Finance Act 1972

• (1) For the purposes of this Schedule there shall be disregarded any distribution consisting of a dividend paid without deduction of income tax by virtue of an election under section 256 of the Taxes Act as originally enacted or a dividend to which section 84 of this Act does not apply by virtue of an election under the said section 256 as amended by this Act.

• (2) Where a company has made a claim or claims under section 254 or 255 of the Taxes Act for an accounting period ending in the year 1972-73, or for an accounting period ending after 6th April 1973 but in a distribution period, the franked investment income to be taken into account under this Schedule shall be calculated as if that claim or those claims had not been made, and the advance corporation tax referred to in paragraph 2(2)(a) and 7(3)(b) above as having been paid by a company (and not repaid) shall be calculated accordingly.

• (3) Where in consequence of the application of this Schedule to any distribution period a company has been denied the benefit of any advance corporation tax and in consequence of the subsequent application of this Schedule to another distribution period it appears that the company ought not have been denied the benefit of that tax, relief shall be given by discharge or repayment of tax.

• (4) In this Schedule references to franked investment income received in any year or period include references to franked investment income treated as received in that year or period; and for the purposes of paragraph 1(3)(b) above in its application to a notional straddling period as defined in paragraph 7 above, franked investment income which is treated by virtue of section 89(3) of this Act as having been received in any accounting period shall be treated as received on the first day of that period.

• (5) In this Schedule references to franked investment income do not include references to franked investment income which by virtue of section 89(5) of this Act cannot be used to frank distributions of a company.

PART II — Other transitional provisions

Limit on set-off of advance corporation tax for accounting period beginning before 1st April 1973 and ending after 3 1st March 1973

12

Subsection (2) of section 85 of this Act shall have effect in relation to an accounting period beginning before 1st April 1973 and ending after 31st March 1973 as if the income charged to corporation tax for that period (determined in accordance with subsection (6) of that section) were such part thereof as would be attributed to the part of that accounting period beginning with the said 1st April if that income were apportioned between that part of the accounting period and the remainder.

Returns for straddling period

13

Schedules 14 and 20 to this Act shall have effect in relation to a straddling period as if the part of it before 6th April 1973 were not included in that period.

Surplus of franked investment income on hand at 5th April 1973

14

Subject to paragraph 15 below, where a company has a surplus of franked investment income (within the meaning of section 240 of the Taxes Act) for the year 1972-73 that surplus shall be treated for the purposes of this Act as an equivalent amount of franked investment income (within the meaning of this Act) received by the company on 6th April 1973.

Set-off of losses etc. against surplus of franked investment income

15

Paragraph 14 above shall not apply for the purposes of a claim under section 254 or 255 of the Taxes Act for any accounting period beginning with 6th April 1973 ; and for the purposes of any such claim for a straddling period that paragraph shall have effect in relation to any such surplus as is there mentioned exclusive of any part thereof which—

• (a) is carried forward from a year of assessment before the year 1972-73 ; or

• (b) would be apportioned, under section 254(3)(a) or 255(2) of that Act as originally enacted, to an accounting period beginning before the straddling period.

16

• (1) For the purposes of this paragraph " a relevant section 240 amount" means any amount which by virtue of paragraphs 14 and 15 above falls to be treated as franked investment income for the purposes of a claim for a straddling period under section 254 or 255 of the Taxes Act.

• (2) Where a company has franked investment income for a straddling period which consists of or includes a relevant section 240 amount, and a surplus of franked investment income for that period falls to be reduced in consequence of a claim under section 254 or 255 of the Taxes Act—

• (a) income tax at 38-75 per cent. shall be repaid to the company in respect of the relevant section 240 amount or the amount of the reduction, whichever is the less ; and

• (b) the amount in respect of which income tax is to be repaid as aforesaid shall be deducted from the amount in respect of which any payment of tax credit falls to be made in consequence of the claim.

• (3) Where a company makes claims under both the said sections 254 and 255 for a straddling period the total amount in respect of which income tax is repayable under this paragraph shall not exceed the relevant section 240 amount.

17

Where in consequence of a claim under section 254 or 255 of the Taxes Act in respect of a surplus of franked investment income for the year 1972-73 a company is entitled to repayment of a sum of income tax, section 90(3) of this Act shall apply as if—

• (a) for the reference to payment of a sum in respect of tax credit there were substituted a reference to repayment of a sum of income tax ; and

• (b) for the reference to the next accounting period there were substituted a reference to the accounting period which begins with or contains 6th April 1973.

Dividends and other distributions at gross rate or of gross amount

18

• (1) Where any right or obligation created before 6th April 1973 is expressed by reference to a dividend at a gross rate or of a gross amount, that right or obligation shall, in relation to a dividend payable on or after that date, take effect as if the reference were to a dividend of an amount which, when there is added to it such proportion thereof as corresponds to the rate of advance corporation tax in force on that date, is equal to a dividend at that gross rate or of that gross amount.

• (2) Sub-paragraph (1) above shall apply with the necessary modifications to a dividend partly at a gross rate or of a gross amount and shall apply to any distribution other than a dividend as it applies to a dividend.

Shortfall assessments

19

• (1) Nothing in this Act shall preclude the making of an assessment under subsection (1) of section 289 of the Taxes Act (shortfall in distributions) for the year 1973-74 in respect of a shortfall in an accounting period ending before 6th April 1973, and for the purposes of any such assessment it shall be assumed that section 232(2) of that Act is in force on the date on which the distribution mentioned in subsection (1) of the said section 289 is to be taken as having been made.

• (2) Subsections (3) and (4) of the said section 289 shall have effect in relation to the year 1973-74 as if references to a surplus of franked investment income were references only to so much, if any, of any such surplus as corresponds to franked investment income treated by virtue of paragraph 14 above as received by the company on 6th April 1973.

• (3) In subsection (5) of the said section 289 references to a later accounting period do not include references to any accounting period beginning with or after 6th April 1973 ; and—

• (a) that subsection shall have effect in relation to a later accounting period which is a straddling period as if for the words " for which there is no such shortfall" and " the required standard" there were substituted respectively the words " for which there is on such excess as is mentioned in paragraph 1(2) of Schedule 16 to the Finance Act 1972 " and " the company's relevant income as defined for the purposes of that Schedule " ; and

• (b) if the distributions for a later accounting period beginning before 6th April 1973 (whether or not a straddling period) include distributions made after 5th April 1973, the amount that would, apart from this sub-paragraph, fall to be deducted under that subsection from the distributions made by the company for that accounting period shall be reduced to such a fraction of that amount as corresponds to the fraction of those distributions made before 6th April 1973 and that amount, as so reduced, shall be deducted rateably from such of those distributions as were made before 6th April 1973.

• (4) This paragraph shall be construed as if it were included in Schedule 16 to this Act.

Small companies, industrial and provident societies etc.

20

Sections 95 and 96 of this Act shall have effect in relation to an accounting period beginning before 1st April 1973 and ending after 31st March 1973 as if the part of that period before the said 1st April and the part after the said 31st March were separate accounting periods, and the profits and income of the company for that accounting period (as defined in those sections) shall be apportioned between those parts.

SCHEDULE 24

Finance Act 1965

1

In section 34(6) of the Finance Act 1965, in the definition of " trading company " for the words " section 292(1) of the Income and Corporation Taxes Act 1970" there shall be substituted the words " paragraph 11 of Schedule 16 to the Finance Act 1972 ".

2

In paragraph 18(1) of Schedule 6 to the said Act of 1965 for the words from " section 297 " to " 1970 " there shall be substituted the words " paragraph 5 of Schedule 16 to the Finance Act 1972 (consequences for income tax of apportionment of income etc. of close company) "; in paragraph 18(2) of that Schedule for the words " subsection (8) of the said section 297 " and " subsection (2)(b) of that section" there shall be substituted respectively the words " sub-paragraph (6) of the said paragraph 5 " and " sub-paragraph (2)(b) of that paragraph " ; and in paragraph 18(5) of that Schedule for the words " the said section 297 " there shall be substituted the words " the said paragraph 5 ".

Provisional Collection of Taxes Act 1968

3

In section 5 of the Provisional Collection of Taxes Act 1968 in subsection (1)(c) after the words “section 243(6) of the Income and Corporation Taxes Act 1970” there shall be inserted the words “or advance corporation tax could be payable or assessed by virtue of section 103(2) of the Finance Act 1972”, and in subsection (2) of that section after the word “Act)” there shall be inserted the words “and the said section 103(2) of the Finance Act 1972”.

Taxes Management Act 1970

4

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

5

In section 11 of the Management Act, after subsection (5) there shall be added—

(6) A notice under this section may require the inclusion in the return of particulars of advance corporation tax paid by the company (and not repaid) and of any surplus advance corporation tax carried forward under section 85(4) of the Finance Act 1972.

6

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

7

In section 31(3)(b) of the Management Act the figure “297” (inserted by the Finance Act 1971) shall be omitted and at the end there shall be inserted “or under paragraph 5 of Schedule 16 to the Finance Act 1972”.

8

In section 55(1)(e) of the Management Act for the words " Schedule 9 to the principal Act (income tax on company distributions etc.)" there shall be substituted the words " Schedule 20 to the Finance Act 1972 (income tax on company payments other than distributions) ".

9

In section 86(1)(d) of the Management Act after the words " corporation tax " there shall be inserted the words " other than advance corporation tax ".

10

For section 87 of the Management Act there shall be substituted—

(87) (1) Any tax assessable in accordance with Schedule 14 or 20 to the Finance Act 1972 shall carry interest at the prescribed rate from the date when the tax becomes due and payable until payment. (2) Where— (a) advance corporation tax paid in respect of distributions made in any return period is repaid under paragraph 4 of the said Schedule 14 in consequence of the receipt of franked investment income in a later return period; or (b) income tax paid in respect of payments made in any return period is repaid or discharged under paragraph 5 of the said Schedule 20 in consequence of the receipt in a later return period of a payment on which income tax is borne by deduction. the repayment or discharge shall not affect interest under this section on the tax so repaid or discharged for such time as is specified in subsection (3) below but, subject to that, this section shall apply as if any such tax which is repaid or discharged had never become payable. (3) The time for which interest is not affected is— (a) any time before the expiration of fourteen days from the end of the later return period, unless the return for that period is made earlier in those fourteen days; and (b) if that return is made earlier in those fourteen days, any time ending before the date on which the return is made. (4) Interest shall not be payable under this section on the tax charged by any assessment unless the total amount of the interest exceeds £10 (5) Subsection (4) above shall have effect as if all advance corporation tax due from a company in accordance with paragraph 3(1) of the said Schedule 14 for any return period, whether or not it is actually assessed, were included in a single assessment, and similarly in the case of all income tax due from a company in accordance with paragraph 4(1) of the said Schedule 20 for any return period. (6) In this section “return period” means a period for which a return is required to be made under the said Schedule 14 or 20. (7) It is hereby declared that this section applies to advance corporation tax and income tax which, in accordance with either of those Schedules, is paid without the making of any assessment (but is paid after it is due). and that where the tax is charged by an assessment (whether or not any part of it has been paid when the assessment is made) this section applies as respects interest running before as well as after the making of the assessment. (8) Tax assessable as mentioned in subsection (1) above shall carry interest from the date when it becomes due and payable even if that date is a non-business day within the meaning of section 92 of the Bills of Exchange Act 1882.

11

In section 88(2) of the Management Act, for the words “Schedule 9 to the principal Act” there shall be substituted the words “Schedule 14 or 20 to the Finance Act 1972.”

12

In section 98 of the Management Act the following shall be added in the first column—

Paragraph 19 of Schedule 16 and paragraphs 2(b), 3 and 4 of Schedule 21 to the Finance Act 1972

;

and the following shall be added in the second column—

Schedules 14 and 20, and paragraphs 1 and 2(a) of Schedule 21, to the Finance Act 1972

.

13

For section 109 of the Management Act there shall be substituted—

(109) (1) The provisions of section 286 of the principal Act (charge of tax in connection with loans by close companies to participators etc.) directing that tax be assessed and recoverable as if it were an amount of corporation tax shall be taken as applying, subject to the provisions of the Taxes Act, and to any necessary modifications, all enactments applying generally to corporation tax, including those relating to the assessing, collecting and receiving of corporation tax, those conferring or regulating a right of appeal and those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law of any part of the United Kingdom. (2) Section 86 of this Act shall apply in relation to tax under the said section 286 as if the date given by the Table in subsection (4) of the said section 86 were the last day of the three months following the end of the financial year in which the loan or advance was made. (3) For the purposes of section 88 of this Act as applied by subsection (1) above, the date when tax charged under the said section 286 ought to have been paid shall be taken to be the first day of the financial year following that in which the loan or advance was made. (4) Section 91 of this Act shall not apply in consequence of any discharge or repayment of tax under section 286(5) of the principal Act. (5) For the purposes of the said section 91, a relief from tax under the said section 286 shall not be treated as affecting tax charged by any assessment unless the assessment is to tax under that section.

14

In Schedule 3 to the Management Act, in column 1 of rule 8 the words “288 or 289” shall be omitted and at the end there shall be inserted the words “or relating to a notice under paragraph 15 of Schedule 16 to the Finance Act 1972”.

Income and Corporation Taxes Act 1970

15

In section 4(3) of the Taxes Act (as substituted by the Finance Act 1971) after the words " or is treated as having been deducted " there shall be inserted the words " or income chargeable under Schedule F ".

16

In section 53(4) of the Taxes Act for the words " Schedule 9 to this Act" there shall be substituted the words " Schedule 20 to the Finance Act 1972 ".

17

In section 226(9) of the Taxes Act for the words " section 292(1) of this Act" there shall be substituted the words " paragraph 11 of Schedule 16 to the Finance Act 1972 ".

18

For section 232(4) of the Taxes Act there shall be substituted—

(4) A company which makes a qualifying distribution shall, if the recipient so requests in writing, furnish to him a statement in writing showing the amount or value of the distribution and (whether or not the recipient is a person entitled to a tax credit in respect of the distribution) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof. The duty imposed by this subsection shall be enforceable at the suit or instance of the person requesting the statement.

19

In section 242(1) of the Taxes Act for paragraphs (a) to (c) there shall be substituted—

(a) in the case of interest which is not a qualifying distribution— (i) the gross amount which, after deduction of the income tax appropriate thereto, corresponds to the net amount actually paid, (ii) the rate and the amount of income tax appropriate to such gross amount, and (iii) the net amount actually paid ; (b) in the case of a dividend or of interest which is a qualifying distribution, each of the following amounts— (i) the amount of the dividend or interest paid, and (ii) (whether or not the recipient is a person entitled to a tax credit in respect thereof) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof.

20

In section 248 of the Taxes Act, in subsection (4)(a) for the words " Schedule 9 to this Act" there shall be substituted the words " Schedule 20 to the Finance Act 1972 ", and in subsection (8) for the words " by reason of section 284(1)(a) or any other provision " there shall be substituted the words " by reason of any provision ".

21

In section 302(1) of the Taxes Act the words " other than section 290 above " shall be omitted and at the end there shall be inserted—

Provided that this subsection shall not by virtue of section 94(3) of the Finance Act 1972 apply to paragraph 9 of Schedule 16 to that Act

.

22

In section 343 of the Taxes Act, in subsection (2)(b), for the words " Schedule 9 to this Act" there shall be substituted the words " Schedule 20 to the Finance Act 1972 " and in subsection (7) for the word " distribution " there shall be substituted the words " qualifying distribution ".

23

In section 393(1) of the Taxes Act for the words " tax under section 289 of this Act (shortfall in distributions of close company)" there shall be substituted the words " tax under Schedule 16 to the Finance Act 1972 (apportionment of income of close companies) ".

24

In section 399(1)(b) of the Taxes Act for the words from " then " onwards there shall be substituted the words

then, for the purposes of Schedule 16 to the Finance Act 1972— (i) the amount of the gain shall be deemed to form part of the company's income for the accounting period in which the event happened, and (ii) the company's distributable income (but not its estate or trading income) for that period shall be treated as increased by the amount of the gain

.

25

In section 432(7) of the Taxes Act the words " section 297(3) (close companies: apportionments)" shall be omitted and there shall be added at the end the words " and paragraph 5(3) of Schedule 16 to the Finance Act 1972 (close companies: apportionments) ".

26

In section 454(1) of the Taxes Act, in paragraph (b) after the words " has been apportioned" there shall be inserted the words " under Schedule 16 to the Finance Act 1972 or (as respects income of accounting periods ending before 6th April 1973) " and at the end there shall be inserted—

Where the income of a body corporate has been, or could have been, apportioned under Schedule 16 to the Finance Act 1972 any amount of that income which by virtue of paragraph (b) above is to be included in the income arising under a settlement shall be increased by such proportion thereof as corresponds to the rate of advance corporation tax applicable to a distribution made at the end of the accounting period to which the apportionment relates.

27

In section 478(8)(d) of the Taxes Act for the words " section 296 of this Act" there shall be substituted the words " paragraph 1 of Schedule 16 to the Finance Act 1972 " and at the end there shall be inserted the words " and that amount shall be treated as increased by such proportion thereof as corresponds to the rate of advance corporation tax applicable to a distribution made at the end of the accounting period to which the apportionment relates ".

28

In section 481(3) of the Taxes Act for the words " section 292(1) of this Act" there shall be substituted the words " paragraph 11 of Schedule 16 to the Finance Act 1972 ".

29

In section 521 of the Taxes Act subsection (3)(a) shall be omitted, and at the end there shall be added—

(4) In this section " interest" and " dividends" do not include any interest or dividend which is a distribution.

30

In section 522 of the Taxes Act for the words " interest on any of its securities, or under section 232(3) of this Act from payments of preference dividends on any of its shares " there shall be substituted the words " interest (not being a distribution) on any of its securities " and the words " or share " (three times) and the words " In this section ' share' includes stock " shall be omitted.

31

In section 526(5) of the Taxes Act for the definition of " franked investment income " there shall be substituted—

• ' franked investment income ' shall be construed in accordance with section 88 of the Finance Act 1972 but subject to section 256(1) of this Act;
• ' franked payment ' shall be construed in accordance with section 84 of the Finance Act 1972 but subject to section 256(1) of this Act and after the definition of " preference dividend " there shall be inserted—

;

• ' qualifying distribution ' has the meaning given in section 84 of the Finance Act 1972 ;
• ' surplus of franked investment income ' has the meaning given in section 89 of the Finance Act 1972 ;
• ' tax credit ' means a credit under section 86 of the Finance Act 1972

.

32

In section 528(3)(a) of the Taxes Act after the words " for any year " there shall be inserted the words " or which for the purposes of Schedule F comprises an amount equal to a tax credit calculated by reference to the rate of advance corporation tax in force for any year ".

33

In Schedule 14 to the Taxes Act, in paragraph 15, for the words " Board may exercise under section 301 of this Act for the purposes of sections 296 to 300 " there shall be substituted the words " inspector may exercise under paragraph 19 of Schedule 16 to the Finance Act 1972 for the purposes of that Schedule ".

SCHEDULE 25

SCHEDULE 26

PART I — Gifts Excepted from Section 121

1

A gift is excepted from each of the paragraphs of subsection (1) of the principal section if it takes effect on the termination of any interest or on the termination of any period, other than an interest or period terminating on or before the death ; but this paragraph shall not be taken to except a gift from paragraph (c) of that subsection by reason only that the gift is dependent on the widow or widower surviving the deceased for a specified period.

2

A gift is excepted from each of the paragraphs of that subsection if it depends on a condition which is not satisfied within twelve months after the death.

3

• (1) A gift is excepted from paragraphs (a) and (b) of that subsection if it is less than the donor's full interest in the property given or is for a limited period or is defeasible or if it or any part of it is or may become applicable for other than charitable purposes or the purposes of a body falling within Schedule 25 to this Act.

• (2) For the purposes of this paragraph—

• (a) any question whether a gift is less than the donor's full interest in the property given shall be decided as at a time twelve months after the death ; and

• (b) any gift which has not been defeated at that time and is not defeasible after that time shall be treated as not being defeasible, whether or not it was capable of being defeated before that time.

PART II — Allocation of Relief

4

Any question how the reduction in estate duty resulting from the principal section and this Schedule is to be attributed to the duty payable respectively on property to which different persons become entitled on the death shall be determined in accordance with the following provisions of this Part of this Schedule ; and nothing in Part III of this Schedule shall be taken to affect that question.

5

The reduction referred to in the following provisions of this Part of this Schedule is the reduction in estate duty after allowing for any reduction in the estate rate and for any reduction attributable to section 16(3) of the Finance Act 1894.

6

No part of the reduction shall reduce the duty on chargeable property except in so far as the duty would be attributable to property specifically given but would fall on residue ; and in particular, where property given as a share in residue or in a fund is exempt property the reduction resulting from that property being exempt property shall not reduce the duty on any share in the residue or fund which is chargeable property.

7

Where any of the exempt property is property falling within paragraph (c) of subsection (1) of the principal section, the reduction shall be so made as to be most favourable to the widow or widower ; and subject thereto and to paragraph 6 above, the reduction shall be treated as reducing duty on property bearing its own duty (whether or not specifically given) before duty on property not bearing its own duty.

PART III — Ascertainment of Exempt and Chargeable Property

Exempt and chargeable property

8

Any question whether or to what extent the value attributable to any property is to be disregarded under the principal section shall be determined in accordance with the following provisions of this Schedule ; and in this Schedule " exempt property " means so much of any property as corresponds to the value to be so disregarded and "chargeable property" means the remainder of the property forming part of the estate.

General principle

9

Where it is material for any purpose which of two or more possible assets are taken to constitute exempt property—

• (a) such assets shall be taken to fall within paragraph (c) of subsection (1) of the principal section as are most favourable to the widow or widower, and any agreement between the widow or the widower and the Commissioners as to what assets will be most favourable shall be conclusive ;

• (b) subject to sub-paragraph (a) above, property bearing its own duty shall be taken to be exempt property before property not bearing its own duty ; and

• (c) subject to sub-paragraphs (a) and (b) above, each of the assets shall be so taken to the extent proportionate to its value.

Small estates and separable property

10

Where, under section 16(3) of the Finance Act 1894 (and apart from the principal section and this Schedule), any property is treated as an estate by itself the principal section and this Schedule shall have effect as if that property were not included in the property passing on the death.

11

Any property which, under section 16(3) of the Finance Act 1894 would fall to be treated as an estate by itself if its net value did not exceed that mentioned therein is in this Schedule referred to as separable property.

Annuities

12

For the purposes of the principal section and of this Schedule the value of any annuity or other periodical payment of any amount shall be taken to be the value of property needed to produce income of that amount; and the value of the property out of which the annuity or other sum is paid shall be taken to be reduced accordingly.

Abatement not attributable to duty

13

Where any gift would fall to be abated owing to the insufficiency of the estate and apart from any estate duty payable on the estate, so much only of any property comprised in the gift shall be taken into account under the following provisions of this Schedule as remains after the abatement.

Abatement for estate duty

14

So much only of the property passing on the death shall be exempt property as remains after making any deductions required by the following paragraphs.

15

There shall first be calculated the aggregate of the following values of the property which is specifically given or to which the widow or widower is specifically entitled—

• (a) the principal value of any property falling within paragraph (a) of subsection (1) of the principal section ;

• (b) the appropriate value of any property falling within paragraph (b) or (c) of that subsection ; and

• (c) the appropriate value of any property not falling within any of those paragraphs;

and for this purpose any debt incurred by the deceased for which no allowance is to be made under section 7(1) of the Finance Act 1894 shall be treated as property specifically given.

16

If the aggregate calculated under paragraph 15 above exceeds the principal value of the estate, the property specifically given (whether exempt or chargeable property) shall be taken to be reduced by such proportion thereof as would result in the aggregate being equal to that principal value; and in making the reduction due effect shall be given to any disposition under which any property is given.

Residue

17

If the aggregate calculated under paragraph 15 above is less than the principal value of the estate, so much of the remainder as is property falling within subsection (1) of the principal section shall be exempt property so far as—

• (a) it is property falling within paragraph (a) of that subsection; or

• (b) it is property falling within paragraph (b) or (c) of that subsection and does not, when added to the amount taken into account under paragraph 15(b) above, exceed the limit specified in paragraph (b) or (c) of that subsection.

Appropriate value

18

The appropriate value of any property bearing its own duty is its principal value.

19

Where property does not bear its own duty then—

• (a) if the property is property falling within paragraph (b) or (c) of subsection (1) of the principal section, its appropriate value is the aggregate of—

• (i) its principal value, so far as it does not exceed the limit mentioned in that paragraph as reduced under paragraph 20 below ; and

• (ii) the grossed-up equivalent of the remainder ; and

• (b) if it is property not falling within that subsection its appropriate value is the grossed-up equivalent of its principal value.

20

Where property specifically given and bearing its own duty falls within paragraph (b) or (c) of subsection (1) of the principal section the limit mentioned therein shall for the purposes of paragraph 19 above be reduced by the principal value of that property (and accordingly shall for those purposes be nil if it is equalled or exceeded by that principal value).

Grossed-up equivalent

21

For the purposes of paragraph 19 above the grossed-up equivalent of the principal value or part of the principal value of any property is such amount as would, after deduction of estate duty at the appropriate rate, be equal to the principal value or part; and for this purpose the appropriate rate—

• (a) in relation to any property other than separable property, is the rate which would be the estate rate apart from the principal section and this Schedule ; and

• (b) in relation to separable property is the rate found by taking me amount of the estate duty that would be payable on that property (apart from the principal section and this Schedule) if no relief were given other than relief under section 16(3) of the Finance Act 1894 and dividing the amount so taken by the principal value of that property.

Amounts payable out of different funds

22

Where amounts are payable out of different funds the calculations required by the preceding provisions of this Part of this Schedule shall be made separately for each of those funds, with the necessary adjustments of the values and amounts referred to therein.

PART IV — Effect of Certain Events after Death

Failure of charitable object

23

Where property given to a charity or property representing such property ceases at any time to be applicable to charitable purposes (without being replaced by other property) there shall be calculated the amount by which the estate duty chargeable on the death would have been increased if so much of the property falling within paragraph (b) of subsection (1) of the principal section and treated as exempt property as corresponds to the principal value at that time of the property ceasing to be so applicable had been treated as chargeable property ; and that amount shall be an amount of estate duty and the persons entitled to the property immediately after that time shall be accountable for it.

Works of national importance, etc., and timber

24

Where objects to which section 40 of the Finance Act 1930 (objects of national, etc., interest) applies would, had they not been enjoyed in kind, have been property falling within subsection (1) of the principal section, then, to the extent that they would have been exempt property they shall remain exempt from estate duty notwithstanding that they are sold, or that an undertaking given under section 48(1) of the Finance Act 1950 has not been observed, but, in the case of objects which would have fallen within paragraph (c) of that subsection, only if they are sold, or the failure to observe the undertaking occurs, within the lifetime of the widow or widower ; and similarly with respect to timber, trees and wood exempted under section 61(5) of the Finance (1909-10) Act 1910.

Deeds of family arrangement

25

If not more than two years after the death any of the dispositions of the property of which the deceased was competent to dispose, whether effected by will or under the law relating to intestacies, or otherwise, are varied by a deed of family arrangement or similar instrument the principal section and this Schedule shall apply as if the variation made by the deed or other instrument had been effected by the deceased.

PART V — Amendment, Repeals and Interpretation

Amendment of Finance Act 1954 s. 32(2)

26

In section 32(2) of the Finance Act 1954 after the words " by reason only" there shall be inserted the words " of section 121 of and Schedule 26 to the Finance Act 1972 or ".

Repeal of superseded provisions

27

The enactments mentioned in Part VII of Schedule 28 to this Act are hereby repealed to the extent specified in the third column of that Part, except—

• (a) in relation to deaths occurring before 22nd March 1972 ; and

• (b) in their application, by virtue of section 33(2) of the Finance Act 1951, to Government departments, local authorities and the other bodies mentioned therein.

Interpretation

28

In this Schedule " the principal section " means section 121 of this Act.

29

In the principal section and in this Schedule " charity " and "charitable" have the same meanings as in the Income Tax Acts and " gift" means—

• (a) any testamentary disposition ; and

• (b) any disposition by virtue of which property passes on the death;

whether the disposition is made by the deceased or any other person ; and " given " and " donor " shall be construed accordingly.

30

In this Schedule—

• " appropriate value " has the meaning assigned to it by paragraphs 18 and 19 above ;

• " chargeable property " and " exempt property " have the meanings assigned to them by paragraph 8 above ;

• " separable property " has the meaning assigned to it by paragraph 11 above.

31

Where the deceased's widow or widower is entitled to a joint tenancy of any property and becomes on the death beneficially entitled to a share of that property that share shall be treated for the purposes of the principal section and this Schedule in like manner as property given to or devolving on the widow or widower.

32

References in this Schedule to property specifically given are references to property given otherwise than as residue or a share in residue.

33

For the purposes of this Schedule any question whether property bears its own duty shall be determined as at the time of the death.

SCHEDULE 27

The Selective Employment Payments Act 1966

1

In section 1(1) of the Selective Employment Payments Act 1966, for the words from the beginning to " this section applies " there shall be substituted the words " Where an employer has paid an employer's insurance contribution for any contribution week in respect of a person in an employment to which this section applies and the case falls within subsection (1) of section 26 of the Finance Act 1967 " and for the words " a payment of an amount equal to the tax paid " there shall be substituted the words " a payment of an amount specified in that section ".

2

In section 3(2) of that Act, for the words " selective employment tax " there shall be substituted the words " employer's insurance contributions " and for the words from " amount of the tax " to the end there shall be substituted the words " appropriate amount specified in section 26 of the Finance Act 1967 ".

3

In section 7(1) of that Act, for the words " selective employment tax ", in both places, there shall be substituted the words " employer's insurance contribution ".

The Finance Act 1967, s. 26

4

For subsection (1) of section 26 of the Finance Act 1967 there shall be substituted the following subsection:—

(1) A payment under section 1 of the principal Act in respect of a person in an employment to which that section applies shall be made in any case where the establishment in or from which that employment is carried out is situated wholly within a development area and, subject to subsections (2), (4) and (5) of this section, the amount of that payment shall be— (a) if that person was treated for the purpose of the employer's insurance contribution as a man over the age of 18, £1.50; (b) if that person was treated for that purpose as a woman over the age of 18, 75p; (c) if that person was treated for that purpose as a boy under the age of 18, 75p; and (d) if that person was treated for that purpose as a girl under the age of 18, 47½ p.

5

In subsection (2) of that section, for the words " any increase " there shall be substituted the words " any payment falling to be made ".

6

In subsection (4) of that section, for the word " increase " there shall be substituted the word " make ".

7

In subsection (5) of that section, for the words " increases " and " paid in both places, there shall be substituted respectively the words " payments " and " made ".

Schedule 28

PART I — Purchase Tax—Initial Repeals

PART II — Purchase Tax—Postponed Repeals

Part III — Spirits and Mechanical Lighters

PART IV — Occupational Pension Schemes

PART V — Interest Relief

PART VI — Taxation of Companies and Company Distributions

Part VII — Estate Duty

PART VIII — Selective Employment Tax

PART IX — Selective Employment Payments

PART X — Unit Trusts, Investment Trusts and Funds in Court

Part XI — Stamp Duty Repeals

PART XII — Miscellaneous Repeals

Amendments consequential on replacement of purchase tax.

1

53

60

62

67

70

79

84

97

112

These repeals take effect on 8th August 1972.

1

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

Provisional Collection of Taxes Act 1968 (c. 2)

8

. . .

15

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

Parts I and II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Parts VIII and IX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Editorial notes