Finance Act 1964 (repealed)

PART I

Spirits

1

Beer

2

Wine and British wine

3

Tobacco

4

Hydrocarbon oils: increase of excise duty

5

Hydrocarbon oils: reliefs

6

Pool betting duty and bookmakers' licence duty

7

Surcharges and rebates under s. 9 of Finance Act 1961

8

Repeal of television advertisement duty

9

Stores

10

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

Exemption from excise duty of vehicles modified for invalids

11

PART II

Charge of income tax for 1964-65

12

Surtax rates for 1963-64

13

Income tax for the year 1963-64 shall be charged, in the case of an individual whose total income exceeded £2,000, at the same higher rates in respect of the excess as were charged for the year 1962-63.

Relief for persons over sixty-five with small incomes

14

In section 13 of the Finance Act 1957 (relief for persons over sixty-five with small incomes), as amended by section 8(2) of the Finance Act 1962 and section 12(7) of the Finance Act 1963, for the references to £325 and to £520 (the income limits for exemption) there shall be substituted references to £360 and to £575; and (as regards the marginal relief) for the reference to £75 (the addition to the income limit) there shall be substituted a reference to £130.

Transfer of part of company's trade without change of ownership

15

• (1) Where on a change in the year 1964-65 or any subsequent year of assessment in the persons carrying on a part of a trade a person carries on that part as his separate trade, and if it had been carried on as a separate trade immediately before the change subsection (1) of section 17 (company reconstruction without change of ownership not to be treated as involving a discontinuance of the trade) of the Finance Act 1954 would have applied to the change, then—

• (a) the part in question shall be treated for all the purposes of the Income Tax Acts not as a new trade set up and commenced by that person, but as carried on by him in continuation of a separate trade consisting of that part; and

• (b) so far as may be necessary for that purpose, there shall be made such apportionments as may be just of any profits or gains, losses, allowances or charges.

• (2) Schedule 3 to the Finance Act 1954 (which contains provisions for supplementing and giving effect to the said section 17) shall apply in relation to the change as if it were an event falling to be treated by subsection (3) of the said section 17 as a change to which subsection (1) thereof applies, but so that paragraph 6 of that Schedule (which modifies the provisions of section 143 of the Income Tax Act 1952 as to the valuation of trading stock on a discontinuance) shall be taken to require that, in computing for the purposes of this section any profits or gains, section 143 of the Income Tax Act 1952 shall apply in relation to the change as it applies on the discontinuance of a trade.

• (3) Where, on changes in the persons respectively carrying on parts of two or more trades, a person carries on those parts together as his separate trade and, in the case of each of the parts, the foregoing provisions of this section would apply if that part alone were so carried on by him, those provisions shall apply separately in relation to each part and the trade carried on by him shall for that purpose be treated as divided into separate trades each corresponding to one of the said parts, and shall not for any of the purposes of the Income Tax Acts be treated as a new trade set up and commenced by him.

Extension of double taxation relief in respect of certain dividends

16

• (1) In the following provisions of the Income Tax Acts (which relate to the allowance of double taxation relief on certain dividends paid to a company resident in the United Kingdom and controlling, directly or indirectly, a specified proportion of the voting power in the company paying the dividend, and provide for taking account of foreign tax paid by the last-mentioned company in respect of its profits), that is to say.—

• (a) in the Income Tax Act 1952, paragraph 10 of Schedule 16 and paragraph 3 of Schedule 17; and

• (b) in the Finance Act 1962, subsection (2) of section 20;

for the words " not less than one-half of the voting power " there shall in each case be substituted the words " not less than one-quarter of the voting power ".

• (2) Accordingly there shall cease to have effect so much of section 20 of the Finance Act 1962 as provides for companies which control, in the company paying the dividend, a proportion of the voting power greater than one-quarter and are subject to a local limitation preventing them from controlling a larger proportion.

• (3) For the purposes of the provisions of the Income Tax Acts mentioned in subsection (1) of this section a company shall be deemed to control, directly or indirectly, not less than one-quarter of the voting power in another company if a third company having such control also controls, directly or indirectly, not less than one-half of the voting power in the first-mentioned company.

• (4) This section, and any repeal made by this Act in section 20 of the Finance Act 1962 (or in the enactments amended by that section), shall have effect only in relation to dividends by reference to which income tax is chargeable for the year 1964-65 or a subsequent year of assessment and (for the purposes of the profits tax) in relation to any other dividends which are received after the end of March 1964 and by reference to which income tax is not chargeable for any year of assessment.

Plant and machinery and other assets leased to traders and others

17

• (1) Subject to the next following section, where—

• (a) a deduction by way of income tax relief which is of one of the kinds listed in subsection (4) hereof is allowable in respect of a payment made under a lease of an asset of any description, and

• (b) before, at or after the time when the payment is made the person who made the payment has obtained or obtains a capital sum in respect of the lessee's interest in the lease, or, before, at or after that time, the lessor's interest in the lease, or any other interest in the asset, has belonged to a person associated with the person who made the payment, and that person so associated with the person who made the payment has obtained a capital sum in respect of that interest,

the person obtaining that sum shall be charged under Case VI of Schedule D for the year of assessment in which the sum is obtained with tax on an amount equal to the amount of the payment in respect of which tax relief is so allowed:

Provided that the total amount on which he is assessed by reference to the capital sum shall not exceed the amount of the capital sum.

• (2) Subject to the next following section, where—

• (a) in computing the profits or losses of a trade or business for the purposes of the profits tax a deduction is allowable in respect of a payment made under a lease of an asset of any description, and

• (b) before, at or after the time when the payment is made the person who made the payment has obtained or obtains a capital sum in respect of the lessee's interest in the lease, or, before, at or after that time, the lessor's interest in the lease, or any other interest in the asset, has belonged to a person associated with the person who made the payment, and that person so associated with the person who made the payment has obtained a capital sum in respect of that interest,

the person obtaining that sum shall be treated for the purposes of the profits tax as having received income chargeable to the profits tax at the time when the sum is obtained of an amount equal to the amount of the payment in respect of which a deduction was so made :

Provided that the total amount of the income which is to be treated as arising under this subsection by reference to the capital sum shall not exceed the amount of the capital sum.

• (3) Subsections (1) and (2) of this section shall not apply to payments under a lease created on or before 14th April 1964.

• (4) The kinds of deductions by way of income tax relief to which subsection (1) of this section applies are as follows—

• (a) a deduction in computing profits or gains or losses of a trade, profession or vocation for the purposes of income tax,

• (b) a deduction in computing profits or gains chargeable under Case VI of Schedule D, or in computing any loss for which relief is allowable under section 346 of the Income Tax Act 1952,

• (c) allowance of a payment as forming part of expenses of management in respect of which relief may be given under section 425 of the Income Tax Act 1952 (including in the reference to the said section 425 a reference to that section as applied by section 438 of that Act (savings banks and certain industrial and provident societies) or by section 69 of the Finance Act 1960 (unit trust schemes),

• (d) a deduction from emoluments to be assessed under Schedule E made in pursuance of paragraph 7 of Schedule 9 to the Income Tax Act 1952, or allowable in computing losses in an employment for income tax purposes,

• (e) a deduction allowable for income tax purposes in computing profits or gains or losses arising from woodlands.

• (5) Where the deduction by way of income tax relief mentioned in subsection (1)(a) of this section is a deduction in computing profits or gains or losses of a trade, profession or vocation, or arising from woodlands, and any part of the payments made under the lease by the person obtaining the capital sum is a payment in respect of which a deduction is not allowed for the reason that the whole or any part of the period in which the payment would fall to be allowed is not a period on the profits or gains of which income tax falls to be computed in respect of the trade, profession or vocation, for the reference in the proviso to the said subsection (1) to the amount of the capital sum there shall be substituted a reference to that amount after deducting the amount of the payment in respect of which a deduction is not allowed for that reason.

• (6) In subsection (2) of this section references to any deduction allowable or made in computing the profits or losses of a trade or business include references to a deduction which would be so allowable or made but for the provisions of section 42(5) of the Finance Act 1938 (payments by one member of a group of companies to another).

• (7) Part I of Schedule 7 to this Act shall apply for the purposes of this section, and in this section and that Schedule—

• " asset " means any description of property or rights other than land or an interest in land, and

• " lease ", in relation to an asset, means any kind of agreement or arrangement under which payments are made for the use of, or otherwise in respect of, an asset, and includes, in particular, any agreement or arrangement all or any of the payments under which represent instalments of, or payments towards, a purchase price,

but, in relation to a lease which constitutes a hire-purchase agreement as denned in Part II of Schedule 7 to this Act, this section shall have effect subject to the modifications set out in the said Part II.

Plant and machinery and other assets leased to persons carrying on trade, etc.: special cases

18

• (1) This section shall apply, and the last foregoing section shall not apply, to payments—

• (a) which are allowable by way of deductions in computing the profits or gains or losses of a trade, and

• (b) which are made under a lease of an asset which at any time before the creation of the lease was used for the purposes—

• (i) of that trade, or

• (ii) of another trade carried on by the person who at that time or later was carrying on the first mentioned trade,

and, when so used, was owned by the person carrying on the trade in which it was being used.

• (2) Subject to this section, the deduction allowable in computing the profits or gains or losses of the trade for the purposes of income tax as respects any such payment shall not exceed the commercial rent of the asset for the period for which the payment was made.

• (3) If under subsection (2) of this section part of a payment which would otherwise be allowable as a deduction is not so allowable, and one or more subsequent payments are made by the same person under the same lease, that part of the first-mentioned payment may be carried forward and treated for the purposes of computing the profits or gains or losses of the trade for the purposes of income tax as if it were made at the time when the next of those subsequent payments was made, and so made for the period for which that subsequent payment was made.

• (4) For the purposes of subsection (2) of this section—

• (a) if more than one payment is made for the same period the payments shall be taken together,

• (b) if payments are made for periods which overlap, the payments shall be apportioned, and the apportioned payments which belong to the common part of the overlapping periods shall be taken together,

• (c) the foregoing references to payments include references to parts of payments which under subsection (3) of this section are treated as if made at a time subsequent to that at which they were made,

and to the extent that a part of a payment carried forward under subsection (3) of this section is not allowable as a deduction it may again be carried forward under the said subsection (3).

• (5) A payment made for a period all of which falls more than one year after the payment is made shall be treated for the purposes of this section as made for that period of one year beginning with the date on which the payment is made, and a payment for a period part of which falls after the end of that year shall be treated for those purposes as if a corresponding part of the payment was made for that year (and no part for any later period).

• (6) For the purpose of making a comparison under subsection (2) of this section between a payment, or payments taken together, and the commercial rent of the asset, " commercial rent" shall mean the rent which might at the relevant time be expected to be paid under a lease of the asset for the remainder of the anticipated normal working life of the asset, being a rent payable at uniform intervals and at a uniform rate which would afford a reasonable return for its market value at the relevant time, having regard to the terms and conditions of the lease, and in this subsection—

• " anticipated normal working life " has, for any asset, the meaning given, for machinery and plant, by section 281(6) of the Income Tax Act 1952, and

• " the relevant time " means the time when the lease was created under which the payment was made with which the commercial rent is to be compared:

Provided that if the asset is used at the same time partly for the purposes of the trade and partly for other purposes the commercial rent as defined in this subsection shall be determined by reference to what would be paid for such a partial use of the asset.

• (7) This section shall not apply in relation to payments made under a lease created on or before 14th April 1964.

• (8) In this section references to the person carrying on a trade are references to the person carrying on the trade for the time being, and where at any time a person succeeds to a trade which until that time was carried on by another person, and by virtue of section 19 of the Finance Act 1953 the trade is to be treated as discontinued, the trade shall, nonetheless, be treated as the same trade for the purposes of this section.

• (9) In this section references to a trade include references to a profession or vocation.

• (10) In this section "asset" and "lease" have the same meanings as in the last foregoing section.

Land sold and leased back: limitation on tax reliefs

19

• (1) If at any time after 14th April 1964 land or any estate or interest in land is transferred from one person to another and—

• (a) as a result of a lease of the land or any part of the land granted at that time or subsequently by the transferee to the transferor, or

• (b) as a result of any other transaction or series of transactions affecting the land or any estate or interest in the land,

the transferor, or any person who is associated with the transferor, becomes liable at the time of the transfer or subsequently to pay any rent under a lease of the land or any part of the land, this section shall apply to all rent due under the lease from the transferor, or from any person who is associated with the transferor.

• (2) If at any time after 14th April 1964 land or any estate or interest in land is transferred from one person to another, and, as a result of any transaction or series of transactions affecting the land or any estate or interest in the land, the transferor, or any person who is associated with the transferor, becomes liable at the time of the transfer or subsequently to make any payment (other than rent under a lease) for which tax relief of any of the kinds listed at the end of this section is available, being a payment by way of rentcharge on the land or any part of the land or a payment in any other way connected with the land, this section shall apply to all such payments under the rent charge or other transaction due from the transferor, or from any person who is associated with the transferor.

• (3) The references in subsections (1) and (2) of this section to the transfer of an estate or interest in land include references to the granting of a lease or any other transaction involving the creation of a new estate or interest in the land and also include references to the transfer of the lessee's interest under a lease by surrender or forfeiture of the lease, and references to any transaction or series of transactions affecting land, or an estate or interest in land, such that some person is the owner, or one of the owners, before and after the carrying out of the transaction or transactions, but another person becomes or ceases to become one of the owners ; and in relation to any such transaction or series of transactions any person who is an owner before the carrying out of the transaction or transactions, and is not the sole owner thereafter, shall be regarded for the purposes of this section as a transferor.

• (4) A deduction by way of income tax relief which is one of the kinds to which this section applies, being a deduction in respect of rent or of any other payment to which this section applies, shall not exceed the commercial rent for the period for which the rent or other payment is made of the land in respect of which that payment is made.