
287Separate taxation of wife’s earnings
288Elections under section 287
CHAPTER IIIRELIEF FOR INVESTMENT IN CORPORATE TRADES: THE BUSINESS EXPANSION SCHEME
289The relief
290Minimum and maximum subscriptions
291Individuals qualifying for relief
292Parallel trades
293Qualifying companies
294Companies with interests in land
295Valuation of interests in land for purposes of section 294(1)(b)
296Section 294 disapplied where amounts raised total £50,000 or less
297Qualifying trades
298Provisions supplementary to sections 293 and 297
299Disposal of shares
300Value received from company
301Provisions supplementary to section 300
302Replacement capital
303Value received by persons other than claimants
304Husband and wife
305Reorganisation of share capital
306Claims
307Withdrawal of relief
308Application to subsidiaries
309Further provisions as to subsidiaries
310Information
311Nominees, bare trustees and approved investment funds
312Interpretation of Chapter III
CHAPTER IVSPECIAL PROVISIONS
313Taxation of consideration for certain restrictive undertakings
314Divers and diving supervisors
315Wounds and disability pensions
316Allowances, bounties and gratuities
317Victoria Cross and other awards
318Other pensions in respect of death due to war service etc
319Crown servants: foreign service allowance
320Commonwealth Agents-General and official agents etc
321Consuls and other official agents
322Consular officers and employees
323Visiting forces
324Designated international organisations
325Interest on deposits with National Savings Bank
326Interest etc. under contractual savings schemes
327Disabled person’s vehicle maintenance grant
328Funds in court
329Interest on damages for personal injuries
330Compensation for National-Socialist persecution
331Scholarship income
332Expenditure and houses of ministers of religion
333Personal equity plans
CHAPTER VRESIDENCE OF INDIVIDUALS
334Commonwealth citizens and others temporarily abroad
335Residence of persons working abroad
336Temporary residents in the United Kingdom
PART VIIITAXATION OF INCOME AND CHARGEABLE GAINS OF COMPANIES
Taxation of income
337Companies beginning or ceasing to carry on a trade
338Allowance of charges on income and capital
339Charges on income: donations to charity
340Charges on income: interest payable to non-residents
341Payments of interest etc. between related companies
342Tax on company in liquidation
343Company reconstructions without a change of ownership
344Company reconstructions: supplemental
Chargeable gains
345Computation of chargeable gains
346Capital distribution of chargeable gains: recovery of tax from shareholder
347Tax on one member of group recoverable from another member
PART IXANNUAL PAYMENTS AND INTEREST
Annual payments
348Payments out of profits or gains brought into charge to income tax: deduction of tax
349Payments not out of profits or gains brought into charge to income tax, and annual interest
350Charge to tax where payments made under section 349
351Small maintenance payments
352Certificates of deduction of tax
Relief for payments of interest (excluding MIRAS)
353General provision
354Loans to buy land etc
355Matters excluded from section 354
356Job-related accommodation
357Limit on amount of loan eligible for relief by virtue of section 354
358Relief where borrower deceased
359Loan to buy machinery or plant
360Loan to buy interest in close company
361Loan to buy interest in co-operative or employee-controlled company
362Loan to buy into partnership
363Provisions supplementary to sections 360 to 362
364Loan to pay inheritance tax
365Loan to buy life annuity
366Information
367Provisions supplementary to sections 354 to 366
368Exclusion of double relief etc
Mortgage interest relief at source
369Mortgage interest payable under deduction of tax
370Relevant loan interest
371Second loans
372Home improvement loans
373Loans in excess of the qualifying maximum, and joint borrowers
374Conditions for application of section 369
375Interest ceasing to be relevant loan interest, etc
376Qualifying borrowers and qualifying lenders
377Variation of terms of repayment of certain loans
378Supplementary regulations
379Interpretation of sections 369 to 378
PART XLOSS RELIEF AND GROUP RELIEF
CHAPTER ILOSS RELIEF: INCOME TAX
Trade etc. losses
380Set-off against general income
381Further relief for individuals for losses in early years of trade
382Provisions supplementary to sections 380 and 381
383Extension of right of set-off to capital allowances
384Restrictions on right of set-off
385Carry-forward against subsequent profits
386Carry-forward where business transferred to a company
387Carry-forward as losses of amounts taxed under section 350
388Carry-back of terminal losses
389Supplementary provisions relating to carry-back of terminal losses
390Treatment of interest as a loss for purposes of carry-forward and carry-back
391Losses from trade etc. carried on abroad
Case VI losses
392Case VI losses
CHAPTER IILOSS RELIEF: CORPORATION TAX
Trade etc. losses
393Losses other than terminal losses
394Terminal losses
395Leasing contracts and company reconstructions
Case VI losses
396Case VI losses
CHAPTER IIILOSS RELIEF: MISCELLANEOUS PROVISIONS
397Restriction of relief in case of farming and market gardening
398Transactions in deposits with and without certificates or in debts
399Dealings in commodity futures etc: withdrawal of loss relief
400Write-off of government investment
401Relief for pre-trading expenditure
CHAPTER IVGROUP RELIEF
402Surrender of relief between members of groups and consortia
403Losses etc. which may be surrendered by way of group relief
404Limitation of group relief in relation to certain dual resident companies
405Claims relating to losses etc. of members of both group and consortium
406Claims relating to losses etc. of consortium company or group member
407Relationship between group relief and other relief
408Corresponding accounting periods
409Companies joining or leaving group or consortium
410Arrangements for transfer of company to another group or consortium
411Exclusion of double allowances
412Claims and adjustments
413Interpretation of Chapter IV
PART XICLOSE COMPANIES
CHAPTER IINTERPRETATIVE PROVISIONS
414Close companies
415Certain quoted companies not to be close companies
416Meaning of “associated company” and “control”
417Meaning of “participator”, “associate”, “director” and “loan creditor”
Additional matters to be treated as distributions
418“Distribution” to include certain expenses of close companies
CHAPTER IICHARGES TO TAX IN CONNECTION WITH LOANS
419Loans to participators etc
420Exceptions from section 419
421Taxation of borrower when loan under section 419 released etc
422Extension of section 419 to loans by companies controlled by close companies
CHAPTER IIIAPPORTIONMENT OF UNDISTRIBUTED INCOME ETC.
423Apportionment of certain income, deductions and interest
424Exclusions from section 423
425Manner of apportionment
426Charge to income tax where apportionment is to an individual
427Reduction of charge under section 426 in certain cases
428Increase of apportioned sum etc. by reference to ACT
429Payment and collection of income tax
430Consequences of apportionment: ACT
PART XIISPECIAL CLASSES OF COMPANIES AND BUSINESSES
CHAPTER IINSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS
Insurance companies: general
431Interpretative provisions relating to insurance companies
432Separation of different classes of business
433Profits reserved for policy holders and annuitants
434Franked investment income etc
435Taxation of gains reserved for policy holders and annuitants
436Annuity business and pension business: separate charge on profits
437General annuity business
438Pension business: exemption from tax
439Restricted government securities
440Identification or exchange of long term assets
441Foreign life assurance funds
442Overseas business of U.K. companies
443Life policies carrying rights not in money
444Life policies issued before 5th August 1965
Provisions applying only to overseas life insurance companies
445Charge to tax on investment income
446Annuity business
447Set-off of income tax and tax credits against corporation tax
448Qualifying distributions and tax credits
449Double taxation agreements
Underwriters
450Assessment, set-off of losses and reinsurance
451Regulations
452Special reserve funds
453Payments into premiums trust fund on account of losses
454Income tax consequences on payments into and out of special reserve fund
455Income tax consequences on death of underwriter
456Unearned income, variation of arrangements and cancellation of approval etc
457Interpretation of sections 450 to 456
Capital redemption business
458Capital redemption business
CHAPTER IIFRIENDLY SOCIETIES, TRADE UNIONS AND EMPLOYERS' ASSOCIATIONS
Unregistered friendly societies
459Exemption from tax
Registered friendly societies
460Exemption from tax in respect of life or endowment business
461Taxation in respect of other business
462Conditions for tax exempt business
463Life or endowment business: application of the Corporation Tax Acts
464Maximum benefits payable to members
465Old societies
466Interpretation of Chapter II
Trade unions and employers' associations
467Exemption for trade unions and employers' associations
CHAPTER IIIUNIT TRUST SCHEMES, DEALERS IN SECURITIES ETC.
Unit trust schemes
468Authorised unit trusts
469Other unit trusts
470Transitional provisions relating to unit trusts
Dealers in securities, banks and insurance businesses
471Exchange of securities in connection with conversion operations, nationalisation etc
472Distribution of securities issued in connection with nationalisation etc
473Conversion etc. of securities held as circulating capital
474Treatment of tax-free income
475Tax-free Treasury securities: exclusion of interest on borrowed money
CHAPTER IVBUILDING SOCIETIES, BANKS, SAVINGS BANKS, INDUSTRIAL AND PROVIDENT SOCIETIES AND OTHERS
476Building societies: regulations for payment of tax
477Investments becoming or ceasing to be relevant building society investments
478Building societies: time for payment of tax
479Interest paid on deposits with banks etc
480Deposits becoming or ceasing to be composite rate deposits
481“Deposit-taker”, “deposit” and “relevant deposit”
482Supplementary provisions
483Determination of reduced rate for building societies and composite rate for banks etc
484Savings banks: exemption from tax
485Savings banks: supplemental
486Industrial and provident societies and co-operative associations
487Credit unions
488Co-operative housing associations
489Self-build societies
490Companies carrying on a mutual business or not carrying on a business
491Distribution of assets of body corporate carrying on mutual business
CHAPTER VPETROLEUM EXTRACTION ACTIVITIES
492Treatment of oil extraction activities etc. for tax purposes
493Valuation of oil disposed of or appropriated in certain circumstances
494Charges on income
495Regional development grants
496Tariff receipts
497Restriction on setting ACT against income from oil extraction activities etc
498Limited right to carry back surrendered ACT
499Surrender of ACT where oil extraction company etc. owned by a consortium
500Deduction of PRT in computing income for corporation tax purposes
501Interest on repayment of PRT
502Interpretation of Chapter V
CHAPTER VIMISCELLANEOUS BUSINESSES AND BODIES
503Letting of furnished holiday accommodation treated as a trade
504Supplementary provisions
505Charities: general
506Qualifying expenditure and non-qualifying expenditure
507The National Heritage Memorial Fund, the Historic Buildings and Monuments Commission for England and the British Museum
508Scientific research organisations
509Reserves of marketing boards and certain other statutory bodies
510Agricultural societies
511The Electricity Council and Boards, the Northern Ireland Electricity Service and the Gas Council
512Atomic Energy Authority and National Radiological Protection Board
513British Airways Board and National Freight Corporation
514Funds for reducing the National Debt
515Signatories to Operating Agreement for INMARSAT
516Government securities held by non-resident central banks
517Issue departments of the Reserve Bank of India and the State Bank of Pakistan
518Harbour reorganisation schemes
519Local authorities
PART XIIIMISCELLANEOUS SPECIAL PROVISIONS
CHAPTER IINTELLECTUAL PROPERTY
Patents and know-how
520Allowances for expenditure on purchase of patent rights: post-31st March 1986 expenditure
521Provisions supplementary to section 520
522Allowances for expenditure on purchase of patent rights: pre-1st April 1986 expenditure
523Lapses of patent rights, sales etc
524Taxation of receipts from sale of patent rights
525Capital sums: death, winding up or partnership change
526Relief for expenses
527Spreading of royalties over several years
528Manner of making allowances and charges
529Patent income to be earned income in certain cases
530Disposal of know-how
531Provisions supplementary to section 530
532Application of the 1968 Act
533Interpretation of sections 520 to 532
Copyright and public lending right
534Relief for copyright payments etc
535Relief where copyright sold after ten years or more
536Taxation of royalties where owner abroad
537Public lending right
Artists' receipts
538Relief for painters, sculptors and other artists
CHAPTER IILIFE POLICIES, LIFE ANNUITIES AND CAPITAL REDEMPTION POLICIES
539Introductory
540Life policies: chargeable events
541Life policies: computation of gain
542Life annuity contracts: chargeable events
543Life annuity contracts: computation of gain
544Second and subsequent assignment of life policies and contracts
545Capital redemption policies
546Calculation of certain amounts for purposes of sections 540, 542 and 545
547Method of charging gain to tax
548Deemed surrender of certain loans
549Certain deficiencies allowable as deductions
550Relief where gain charged at a higher rate
551Right of individual to recover tax from trustees
552Information: duty of insurers
553Non-resident policies and off-shore capital redemption policies
554Borrowings on life policies to be treated as income in certain cases
CHAPTER IIIENTERTAINERS AND SPORTSMEN
555Payment of tax
556Activity treated as trade etc. and attribution of income
557Charge on profits or gains
558Supplementary provisions
CHAPTER IVSUB-CONTRACTORS IN THE CONSTRUCTION INDUSTRY
559Deductions on account of tax etc. from payments to certain sub-contractors
560Persons who are sub-contractors or contractors for purposes of Chapter IV
561Exceptions from section 559
562Conditions to be satisfied by individuals
563Conditions to be satisfied by partners who are individuals
564Conditions to be satisfied by firms
565Conditions to be satisfied by companies
566General powers to make regulations under Chapter IV
567Meaning of “construction operations”
CHAPTER VSCHEMES FOR RATIONALIZING INDUSTRY
568Deductions from profits of contributions paid under certified schemes
569Repayment of contributions
570Payments under certified schemes which are not repayments of contributions
571Cancellation of certificates
572Application to statutory redundancy schemes
CHAPTER VIOTHER PROVISIONS
Relief for losses on unquoted shares in trading companies
573Relief for companies
574Relief for individuals
575Exclusion of relief under section 573 or 574 in certain cases
576Provisions supplementary to sections 573 to 575
Miscellaneous
577Business entertaining expenses
578Housing grants
579Statutory redundancy payments
580Provisions supplementary to section 579
581Borrowing in foreign currency by local authorities and statutory corporations
582Funding bonds issued in respect of interest on certain debts
583Inter-American Development Bank
584Relief for unremittable overseas income
585Relief from tax on delayed remittances
586Disallowance of deductions for war risk premiums
587Disallowance of certain payments in respect of war injuries to employees
588Training courses for employees
589Qualifying courses of training etc
PART XIVPENSION SCHEMES, SOCIAL SECURITY BENEFITS, LIFE ANNUITIES ETC.
CHAPTER IRETIREMENT BENEFIT SCHEMES
Approval of schemes
590Conditions for approval of retirement benefit schemes
591Discretionary approval
Tax reliefs
592Exempt approved schemes
593Relief by way of deductions from contributions
594Exempt statutory schemes
Charge to tax in certain cases
595Charge to tax in respect of certain sums paid by employer etc
596Exceptions from section 595
597Charge to tax: pensions
598Charge to tax: repayment of employee’s contributions
599Charge to tax: commutation of entire pension in special circumstances
600Charge to tax: unauthorised payments to or for employees
601Charge to tax: payments to employers
602Regulations relating to pension fund surpluses
603Reduction of surpluses
Supplementary provisions
604Application for approval of a scheme
605Information
606Responsibilities of administrator of scheme, and employer
607Pilots' benefit fund
608Superannuation funds approved before 6th April 1980
609Schemes approved before 23rd July 1987
610Amendments of schemes
611Definition of “retirement benefits scheme”
612Other interpretative provisions, and regulations for purposes of this Chapter
CHAPTER IIOTHER PENSION FUNDS AND SOCIAL SECURITY BENEFITS AND CONTRIBUTIONS
613Parliamentary pension funds
614Exemptions and reliefs in respect of income from investments etc. of certain pension schemes
615Exemption from tax in respect of certain pensions
616Other overseas pensions
617Social security benefits and contributions
CHAPTER IIIRETIREMENT ANNUITIES
618Termination of relief under this Chapter, and transitional provisions
619Exemption from tax in respect of qualifying premiums
620Qualifying premiums
621Other approved contracts
622Substituted retirement annuity contracts
623Relevant earnings
624Sponsored superannuation schemes and controlling directors
625Carry-forward of unused relief under section 619
626Modification of section 619 in relation to persons over 50
627Lloyd’s underwriters
628Partnership retirement annuities
629Annuity premiums of Ministers and other officers
CHAPTER IVPERSONAL PENSION SCHEMES
Preliminary
630Interpretation
631Approval of schemes
Restrictions on approval
632Establishment of schemes
633Scope of benefits
634Annuity to member
635Lump sum to member
636Annuity after death of member
637Lump sum on death of member
638Other restrictions on approval
Tax reliefs
639Member’s contributions
640Maximum amount of deductions
641Carry-back of contributions
642Carry-forward of relief
643Employer’s contributions and personal pension income etc
644Meaning of “relevant earnings”
645Earnings from pensionable employment
646Meaning of “net relevant earnings”
Charge to tax
647Unauthorised payments
648Contributions under unapproved arrangements
Miscellaneous
649Minimum contributions under Social Security Act 1986
650Withdrawal of approval
651Appeals
652Information about payments
653Information: penalties
654Remuneration of Ministers and other officers
655Transitional provisions
CHAPTER VPURCHASED LIFE ANNUITIES
656Purchased life annuities other than retirement annuities
657Purchased life annuities to which section 656 applies
658Supplementary
CHAPTER VIMISCELLANEOUS
659Financial futures and traded options
PART XVSETTLEMENTS
CHAPTER IDISPOSITIONS FOR SHORT PERIODS
660Dispositions for period which cannot exceed six years
661Adjustments between disponor and trustees
662Application of Chapter I to dispositions by two or more disponors
CHAPTER IISETTLEMENTS ON CHILDREN
663The general rule
664Accumulation settlements
665Meaning of “irrevocable”
666Interest paid by trustees
667Adjustments between disponor and trustees
668Application of Chapter II to settlements by two or more settlors
669Power to obtain information under Chapter II
670Interpretation of Chapter II
CHAPTER IIIREVOCABLE SETTLEMENTS ETC.
671Revocable settlements allowing release of obligation
672Revocable settlements allowing reversion of property
673Settlements where settlor retains an interest
674Settlements: discretionary power for benefit of settlor etc
675Provisions supplementary to sections 671 to 674
676Disallowance of deduction from total income of certain sums paid by settlor
677Sums paid to settlor otherwise than as income
678Capital sums paid by body connected with settlement
679Application of Chapter III to settlements by two or more settlors
680Power to obtain information for purposes of Chapter III
681Interpretation of Chapter III
682Ascertainment of undistributed income
CHAPTER IVLIABILITY TO HIGHER RATE AND ADDITIONAL RATE TAX
Liability of settlors
683Settlements made after 6th April 1965
684Settlements made before 7th April 1965 but after 9th April 1946
685Provisions supplementary to sections 683 and 684
Liability of trustees
686Liability to additional rate tax of certain income of discretionary trusts
687Payments under discretionary trusts
688Schemes for employees and directors to acquire shares
689Recovery from trustees of discretionary trusts of higher rate tax due from beneficiaries
CHAPTER VMAINTENANCE FUNDS FOR HISTORIC BUILDINGS
690Schedule 4 directions
691Certain income not to be income of settlor etc
692Reimbursement of settlor
693Severance of settled property for certain purposes
694Trustees chargeable to income tax at 30 per cent. in certain cases
PART XVIESTATES OF DECEASED PERSONS IN COURSE OF ADMINISTRATION
695Limited interests in residue
696Absolute interests in residue
697Supplementary provisions as to absolute interests in residue
698Special provisions as to certain interests in residue
699Relief from higher rate tax for inheritance tax on accrued income
700Adjustments and information
701Interpretation
702Application to Scotland
PART XVIITAX AVOIDANCE
CHAPTER ICANCELLATION OF TAX ADVANTAGES FROM CERTAIN TRANSACTIONS IN SECURITIES
703Cancellation of tax advantage
704The prescribed circumstances
705Appeals against Board’s notices under section 703
706The tribunal
707Procedure for clearance in advance
708Power to obtain information
709Meaning of “tax advantage” and other expressions
CHAPTER IITRANSFERS OF SECURITIES
Transfers with or without accrued interest: introductory
710Meaning of “securities”, “transfer” etc. for purposes of sections 711 to 728
711Meaning of “interest”, “transfers with or without accrued interest” etc
712Meaning of “settlement day” for purposes of sections 711 to 728
Transfers with or without accrued interest: charge to tax and reliefs
713Deemed sums and reliefs
714Treatment of deemed sums and reliefs
715Exceptions from sections 713 and 714
716Transfer of unrealised interest
717Variable interest rate
718Interest in default
719Unrealised interest in default
Transfers with or without accrued interest: supplemental
720Nominees, trustees etc
721Death
722Trading stock
723Foreign securities: delayed remittances
724Insurance companies
725Lloyd’s underwriters
726Building societies
727Stock lending
728Information
Other transfers of securities
729Sale and repurchase of securities
730Transfers of income arising from securities
Purchase and sale of securities
731Application and interpretation of sections 732 to 734
732Dealers in securities
733Persons entitled to exemptions
734Persons other than dealers in securities
735Meaning of “appropriate amount in respect of” interest
Miscellaneous provisions relating to securities
736Company dealing in securities: distribution materially reducing value of holding
737Manufactured dividends: treatment of tax deducted
Supplemental
738Power to amend sections 732, 735 and 737
CHAPTER IIITRANSFER OF ASSETS ABROAD
739Prevention of avoidance of income tax
740Liability of non-transferors
741Exemption from sections 739 and 740
742Interpretation of sections 739 to 741
743Supplemental provisions
744No duplication of charge
745Power to obtain information
746Persons resident in the Republic of Ireland
CHAPTER IVCONTROLLED FOREIGN COMPANIES
747Imputation of chargeable profits and creditable tax of controlled foreign companies
748Limitations on direction-making power
749Residence and interest
750Territories with a lower level of taxation
751Accounting periods and creditable tax
752Apportionment of chargeable profits and creditable tax
753Notices and appeals
754Assessment, recovery and postponement of tax
755Information relating to controlled foreign companies
756Interpretation and construction of Chapter IV
CHAPTER VOFFSHORE FUNDS
Material interests in non-qualifying offshore funds
757Disposal of material interests in non-qualifying offshore funds
758Offshore funds operating equalisation arrangements
759Material interests in offshore funds
760Non-qualifying offshore funds
Charge to tax of offshore income gains
761Charge to income tax or corporation tax of offshore income gain
762Offshore income gains accruing to persons resident or domiciled abroad
763Deduction of offshore income gain in determining capital gain
764Offshore income gains of trustees
CHAPTER VIMISCELLANEOUS
Migration etc. of company
765Migration etc.of companies
766Offences under section 765
767Interpretation and commencement of sections 765 and 766
Change in ownership of company
768Change in ownership of company: disallowance of trading losses
769Rules for ascertaining change in ownership of company
Transactions between associated persons
770Sales etc. at an undervalue or overvalue
771Transactions by petroleum companies
772Information for purposes of section 770, and appeals
773Interpretation of sections 770 and 771
774Transactions between dealing company and associated company
Other provisions
775Sale by individual of income derived from his personal activities
776Transactions in land: taxation of capital gains
777Provisions supplementary to sections 775 and 776
778Power to obtain information
779Sale and lease-back: limitation on tax reliefs
780Sale and lease-back: taxation of consideration received
781Assets leased to traders and others
782Leased assets: special cases
783Leased assets: supplemental
784Leased assets subject to hire-purchase agreements
785Meaning of “asset”, “capital sum” and “lease” for purposes of sections 781 to 784
786Transactions associated with loans or credit
787Restriction of relief for payments of interest
PART XVIIIDOUBLE TAXATION RELIEF
CHAPTER ITHE PRINCIPAL RELIEFS
788Relief by agreement with other countries
789Arrangements made under old law
790Unilateral relief
791Power to make regulations for carrying out section 788
CHAPTER IIRULES GOVERNING RELIEF BY WAY OF CREDIT
General
792Interpretation of credit code
793Reduction of United Kingdom taxes by amount of credit due
794Requirement as to residence
795Computation of income subject to foreign tax
796Limits on credit: income tax
797Limits on credit: corporation tax
798Interest on certain overseas loans
Tax underlying dividends
799Computation of underlying tax
800Dividends paid between related companies but not covered by arrangements
801Dividends paid between related companies: relief for U.K. and third country taxes
802U.K. insurance companies trading overseas
803Underlying tax reflecting interest on loans
Miscellaneous rules
804Relief against income tax in respect of income arising in years of commencement
805Elections against credit
806Time limit for claims etc
CHAPTER IIIMISCELLANEOUS PROVISIONS
807Sale of securities with or without accrued interest
808Restriction on deduction of interest or dividends from trading income
809Relief in respect of discretionary trusts
810Postponement of capital allowances to secure double taxation relief
811Deduction for foreign tax where no credit allowable
812Withdrawal of right to tax credit of certain non-resident companies connected with unitary states
813Recovery of tax credits incorrectly paid
814Arrangements to avoid section 812
815Power to inspect documents
816Disclosure of information
PART XIXSUPPLEMENTAL
Miscellaneous
817Deductions not to be allowed in computing profits or gains
818Arrangements for payments of interest less tax or of fixed net amount
819Old references to standard rate tax
820Application of Income Tax Acts from year to year
821Under-deductions from payments made before passing of annual Act
822Over-deductions from interest on loan capital etc. made before passing of annual Act
823Adjustments of reliefs where given at different times
824Repayment supplements: individuals and others
825Repayment supplements: companies
826Interest on tax overpaid
827VAT penalties etc
828Orders and regulations made by the Treasury or the Board
829Application of Income Tax Acts to public departments and avoidance of exempting provisions
830Territorial sea and designated areas
Interpretation
831Interpretation of this Act
832Interpretation of the Tax Acts
833Interpretation of Income Tax Acts
834Interpretation of the Corporation Tax Acts
835“Total income” in the Income Tax Acts
836Returns of total income
837“Annual value” of land
838Subsidiaries
839Connected persons
840Meaning of “control” in certain contexts
841Recognised stock exchange and recognised investment exchanges
842Investment trusts
Commencement, savings, repeals etc.
843Commencement
844Savings, transitional provisions, consequential amendments and repeals
845Short title
SCHEDULES
SCHEDULE 1RESTRICTIONS ON SCHEDULE A DEDUCTIONS
Expenditure before 1964-65: deductions from rents
1(1) Except as provided by sub-paragraphs (2) and (3) below,...
Expenditure before 1964-65: deductions from other receipts
2(1) Subject to sub-paragraph (2) below, no payment shall be...
Expenditure on sea walls before 1964-65
3(1) Section 30 shall not apply in relation to expenditure...
SCHEDULE 2PREMIUMS ETC. TAXABLE UNDER SCHEDULES A AND D: SPECIAL RELIEF FOR INDIVIDUALS
1A claim for relief under this Schedule shall be made...
2The relief shall be computed in accordance with paragraphs 3...
3There shall be computed— (a) the amount of the tax...
4(1) Where the relief is to be given in respect...
5A provision of paragraph 3 or 4 above requiring tax...
6A provision of paragraph 3 or 4 above shall apply...
SCHEDULE 3MACHINERY FOR ASSESSMENT, CHARGE AND PAYMENT OF INCOME TAX UNDER SCHEDULE C AND, IN CERTAIN CASES, SCHEDULE D
PART IPUBLIC REVENUE DIVIDENDS ETC. PAYABLE TO THE BANK OF ENGLAND OR THE BANK OF IRELAND OR ENTRUSTED FOR PAYMENT TO THE BANK OF ENGLAND, THE BANK OF IRELAND OR THE NATIONAL DEBT COMMISSIONERS
1The Bank of England and the Bank of Ireland as...
2(1) In the case of dividends and profits attached thereto...
3Money set apart or retained under paragraph 2 above, and...
4No deduction of income tax under this Part of this...
PART IIPUBLIC REVENUE DIVIDENDS PAYABLE BY PUBLIC OFFICES AND DEPARTMENTS
5Where any payment is made of public revenue dividends payable...
PART IIIOTHER PUBLIC REVENUE DIVIDENDS, FOREIGN DIVIDENDS AND PROCEEDS OF COUPONS
6(1) The following persons are chargeable persons for the purposes...
7The Board shall have all necessary powers in relation to...
8The chargeable person shall out of moneys in his hands...
9The chargeable person shall pay the income tax into the...
10(1) Subject to sub-paragraph (2) below, a chargeable person who...
11Nothing in paragraphs 6 to 10 above shall impose on...
12Where income tax in respect of the proceeds of the...
13(1) Without prejudice to the generality of paragraph 7 above,...
14In this Part of this Schedule— “dividends” includes foreign dividends,...
PART IVINTEREST PAYABLE OUT OF THE PUBLIC REVENUE OF THE REPUBLIC OF IRELAND ETC.
15(1) Any person who is entrusted with the payment of...
SCHEDULE 4DEEP DISCOUNT SECURITIES
Interpretation
1(1) For the purposes of this Schedule—
Charge to tax after acquisition of certain securities
2(1) This sub-paragraph applies to deep discount securities issued by...
3(1) Where a person acquires a chargeable security, the chargeable...
Charge to tax on disposal of securities
4(1) On the disposal by any person of any deep...
Deduction of income element from total profits of company and allowance as charge on income
5(1) In computing the corporation tax chargeable for any accounting...
6(1) Section 494 shall apply in relation to income elements...
Disposals
7(1) Subject to sub-paragraphs (2) and (3) below, there is...
8(1) Where any deep discount security is disposed of and...
Securities issued and owned by associated companies or group companies
9(1) Where a deep discount security issued by a company...
Close companies
10(1) Where a deep discount security issued by a close...
Early redemption
11(1) Where any deep discount security is redeemed before the...
Identification of securities disposed of
12The rules contained in section 88 of the Finance Act...
Information
13(1) Every company which issues deep discount securities shall cause...
Charities
14A charity shall be exempt from income tax in respect...
SCHEDULE 5TREATMENT OF FARM ANIMALS ETC. FOR PURPOSES OF CASE I OF SCHEDULE D
Farming: the general rule
1(1) Subject to the provisions of this Schedule, in computing...
Farming: election for the herd basis
2(1) An election for the herd basis shall apply to...
3(1) Where an election for the herd basis has effect,...
Farming: provisions applicable to special cases
4A farmer who, having kept a production herd of a...
5(1) Where a farmer transfers to another person all or...
6(1) Where the whole or a substantial part of a...
Exclusion of working animals, and interpretation of preceding provisions
7Nothing in this Schedule applies to any animals kept wholly...
8(1) In this Schedule “herd” includes a flock, and any...
Application of preceding provisions to trades other than farming, creatures other than animals, and animals and creatures kept singly
9(1) The preceding provisions of this Schedule shall, with the...
Supplemental and saving
10Where an election for the herd basis is made, every...
11Where an election for the herd basis has effect for...
12The validity of an election for the herd basis in...
SCHEDULE 6TAXATION OF DIRECTORS AND OTHERS IN RESPECT OF CARS
PART ITABLES OF FLAT RATE CASH EQUIVALENTS
PART IISUPPLEMENTARY PROVISIONS
Application of Tables A and B
1(1) In the case of cars with an original market...
Reduction for periods when car not available for use
2(1) If, for any part of the relevant year, the...
Car used preponderantly for business purposes
3(1) The cash equivalent derived from Table A, B or...
Reduction for employee paying for use of car
4If in the relevant year the employee was required, as...
Cars with insubstantial business use and additional cars
5(1) The cash equivalent derived from Table A, B or...
SCHEDULE 7TAXATION OF BENEFIT FROM LOANS OBTAINED BY REASON OF EMPLOYMENT
PART IMEANING OF “OBTAINED BY REASON OF EMPLOYMENT”
1(1) Subject to sub-paragraph (5) below, the benefit of a...
2In paragraph 1 above— (a) references to a loan being...
PART IICALCULATION OF CASH EQUIVALENT OF LOAN BENEFIT
General
3(1) The cash equivalent for any year of the benefit...
Normal method of calculation (averaging)
4In the absence of a requirement or election that paragraph...
Election for alternative method of calculation
5(1) For any year of assessment (“the relevant year”) the...
PART IIIEXCEPTIONS WHERE INTEREST ELIGIBLE FOR RELIEF
6Interest is eligible for relief for the purposes of this...
7Section 160(1) does not apply to a loan in any...
8Where for any year interest is paid on a loan...
9(1) Where for any year— (a) no interest is paid...
10(1) If— (a) a person has a loan on which...
11(1) Where in any year a person has, alone or...
12References in paragraphs 10 and 11 above to a husband...
SCHEDULE 8PROFIT-RELATED PAY SCHEMES: CONDITIONS FOR REGISTRATION
Form
1The terms of the scheme must be set out in...
Employer and employment unit
2The scheme must identify the scheme employer.
3If the scheme employer does not pay the emoluments of...
4(1) The scheme must identify the undertaking to which the...
Employees
5The scheme must contain provisions by reference to which the...
6The scheme must contain provisions ensuring that no payments are...
7(1) The scheme must contain provisions ensuring that no payments...
8The persons within this paragraph are any of the following...
Profit periods
9The scheme must identify the accounting period or periods by...
10(1) Subject to sub-paragraphs (2) and (3) below, any such...
Distributable pool
11The scheme must contain provisions by reference to which the...
12Except where the scheme is a replacement scheme (within the...
13(1) Method A is that the distributable pool is equal...
14(1) Method B is that the distributable pool is—
15If the scheme is a replacement scheme (within the meaning...
Payment from distributable pool etc.
16The scheme must provide for the whole of the distributable...
17The scheme must make provision as to when payments will...
18(1) The provisions of the scheme must be such that...
Ascertainment of profits
19(1) The scheme must provide for the preparation of a...
20(1) The scheme must provide that, in preparing a profit...
SCHEDULE 9APPROVED SHARE OPTION SCHEMES AND PROFIT SHARING SCHEMES
PART IGENERAL
1(1) Subject to the provisions of this Schedule, on the...
2(1) The Board shall not approve a scheme under this...
3(1) If, at any time after the Board have approved...
4If an alteration is made in the scheme at any...
5If aggrieved— (a) in any case, by the failure of...
6The Board may by notice require any person to furnish...
PART IIREQUIREMENTS GENERALLY APPLICABLE
7The provisions of this Part apply in relation to all...
8The scheme must not provide for any person to be...
9(1) A share option scheme must provide for directors and...
10Scheme shares must form part of the ordinary share capital...
11Scheme shares must be— (a) shares of a class quoted...
12(1) Scheme shares must be— (a) fully paid up;
13(1) In determining, in the case of a share option...
14(1) Except where scheme shares are shares in a company...
15(1) Except in the case of a profit sharing scheme,...
PART IIIREQUIREMENTS APPLICABLE TO SAVINGS-RELATED SHARE OPTION SCHEMES
16(1) The scheme must provide for the scheme shares to...
17Subject to paragraphs 18 to 21 below, the rights obtained...
18The scheme must provide that if a person who has...
19The scheme must provide that if a person who has...
20The scheme must provide that where a person who has...
21(1) The scheme may provide that— (a) if any person...
22Except as provided in paragraph 18 above, rights obtained by...
23No person shall be treated for the purposes of paragraph...
24(1) The scheme must provide for a person’s contributions under...
25The price at which scheme shares may be acquired by...
26(1) Subject to paragraph 8 above, every person who—
PART IVREQUIREMENTS APPLICABLE TO OTHER SHARE OPTION SCHEMES
27(1) A person must not be eligible to obtain rights...
28(1) The scheme must provide that no person shall obtain...
29The price at which scheme shares may be acquired by...
PART VREQUIREMENTS APPLICABLE TO PROFIT SHARING SCHEMES
30(1) The scheme must provide for the establishment of a...
31The trust instrument shall provide that, as soon as practicable...
32(1) The trust instrument must contain a provision prohibiting the...
33The trust instrument must contain a provision requiring the trustees—...
34The trust instrument must impose an obligation on the trustees—...
35(1) An individual shall not be eligible to have shares...
36(1) Subject to paragraphs 8 and 35 above, every person...
PART VIMATERIAL INTEREST TEST
Interests under trusts
37(1) This paragraph applies in a case where—
Options etc.
38(1) For the purposes of section 187(3)(a) a right to...
Shares held by trustees of approved profit sharing schemes
39In applying section 187(3), as respects any time before or...
SCHEDULE 10FURTHER PROVISIONS RELATING TO PROFIT SHARING SCHEMES
Limitations on contractual obligations of participants
1(1) Any obligation placed on the participant by virtue of...
The period of retention
2For the purposes of any of the relevant provisions, “the...
The appropriate percentage
3Subject to paragraph 6(4) below, for the purposes of any...
Capital receipts
4(1) Money or money’s worth is not a capital receipt...
Company reconstructions
5(1) This paragraph applies where there occurs in relation to...
Excess or unauthorised shares
6(1) This paragraph applies in any case where—
P.A.Y.E. deduction of tax
7(1) Subject to sub-paragraphs (4) and (5) below, where the...
SCHEDULE 11RELIEF AS RESPECTS TAX ON PAYMENTS ON RETIREMENT OR REMOVAL FROM OFFICE OR EMPLOYMENT
PART IGENERAL PROVISIONS
Preliminary
1Relief shall be allowed in accordance with the following provisions...
2(1) A person shall not be entitled to relief under...
Relief by reduction of sums chargeable
3In computing the charge to tax in respect of a...
Relief by reduction of tax
4(1) Subject to sub-paragraph (2) below, in the case of...
5(1) Subject to sub-paragraph (2) below, in the case of...
6Where tax is chargeable under section 148 in respect of...
7Where tax is chargeable under section 148 in respect of...
Supplemental
8Any reference in this Schedule to the emoluments of an...
9In this Schedule “the relevant date” means, in relation to...
10In this Schedule, “foreign service”, in relation to an office...
11Any reference in this Schedule to the amount of tax...
PART IIPAYMENTS IN PURSUANCE OF PRE-10th MARCH 1981 OBLIGATIONS
12Where a payment is made in pursuance of an obligation...
13The following paragraphs shall be inserted immediately before paragraph 3—...
14In paragraph 3, after the words “from the payment” there...
15In paragraph 4(1), for the words following sub-pargraph (b) there...
16The following paragraphs shall be inserted after paragraph 5— (1) Where the income of the holder or past holder...
17The following proviso shall be added at the end of...
18The following words shall be added at the end of...
19The following paragraph shall be inserted after paragraph 8— In this Schedule “payment of compensation for loss of office”...
SCHEDULE 12FOREIGN EARNINGS
1This Schedule shall have effect for the purpose of supplementing...
Emoluments eligible for relief
2(1) This paragraph has effect where a deduction falls to...
Qualifying periods
3(1) For the purposes of section 193(1) a qualifying period...
Supplementary
4For the purposes of this Schedule a person shall not...
5Notwithstanding section 132(4)(b), there shall be treated for the purposes...
6Where an employment is in substance one the duties of...
7In this Schedule references to an employment include references to...
SCHEDULE 13COLLECTION OF ADVANCE CORPORATION TAX
Duty to make returns
1(1) A company shall for each of its accounting periods...
Contents of return
2(1) Subject to paragraph 7(2) below, the return made by...
Payment of tax
3(1) Subject to paragraph 7(2) below, advance corporation tax in...
Receipt of franked investment income after payment of advance corporation tax
4(1) This paragraph shall have effect where—
Claims for set-off in respect of franked investment income received by a company
5Where under paragraph 2 or 4 above franked investment income...
6(1) Where a claim has been made under paragraph 5...
Qualifying distributions which are not payments and payments of uncertain nature
7(1) This paragraph applies to— (a) any qualifying distribution which...
Items included in error
8Where any item has been included in a return under...
Qualifying distribution made otherwise than in an accounting period
9Where a company makes a qualifying distribution on a date...
Assessments and due date of tax
10(1) All the provisions of the Corporation Tax Acts as...
SCHEDULE 14PROVISIONS ANCILLARY TO SECTION 266
PART IMODIFICATION OF SECTION 266 IN CERTAIN CASES
Husband and wife
1(1) The references in section 266 to an individual’s spouse...
Premiums payable to friendly societies and industrial assurance companies
2(1) This paragraph applies to— (a) a policy issued in...
3(1) Where a policy is issued or a contract is...
PART IISUPPLEMENTARY PROVISIONS AS TO RELIEF UNDER SECTION 266
4(1) Where it appears to the Board that the relief...
5Where a person is entitled to relief under section 266...
6(1) Where in any year of assessment the relief to...
7(1) The Board may make regulations for carrying into effect...
8(1) A policy of life insurance issued in respect of...
SCHEDULE 15QUALIFYING POLICIES
PART IQUALIFYING CONDITIONS
General rules applicable to whole life and term assurances
1(1) Subject to the following provisions of this Part of...
General rules applicable to endowment assurances
2(1) Subject to the following provisions of this Part of...
Special types of policy
(i) Friendly Society policies
3(1) Paragraphs 1 and 2 above do not apply to...
4(1) The provisions of this paragraph have effect notwithstanding anything...
5Section 466 shall apply for the interpretation of paragraphs 3...
6(1) A policy which was issued by any friendly society,...
(ii) Industrial assurance policies
7(1) A policy issued in the course of an industrial...
8Where a policy issued in respect of an insurance made...
(iii) Family income policies and mortgage protection policies
9(1) The following provisions apply to any policy which is...
Other special provisions
(i) Short-term assurances
10A policy which secures a capital sum payable only on...
(ii) Personal accident insurance
11(1) A policy which evidences a contract of insurance to...
(iii) Exceptional mortality risk
12For the purpose of determining whether any policy is a...
(iv) Connected policies
13Subject to paragraph 14 below, where the terms of any...
14(1) A policy shall not be a qualifying policy if...
(v) Premiums paid out of sums due under previous policies
15(1) Where, in the case of a policy under which...
(iv) Additional premiums under section 72(9) of the Finance Act 1984
16In determining whether a policy is a qualifying policy, no...
(vii) Substitutions and variations
17(1) Subject to paragraph 19 below, where one policy (“the...
18(1) Subject to paragraph 19 below and to the provisions...
19(1) The following provisions of this paragraph shall have effect...
20(1) Where, as a result of a variation in the...
PART IICERTIFICATION OF QUALIFYING POLICIES
Policies issued in respect of insurances made on or after 1st April 1976 or varied on or after that date
21(1) A policy of life insurance issued in respect of...
22(1) A body which issues or which, after 5th April...
PART IIIPOLICIES ISSUED BY NON-RESIDENT COMPANIES
23In this Part— (a) any reference to a paragraph is...
24(1) This paragraph applies to a policy of life insurance—...
25(1) In the application of paragraph 17 in any case...
26If, in the case of a substitution of policies falling...
27(1) For the purposes of Part I and paragraphs 21...
SCHEDULE 16COLLECTION OF INCOME TAX ON COMPANY PAYMENTS WHICH ARE NOT DISTRIBUTIONS
Interpretation
1In this Schedule “relevant payment” means any payment to which...
Duty to make returns
2(1) A company shall for each of its accounting periods...
Contents of returns
3The return made by a company for any period shall...
Payment of tax
4(1) Subject to sub-paragraph (4) below, income tax in respect...
Set-off of income tax borne on company income against tax payable
5(1) Where in any accounting period a company receives any...
6(1) Where a claim has been made under paragraph 5...
7Income tax set against other tax under paragraph 5 above...
Items included in error
8Where any item has been included in a return or...
Relevant payment made otherwise than in accounting period
9Where a company makes a relevant payment on a date...
Assessments and due date of tax
10(1) All the provisions of the Income Tax Acts as...
Saving
11Nothing in paragraphs 1 to 10 above shall be taken...
SCHEDULE 17DUAL RESIDENT INVESTING COMPANIES
PART IDIVISION OF ACCOUNTING PERIODS COVERING 1st APRIL 1987
1(1) This Part of this Schedule has effect in the...
2Subject to paragraph 5 below, for the purposes referred to...
3If, in the straddling period of a dual resident investing...
PART IIEARLY PAYMENTS OF INTEREST ETC. AND CHARGES ON INCOME
Interpretation
4In this Part of this Schedule— (a) a “1986 accounting...
Early payment of interest etc.
5(1) If the conditions in sub-paragraph (2) or (3) below...
Early payment of charges on income
6(1) If, in the case of a dual resident investing...
Appeals
7Notice of the giving of a direction under paragraph 5...
PART IIIGENERAL
8(1) Parts I and II of this Schedule have effect...
SCHEDULE 18GROUP RELIEF: EQUITY HOLDERS AND PROFITS OR ASSETS AVAILABLE FOR DISTRIBUTION
1(1) For the purposes of section 413(7) to (9) and...
2(1) Subject to the following provisions of this Schedule, for...
3(1) Subject to the following provisions of this Schedule, for...
4(1) This paragraph applies if any of the equity holders—...
5(1) This paragraph applies if, at any time in the...
6For the purposes of section 413(7) to (9) and paragraphs...
7(1) In this Schedule “the relevant accounting period” means—
SCHEDULE 19APPORTIONMENT OF INCOME OF CLOSE COMPANIES
PART IDETERMINATION OF RELEVANT INCOME AND DISTRIBUTIONS
Relevant income
1(1) Subject to the provisions of this Part of this...
Maximum amount of relevant income
2(1) Subject to paragraphs 10 and 12 below, the relevant...
Distributions
3(1) For the purposes of this Chapter the distributions of...
Distributable income and estate or trading income
4(1) For the purposes of this Chapter, the distributable income...
5(1) For the purposes of this Chapter, “estate or trading...
6(1) The amount for part of an accounting period of...
Meaning of “trading company” and “member of a trading group”
7(1) For the purposes of this Chapter, a “trading company”...
Requirements of a company’s business
8(1) For the purposes of paragraph 1(2) above there shall...
9(1) Paragraph 1(3) above shall not apply to—
Cessations and liquidations
10(1) Where a close company ceases to carry on the...
Legal restrictions on distributions
11(1) Subject to paragraph 12 below, where a company is...
Stock dividends
12(1) Where a company issues to a close company any...
PART IIPROCEDURE
Notice of amount to be apportioned
13(1) Where in the case of any company the inspector...
Notice of manner of apportionment
14(1) Where notice has been served on a company under...
Revision of apportionment
15(1) If the inspector discovers that the amount apportioned in...
Protection by transmission of accounts
16(1) A close company may, at any time after the...
Information
17(1) The inspector may, by notice, require any company which...
Exercise of functions by the Board
18(1) Any functions conferred by this Chapter on the inspector...
SCHEDULE 20CHARITIES: QUALIFYING INVESTMENTS AND LOANS
PART IQUALIFYING INVESTMENTS
1Investments specified in any of the following paragraphs of this...
2Any investment falling within Part I, Part II, apart from...
3Any investment in a common investment fund established under section...
4Any interest in land, other than an interest held as...
5Shares in, or securities of, a company which are quoted...
6Units, or other shares of the investments subject to the...
7(1) Deposits with an institution authorised under the Banking Act...
8Certificates of deposit as defined in section 56(5).
9(1) Any loan or other investment as to which the...
PART IIQUALIFYING LOANS
10For the purposes of section 506, a loan which is...
PART IIIATTRIBUTION OF EXCESS NON-QUALIFYING EXPENDITURE TO EARLIER CHARGEABLE PERIODS
11This Part of this Schedule applies in the circumstances specified...
12(1) So much of the unapplied non-qualifying expenditure as is...
13(1) Where, in accordance with paragraph 12 above, an amount...
14All such adjustments shall be made, whether by way of...
SCHEDULE 21TAX RELIEF IN CONNECTION WITH SCHEMES FOR RATIONALIZING INDUSTRY AND OTHER REDUNDANCY SCHEMES
PART IPRELIMINARY
1(1) In this Schedule— “scheme” means a scheme which is...
PART IIRELIEF IN RESPECT OF CERTAIN PAYMENTS
2The question whether any, and if so, what, relief is...
3No relief shall be given in respect of the payment...
4No relief shall be given in respect of the payment...
5The amount of the reduction to be made in respect...
6(1) For the purposes of this Schedule, and subject to...
PART IIIEXCLUSION OF RELIEF IN RESPECT OF CONTRIBUTIONS PAID AFTER RELIEF HAS BEEN GIVEN UNDER PART II
7The provisions of this Part of this Schedule shall have...
8There shall be ascertained— (a) the total amount of those...
9For the purpose of determining what deduction is to be...
10When two or more contributions are paid at the same...
SCHEDULE 22REDUCTION OF PENSION FUND SURPLUSES
1(1) The Board may make regulations providing for this Schedule...
2(1) The administrator of a scheme in relation to which...
3(1) Subject to paragraph 4(4) below, where a valuation produced...
4(1) Where a valuation has been produced under paragraph 2...
5(1) Where particulars have been furnished under paragraph 4 above,...
6(1) Where proposals are submitted to the Board under paragraph...
7(1) Where this paragraph applies the Board may specify a...
8(1) The Board may make regulations providing that an appeal...
SCHEDULE 23OCCUPATIONAL PENSION SCHEMES: SCHEMES APPROVED BEFORE 23rd JULY 1987
Preliminary
1(1) This Schedule shall be deemed to have come into...
Accelerated accrual
2(1) This paragraph applies where an employee becomes a member...
3(1) This paragraph applies where an employee becomes a member...
4(1) This paragraph applies where an employee becomes a member...
Final remuneration
5(1) This paragraph applies where an employee who is a...
Lump sums
6(1) This paragraph applies where an employee becomes a member...
Additional voluntary contributions
7(1) This paragraph applies where— (a) the rules of the...
8(1) This paragraph applies where an employee who is a...
Supplementary
9In this Schedule “relevant annual remuneration” means final remuneration or,...
SCHEDULE 24ASSUMPTIONS FOR CALCULATING CHARGEABLE PROFITS, CREDITABLE TAX AND CORRESPONDING UNITED KINGDOM TAX OF FOREIGN COMPANIES
General
1(1) The company shall be assumed to be resident in...
2(1) The company shall be assumed to have become resident...
3The company shall be assumed not to be a close...
4(1) Subject to sub-paragraph (2) below, where any relief under...
Group relief etc.
5The company shall be assumed to be neither a member...
6(1) In relation to section 247 it shall be assumed—...
7The company shall be assumed not to be a subsidiary...
Company reconstructions
8Without prejudice to the operation of section 343 in a...
Losses in pre-direction accounting periods
9(1) Subject to sub-paragraph (2) below, this paragraph applies in...
Capital allowances
10(1) Subject to paragraphs 11 and 12 below, if, in...
11(1) This paragraph applies in any case where it appears...
Unremittable overseas income
12For the purposes of the application of section 584 to...
SCHEDULE 25CASES EXCLUDED FROM DIRECTION-MAKING POWERS
PART IACCEPTABLE DISTRIBUTION POLICY
1The provisions of this Part of this Schedule have effect...
2(1) Subject to sub-paragraph (2) below, a controlled foreign company...
3(1) Subject to sub-paragraphs (2) and (5) below, for the...
4(1) For the purposes of this Part of this Schedule,...
PART IIEXEMPT ACTIVITIES
5(1) The provisions of this Part of this Schedule have...
6(1) Throughout an accounting period a controlled foreign company is...
7(1) For the purposes of paragraph 6(1)(a) above, a “business...
8(1) Subject to sub-paragraph (4) below, the condition in paragraph...
9(1) Subject to sub-paragraph (3) below, for the purposes of...
10Goods which are actually delivered into the territory in which...
11(1) For the purposes of paragraph 6(2)(b) above, each of...
12(1) Subject to sub-paragraph (2) below, in paragraphs 6 and...
PART IIITHE PUBLIC QUOTATION CONDITION
13(1) The provisions of this Part of this Schedule have...
14(1) The condition in paragraph 13(2) above is not fulfilled...
15(1) References in this Part of this Schedule to shares...
PART IVREDUCTIONS IN UNITED KINGDOM TAX AND DIVERSION OF PROFITS
16(1) The provisions of this Part of this Schedule have...
17(1) A transaction achieves a reduction in United Kingdom tax...
18It is the main purpose or one of the main...
19(1) The existence of a controlled foreign company achieves a...
SCHEDULE 26RELIEFS AGAINST LIABILITY FOR TAX IN RESPECT OF CHARGEABLE PROFITS
Trading losses and group relief etc.
1(1) In any case where— (a) an amount of chargeable...
Advance corporation tax
2(1) In any case where— (a) an amount of chargeable...
Gains on disposal of shares in controlled foreign companies
3(1) This paragraph applies in any case where—
Dividends from the controlled foreign company
4(1) This paragraph applies in any case where—
5(1) In so far as any provision of—
6(1) In any case where— (a) on a claim for...
SCHEDULE 27DISTRIBUTING FUNDS
PART ITHE DISTRIBUTION TEST
Requirements as to distributions
1(1) For the purposes of this Chapter, an offshore fund...
Funds operating equalisation arrangements
2(1) In the case of an offshore fund which throughout...
Income taxable under Case IV or Case V of Schedule D
3(1) Sub-paragraph (2) below applies if any sums which form...
Commodity income
4(1) To the extent that the income of an offshore...
United Kingdom equivalent profits
5(1) Any reference in this Schedule to the United Kingdom...
PART IIMODIFICATIONS OF CONDITIONS FOR CERTIFICATION IN CERTAIN CASES
Exclusion of investments in distributing offshore funds
6(1) In any case where— (a) in an account period...
7The modification referred to in paragraph 6(3)(a) above is that,...
8(1) The modification referred to in paragraph 6(3)(b) above is...
9(1) The references in paragraphs 7 and 8(1) above to...
Offshore funds investing in trading companies
10(1) In any case where the assets of an offshore...
Offshore funds with wholly-owned subsidiaries
11(1) In relation to an offshore fund which has a...
Offshore funds with interests in dealing and management companies
12(1) Section 760(3)(c) shall not apply to so much of...
Disregard of certain investments forming less than 5 per cent. of a fund
13(1) In any case where— (a) in any account period...
Power of Board to disregard certain breaches of conditions
14If, in the case of any account period of an...
PART IIICERTIFICATION PROCEDURE
Application for certification
15(1) The Board shall, in such manner as they think...
Appeals
16(1) An appeal to the Special Commissioners—
PART IVSUPPLEMENTARY
Assessment: effect of non-certification
17No appeal may be brought against an assessment to tax...
18(1) Without prejudice to paragraph 17 above, in any case...
Postponement of tax pending determination of question as to certification
19(1) In any case where— (a) an application has been...
Information as to decisions on certification etc.
20No obligation as to secrecy imposed by statute or otherwise...
SCHEDULE 28COMPUTATION OF OFFSHORE INCOME GAINS
PART IDISPOSALS OF INTERESTS IN NON-QUALIFYING FUNDS
Interpretation
1In this Part of this Schedule “material disposal” means a...
Calculation of unindexed gain
2(1) Where there is a material disposal, there shall first...
3(1) If the amount of any chargeable gain or allowable...
Gains since 1st January 1984
4(1) This paragraph applies where— (a) the interest in the...
The offshore income gain
5(1) Subject to sub-paragraph (2) below, a material disposal gives...
PART IIDISPOSALS INVOLVING AN EQUALISATION ELEMENT
6(1) Subject to paragraph 7 below, a disposal to which...
7(1) For the purposes of this Part of this Schedule,...
8(1) On a disposal involving an equalisation element, the Part...
SCHEDULE 29CONSEQUENTIAL AMENDMENTS
THE CAPITAL ALLOWANCES ACTS
1The Capital Allowances Act 1968 and Part III of the...
2No allowance shall be made under Chapter I of Part...
TAXES MANAGEMENT ACT 1970 c. 9
3The Taxes Management Act 1970 shall have effect subject to...
4The following subsections shall be inserted in section 8 after...
5In section 16(1)(c) and (2)(b) after “copyright” there shall be...
6The following section shall be inserted after section 16— Agency...
7(1) In subsection (1) of section 18 after the words...
8(1) In subsection (1) of section 55 (recovery of tax...
9The following Table shall be substituted for the Table in...
10(1) The Taxes Management Act 1970, as amended by the...
THE FRIENDLY SOCIETIES ACT (NORTHERN IRELAND) 1970 c. 31 (N.I.)
11In section 1 of the Friendly Societies Act (Northern Ireland)...
THE FINANCE ACT 1973 c. 51
12In section 38 of the Finance Act 1973 the following...
FRIENDLY SOCIETIES ACT 1974 c. 46
13In section 7 of the Friendly Societies Act 1974 at...
THE SOCIAL SECURITY ACTS
14In section 9(1) of the Social Security Act 1975 and...
CAPITAL GAINS TAX ACT 1979 c. 14
15In the Capital Gains Tax Act 1979—
16In section 18 (residence etc.) the following subsections shall be...
17In section 31 (consideration chargeable to tax on income) the...
18The following section shall be inserted after section 32— Expenditure:...
19In section 33 (exclusion of certain expenditure) the following subsection...
20The following section shall be inserted after section 33— Transfer...
21In section 101 the following subsection shall be inserted after...
22The following section shall be inserted after section 123— Harbour...
23The following section shall be inserted after section 132— Deep...
24The following section shall be inserted after section 142— Disposal...
25The following section shall be inserted after section 144— Profit...
26The following sections shall be inserted after section 149— Building...
27In section 155 (interpretation) after subsection (1) there shall be...
28In section 157 (savings) after subsection (1) there shall be...
FINANCE ACT 1982 c. 39
29In section 134(1) after second “Act” there shall be inserted...
ADMINISTRATION OF JUSTICE ACT 1985 c. 61
30In paragraph 36(3) of Schedule 2 to the Administration of...
LAW REFORM (MISCELLANEOUS PROVISIONS) (SCOTLAND) ACT 1985 c. 73
31In Schedule 1 to the Law Reform (Miscellaneous Provisions) (Scotland)...
TRANSLATION OF REFERENCES TO ENACTMENTS REPEALED AND RE-ENACTED
32In the enactments specified in Column 1 of the following...
SCHEDULE 30TRANSITIONAL PROVISIONS AND SAVINGS
Corporation tax payment dates
1(1) In this paragraph, an “old company” means a company...
Duration of leases
2(1) Subject to sub-paragraph (2) and paragraph 3 below, section...
3(1) Sections 24 and 38 shall have effect subject to...
4(1) Where section 38 does not have effect, the following...
Repeal of section 136 of the Income Tax Act 1952: allowance of annual value of land as a business expense
5(1) This paragraph has effect for allowing deductions by reference...
Loss relief etc.
6(1) The substitution of this Act for the corresponding enactments...
7(1) This paragraph shall apply with respect to claims for...
Capital allowances
8Without prejudice to paragraphs 6 and 7 above, where a...
Social security benefits
9(1) In relation to any period before regulations containing the...
Children’s settlements: irrevocable dispositions made before 22nd April 1936
10(1) Sub-paragraph (2) below applies to any disposition which—
Pre-1959 settlements
11(1) Where, in the case of any settlement made before...
12Where, in the case of any settlement made before 9th...
General powers of amendment in Acts relating to overseas countries
13Where under any Act passed before this Act and relating...
Double taxation agreements
14The repeal by this Act of section 16 of the...
Securities
15The repeal by this Act of Schedule 22 to the...
Building societies
16Any enactment relating to building societies contained in this Act...
Pension business
17Any reference to pension business in any enactment (other than...
Stock relief
18Schedule 9 to the Finance Act 1981 shall continue to...
Schedule E emoluments
19The repeal by this Act of section 21 of the...
Unitary states
20The repeal by this Act of section 54 of and...
Continuity and construction of references to old and new law
21(1) The continuity of the operation of the Tax Acts...
SCHEDULE 31REPEALS

Income and Corporation Taxes Act 1988

1988 Chapter 1

An Act to consolidate certain of the enactments relating to income tax and corporation tax, including certain enactments relating also to capital gains tax; and to repeal as obsolete section 339(1) of the Income and Corporation Taxes Act 1970 and paragraphs 3 and 4 of Schedule 11 to the Finance Act 1980.

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—