Finance Act , 1964

PART I Income Tax

1 Income tax and sur-tax for the year 1964-65.

1.—(1) Income tax shall be charged for the year beginning on the 6th day of April, 1964, at the rate of six shillings and four pence in the pound.

(2) Sur-tax for the year beginning on the 6th day of April, 1964, shall be charged in respect of the income of any individual the total of which from all sources exceeds two thousand five hundred pounds and shall be so charged at the same rates as those at which it is charged for the year beginning on the 6th day of April, 1963.

(3) The several statutory and other provisions which were in force on the 5th day of April, 1964, in relation to income tax and sur-tax and any such provisions which came into operation on the 6th day of April, 1964, in relation thereto shall, subject to the provisions of this Act, have effect in relation to the income tax and sur-tax to be charged as aforesaid for the year beginning on the 6th day of April, 1964.

2 Allowances from unearned income of persons aged sixty-five or upwards.

2.—(1) An individual who, in the manner prescribed by the Income Tax Acts, makes a claim in that behalf, makes a return in the prescribed form of his total income, and proves that at any time during the year of assessment either he or, in the case of a married man, his wife living with him was of the age of sixty-five years or upwards shall, for the purpose of ascertaining the amount of his assessable income for the purpose of income tax, be allowed a deduction from the amount of his unearned income of a sum equal to one-fourth of the amount of that income:

Provided that—

(a) in case the individual is entitled to a deduction exceeding three hundred and fifty pounds under section 16 of the Finance Act, 1920—

(i) in case that deduction is five hundred pounds, there shall be no deduction under this section, and

(ii) in any other case, the deduction under this section shall not be greater than the amount by which the deduction under the said section 16 falls short of five hundred pounds, and

(b) in any other case, the deduction under this section shall not be greater than one hundred and fifty pounds.

(2) For the purpose of subsection (1) of this section the amount of the unearned income of any individual shall be taken to be the amount of his total income diminished by the amount of his earned income.

(3) All such provisions of the Income Tax Acts as apply in relation to allowances or deductions within the meaning of the Third Schedule to the Finance Act, 1920, shall, with any necessary modifications, apply in relation to deductions under this section.

(4) Section 9 of the Finance Act, 1958, is hereby amended—

(i) by the substitution for paragraph (d) of subsection (2) of the following paragraph:

“(d) so far as it flows from relief under section 2 of the Finance Act, 1964, in proportion to the amounts of their respective unearned incomes within the meaning of the said section 2,” and

(ii) by the substitution in subsection (6) of “section 2 of the Finance Act, 1964,” for “section 4 of the Finance Act, 1951 (No. 15 of 1951), or”.

(5) In this section “earned income” and “total income” mean respectively earned income as estimated in accordance with the provisions of the Income Tax Acts and total income from all sources as so estimated.

3 Relief for small incomes.

3.—(1) In this section—

“total income” means total income from all sources as estimated in accordance with the provisions of the Income Tax Acts;

“relevant income” means, in relation to any individual, his total income exclusive of any part thereof which arises to him by virtue or in consequence of a disposition within the meaning of section 20 of the Finance Act, 1922, and which, if subparagraphs (ii) and (iii) of paragraph (b) of subsection (1) of that section had been omitted therefrom, would be deemed to be income of the person by whom the disposition was made.

(2) Subject to the provisions of this section, an individual who, in the manner prescribed by the Income Tax Acts, makes a claim in that behalf, makes a return in the prescribed form of his total income, and proves that his total income for the year of assessment does not exceed four hundred and fifty pounds, shall, for the purpose of ascertaining the amount of his assessable income for the purpose of income tax, be allowed a deduction from the amount of his relevant income of a sum equal to one-fourth of the amount of that income.

(3) Subject as aforesaid, an individual not entitled to a deduction under the foregoing subsection shall be entitled to have the amount of the income tax payable in respect of his total income reduced, where necessary, so as not to exceed a sum equal to the aggregate of the two following amounts, that is to say, the amount of the tax which would have been payable if his total income had amounted to, but had not exceeded, four hundred and fifty pounds and one-half of the amount by which his total income exceeds four hundred and fifty pounds.

(4) For the purposes of subsection (3) of this section, the computation of the tax which would have been payable if the individual's total income had amounted to, but had not exceeded, four hundred and fifty pounds shall be made—

(a) in a case in which the individual's relevant income amounts to not less than four hundred and fifty pounds, on the basis that the income of four hundred and fifty-pounds consisted wholly of relevant income, and

(b) in a case in which the individual's relevant income is less than four hundred and fifty pounds, on the basis that the income of four hundred and fifty pounds included the whole of the relevant income.

(5) An individual shall not be entitled to any deduction or relief under this section if he is entitled to a deduction under section 2 of this Act and any deduction or relief under this section shall be in substitution for and not in addition to the deduction under section 16 of the Finance Act, 1920.

(6) Section 9 of the Finance Act, 1958, is hereby amended—

(i) by the insertion before paragraph (e) of subsection (2) of the following paragraph:

“(dd) so far as it flows from relief under section 3 of the Finance Act, 1964, in proportion to the amounts of their respective relevant incomes within the meaning of the said section 3, and” and

(ii) by the addition of “or under section 3 of the Finance Act, 1964” at the end of subsection (6).

(7) All such provisions of the Income Tax Acts as apply in relation to allowances or deductions within the meaning of the Third Schedule to the Finance Act, 1920, shall, with any necessary modifications, apply in relation to deductions or relief under this section.

4 Limitation of deductions for certain taxes.

4.—As respects the computation of income for the purposes of income tax for the year 1964-65 or for any subsequent year of assessment—

(a) any deduction which, but for this paragraph, would be allowable for the tax in the United Kingdom known as profits tax shall be reduced by an amount equal to so much of that tax as can, under section 21 of the Finance Act, 1949, be allowed as a credit against corporation profits tax;

(b) paragraph 8 of the Second Schedule to the Finance Act, 1958, shall have effect as if, in clause (c) of subparagraph (3), “either falls to be allowed as a credit against corporation profits tax, or” were deleted.

5 Carrying out of voluntary health schemes—deeming not to be trade.

5.—The business of carrying out under section 4 of the Voluntary Health Insurance Act, 1957, schemes of voluntary health insurance shall, for all the purposes of the Income Tax Acts in relation to the Voluntary Health Insurance Board, be deemed not to be a trade, and accordingly, in particular and without prejudice to the generality of the foregoing, that Board shall be exempt from income tax under Case I of Schedule D in respect of profits or gains arising from that business:

Provided that that Board shall be entitled to relief under section 34 of the Income Tax Act, 1918, as if the foregoing provisions of this section had not been enacted.

6 Amendment of section 22 of Finance Act, 1963, and deeming of having ceased to be collector.

6.—(1) Section 22 of the Finance Act, 1963, is hereby amended by the addition of the following subsection:

“(3) As soon as may be after the termination of the appointment of a collector referred to in subsection (2) of this section, the inspector of taxes shall transmit to the Collector-General for collection particulars of all sums of income tax or balances thereof contained in duplicates which were delivered to that collector and which remained unpaid on such termination, and references in the Income Tax Acts to duplicates of assessments delivered to collectors shall be construed as including references to particulars so transmitted.”

(2) The reference in subsection (2) of section 23 of the Finance Act, 1963, to section 22 of that Act shall be construed as including a reference to that section as amended by subsection (1) of this section.

(3) Where, before or after the 6th day of April, 1964, the collector duly appointed to collect any income tax in succession to another collector institutes or continues proceedings under section 11 of the Finance Act, 1924, for the recovery of the tax or any balance thereof, the other collector shall, for the purposes of the proceedings, be deemed until the contrary is proved to have ceased to be the collector appointed to collect the tax.

7 Sur-tax to be charged on consideration for certain restrictive covenants, etc.

7.—(1) Where—

(a) an individual who holds, has held or is about to hold an office or employment gives, in connection with his holding thereof, an undertaking (whether absolute or qualified and whether legally valid or not) the tenor or effect of which is to restrict him as to his conduct or activities; and

(b) in respect of the giving of that undertaking by him, or of the total or partial fulfilment of that undertaking by him, any sum is paid, on or after the 14th day of April, 1964, either to him or to any other person; and

(c) apart from this section, the sum paid would neither fall to be treated as income of any person for the purposes of income tax for any year of assessment nor fall to be taken into account as a receipt in computing, for the purposes of income tax for any year of assessment, the amount of any income of, or loss incurred by, any person,

the same results shall follow in relation to sur-tax for the year of assessment in which the said sum is paid as would have followed if the said sum had been paid to the said individual (and not to any other person) as and for the net amount of an annual payment to which the said individual was entitled, being an annual payment chargeable to income tax from the gross amount of which tax had been duly deducted under Rule 21 of the General Rules:

Provided that where the individual has died before the payment of the said sum, so much of the preceding provisions of this subsection as relates to the results which are to follow from the matters specified in paragraphs (a) to (c) of this subsection shall have effect as if the said sum had been paid immediately before the death.

(2) Where valuable consideration otherwise than in the form of money is given in respect of the giving of, or of the total or partial fulfilment of, any undertaking, the preceding provisions of this section shall apply as if a sum had instead been paid equal to the value of that consideration.

(3) The preceding provisions of this section shall not apply to any sum paid or consideration given if the undertaking in question was given before the 14th day of April, 1964.

(4) Where any sum is paid or valuable consideration given to any person in any year of assessment in respect of the giving of, or of the total or partial fulfilment of, an undertaking given on or after the 14th day of April, 1964, and satisfying the conditions specified in paragraph (a) of subsection (1) of this section (not being a sum from which tax is duly deducted under any provision of the Income Tax Acts), it shall be the duty of the person paying over the sum or giving the consideration to deliver particulars thereof in writing to the inspector of taxes not later than one month after the end of that year, identifying the recipient of the payment or consideration, the undertaking in connection with which it was made or given and the individual who gave that undertaking.

(5) The Third Schedule to the Finance Act, 1963, is hereby amended by the insertion in the third column thereof of “Finance Act, 1964 Subsection (4) of section 7”.

(6) In this section, “office or employment” means any office or employment whatsoever such that the emoluments thereof, if any, are or would be chargeable to income tax under Schedule E, or under Case III of Schedule D in accordance with Rule (1) of the Rules contained in Part II of the First Schedule to the Finance Act, 1929, for any year of assessment; and references in this section to the giving of valuable consideration do not include references to the mere assumption of an obligation to make over or provide valuable property, rights or advantages, but do include references to the doing of anything in or towards the discharge of such an obligation.

8 Payments on retirement or removal from office or employment.

8.—(1) Subject to the provisions of this and the next following section, income tax shall be charged under Schedule E in respect of any payment to which this section applies which is made to the holder or past holder of any office or employment, or to his executors or administrators, whether made by the person under whom he holds or held the office or employment or by any other person.

(2) This section applies to any payment (not otherwise chargeable to income tax) which is made, whether in pursuance of any legal obligation or not, either directly or indirectly in consideration or in consequence of, or otherwise in connection with, the termination of the holding of the office or employment or any change in its functions or emoluments including any payment in commutation of annual or periodical payments (whether chargeable to tax or not) which would otherwise have been made as aforesaid

(3) For the purposes of this and the next following section, any payment made to the spouse or any relative or dependant of a person who holds or has held an office or employment, or made on behalf of or to the order of that person, shall be treated as made to that person, and any valuable consideration other than money shall be treated as a payment of money equal to the value of that consideration at the date when it is given.

(4) Any payment which is chargeable to tax by virtue of this section shall be treated as income received on the following date, that is to say—

(a) in the case of a payment in commutation of annual or other periodical payments, the date on which the commutation is effected;

(b) in the case of any other payment, the date of the termination or change in respect of which the payment is made,

and shall be treated as emoluments of the holder or past holder of the office or employment assessable to income tax under Schedule E and any such payment shall be treated for all the purposes of the Income Tax Acts as earned income.

(5) In the case of the death of any person who, if he had not died, would have been chargeable to tax in respect of any such payment, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators, and shall be a debt due from and payable out of his estate.

(6) This section does not apply to any payment made before the 14th day of April, 1964, nor to any payment, whenever made, being—

(a) a payment made in pursuance of an obligation incurred before that date; or

(b) a payment made in respect of a termination or change which took place before that date, not being a payment made in commutation of annual or periodical payments;

but subject as aforesaid this section applies to payments made before as well as after the passing of this Act.

(7) Where any payment chargeable to tax under this section is made to any person in any year of assessment, it shall be the duty of the person by whom it is made to deliver particulars thereof in writing to the inspector of taxes not later than fourteen days after the end of that year.

(8) The Third Schedule to the Finance Act, 1963, is hereby amended by the insertion in the third column thereof of “Finance Act, 1964 Subsection (7) of section 8”.

9 Exemptions and reliefs in respect of tax under section 8.

9.—(1) Tax shall not be charged by virtue of the last foregoing section in respect of the following payments, that is to say—

(a) any payment made in connection with the termination of the holding of an office or employment by the death of the holder, or made on account of injury to or disability of the holder of an office or employment;

(b) any sum chargeable to sur-tax under section 7 of this Act;

(c) a benefit provided in pursuance of any such scheme or agreement as is referred to in section 32 of the Finance Act, 1958, where the holder of the office or employment was chargeable to tax in respect of sums paid, or treated as paid, with a view to the provision of the benefit;

(d) a benefit paid in pursuance of any such scheme or fund as is described in subsection (1) and subsection (2) of section 33 of the Finance Act, 1958.

(2) Tax shall not be charged by virtue of the last foregoing section in respect of a payment in respect of an office or employment in which the holder's service included foreign service where—

(a) in the case of a payment of compensation for loss of office, the foreign service comprised the whole of the three years immediately preceding the relevant date (or the whole period of service if less than three years), or

(b) in the case of any other payment, the foreign service comprised either—

(i) in any case, three-quarters of the whole period of service down to the relevant date, or

(ii) where the period of service down to the relevant date exceeded ten years, the whole of the last ten years, or

(iii) where the period of service down to the relevant date exceeded twenty years, one-half of that period, including any ten of the last twenty years.

(3) Tax shall not be charged by virtue of the last foregoing section in respect of a payment of an amount not exceeding three thousand pounds, and in the case of a payment which exceeds that amount shall be charged only in respect of the excess: