Finance Act 1971

it shall be treated, subject to paragraph 7 below, as diminishing a quantity subsequently acquired, and a quantity so acquired at an earlier date rather than one so acquired at a later date.

Disposal and acquisition of guaranteed stock or gilt-edged securities—general

7

• (1) The following provisions shall apply, subject to paragraph 6(1) above and paragraph 8 below, for the purpose of identifying gilt-edged securities disposed of by any person with securities of the same kind acquired by him in the same capacity, and for determining whether the application of section 27(3) of the Finance Act 1965 to any securities is excluded by paragraph 4 above.

• (2) Securities disposed of at an earlier date shall be identified before securities disposed of at a later date, and their identification shall have effect also for determining what securities might be comprised in the later disposal.

• (3) Securities disposed of shall be identified with securities acquired within the twelve months preceding the disposal rather than with securities not so acquired, and with securities so acquired at an earlier date rather than with securities so acquired at a later date.

Acquisition and disposal of gilt-edged securities—disposal to husband or wife and third person

8

• (1) Where, in the case of a man and his wife living with him, one of them—

• (a) disposes of gilt-edged securities of any kind to the other; and

• (b) disposes of gilt-edged securities of the same kind to a third person;

then, if under the preceding provisions of this Schedule any of the securities disposed of to the husband or wife would be identified with securities acquired within the twelve months preceding the disposal and any of the securities disposed of to the third person with securities not so acquired, the securities disposed of to the third person shall be identified with securities so acquired before any securities disposed of to the husband or wife are so identified.

• (2) If there is more than one disposal to the wife or husband, or to a third party, the provisions of this paragraph shall be applied to securities disposed of at an earlier date before they are applied to securities disposed of at a later date, and the identification of the securities disposed of at the earlier date shall have effect also for determining what securities might be comprised in the later disposal.

Re-acquisition of gilt-edged securities after sale at a loss

9

• (1) Where a loss accrues to a person from his acquisition and disposal of gilt-edged securities and he re-acquires (in the same capacity) the same securities within one month of the disposal or, if the re-acquisition is not through a stock exchange, within six months of the disposal, that loss shall not be deductible except from a chargeable gain accruing to him on the disposal of the securities re-acquired.

• (2) Where a person disposes of gilt-edged securities and afterwards acquires gilt-edged securities of the same kind within the period referred to in sub-paragraph (1) above, he shall be treated for the purposes of that sub-paragraph as re-acquiring the securities disposed of (or such quantity of them as does not exceed the quantity acquired) but so that—

• (a) there cannot be in relation to the same disposal more than one re-acquisition of the same security, nor can there be by the same acquisition of a security a re-acquisition in relation to more than one disposal; and

• (b) if an acquisition could be treated as a re-acquisition of securities disposed of either at an earlier or at a later date it shall be treated as a re-acquisition of the securities disposed of at the earlier date ; and

• (c) if securities disposed of by the same disposal could be treated as re-acquired at an earlier or at a later date they shall be treated as re-acquired at the earlier date.

• (3) In the case of a man and his wife living with him the preceding provisions of this paragraph shall, with the necessary modifications, apply also where a loss on the disposal accrues to one of them and the acquisition after the disposal is made by the other.

Time of disposal and acquisition

10

• (1) Subject to section 45(5) of the Finance Act 1965 and sub-paragraph (2) below, where an asset is disposed of and acquired under a contract the time at which the disposal and acquisition is made is the time the contract is made (and not, if different, the time at which the asset is conveyed or transferred).

• (2) If the contract is conditional (and, in particular, if it is conditional on the exercise of an option) the time at which the disposal and acquisition is made is the time when the condition is satisfied.

11

Where an interest in land is acquired, otherwise than under a contract, by an authority possessing compulsory purchase powers the time at which the disposal and acquisition is made is the time at which the compensation for the acquisition is agreed or otherwise determined (variations on appeal being disregarded for this purpose) or, if earlier (but after 20th April 1971), the time when the authority enter on the land in pursuance of their powers.

Consequential amendments

12

In section 270 of the Income and Corporation Taxes Act 1970—

• (a) in subsection (3) after the word “disposal” there shall be inserted the words “and the asset consists of specified securities ” and for the words from “subsections (1) and (2)” to “(1) above ” there shall be substituted the words “the provisions of Schedule 10 to the Finance Act 1971 applying to such securities ”, and

• (b) after subsection (5) there shall be added the following subsection:—

(6) In this section ' specified securities' has the same meaning as in section 41 of the Finance Act 1969.

13

In section 271(4) of the Income and Corporation Taxes Act 1970 after the word “disposal” there shall be inserted the words " and the asset consists of securities of a description specified in section 41(8) of the Finance Act 1969 “and for the words ” the preceding provisions of this section “there shall be substituted the words ” the provisions of Schedule 10 to the Finance Act 1971 applying to such securities ".

SCHEDULE 11. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

1

In this Schedule “the principal section” means section 57 of this Act.

Losses

2

• (1) Where, in the case of any individual, subsection (1) of the principal section applies in any year of assessment, or would apply if there were any, or sufficient, capital gains accruing to him, then if any allowable losses accrued to him in that year, they shall be treated for the purpose of applying section 20(4) of the Finance Act 1965 (deduction of allowable losses) in any subsequent year as reduced by the amount of the chargeable gains accruing to him in the year in which the losses accrued.

• (2) Where in any year of assessment in which a married woman is living with her husband there is in the case of one but not in the case of the other an excess of allowable losses over chargeable gains the excess shall be treated for the said purpose as reduced by the amount by which the other's chargeable gains exceed the other's allowable losses.

Consideration

3

In computing for the purposes of the principal section the amount or value of the consideration for a disposal made by any person there shall be deducted the incidental costs to him of making the disposal.

4

Where by virtue of section 29(1)(b) of the Finance Act 1970 (taxation of mineral royalties) a chargeable gain is treated as accruing to any person in any year of assessment the amount thereof shall be treated for the purposes of the principal section as consideration for a disposal made by him in that year.

5

If the consideration for any disposal is payable by instalments over a period exceeding eighteen months and beginning not earlier than the time when the disposal is made, then, for the purposes of the principal section, such part only of the consideration as is payable in the year of assessment in which the disposal is made shall be taken into account for that year, but any part payable in a subsequent year of assessment shall be deemed to be a consideration for a disposal made in that subsequent year.

6

Paragraph 14(5) of Schedule 6 to the Finance Act 1965 (consideration brought into account without discount etc.) shall apply for the purposes of the principal section as it applies for the computation under that Schedule.

7

Paragraph 14(2)(a) of Schedule 7 to the Finance Act 1965 (consideration for option) shall apply for the purposes of the principal section as it applies for the computation of chargeable gains.

Disregard of consideration for certain disposals

8

• (1) For the purposes of the principal section the consideration for a disposal shall be disregarded if, under any provision—

• (a) it falls to be excluded from the computation of a gain arising on the disposal; or

• (b) a gain accruing on the disposal is not a chargeable gain.

• (2) Where a disposal satisfies the following conditions, namely—

• (a) that it is the disposal of an asset which is tangible movable property; and

• (b) that it is not such a disposal as is mentioned in section 30(6) of the Finance Act 1965 (commodities dealt with on terminal market and currency) ; and

• (c) that the consideration for it is not disregarded under sub-paragraph (1) above ;

then, if, apart from the disposal and any other disposal satisfying those conditions, the principal section would apply it shall, notwithstanding the disposal, apply for the purpose of determining whether any or what tax is chargeable in respect of disposals not satisfying those conditions but shall not affect the tax chargeable in respect of disposals satisfying those conditions.

Disposals on death

9

Where by virtue of section 24 of the Finance Act 1965 a disposal is deemed to occur on the death (before 31st March 1971) of an individual, the consideration for that disposal shall be disregarded for the purposes of the principal section so far as that section relates to the tax chargeable apart from the death, but this paragraph shall not affect the tax chargeable in respect of the disposal deemed to occur on the death.

SCHEDULE 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Death not constituting disposal

1

For subsection (1) of section 24 of the Finance Act 1965 there shall be substituted the following subsection:—

(1) For the purposes of this Part of this Act, the assets of which a deceased person was competent to dispose— (a) shall be deemed to be acquired on his death by the personal representatives or other person on whom they devolve for a consideration equal to their market value at the date of the death ; but (b) shall not be deemed to be disposed of by him on his death (whether or not they were the subject of a testamentary disposition)

.

2

At the end of subsection (9) of that section (construction of references to assets of which the deceased was competent to dispose) there shall be added the words “and include references to his severable share in any assets to which, immediately before his death, he was beneficially entitled as a joint tenant ”.

Donatio mortis causa not chargeable gain

3

Notwithstanding section 22(4) of the Finance Act 1965 no chargeable gain shall accrue to any person on his making a disposal by way of donatio mortis causa.

4

In section 45(1) of the Finance Act 1965, in the definition of “legatee ”, for the words from “and a donatio ” to “gift” there shall be substituted the words " and a person taking under a donatio mortis causa shall be treated (except for the purposes of section 24 of this Act) as a legatee and his acquisition as made at the time of the donor's death ".

5

In sub-paragraph (2) of paragraph 20 of Schedule 7 to the Finance Act 1965 (which makes exceptions to the rule that neither a gain nor a loss accrues on a disposal between husband and wife) the following shall be substituted for paragraph (b)—

(b) if the disposal is by way of donatio mortis causa

.

Settled property

6

Where, by virtue of subsection (3) of section 25 of the Finance Act 1965, the assets forming part of any settled property are deemed to be disposed of and re-acquired by the trustee on the occasion when a person becomes absolutely entitled thereto as against the trustee, then, if that occasion is the termination of a life interest (within the meaning of that section) by the death of the person entitled to that interest—

• (a) no chargeable gain shall accrue on the disposal; and

• (b) if on the death the property reverts to the disponer the disposal and re-acquisition under that subsection shall be deemed to be for such consideration as to secure that neither a gain nor a loss accrues to the trustee, and shall, if the trustee had first acquired the property at a date earlier than 6th April 1965, be deemed to be at that earlier date.

7

In section 25(4) of the Finance Act 1965 (notional disposal of all assets of settled property on termination of life interest in all or part of settled property) for the words “all the assets forming part of the settled property, except any which at that time cease to be settled property” there shall be substituted the words “the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property ” and for the words “their market value ” there shall be substituted the words " the whole or a corresponding part of the market value of the asset. "

8

At the end of the said section 25(4) there shall be inserted the following paragraph:—

For the purposes of this subsection a life interest which is a right to part of the income of settled property shall be treated as a life interest in a corresponding part of the settled property

.

9

Where the said section 25(4) applies on the death of the person entitled to the life interest referred to therein, no chargeable gain shall accrue on the disposal deemed to be made under that section.

10

Subsections (3) and (4) of section 25 of the Finance Act 1965 shall apply, where an annuity which is not a life interest within the meaning of that section is terminated by the death of the annuitant, as they apply on the termination of a life interest by the death of the person entitled thereto.

11

Where a life interest (within the meaning of section 25 of the Finance Act 1965) in settled property is terminated by the death of a person on whose death estate duty falls to be charged on the property by virtue of section 2(1)(b) of the Finance Act 1894, then—

• (a) if the value on which estate duty is so chargeable is not reduced under paragraph 3 of Part II of Schedule 17 to the Finance Act 1969 or paragraph 3 of Part II of Schedule 1 to the Finance Act (Northern Ireland) 1969 paragraphs 6 and 9 above shall apply as if that person had been entitled thereto at his death ; and

• (b) if that value is so reduced by any percentage, any chargeable gain or allowable loss accruing on the disposal deemed to be made under section 25(3) or 25(4) of the Finance Act 1965 shall be reduced by the complementary percentage, that is to say the percentage found by subtracting the first-mentioned percentage from one hundred per cent.

12

In section 25 of the Finance Act 1965 the following shall be inserted after subsection (4)—

(4A) Where, by virtue of section 2(1)(b) of the Finance Act 1894, estate duty is chargeable on any property comprised, at the time of a death, in settled property in a case where neither subsection (3) nor subsection (4) above applies, the appropriate portion of each of the assets forming part of the property so comprised shall for the purposes of this Part of this Act be deemed to be disposed of and immediately re-acquired at that time by the trustee for a consideration equal to the appropriate portion of the market value of the asset; but no chargeable gain shall accrue on the disposal. For the purposes of this subsection the appropriate portion is the value on which estate duty is so chargeable divided by the market value of the whole of the settled property at the time of the death.

13

Section 31(3)(b) of the Finance Act 1965 (concession on certain notional disposals of settled property) shall not apply in relation to a disposal on which by virtue of this Schedule no chargeable gain or allowable loss accrues to the trustee.

Gifts

14

• (1) After section 25 of the Finance Act 1965 there shall be inserted the following section:—

(25A) (1) Where on the death of a person, estate duty falls to be charged, by virtue of section 2(1)(c) of the Finance Act 1894, on an asset comprised in a gift inter : vivos, and at the time of the death the asset— (a) is owned by the donee ; or (b) is property settled by the gift or property which for the purposes of section 38 of the Finance Act 1957 or section 1 of the Finance Act (Northern Ireland) 1957 is by virtue of subsection (9) thereof treated as property settled by the gift, then, subject to subsection (2) below, the asset shall for the purposes of this Part of this Act be deemed to be disposed of and immediately re-acquired at that time by the donee or trustee for a consideration equal to its market value ; but no chargeable gain shall accrue on the disposal. (2) Where the value on which estate duty is so chargeable is reduced under section 35 of the Finance Act 1968 or section 1 of the Finance Act (Northern Ireland) 1968 the appropriate portion only of the asset shall be deemed to be so disposed of and re-acquired and the consideration shall be deemed to be equal to the appropriate portion of the market value of the asset. For the purposes of this subsection the appropriate portion is the value on which estate duty is chargeable divided by the market value of the asset at the time of the death.

• (2) Section 42(3) of the Finance Act 1966 shall cease to have effect.

Market value determined for estate duty

15

For section 26 of the Finance Act 1965 there shall be substituted the following section:—

(26) (1) Where estate duty is chargeable in respect of any property passing on a death and the principal value of an asset forming part of that property has been ascertained (whether in any proceedings or otherwise) for the purposes of that duty, the principal value so ascertained shall be taken for the purposes of this Part of this Act to be the market value of that asset at the date of the death. (2) Where the principal value has been reduced under section 35 of the Finance Act 1968 or section 1 of the Finance Act (Northern Ireland) 1968, the reference in subsection (1) above to the principal value as ascertained for the purposes of estate duty is a reference to that value as so ascertained before the reduction.

Insolvents' assets

16

In paragraph 10(2)(b) of Schedule 10 to the Finance Act 1966 for the words “disposed of by the deceased ” there shall be substituted the words “acquired by the persons on whom they devolve ”.

Death of heir of entail or proper liferenter

17

In paragraph 4 of Schedule 12 to the Finance Act 1968—

• (a) in sub-paragraph (1) for the words “charging of capital gains tax on the death ” there shall be substituted the words “consequences of the death ”;

• (b) in sub-paragraph (2) paragraph (a) and, in paragraph (b), the words from “(i) in the case ” to “those assets ” shall be omitted ; and

• (c) sub-paragraphs (3) to (9) shall be omitted.

Northern Ireland estate duty

18

In paragraphs 11, 12, 14 and 15 of this Schedule references to estate duty include references to estate duty leviable under the law of Northern Ireland.

SCHEDULE 13

The Commissioners of Her Majesty's Treasury and the Ministry of Finance for Northern Ireland, with a view to assimilating the burdens on the Consolidated Fund of the United Kingdom and the Exchequer of Northern Ireland in respect of health services, have entered into the following Agreement, which supersedes as from 1st April 1971 the Agreement of 11th February 1949 set out in the Schedule to the Social Services (Northern Ireland Agreement) Act 1949, as amended by the Agreement of 28th February 1968 set out in Schedule 19 to the Finance Act 1968.

1

• (1) There shall be ascertained in respect of each financial year during which this Agreement is in operation the total net cost in Great Britain and in Northern Ireland under the National Health Service Act 2006, the National Health Service (Wales) Act 2006 and the National Health Service (Scotland) Act 1978 as they may be amended from time to time, and the corresponding enactments in Northern Ireland.

• (2) The net cost under paragraph (1) above shall be the actual cost as certified annually by the Commissioners of Her Majesty’s Treasury as respects the services in Great Britain and by the Ministry of Finance for Northern Ireland as respects the services in Northern Ireland.

• (3) The net cost under paragraph (1) above of services in Northern Ireland shall, in relation to the net cost of the corresponding services in Great Britain, be determined subject to such adjustments, if any, as may be necessary to take account, from time to time, of any differences between methods of administration in Great Britain and in Northern Ireland.

2

• (1) If in respect of any financial year the total net cost in Northern Ireland under article 1 of this Agreement is less than 2 per cent. of the total net cost in Great Britain and Northern Ireland, there shall be paid from the Exchequer of Northern Ireland to the Consolidated Fund of the United Kingdom a contribution equal to 90 per cent. of the amount by which the said net cost in Northern Ireland is less than the said 2 per cent.

• (2) If in respect of any financial year the total net cost in Northern Ireland under article 1 of this Agreement exceeds 2 per cent. of the total net cost in Great Britain and Northern Ireland, there shall be paid to the Exchequer of Northern Ireland out of the Consolidated Fund of the United Kingdom a contribution equal to 90 per cent. of the amount by which the said net cost in Northern Ireland exceeds the said 2 per cent.

3

It is hereby agreed that, subject to such differences as may from time to time exist between the methods of administration in Great Britain and in Northern Ireland of the services covered by this Agreement, the Government of Northern Ireland undertakes to keep the scale and standard of comprehensive health services in Northern Ireland in general conformity with the scale and standard of such services in Great Britain, and to ensure that the rates of remuneration of persons employed in such services in Northern Ireland correspond as nearly as may be with the rates for such services obtaining in Great Britain.

4

Payments on account of such contributions as may ultimately be found to be due under article 2 of this Agreement from the Exchequer of Northern Ireland or from the Consolidated Fund of the United Kingdom shall be made of such amounts and at such times as may be agreed between the Commissioners of Her Majesty’s Treasury and the Ministry of Finance for Northern Ireland.

5

Any question arising under this Agreement, whether as to the amount of any adjustments necessary in the determination of net costs in Great Britain and Northern Ireland for the purposes of article 1 of this Agreement, or of any contribution payable under article 2, or otherwise, shall, in default of agreement between the Commissioners of Her Majesty’s Treasury and the Ministry of Finance for Northern Ireland, be determined by the Joint Exchequer Board, whose decision shall be final.

6

This Agreement shall not come into operation until confirmed by Acts of the Parliaments of the United Kingdom and Northern Ireland respectively, but upon being so confirmed shall have effect as from 1st April 1971.

SCHEDULE 14

PART I — OCCUPATIONAL PENSIONS SCHEMES

PART II — NEW METHOD OF CHARGING TAX

PART III — BETTERMENT LEVY

PART IV — CASE VII

PART V — Capital Gains—Abolition of Charge on Death etc.

PART VI — Stamp Duty

PART VII

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

4

8

CHAPTER I — GENERAL

13

22

CHAPTER II — SUB-CONTRACTORS IN CONSTRUCTION INDUSTRY

CHAPTER III — METHOD OF CHARGING INCOME TAX FOR 1973-74 AND SUBSEQUENT YEARS

32

40

61

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

1

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

Schemes approved under old law Taxation of refunds of contributions and commutation payments

9

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

1

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

91

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

1

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

Section 21.

Editorial notes

The Commissioners of Her Majesty’s Treasury and the Ministry of Finance for Northern Ireland, with a view to assimilating the burdens on the Consolidated Fund of the United Kingdom and the Exchequer of Northern Ireland in respect of health services, have entered into the following Agreement, which supersedes as from 1st April 1971 the Agreement of 11th February 1949 set out in the Schedule to the Social Services (Northern Ireland Agreement) Act 1949, as amended by the Agreement of 28th February 1968 set out in Schedule 19 to the Finance Act 1968.