Finance Act 1971

Manner of making allowances and charges

48

• (1) Subject to subsection (2) below, any allowance or charge made to or on any person under this Chapter shall be made to or on that person in taxing his trade.

• (2) Any allowance made by virtue of section 46(1) above shall be made by way of discharge or repayment of tax, and, subject to subsection (3) below, shall be available primarily against income from the letting of machinery or plant; and effect shall be given to any charge made by virtue of the said section 46(1)—

• (a) if a charge to income tax, by making the charge under Case VI of Schedule D,

• (b) if a charge to corporation tax, by treating the amount on which the charge is to be made as income from the letting of machinery or plant.

• (3) Where an allowance falling to be made for any chargeable period by virtue of section 46(1) above is in respect of expenditure on the provision of machinery or plant which for the whole or any part of that period or its basis period is not used for the purposes of a trade carried on by the lessee, that allowance or, as the case may require, a proportionate part thereof shall be available primarily against income from the letting of that machinery or plant only.

• (4) The following provisions of the Capital Allowances Act 1968 with respect to the manner of making allowances and charges, that is to say, sections 70 and 71 (allowances and charges under Part I of that Act as it applies for the purposes of income tax) and sections 73 and 74 (corresponding provisions for corporation tax) shall have effect as if the references therein to the said Part I included references to this Chapter:

Provided that, where an allowance falling to be made for any chargeable period by virtue of section 46(1) above is in respect of expenditure on the provision of machinery or plant which for the whole or any part of that period or its basis period is not used for the purposes of a trade carried on by the lessee, the proviso to subsection (1) of the said section 71 or, as the case may be, subsection (4) of the said section 74 shall not apply to that allowance or, as the case may require, to a proportionate part thereof.

Minor rules, and consequential amendments

49

The provisions of Schedule 8 to this Act shall have effect, being provisions supplementing the foregoing provisions of this Chapter, and provisions making consequential amendments in certain enactments.

Interpretation etc.

50

• (1) In this Chapter—

• “capital expenditure” means capital expenditure to which this Chapter applies in accordance with section 40 above;

• “chargeable period” means an accounting period of a company or a year of assessment; and a reference to a “chargeable period or its basis period” is a reference to the chargeable period if it is an accounting period and to the basis period for it if it is a year of assessment, a reference to a “chargeable period related to ” the incurring of expenditure, or a sale or other event, is a reference to the chargeable period in which, or to that in the basis period for which, the expenditure is incurred or the sale or other event takes place, and means the latter if, but only if, the chargeable period is a year of assessment;

• “income” includes any amount on which a charge to tax is authorised to be made under this Chapter;

• “new” means unused and not second-hand.

“tax ”, where neither income tax nor corporation tax is specified, means either of those taxes.

• (2) In this Chapter as it applies for income tax purposes “basis period” shall be construed in accordance with subsections (2) to (5) of section 72 of the Capital Allowances Act 1968, with references in those provisions to Part I of that Act or Chapter II of that Part read for the purpose as references to this Chapter.

• (3) Section 82(1) of the Capital Allowances Act 1968 (construction of references to capital expenditure and capital sums) shall apply for the purposes of this Chapter as it applies for the purposes of Part I of that Act.

• (4) Any reference in this Chapter to the date on which expenditure is incurred shall be construed as a reference to the date when the sums in question become payable; and for the purposes of this Chapter, any expenditure incurred for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by him on the first day on which he does carry it on.

• (5) Any reference in this Chapter to an allowance made includes a reference to an allowance which would be made but for an insufficiency of profits or gains, or other income, against which to make it.

• (6) Any reference in this Chapter to any machinery, plant, building, structure or works shall be construed as including a reference to a part of any machinery, plant, building, structure or works.

• (7) The provisions of this Chapter, and the provisions applying for the purposes of this Chapter, shall apply in relation to a share in machinery or plant as they apply in relation to a part of machinery or plant; and, for the purposes of the said provisions, a share in machinery or plant shall be deemed to be used for the purposes of a trade so long as, and only so long as, the machinery or plant is used for the purposes thereof.

• (8) In section 411(1)(c) of the Taxes Act (use of asset for providing business entertainment to be treated for capital allowances purposes as use otherwise than for the purposes of a trade), the reference to Chapter II of Part I of the Capital Allowances Act 1968 shall include a reference to this Chapter.

CHAPTER II — Other Provisions

Initial allowances for industrial buildings-continuance of increased rate for development and intermediate areas and Northern Ireland

51

The rate of initial allowance under section 1 of the Capital Allowances Act 1968 (industrial buildings and structures) provided for by section 15(1) of the Finance Act 1970 in a case falling within subsection (2) of that section (that is to say, a rate of two-fifths in the case of buildings and structures in development areas, intermediate areas and Northern Ireland) shall apply in relation to expenditure incurred after 5th April 1972 as well as in relation to expenditure incurred during the period beginning on 6th April 1970 and ending on the said 5th April; and accordingly, the said section 15(1) shall be amended by inserting after the words “In relation to capital expenditure incurred ” the words “in a case falling within subsection (2) below on or after 6th April 1970, and in any other case ”.

Initial allowances for mining etc. works-increased rate for development areas and Northern Ireland, and right of disclaimer

52

• (1) In relation to expenditure within section 56(1) of the Capital Allowances Act 1968 (works in connection with mines, oil wells and other sources of mineral deposits of a wasting nature) which is incurred on or after 27th October 1970 on the construction of works situated—

• (a) in an area which is a development area (within the meaning of Part I of the Local Employment Act 1960) on the date on which the expenditure is incurred or, if the expenditure is incurred under a contract entered into on or after the said 27th October, on the date on which the contract was entered into, or

• (b) in Northern Ireland,

section 56(2) of that Act (which provides for an initial allowance of an amount equal to two-fifths of any expenditure within the said section 56(1)) shall have effect with the substitution for the words “two-fifths ” of the words “the whole ”.

Expenditure shall not be treated for the purposes of this subsection as having been incurred after the date on which it was in fact incurred by reason only of section 64 of the said Act of 1968 (expenditure incurred before trade began).

• (2) A company to whom an initial allowance under the said section 56(1) falls to be made for any chargeable period in respect of expenditure incurred on or after 27th October 1970 may, by notice in writing given to the inspector not later than two years after the end of that period, either disclaim the allowance or require that the amount thereof be reduced to an amount specified in the notice; and a person other than a company claiming an initial allowance under the said section 56(1) in respect of expenditure so incurred may require the amount thereof to be reduced to an amount specified in the claim.

Writing-down allowances-increased rates for machinery and plant provided before 6th November 1962

53

Paragraph 2(1) of Schedule 4 to the Capital Allowances Act 1968 (under which the increased rates of writing-down allowances provided for by that Schedule apply only to new machinery and plant capital expenditure on the provision of which was incurred after 5th November 1962) shall be amended by inserting at the end the words " and, for accounting periods ending on or after 27th October 1970 and years of assessment from the year 1971-72 onwards, also to any machinery or plant not within the meaning of that expression. "

Double taxation relief and overspill relief

54

• (1) In any claim under section 515 of the Taxes Act (postponement of capital allowances to secure double taxation relief), no account shall be taken of expenditure incurred, or treated for the purposes of Chapter I of this Part of this Act as incurred, on or after 27th October 1970.

• (2) Section 84 of, and Schedule 20 to, the Finance Act 1965 (transitional relief for existing companies with overseas trading income) shall have effect as if the said Chapter I and subsection (1) above had not been enacted.

PART IV — TAX ON CAPITAL GAINS AND ESTATE DUTY

Restoration of development value in computation of chargeable gains, and repeal of certain provisions made in connection with betterment levy

55

Taxation of short-term capital gains

56

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Exemption or relief for small disposals

57

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Disposal of options

58

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Abolition of charge to capital gains tax on death, etc.

59

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Replacement of business assets

60

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Alteration of amount of estate duty

61

• (1) As respects deaths occurring after 30th March 1971 the provisions of Part I of Schedule 17 to the Finance Act 1969 for determining the amount of estate duty on an estate shall have effect with the substitution of the words “£12,500 ” for the words “£10,000 ”—

• (a) in paragraph (a) (under which no duty is payable on an estate if the aggregate principal value of all property comprised in the estate does not exceed £10,000); and

• (b) in paragraph (b)(i) (under which the rate applicable to so much of that aggregate principal value as exceeds that sum but does not exceed £17,500 is 25 per cent.).

• (2) As respects deaths so occurring, section 16(3) of the Finance Act 1894 as substituted by section 33(1) of the Finance Act 1954 and further amended by paragraph 3 of Part III of Schedule 17 to the Finance Act 1969 (property other than certain settled property not to be aggregated with the latter if net value of non-settled property does not exceed £10,000, and provision for marginal relief if that net value does exceed that amount) shall have effect with the substitution of the words “£12,500 ” for the words “ten thousand pounds ” in paragraphs (a) and (b).

Payment of estate duty by instalments

62

• (1) Estate duty chargeable on a death in respect of any property to which this subsection applies may, at the option of the person paying the duty, be paid by eight equal yearly instalments or sixteen half-yearly instalments.

• (2) The property to which subsection (1) above applies is the following, that is to say—

• (a) shares or securities of a company the principal value of which falls to be ascertained under section 55 of the Finance Act 1940 (valuation by reference to assets of the company);

• (b) shares or securities of a company not falling within paragraph (a) above and not quoted on a recognised stock exchange in the United Kingdom or elsewhere, if either the condition stated in subsection (3) below is fulfilled or the Commissioners of Inland Revenue are satisfied that the estate duty on those shares or securities cannot be paid at once without undue hardship;

• (c) the following property situate in England and Wales, that is to say any leasehold estate or interest in land and any property which is treated as personal property for estate duty purposes by reason only of being held on trust for sale, not being in any case an estate, interest or right by way of mortgage or other security.

• (3) The condition mentioned in subsection (2)(b) above is that not less than 20 per cent. of the estate duty chargeable on the death for which the person paying the duty on the shares or securities is accountable (in the same capacity) consists of duty on those shares or securities and such other duty (if any) as may by virtue of the other provisions of this section or of section 6(8) of the Finance Act 1894 (real property) be paid by instalments.

• (4) Where estate duty is chargeable on a death in respect of a business or an interest in a business, so much of the duty chargeable on the death as is attributable to the net value of the business or, as the case may be, to the value of that interest may, at the option of the person paying the duty, be paid by eight equal yearly instalments or sixteen half-yearly instalments.

• (5) For the purposes of subsection (4) above “the net value of the business” means the principal value of the assets used in the business (including goodwill) reduced by the aggregate amount of any liabilities incurred for the purpose of the business ; and in ascertaining for the purposes of subsection (4) above the value of an interest in a business, no regard shall be had to assets or liabilities other than those by reference to which the net value of the business would have fallen to be ascertained in accordance with this subsection if the entire business had passed on the death of the deceased.

• (6) Notwithstanding anything in section 6 of the Finance Act 1894 (collection and recovery of estate duty), where subsection (1) or (4) above applies the first instalment shall be payable at the expiration of twelve months from the death of the deceased, and interest under section 18 of the Finance Act 1896 on the unpaid portion of the duty shall be added to each instalment and paid accordingly.

• (7) Notwithstanding the exercise of the option under subsection (1) or (4) above in respect of any estate duty, the duty for the time being unpaid, with interest under the said section 18 to the time of payment, may be paid at any time; and in any case the duty or, as the case may be, the unpaid portion of the duty, and any interest accrued under that section, shall become payable forthwith (whether before or after the expiration of twelve months from the death of the deceased)—

• (a) in the case of duty on property to which subsection (1) above applies by virtue of paragraph (a), paragraph (b) or paragraph (c) of subsection (2) above, as the case may be, on a sale of the whole or any part of the property in question;

• (b) in the case of duty on property consisting of a business falling within subsection (4) above, on a sale of the whole or any part of the business or of any interest in the business;

• (c) in the case of duty on property consisting of an interest in such a business, on a sale of the whole or any part of that interest,

so however that where the sale is of a part only of the property in question or, in a case falling within paragraph (b) above, is of an interest in the business, there shall become payable forthwith (with any interest thereon accrued as aforesaid) only such proportion of the duty or, as the case may be, of the unpaid portion of the duty as is referable to the part or interest sold.

• (8) Where estate duty is chargeable on a death in respect of an interest in a business and, under a partnership agreement or otherwise, any sum is paid in satisfaction of the whole or any part of that interest otherwise than on a sale, that interest or the part of it in question shall for the purposes of subsection (7) above be treated as having been sold at the time of the payment.

• (9) Where a person, having paid to the Commissioners of Inland Revenue any estate duty which is or might have been payable to them by instalments under this section, is entitled to recover the duty from some other person by whom, as against him, the duty falls to be borne, that other person shall, in the absence of any agreement to the contrary, be entitled to repay the duty by the like instalments (with the like interest thereon) as if he were paying the duty to the Commissioners.

• (10) This section shall apply in relation to any death occurring after 30th March 1971.

• (11) In this section—

• (a) “business” includes a business carried on in the exercise of a profession or vocation, but does not include a business carried on otherwise than for gain;

• (b) “company” includes any body corporate.

• (12) This section shall be construed as one with Part I of the Finance Act 1894.

PART V — MISCELLANEOUS

Selective employment tax

63

Stamp duty-abolition of duty on bonds, mortgages etc.

64

Stamp duty-composition in respect of transfer duty on certain loan capital

65

Option mortgages

66

Confirmation of health service agreement with Northern Ireland and U.K. contribution towards cost of certain allowances and benefits in Northern Ireland

67

• (1) Confirmation is hereby given to the agreement between the Treasury and the Ministry of Finance for Northern Ireland set out in Schedule 13 to this Act (an agreement which, if confirmed by Acts of the Parliaments of the United Kingdom and Northern Ireland, supersedes as from 1st April 1971 an earlier agreement as amended).

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

• (3) The preceding provisions of this section shall not come into operation unless and until Her Majesty by Order in Council declares that a corresponding provision has been enacted by the Parliament of Northern Ireland.

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

Payments to Banks of England and Ireland in respect of management of Government securities

68

Section 16 of the National Loans Act 1968 (supplemental provisions as to the national debt) shall be amended as follows—

• (a) in subsection (7) (under which payments to the Banks of England and Ireland in respect of management of Government securities must relate to management in financial years ending on 31st March), for the words “in the year ending 31st March 1968 or any subseequent financial year” there shall be substiuted the words “in any period”, and

• (b) subsection (8) (which governs the calculation of the amount of such payments and the time of payment) shall be omitted.

Citation, interpretation, construction, extent and repeals

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• (1) This Act may be cited as the Finance Act 1971.

• (2) In this Act “the Taxes Act” means the Income and Corporation Taxes Act 1988.

• (3) In this Act—

sections 3, 8, 9, 10 and 12 shall be construed as one with the Customs and Excise Act 1952;

Parts II and III, so far as they relate to income tax, shall be construed as one with the Income Tax Acts and, so far as they relate to corporation tax, shall be construed as one with the Corporation Tax Acts;

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

• (4) Except so far as the context otherwise requires, any reference in this Act to any enactment shall be construed as a reference to that enactment as amended, and as including a reference to that enactment as applied, by or under any other enactment, including this Act.

• (5) Except as otherwise expressly provided, such of the provisions of this Act as relate to matters in respect of which the Parliament of Northern Ireland has power to make laws do not extend to Northern Ireland.

• (6) If the Parliament of Northern Ireland passes provisions amending or replacing any enactment of that Parliament referred to in this Act the reference shall be construed as a reference to the enactment as so amended or, as the case may be, as a reference to those provisions.

• (7) The enactments mentioned in Schedule 14 to this Act (Part VI of which includes certain obsolete enactments) are hereby repealed to the extent mentioned in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

SCHEDULE 1

Entry outwards of export goods not within section 47 of the Act of 1952

1

• (1) This paragraph applies to all goods to which section 47 of the Act of 1952 (entry outwards of certain dutiable etc. goods) does not apply.

• (2) Subject to paragraphs 4 and 13 below, before any goods to which this paragraph applies are exported or shipped for exportation, the exporter shall deliver to the proper officer an entry outwards of the goods under this paragraph.

• (3) The form of entries under this paragraph, the particulars to be contained therein and the manner of their delivery shall be such as the Commissioners may from time to time direct.

• (4) Directions under this paragraph may, if the Commissioners think fit, contain provisions authorising the delivery in circumstances specified in the directions of provisional entries under this paragraph, and imposing requirements on persons delivering such entries as to the subsequent delivery of perfected entries, and the obtaining and retention for a specified period of receipts for perfected entries.

• (5) Where the particulars contained in any entry delivered under this paragraph are in any way incorrect or inaccurate, the person delivering it shall notify the proper officer of any necessary correction within a period of fourteen days beginning with the day of delivery.

• (6) The Commissioners may give directions under this paragraph imposing on persons specified in the directions requirements as to the giving of information with respect to, and the furnishing of documents in connection with, goods which have been entered under this paragraph but are not exported or shipped for exportation within a specified period beginning with the day of delivery of the entry.

• (7) Goods shall not be treated by virtue of anything in this paragraph as goods to which section 47 of the Act of 1952 applies.

Provisional entries under section 47 of the Act of 1952

2

Directions under section 47 of the Act of 1952 may, if the Commissioners think fit, contain provisions authorising the delivery in circumstances specified in the directions of provisional entries under that section, and imposing requirements on persons delivering such entries as to the subsequent delivery of perfected entries, and the obtaining and retention for a specified period of receipts for perfected entries.

Register of exporters, and assignment of identifying numbers

3

The Commissioners shall have power—

• (a) to maintain a register of exporters,

• (b) to enter therein any person applying for registration and appearing to them to be concerned in the exportation of goods and to satisfy such requirements for registration as they may think fit to impose.

• (c) to give directions imposing requirements on registered persons (and, in particular, requirements as to the keeping of records and accounts and the giving of access thereto) as a condition of their remaining on the register,

• (d) to assign to registered persons numbers for use for export purposes, and

• (e) to cancel the registration of any person if it appears to them that he has failed to comply with any direction under this paragraph or that there is other reasonable cause for cancellation.

Alternative to entry in the case of registered exporters

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• (1) If the Commissioners think fit so to direct, goods within paragraph (c) or (d) of section 47(5) of the Act of 1952 may be shipped for exportation without entry under that section, and goods to which paragraph 1 above applies may be shipped for exportation without entry under that paragraph, if, before shipment, a number assigned under paragraph 3 above to a person concerned in the exportation of the goods, together with such particulars of the goods and other information relating thereto as the directions may require, is furnished in accordance with the directions to a person specified therein.

• (2) Directions under this paragraph may contain provision enabling the Commissioners to exclude shipments of goods from their operation in particular cases by giving notice to that effect in accordance with the directions.

Specifications under section 49 of the Act of 1952

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• (1) Section 49 of the Act of 1952 (duty of exporters to deliver specifications of goods not required to be entered under section 47 of the Act) shall apply to any goods which are shipped for exportation without entry under the said section 47 by virtue of directions given under paragraph 4 above, and shall not apply to any goods to which paragraph 1 above applies unless they are shipped for exportation without entry under that paragraph by virtue of directions so given.

• (2) Where any goods are shipped for exportation without entry by virtue of directions given under paragraph 4 above, the person whose number was furnished in relation to the goods for the purpose of their shipment without entry shall, if it was so furnished with his consent, be the exporter of the goods for the purposes of the said section 49.

• (3) The Commissioners may give a direction under this paragraph requiring any person delivering a specification under the said section 49 in relation to goods shipped for exportation to obtain a receipt therefor in accordance with the direction and to retain it for a period specified therein.

• (4) The said section 49 shall be amended as follows—

• (a) in subsection (1), for the words “six days” (period for delivery of specification) there shall be substituted the words “fourteen days ”,

• (b) in subsection (2), for the words “five pounds” (penalty for failure to deliver specification) there shall be substituted the words “£100 ” , and

• (c) in subsection (3), for the words “five pounds ” (penalty for failure to correct wrong specification, etc.) there shall be substituted the words “£10 ”, and for the words from “either himself ” to the end there shall be substituted the words “notifies the proper officer of any necessary correction within a period of fourteen days beginning with the day of delivery ”.

• (5) In consequence of the amendment made by sub-paragraph (4)(a) above, section 11(5) of the Finance Act 1966 (application of the said section 49 to goods exported by pipe-line) shall also be amended by substituting for the words “six days ” the words “fourteen days ”.

New provisions about putting export goods alongside for loading

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• (1) This paragraph applies to all goods which are required to be entered outwards before shipment for exportation, whether under section 47 of the Act of 1952 or under paragraph 1 above.

• (2) The Commissioners may make regulations—

• (a) prohibiting, as from such date as is specified in the regulations, the putting of any goods to which this paragraph applies alongside any ship or aircraft for loading for exportation except under a written authority in that behalf obtained in accordance with, and in such form as is specified in, the regulations, and

• (b) requiring any person putting goods alongside a ship or aircraft under one or more such authorities to endorse the authority or each of the authorities with such particulars as are specified in the regulations, and to deliver the endorsed authority or authorities, together with a written statement of the number of authorities delivered, to the proper officer within such period as is so specified.

Miscellaneous provisions as to information, documentation, etc.

7

The Commissioners may give directions under this paragraph imposing on persons specified in the directions requirements as to the giving of information with respect to, or the furnishing of documents in connection with, goods exported, or intended to be exported, in any such vehicle or container as is specified in the directions, or by such other means, or in accordance with any such commercial procedure, as is so specified.

8

The Commissioners may give directions under this paragraph providing that, before any goods are shipped for exportation, a number identifying the goods in compliance with the directions is to be given in accordance with the directions by and to such persons as are specified in the directions.

9

Section 54(1)(c) of the Act of 1952 (under which the Commissioners may make regulations requiring the delivery of a manifest of all cargo carried in an exporting ship) shall be amended by inserting—

• (a) after the word “manifest”, the words “containing such particulars as the Commissioners may direct”, and

• (b) after the word “ship ”, the words “and, if the Commissioners so direct, such other documents relating to the cargo as are specified in the direction ”.

10

Sections 47(2) and 86(3) of the Act of 1952 (goods to be treated as entered when entry signed by proper officer) shall cease to have effect.

Penalties

11

• (1) If any goods of which entry is required under paragraph 1 of this Schedule are exported or shipped for exportation before delivery of an entry in respect thereof, the exporter shall be liable to a penalty of £100.

• (2) Any person who fails to comply with sub-paragraph (5) of the said paragraph 1 in the case of any entry shall be liable to a penalty of £10.

• (3) Any person who, being required by directions given under or by virtue of paragraph 1, 2 or 5 of this Schedule to obtain and retain for a specified period a receipt for any entry or specification, fails to produce a receipt complying with the directions on demand made by a proper officer at any time during that period shall be liable to a penalty of £100.

• (4) If any person, for the purpose of enabling any goods to be shipped without entry by virtue of directions given under paragraph 4 of this Schedule, furnishes a number other than one for the time being assigned to him under paragraph 3 of this Schedule, then, unless the number is one for the time being assigned to another person under that paragraph and is furnished with that person's consent, he shall be liable to a penalty of £100.

• (5) Any person who contravenes or fails to comply with any regulations made under this Schedule, or with any directions given under or by virtue of any provision of this Schedule other than paragraph 3, shall be liable to a penalty of £100.

Supplementary

12

• (1) Regulations or directions made or given under any provision of this Schedule may make different provision for different circumstances.

• (2) Directions given under any such provision may be varied or revoked by subsequent directions thereunder.

13

The Commissioners may relax any requirement imposed by or under this Schedule as they think fit in relation to any goods.

14

• (1) The provisions of this Schedule shall be treated for all purposes as included in Part II of the Act of 1952.

• (2) Without prejudice to section 11(4) of the Finance Act 1966 (application of customs Acts to exportation by pipe-line) paragraph 6(2) of this Schedule shall apply to the charging of goods into a pipe-line for exportation as it applies to the putting of goods alongside a ship or aircraft for loading for exportation.

15

Paragraphs 1, 2, 4 to 8 and 11 of this Schedule shall come into operation on such day as the Commissioners may by order made by statutory instrument appoint, and different days may be so appointed for different paragraphs.

SCHEDULE 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Approval of contract for dependants or for life insurance

1

After section 226 of the Taxes Act insert—

(226A) (1) The Board may approve under this section— (a) a contract the main object of which is the provision of an annuity for the wife or husband of the individual, or for any one or more dependants of the individual, (b) a contract the sole object of which is the provision of a lump sum on the death of the individual before he attains the age of 70, being a lump sum payable to his personal representatives. (2) The Board shall not approve the contract unless it appears to them that it is made by the individual with a person lawfully carrying on in the United Kingdom the business of granting annuities on human life. (3) The Board shall not approve a contract under subsection (1)(a) above unless it appears to them to satisfy all the following conditions, that is— (a) that any annuity payable to the wife or husband or dependant of the individual commences on the death of the individual, (b) that any annuity payable to the individual commences at a time after the individual attains the age of 60, and, unless the individual's annuity is one to commence on the death of a person to whom an annuity would be payable under the contract if that person survived the individual, can not commence after the time when the individual attains the age of 70, (c) that the contract does not provide for the payment by the person contracting with the individual of any sum, other than any annuity payable to the individual's wife or husband or dependant, or to the individual except, in the event of no annuity beaming payable under the contract, any sums payable to the individual's personal representatives by way of return of premiums, by way of reasonable interest on premiums or by way of bonuses out of profits, (d) that the contract does not provide for the payment of any annuity otherwise than for the life of the annuitant, (e) that the contract does include provision securing that no annuity payable under it shall be capable in whole or in part of surrender, commutation or assignment. (4) The Board may, if they think fit, and subject to any conditions that they think proper to impose, approve a contract under subsection (1)(a) above notwithstanding that, in one or more respects, they are not satisfied that the contract complies with the provisions of paragraphs (a) to (e) of subsection (3) above. (5) Subsections (2) and (3) of section 226 above shall not apply to the approval of a contract under this section. (6) The main purpose of a trust scheme, or part of a trust scheme, within section 226(5) above may be to provide annuities for the wives, husbands and dependants of the individuals, or lump sums payable to the individuals personal representatives on death and in that case— (a) approval of the trust scheme shall be subject to the preceding provisions of this section with any necessary modifications, and not subject to subsections (2) and (3) of section 226 above, (b) the provisions of this Chapter shall apply to the scheme or part of the scheme when duly approved as it applies to a contract approved under this section. (c) section 226(6) above (tax relief for investments or deposits of the fund) shall apply to any duly approved trust scheme, or part of a trust scheme. (7) Except as otherwise provided in this Chapter, any reference in the Tax Acts to a contract or scheme approved under section 226 above shall include a reference to a contract or scheme approved under this section.

Relief carried forward

2

For subsection (2) of section 227 of the Taxes Act substitute—

(2) If in any year of assessment a reduction or a greater reduction would be made under this section in the relevant earnings of an individual but for either or both of the following reasons, that is— (a) an insufficiency of net relevant earnings, or (b) the operation of paragraph (b) of subsection (1B) above (as respects a qualifying premium paid under a contract approved under section 226A of this Act), the amount of the reduction which would be made but for those reasons less the amount of any reduction which is made in that year, shall be carried forward to the next following year, and shall be treated for the purposes of relief under this section as the amount of a qualifying premium paid in that following year. (2A) If and so far as an amount once carried forward under subsection (2) above (and treated as the amount of a qualifying premium paid in the said following year) is not deducted from or set off against the individual's net relevant earnings for that year of assessment, it shall be carried forward again to the next following year (and treated as the amount of a qualifying premium paid in that year), and so on for succeeding years (if necessary). (2B) The provisions of this subsection have effect for determining whether and how far an amount carried forward under subsection (2) above is to be treated as paid under an individual's contract on the one hand or a contract approved under section 226A of this Act on the other. If and so far as any such amount could not have been so carried forward but for a qualifying premium paid under an individual's contract, that amount, or any part of it, when so carried forward on the first or any subsequent occasion, shall be treated for the purposes of this Chapter as the amount of a qualifying premium paid under an individual's contract. In this subsection " individual's contract" means an approved annuity contract other than one approved under section 226A of this Act.

Relief in respect of late assessments

3

For subsection (3) of section 227 of the Taxes Act substitute—

(3) Where a relevant assessment to tax becomes final and conclusive at a time after 5th October in the year of assessment to which it relates, a qualifying premium paid— (a) after that year of assessment, and (b) not more than six months after that time, may, if the individual so elects not more than six months after that time, be treated for the purposes of this section as paid in the year of assessment (and not in the year in which it is paid): Provided that where either— (i) the amount of that premium, together with any qualifying premiums paid by him in the year to which the assessment relates (or treated as so paid by virtue of any previous election under this subsection), exceeds the maximum amount of the reduction which may be made under this section in his relevant earnings for that year, or (ii) the amount of that premium itself exceeds the increase in that maximum amount which is due to taking into account the income on which the assessment is made, then the election shall have no effect as respects the excess. In this subsection “a relevant assessment to tax” means an assessment on the individual's relevant earnings or on the profits or gains of a partnership from which the individual derives relevant earnings

.

Holders of pensionable offices, etc.

4

In section 228 of the Taxes Act (application of limits on relief to holders of pensionable offices, etc.)—

• (a) in subsection (1) for the words from “the proviso” to the end of the subsection substitute " section 227(1A) and (1C) of this Act shall have effect with the substitution for references to £1,500 of references to £1,500 less 15 per cent. of his pensionable emoluments for the year of assessment ",

• (b) in subsection (2)(b) for “one-tenth” substitute " 15 per cent. ".

Persons born before 1916

5

For section 228(4) of the Taxes Act substitute—

(4) Subject to subsection (5) below, in the case of an individual born at a time specified in the first column of the Table set out below, section 227(1A) and (1C) of this Act, and subsections (1) and (2) above, shall have effect with the substitution for references to £1,500 and to 15 per cent. of references respectively to such sum and such percentage as are specified for his case in the second and third columns of the Table.

Year of birth	Sum	Percentage
1914 or 1915	£1,600	16
1912 or 1913	£1,700	17
1910 or 1911	£1,800	18
1908 or 1909	£1,900	19
1907 or any earlier year	£2,000	20

Amendment to Chapter III of Part XIV of Taxes Act (charges in respect of life policies)

6

In section 393 of the Taxes Act after subsection (2) insert—

(2A) Nothing in this Chapter shall apply to a policy of insurance which constitutes, or is evidence of, a contract for the time being approved under section 226A of this Act

.

Commencement and transitionals

7

• (1) Nothing in the principal section or this Schedule shall affect relief for a year of assessment before the year 1971-72.

• (2) Subsection (3) of the principal section shall not authorise the approval of an annuity contract or trust scheme which allows the commutation of an annuity or part of an annuity first becoming payable before 6th April 1971.

• (3) Paragraph 2 of this Schedule shall have effect as respects amounts carried forward from years before the year 1971-72 as well as respects later years.

SCHEDULE 3

PART I — TRANSITIONAL

1

Section 208 of the Taxes Act (relief for superannuation funds)—

• (a) shall not apply to a retirement benefits scheme which is or has at any time been approved (that is to say approved for the purposes of Chapter II of Part II of the Finance Act 1970),

• (b) shall not apply to a scheme which comes into being after 5th April 1973, or which is altered after that date,

• (c) shall cease to have effect on 6th April 1980.

2

• (1) Section 23 of the Finance Act 1970 (taxation of schemes with exceptions for approved schemes and the others mentioned in section 24(1) of that Act)—

• (a) in the case of a scheme which comes into being at a time after 5th April 1973 but before 6th April 1980, or which is altered at a time between those two dates, shall come into force at that time,

• (b) shall come into force for all purposes on 6th April 1980.

• (2) Neither subsection (1) nor subsection (2) of section 220 of the Taxes Act (which will be superseded by section 23 of the Finance Act 1970) shall apply to an approved scheme or to a scheme as respects which the said section 23 is in force, and Chapter II of Part IX of the Taxes Act (which contains the said section 220) shall cease to have effect on 6th April 1980.

• (3) Sub-paragraph (2) above, and the repeal by this Act of the said Chapter II of Part IX, shall not affect any liability to tax in respect of a scheme for any period before the time when that Chapter II (or any provision of that Chapter) ceases to apply to the scheme, nor to the giving of any relief under section 221(3) of the Taxes Act.

3

• (1) On such date as the Treasury may by order in a statutory instrument appoint—

• (a) section 22 of the Finance Act 1970 (exemptions and reliefs for certain statutory schemes) shall come into force, and

• (b) section 209 of the Taxes Act (corresponding provision for the schemes within the said section 22, and certain other statutory schemes) shall cease to have effect.

• (2) The said section 209 shall not apply as respects a payment or repayment of contributions at a time when the relevant scheme is an exempt approved scheme, and the repeal by this Act of the said section 209 shall not apply as respects a payment or repayment of contributions at a time before the repeal takes effect

4

Where an alteration has been made in a scheme which before the alteration was a statutory superannuation scheme as defined in section 224(1) in Chapter II of Part IX of the Taxes Act, and, although the scheme was approved under an enactment or regulation relating to superannuation, the alteration was not so approved—

• (a) the scheme shall not, after the alteration, be treated as a statutory superannuation scheme within the said definition, and

• (b) section 209 of the Taxes Act shall not, after the alteration, apply to that scheme.

5

• (1) This paragraph has effect as respects any retirement benefits scheme which authorises the employer to determine individual by individual which employees are subject to the scheme.

• (2) For the purposes of—

• (a) Chapter II of Part IX of the Taxes Act, and

• (b) Chapter II of Part II of the Finance Act 1970,

the Board may, if they think fit, distinguish between employees who become subject to any such scheme at a time not later than 5th April 1973 on the one hand and those who become subject to the scheme at any later time on the other hand, and may treat the scheme as being, in relation to those two classes of employees, two different schemes, of which the one relating to employees becoming subject to the scheme on and after 6th April 1973 is a scheme coming into being on that date.

• (3) Where the Board exercise their powers under this paragraph, the preceding provisions of this Schedule distinguishing between schemes coming into being up to 5th April 1973 and schemes coming into being later, shall apply accordingly to what are to be so treated as separate schemes.

• (4) The provisions of this paragraph are without prejudice to the powers of the Board as respects the treatment of schemes conferred by section 25 of the Finance Act 1970.

6

References in this Part of this Schedule to the alteration of a scheme do not include references to any alteration which, in the opinion of the Board, is immaterial.

PART II — Taxation of Refunds of Contributions and Certain other Payments

7

For paragraphs 2 and 3 of Part II of Schedule 5 to the Finance Act 1970 substitute, as respects tax for the year 1971-72 and subsequent years of assessment—

(2) (1) Subject to the provisions of this paragraph, tax shall be charged under this paragraph on any repayment to an employee during his lifetime of any contributions (including interest on contributions, if any) if the payment is made under— (a) a scheme which is or has at any time been an exempt approved scheme, or (b) a statutory scheme established under a public general Act. (2) Where any payment is chargeable to tax under this paragraph, the administrator of the scheme shall be charged to income tax under Case VI of Schedule D and, subject to sub-paragraph (3) below, the rate of the tax shall be 10 per cent. (3) The Treasury may, by order in a statutory instrument subject to annulment in pursuance of a resolution of the Commons House of Parliament, from time to time increase or decrease the rate of tax under sub-paragraph (2) above. (4) The tax shall be charged on the amount paid or, if the rules permit the administrator to deduct the tax before payment, on the amount before deduction of tax, and the amount so charged to tax shall not be treated as income for any other purpose of the Tax Acts. (5) (a) Sub-paragraph (1)(a) above shall not apply in relation to a contribution made after the scheme ceases to be an exempt approved scheme (unless it again becomes an exempt approved scheme); (b) sub-paragraph (1)(b) above shall not apply to any payment made before the coming into force of section 22 of this Act. (6) This paragraph shall not apply where the employee's employment was carried on outside the United Kingdom. (7) In relation to a statutory scheme “employee” in this paragraph includes any officer. (3) (1) Where— (a) a scheme which is or has at any time been an approved scheme, or (b) a statutory scheme established under a public general Act, contains a rale allowing, in special circumstances, a payment in commutation of an employee's entire pension, and any pension is commuted, whether wholly or not, under the rale, tax shall be charged on the amount by which the sum receivable exceeds— (i) the largest sum which would have been receivable in commutation of any part of the pension if the scheme had secured that the aggregate value of the relevant benefits payable to an employee on or after retirement, excluding any pension which was not commutable, could not exceed three-eightieths of his final remuneration for each year of service up to a maximum of 40, or (ii) the largest sum which would have been receivable in commutation of any part of the pension under any rule of the scheme authorising the commutation of part (but not the whole) of the pension, or which would have been so receivable but for the said circumstances, whichever gives the lesser amount chargeable to tax. (2) Where any amount is chargeable to tax under this paragraph the administrator of the scheme shall be charged to income tax under Case VI of Schedule D on that amount, and sub-paragraphs (2), (3) and (4) of paragraph 2 above shall apply as they apply to tax chargeable under that paragraph. (3) This paragraph shall not apply where the employee's employment was carried on outside the United Kingdom. (4) In relation to a statutory scheme “employee” in this paragraph includes any officer. (5) In applying paragraph (i) or paragraph (ii) of sub-paragraph (1) above— (a) the same considerations shall be taken into account, including the provisions of any other relevant scheme, as would have been taken into account by the Board in applying section 19 of this Act, and (b) where the scheme has ceased to be an approved scheme, account shall only be taken of the rules in force when the scheme was last an approved scheme. (6) Sub-paragraph (1)(b) above shall not apply to any payment made before the coming into force of section 22 of this Act

.

Schemes approved under old law

8

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

Schemes approved under old law or new law

9

• (1) This paragraph applies to any payment to or for the benefit of an employee, otherwise than in course of payment of a pension, being a payment made out of funds which are or have been held for the purposes of a scheme which is or has at any time been approved for the purposes of—

• (a) Chapter II of Part II of the Finance Act 1970, or

• (b) section 208 of the Taxes Act, or

• (c) Chapter II of Part IX of the Taxes Act.

• (2) If the payment—

• (a) is not expressly authorised by the rules of the scheme, or

• (b) is made at a time when the scheme is not approved for the purposes of any of the enactments mentioned in paragraphs (a), (b) or (c) of sub-paragraph (1) above, and would not have been expressly authorised by the rules of the scheme when it was last so approved,

the employee (whether or not he is the recipient of the payment) shall be chargeable to tax on the amount of the payment under Schedule E for the year of assessment in which the payment is made.

• (3) Any payment chargeable to tax under this paragraph shall not be chargeable to tax under paragraph 2 or paragraph 3 of Part II of Schedule 5 to the Finance Act 1970 (as set out in this Schedule), or under the Regulations mentioned in paragraph 8 above.

• (4) References in this paragraph to any payment include references to any transfer of assets or other transfer of money's worth.

• (5) Paragraph 5 of Part II of Schedule 5 to the Finance Act 1970 (Which is superseded by this paragraph) shall not have effect as respects tax for the year 1971-72 or any subsequent year of assessment.

PART III — Consequential and Minor Amendments

Capital gains: amendment of Finance Act 1965

10

In section 38(2) of the Finance Act 1965 as amended by Part II of the Table in paragraph 11 of Schedule 15 to the Taxes Act after “section 208(2) of the Income and Corporation Taxes Act 1970 ” add “or section 21(7) of the Finance Act 1970 ”.

Saving for certain life policies

11

In section 19(4) and section 393(2) of the Taxes Act (life policies, etc.) after paragraph (b) insert

, or (c) to any policy of life insurance issued in connection with an approved scheme as defined in Chapter II of Part II of the Finance Act 1970.

Amendments of Finance Act 1970

12

• (1) For section 19(4) of the Finance Act 1970 substitute—

(4) Where an alteration has been made in a retirement benefits scheme, no approval given as regards the scheme before the alteration shall apply after the date of the alteration unless the alteration has been approved by the Board.

• (2) For section 24(2) of the said Act (exceptions from charge to tax under section 23) substitute—

(2) Neither subsection (1) nor subsection (2) of the last preceding section shall apply for any year of assessment where, apart from those subsections— (a) the employee is, by reason of his exercising his employment outside the United Kingdom, not assessable to tax for that year under Case I or II of Schedule E in respect of the emoluments of his employment, or (b) he is assessable to tax for that year in respect of those emoluments only under Case III of Schedule E.

• (3) In the definition of “administrator” in section 26(1) of the said Act the words “resident in the United Kingdom” shall be omitted.

• (4) In the said section 26(1) after the definition of “exempt approved scheme ” insert—

• ' final remuneration ' means the average annual remuneration of the last three years' service

.

• (5) Paragraph 4 of Part II of Schedule 5 to the said Act (charge to tax in respect of payments to employer) shall be amended as follows—

• (a) before the words “an exempt approved scheme” in sub-paragraph (1) insert “a scheme which is or has at any time been ”,

• (b) at the end add—

(3) References in this paragraph to any payment include references to any transfer of assets or other transfer of money's worth.

• (6) for paragraph 12(6) of Part III of Schedule 5 to the said Act substitute—

(6) At the end of paragraph 4(c) of Schedule 8 to the Taxes Act (standard capital superannuation benefit) add “or in section 24(1) of the Finance Act 1970 ”

.

Construction

13

• (1) The principal sections and this Schedule shall be construed as one with Chapter II of Part II of the Finance Act 1970 and Schedule 5 to that Act.

• (2) In paragraph 9(1) of the said Schedule 5, the reference to Part II of that Schedule shall include a reference to Part II of this Schedule.

• (3) Without prejudice to the preceding provisions of this paragraph, references in paragraph 10 of the said Schedule 5 to that Schedule shall include references to this Schedule.

SCHEDULE 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Meaning of wife's earnings

1

References in this Schedule to the wife's earnings are references to any earned income of hers other than—

• (a) income arising in respect of any pension, superannuation or other allowance, deferred pay or compensation for loss of office given in respect of the husband's past services in any office or employment; or

• (b) any payment on account of an allowance under the Family Allowances Acts 1965 to 1969 or the Family Allowances Acts (Northern Ireland) 1966 to 1969 or any payment or benefit under the National Insurance Acts 1965 to 1970 or the National Insurance Acts (Northern Ireland) 1966 to 1969 which is payable to the wife otherwise than by virtue of her own insurance.

General Rule

2

In charging the income of husband and wife in accordance with section 37 of the Taxes Act (wife's income deemed to be husband's)—

• (a) the wife's earnings shall be charged to income tax as if she were a single woman with no other income ; and

• (b) the husband's other income shall be charged to income tax as if the wife's earnings were nil.

Personal reliefs

3

• (1) Subject to the following provisions of this paragraph, the reliefs to be given under Chapter II of Part I of the Taxes Act (including the deductions from total income to be made for the purposes of surtax under section 28 of that Act) shall be determined as if the husband and the wife were not married and—

• (a) any children of his (within the meaning of section 10(1) of the Taxes Act) were his children and not hers ;

• (b) the wife's earnings were her only income ; and

• (c) the husband's income included all income of the wife's other than her earnings.

• (2) Accordingly the reliefs to be given under that Chapter in respect of the income chargeable under either sub-paragraph (a) or sub-paragraph (b) of paragraph 2 above shall not reduce the tax or the income chargeable under the other of those sub-paragraphs.

• (3) No relief shall be given either to the husband or to the wife under section 6, 7, 9(2), 9(3), 13 or 14 of the Taxes Act.

• (4) References in Chapter II of Part I of the Taxes Act to the claimant shall be construed as including the wife.

Effect of deductions etc.

4

• (1) Notwithstanding anything to the contrary in the Income Tax Acts, where any amount is under any provision of those Acts to be deducted from or set off against income in respect of any payments, loss or capital allowance, then—

• (a) if under that provision it is (or is in the first instance) to reduce the wife's earned income, or is to be deducted or set off in respect of payments made by her, it shall be treated as reducing her earnings and as not reducing any other income ; and

• (b) in any other case it shall be treated as not reducing the wife's earnings.

• (2) Sub-paragraph (1) above shall not affect the giving of any relief under section 174 of the Taxes Act (carry-back of terminal losses) for a year of assessment for which no election under section 23 of this Act was in force.

Assessments, recovery and returns

5

Income tax charged on the wife's earnings under paragraph 2(a) above shall, whether or not an application under section 38 of the Taxes Act (separate assessment) is in force, be assessed and recovered as if she were a single woman, and any repayment of tax assessed in pursuance of this paragraph shall be made to her.

6

Where an application under section 38(2) of the Taxes Act (separate assessment to surtax) is in force then, in addition to any surtax charged under paragraph 2(a) above, so much of the surtax charged under paragraph 2(b) above as is attributable to any income of the wife's shall be assessed on and recovered from her; and for this purpose—

• (a) income other than earned income shall be treated as the highest part of the income charged under paragraph 2(b) above;

• (b) if any income so charged is reduced by deductions under section 28 of the Taxes Act, income other than the wife's shall be treated as so reduced before income of the wife's ; and

• (c) so much of the surtax so charged as under the preceding provisions of this paragraph is treated as charged in respect of income other than earned income shall be attributable to the husband and the wife in proportion to their respective shares of that income so charged.

7

Where subsection (3) of section 39 of the Taxes Act (separate returns in cases of separate assessment) applies for the purposes of subsection (1) and (2) of that section it shall apply also for the purpose of this Schedule ; but subject thereto nothing in this Schedule or in section 23 of this Act shall be taken to affect the provisions of the Taxes Management Act 1970 as to returns.

Modifications for 1973-74 and subsequent years

8

In relation to the year 1973-74 and subsequent years of assessment the preceding paragraphs of this Schedule shall apply with the omission of the following:—

• (a) in paragraph 3(1), the words “(including the deductions from total income to be made for the purposes of surtax under section 28 of that Act) ” ;

• (b) in paragraph 3(3), the references to sections 6, 9(2) and 9(3) of the Taxes Act; and

• (c) paragraph 6.

SCHEDULE 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART I — Operations Included

PART II — Operations Excluded

SCHEDULE 6

PART I

1

The Income and Corporation Taxes Act 1970 shall be amended in accordance with the following provisions of this Part of this Schedule.

2

For section 3 there shall be substituted the following section:—

(3) Where a person is required to be assessed and charged with income tax in respect of any property, profits or gams out of which he makes any payment in respect of— (a) any annuity or other annual payment (not being interest); or (b) any royalty or other sum in respect of the user of a patent; or (c) any rent, royalty or other payment which, by section 156 or 157 of this Act (mining etc., rents and royalties) is declared to be subject to deduction of tax under Part II of this Act as if it were a royalty or other sum paid in respect of a patent; he shall, in respect of so much of the property, profits or gains as is equal to the payment and may be deducted in computing his total income, be charged at the basic rate.

3

In section 4 in subsection (1) the words “other than surtax” shall be omitted and for subsection (3) there shall be substituted the following subsection:—

(3) Except as otherwise provided by the Income Tax Acts, any income tax charged at a rate other than the basic rate on income from which income tax has been deducted (otherwise than under section 204 of this Act) or is treated as having been deducted shall be due and payable on or before 6th July following the end of the year for which it is assessed, except that any such tax included in an assessment made later than 6th June following the end of that year shall be due and payable at the expiration of thirty days from the issue of the notice of assessment.

4

In section 5 for the words “6 to 21 ” there shall be substituted the words “7 to 21 ”.

5

In section 8—

• (a) in subsection (1)(a) for the words following sub-paragraph (ii) there shall be substituted the words “to a deduction of £600 from his total income ”;

• (b) in subsection (1)(b) for the words from “from ” to the end there shall be substituted the words “of £420 from his total income ”;

• (c) in subsection (2) for the words from “by an amount” to “£325” there shall be substituted the words “by the amount of that earned income or by £420 ”.

6

In section 10—

• (a) in subsection (1) for the words from “the amount” to “standard rate on ” there shall be substituted the words “his total income of ”;

• (b) in subsection (3)(a) for “£205 ” there shall be substituted “£265 ”.

• (c) in subsection (3)(b) for “£180” there shall be substituted “£235 ”, and

• (d) in subsection (3)(c) for “£155 ” there shall be substituted “£200 ”.

7

In section 12(1)—

• (a) for the words from “from the amount” to “£75 ” there shall be substituted the words “of £100 from his total income ”, and

• (b) in paragraph (iii) of the proviso the words “of tax ” shall be omitted.

8

In section 13 for the words from “from the amount” to the end there shall be substituted the words “of £100 from his total income ”.

9

In section 14—

• (a) in subsection (2) for the words from “from the amount” to the end there shall be substituted the words “of £130 from his total income ”;

• (b) in subsection (3) for “£100” there shall be substituted “£130 ”.

10

In section 16—

• (a) in subsection (1) for “£387” there shall be substituted “£412 ” and for the words from “from the amount” to “on £75 ” there shall be substituted the words “of £100 from his total income ”;

• (b) for “£75 ” wherever it occurs in the proviso to subsection (1) or in subsections (2) and (3) there shall be substituted “£100 ”;

• (c) in subsection (2) for “£387” there shall be substituted “£412 ”, for “£422” there shall be substituted “£457 ” and for “£110 ” there shall be substituted “£145 ”.

11

In section 17 for the words from “from the amount” to “£40 ” there shall be substituted the words “of £55 from his total income ”.

12

In section 18—

• (a) in subsection (1) the words “seven-ninths of”, in the first place where they occur, shall be omitted and for the words from “from the amount ” to “seven-ninths of ” there shall be substituted the words “from his total income equal to £130 reduced by ”;

• (b) in subsection (2) the words “seven-ninths of” in the first place where they occur shall be omitted and for the words from “from the amount ” to “seven-ninths of ” there shall be substituted the words “from his total income of £260 reduced by ”;

• (c) in subsection (4)(b) for “£100 ”, in both places, there shall be substituted “£130 ”;

• (d) in subsection (4)(c) for “£200 ”, in both places, there shall be substituted “£260 ”.

13

In section 30—

• (a) in subsection (1) the words from “whether an assessment” to “years of assessment” shall be omitted ;

• (b) in subsection (3) for the words “the amount of the surtax for any year which would have been payable in his case ” there shall be substituted the words “what would have been his excess liability for any year ” and the words “for the purposes of surtax ” shall be omitted ;

• (c) at the end of subsection (3) there shall be added the words " In this subsection ' excess liability' means the excess of liability to income tax over what it would be if all income tax were charged at the basic rate to the exclusion of any other rate ";

• (d) in subsection (4) for the words from the beginning to “such individual” there shall be substituted the words “For the purpose of assessing any individual to tax in pursuance of this section ” for the words “assessed to surtax ” there shall be substituted the words “assessed to tax ” and for the words “avoidance of surtax ” (in both places) there shall be substituted the words “avoidance of tax ”;

• (e) in subsection (5) the words “for the purposes of surtax ” shall be omitted.

14

In section 33(1) and (2) for the words “sections 30 to 32 ” there shall be substituted the words “section 30 ”.

15

In section 34(1) for the words following the paragraphs and preceding the proviso there shall be substituted the words " the said sum shall be treated for the purpose of computing the said individual's total income as received by him after deduction of income tax from a corresponding gross amount; and—

• (i) no assessment shall be made on the individual in respect of income tax at the basic rate on that amount but he shall be treated as having paid income tax at the basic rate on that amount or, if his total income is reduced by any deductions, on so much of that amount as is part of his total income as so reduced ;

• (ii) no repayment shall be made of income tax treated by virtue of paragraph (i) above as having been paid ; and

• (iii) the said amount shall be treated for the purposes of sections 52 and 53 of this Act as not brought into charge to income tax."

16

In section 36—

• (a) in subsection (1) for the word “surtax” there shall be substituted the words “the excess amount of the income tax ” and at the end of the subsection there shall be added the words " In this section ' the excess amount' means so much of the income tax payable in respect of the beneficiary's income as exceeds what would be the amount thereof if all income tax were chargeable at the basic rate to the exclusion of any other rate ";

• (b) in subsection (2) for the words “any surtax ” there shall be substituted the words “the whole or part of the excess amount of the income tax ” and for the words “the said surtax ” (in both places) there shall be substituted the words “the excess amount or any part thereof ”;

• (c) in subsection (3) for the words “the said surtax” there shall be substituted the words “the excess amount or any part thereof ”;

• (d) in subsection (4) for the word “surtax ” there shall be substituted the word “tax ”.

17

In section 37 subsection (5) shall be omitted and for subsection (3) there shall be substituted the following subsection:—

(3) Any deduction from a man's total income made under section 8(2) of this Act shall be treated as first reducing the earned income of his wife.

18

In section 38 the following shall be substituted for subsection (2):—

(2) Notwithstanding an application under subsection (1) above the income of the husband and the wife shall be treated as one in estimating total income and in determining whether any or what amount of that income is chargeable as investment income ; and the amount of tax payable by each of them shall be ascertained by first dividing between them, in proportion to the amounts of their respective incomes, the amount that would be payable by them if no reliefs were given under Chapter II of this Part of this Act and then applying section 39 below to give effect to those reliefs.

19

In section 39—

• (a) in subsection (1) the words “other than surtax ” and paragraphs (a) and (b) shall be omitted ;

• (b) in subsection (1)(e) for the words from “if” to the end there shall be substituted the words “if no personal reliefs had been allowable ”.

• (c) in the proviso to subsection (1) for the words from “paragraphs (a) to (e) ” to “reduce ” there shall be substituted the words “paragraphs (c) to (e) above shall not be less than the reduction resulting from section 37(3) above in ”;

• (d) in subsection (2) the words “(other than surtax)” (in both places) shall be omitted ; and

• (e) subsection (4) shall be omitted.

20

In section 52—

• (a) paragraph (a) of subsection (1) shall be omitted ;

• (b) in paragraph (c) of that subsection the words from “at the standard rate ” to “due ” shall be omitted ;

• (c) at the end of that subsection there shall be added the words

and (e) the deduction shall be treated as income tax paid by the person to whom the payment is made

; and

• (d) in subsection (2) the words after “income tax thereon ” shall be omitted.

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In section 53—

• (a) in subsection (1) the words after “income tax thereon” shall be omitted, and

• (b) in subsection (2) for the words “standard rate ” there shall be substituted the words “basic rate ”.

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In section 54(1) for the words following “income tax thereon ” there shall be substituted the words “for the year in which the payment is made ”.

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