Finance Act 1974

PART I — CUSTOMS AND EXCISE AND VALUE ADDED TAX

Increase of duties on spirits, beer, wine, British wine and tobacco

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Increase of certain duties on betting

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• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) For the purposes of pool betting duty on bets made at any time by reference to any event taking place after 31st March 1974, section 7(1) of the Betting and Gaming Duties Act 1972 and section 18(1) of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 (under which the amount of the duty is 33⅓ per cent. of the amount on which the duty falls to be computed) shall each have effect with the substitution for the words “33⅓ per cent.” of the words “ 40 per cent. ”, except in the of bets made by way of pool betting in respect of a competition prize held by—

• (a) the holder of a licence under the Pool Competitions Act 1971, or

• (b) any person approved by the Secretary of State in that behalf on the recommendation of the Gaming Board for Great Britain,

in respect of which the amount of the pool betting duty shall be 33⅓ per cent.

Continuation of powers under section 9 of Finance Act 1961

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Delivery of rum for home use after two years' warehousing

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Value added tax-time of supply

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Value added tax tribunals

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PART II — INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX (GENERAL)

Charge of income tax for 1974-75

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• (1) Income tax for the year 1974-75 shall be charged at the basic rate of 33 per cent.; and

• (a) in respect of so much of an individual's total income as exceeds £4,500 at such higher rates as are specified in the Table below ; and

• (b) in respect of so much of the investment income included in an individual's total income as exceeds £2,000 at the additional rate of 15 per cent.

Part of excess over £4,500	Higher rate
The first £500	38 per cent.
The next £1,000	43 per cent.
The next £1,000	48 per cent.
The next £1,000	53 per cent.
The next £2,000	58 per cent.
The next £2.000	63 per cent
The next £3,000	68 per cent.
The next £5,000	73 per cent.
The remainder	83 per cent.

• (2) In section 59(2) of the Finance Act 1973, in the definition of " the additional rate ", after the words " Finance Act 1971 " there shall be inserted the words " or, if more than one, the higher or highest of them ".

Increase of surtax rates for 1972-73

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• (1) Subject to the following provisions of this section, section 10 of the Finance Act 1973 (surtax rates for 1972-73) shall have effect as if—

• (a) each of the higher rates applied by subsection (1) of that section were increased by 10 per cent, of the difference between that rate and the standard rate for the year 1972-73 (the differences being equal to the percentages specified in the Table in section 12(1) of the Finance Act 1970); and

• (b) the 40 per cent, mentioned in subsection (2) of that section (reduced marginal rate) were increased to 44 per cent.;

and so much of the surtax charged for that year as is attributable to this section is in the following provisions of this section referred to as " the surcharge ".

• (2) The surtax charged by any assessment made before 1st July 1974 in acordance with section 10 of the Finance Act 1973 as originally enacted shall, unless by that date a further assessment has been made in respect of the surcharge, be treated as from that date as varied in accordance with subsection (1) above by virtue of this Act and without more.

• (3) The provisions of the Income Tax Acts prescribing dates for the payment and recovery of surtax (which, in relation to surtax, have effect as originally enacted) shall be modified as follows—

• (a) section 4(3) of the Taxes Act (payment by individuals) shall have effect as if the 1st January mentioned in it were, in relation to one half of the surcharge, 1st July 1974. and, in relation to the other half, 1st January 1975. ; and section 24 of the Finance Act 1971 (claims for deferment) shall not apply in relation to the surcharge and shall not by reason of the surcharge apply to any amount to which it does not apply apart from the surcharge; and

• (b) section 297(6) of the Taxes Act (recovery from close company or participator) shall have effect as if the 1st and 2nd January mentioned in paragraphs (a) and (b) respectively of the proviso were, in relation to one half of the surcharge, 1st and 2nd July 1974 and, in relation to the other half, 1st and 2nd January 1975 ;

and 1st July 1974 and 1st January 1975 shall also be taken for the purposes of section 88 of the Taxes Management Act 1970 (interest on tax recovered to make good loss due to taxpayer's fault) as the dates when one half of the surcharge and the other half ought to have been paid respectively.

• (4) Where the surcharge is charged by an assessment treated under subsection (2) above as varied it shall be deemed for the purposes of section 86 of the Taxes Management Act 1970 (interest on overdue tax) to be charged by an assessment separately made.

• (5) Sections 40 and 41 of the Taxes Act (recovery of tax attributable to wife's income) shall have effect in relation to the surcharge as if it had been charged by an assessment separately made, as if that assessment had been made before the service of any notice for the year 1972-73 under section 41(1) of that Act, and with any other necessary modifications.

• (6) Section 29 of the Taxes Act (relief in case of death) shall, in relation to surtax for the year 1972-73, apply to a person who died after the end of that year but before 27th March 1974 as it applies to a person who died in that year.

• (7) Where surtax for the year 1972-73 has been assessed on any person in the name of a company which is dissolved before the end of January 1975 (and whether before or after the passing of this Act) and, the assessment having been made in accordance with section 10 of the Finance Act 1973 as originally enacted, a notice of charge under section 297(6) of the Taxes Act is served on that person in respect of the surcharge, the surcharge shall become payable by him, without any election under that section, on whichever of the following is the latest, that is to say, 1st January 1975, the day after the service of the notice, and the day after the dissolution of the company.

• (8) Section 21 of the Finance Act 1965 (under which the rate of capital gains tax may depend on the rates of income tax, including surtax) shall have effect as if the preceding provisions of this section had not been enacted.

Charge of corporation tax for financial year 1973

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Corporation tax shall be charged for the financial year 1973 at the rate of 52 per cent.

Corporation tax-other rates and fractions

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• (1) The fractions by which, under section 93(2) of the Finance Act 1972, chargeable gains are to be reduced before they are included in a company's profits for the purposes of corporation tax shall be—

• (a) for companies other than authorised unit trusts or investment trusts, eleven twenty-sixths ; and

• (b) for authorised unit trusts and investment trusts, thirty seven fifty-seconds;

and the fraction specified in paragraph (b) above shall, as from 1st April 1973, replace that specified in section 93(2).

• (2) The small companies rate for the financial year 1973 shall be 42 per cent, and for that year the fraction mentioned in section 95(2) of the Finance Act 1972 (marginal relief for small companies) shall be one-sixth.

• (3) The special rate for the purposes of section 96 of the Finance Act 1972 (relief for industrial and provident societies, housing associations and building societies) shall for the financial year 1973 and subsequent years be 40 per cent.

Mitigation of corporation tax liability of small companies

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For any financial year after 1972 for references to the amounts of £15,000 and £25,000 in section 95(3)(a) of the Finance Act 1972 there shall be substituted the amounts of £25,000 and £40,000 and for references to the amounts of £15,000 and £25,000 in section 95(3)(b) of the same Act there shall be substituted the amounts of £25,000 and of £40,000.

Rate of advance corporation tax for financial year 1974

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The rate of advance corporation tax for the financial year 1974 shall be thirty-three sixty-sevenths.

Payments in addition to advance corporation tax due in financial year 1974

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• (1) Where a company is liable to pay an amount of advance corporation tax and that amount (whenever paid) is due at any time during the financial year 1974 the company shall be liable to make, in addition, a payment of one-half of that amount; but nothing in this section shall require such a payment to be made by the trustees of an authorised unit trust or by an investment trust (within the meaning of Chapter VI of Part XII of the Taxes Act).

• (2) Where a company makes a payment under this section the payment shall, subject to subsection (3) below, be deemed to be made on account of its liability to corporation tax for the relevant accounting period; and accordingly, if the amount of the payments made under this section exceeds the amount of that liability, the excess shall be repaid to the company.

• (3) Where throughout the relevant accounting period of a company which makes a payment under this section (in this subsection referred to as " the parent company") another company is a subsidiary of the parent company for the purposes of section 92 of the Finance Act 1972, the parent company may by notice in writing to the inspector elect that, to the extent only of the subsidiary's liability to corporation tax for the subsidiary's relevant accounting period, or to such less extent as may be specified in the notice, the payment shall be deemed to be made on account of that liability.

• (4) A payment under this section shall, if the amount of advance corporation tax by reference to which it is to be made is due before 1st September 1974, be due on that day and shall in any other case be due at the same time as that amount; and any such payment shall be made without the making of an assessment.

• (5) Where an amount of advance corporation tax due and paid before 1st September 1974 is repaid before that date under paragraph 4 of Schedule 14 to the Finance Act 1972, that amount shall be left out of account for the purposes of this section; and where, after a company has made a payment under this section, the whole or part of the advance corporation tax by reference to which it was made is repaid under that paragraph, there shall be repaid to the company, together with the advance corporation tax, so much of the payment as does not exceed one-half of the amount of advance corporation tax so repaid.

• (6) For the purposes of subsection (5) above any repayment of advance corporation tax made after the end of the financial year 1974 shall, if it might be attributed either to advance corporation tax due during that year or to advance corporation tax due after that year, be attributed to advance corporation tax due after that year.

• (7) Except as provided by subsection (5) above or subsection (8) below, the repayment of any amount under this section shall be made at the time payment of the corporation tax on account of which it is deemed to be made is due (or, as the case may be, would be due if there were any liability to corporation tax).

• (8) If the inspector is satisfied before the time mentioned in subsection (7) above that an amount falls to be repaid under that subsection, that amount shall be repaid when the inspector is so satisfied; but no repayment shall be made by virtue of this subsection before 1st September 1975.

• (9) The relevant accounting period for the purposes of this section shall be determined as follows, but subject to subsection (10)(b) below:—

• (a) if the company has an accounting period ending in the financial year 1974 which is a period of twelve months or is the company's first accounting period, that period shall be the relevant accounting period;

• (b) if the company does not have such an accounting period but has an accounting period ending in the financial year 1974, that accounting period (or if more than one the first of them) and, so far as necessary, any subsequent accounting period shall be a relevant accounting period; and

• (c) if the company has no accounting period ending in the financial year 1974 its first accounting period ending after that financial year shall be the relevant accounting period;

but where a relevant accounting period falling under paragraph (b) above is a period of less than twelve months it shall be the relevant accounting period for such part only of the payments made under this section and repayments due to the company under subsection (7) of this section as bears to the whole thereof the same proportion as the length of that period bears to twelve months.

• (10) Where the affairs of a company are wound up, then—

• (a) if the winding-up commenced before 1st January 1974, the company shall not be required to make any payment by virtue of this section ; and

• (b) if the winding-up commenced on or after that date but before the end of the financial year 1974 and the company so elects by notice in writing given to the inspector, the accounting period ending with the commencement of the winding-up shall be the relevant accounting period.

• (11) If any payment to be made under this section is not made at the time it is due the amount of the payment may be assessed on the company and shall carry interest as if it were an amount of tax assessable in accordance with Schedule 14 to the Finance Act 1972; and for the purpose of recovering the whole or part of the interest the amount of the payment may be so assessed whether or not it has been paid.

Alteration of personal reliefs

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• (1) Chapter II of Part I of the Taxes Act shall be amended in accordance with the following provisions of this section.

• (2) In section 8 (personal relief)—

• (a) for the reference in subsection (1)(a) (married) to £775 there shall be substituted a reference to £865 ; and

• (b) for the references in subsections (1)(b) (single) and (2) (wife's earned income relief) to £595 there shall be substituted references to £625.

• (3) In section 10(3) (appropriate amount for child)—

• (a) for the reference to £265 (child over sixteen) there shall be substituted a reference to £305 ;

• (b) for the reference to £235 (child over eleven but not over sixteen) there shall be substituted a reference to £275; and

• (c) for the reference to £200 (child not over eleven) there shall be substituted a reference to £240.

• (4) In section 14 (additional relief for widows and others in respect of children) for the references to £130 there shall be substituted references to £180.

• (5) In section 7 (persons over sixty-five with small incomes)—

• (a) for the references to £700 and £1,000 (income limits for exemption) there shall be substituted references to £810 and £1,170;

• (b) for the reference to £340 (excess over those limits beyond which relief by reduction of tax is excluded) there shall be substituted a reference to £565 ; and

• (c) for the reference to 50 per cent, (percentage governing relief by reduction of tax) there shall be substituted a reference to 55 per cent.

• (6) In section 24 (reduction on account of family allowances) for the reference to £60 there shall be substituted a reference to £52.

Maintenance payments

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• (1) Where an individual's income for any year of assessment consists of or includes amounts paid as maintenance payments to him or for his benefit, the first £1,000 of those amounts shall not be investment income for the purposes mentioned in section 32(3) of the Finance Act 1971.

• (2) In this section—

• " maintenance payments " means payments made by a party to a marriage by way of provision for the other party or for a child of both or either of the parties, or payments by way of provision for a child which are made by his natural father;

• " marriage " includes a marriage which has been dissolved or annulled;

• " child " includes an illegitimate child and an adopted child;

and for the purposes of this section payments to or for the benefit of a party to a marriage which are made under a settlement (within the meaning of Chapter III of Part XVI of the Taxes Act) made by the other party shall be treated as made by the other party if they are made during his life.

Partnership retirement annuities

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• (1) Where a person (in this section referred to as the former partner) has ceased to be a member of a partnership on retirement because of age or ill-health or on death and, under—

• (a) the partnership agreement; or

• (b) an agreement replacing the partnership agreement or supplementing it or supplementing an agreement replacing it; or

• (c) an agreement made with an individual who acquires the whole or part of the business carried on by the partnership;

annual payments are made for the benefit of the former partner or his widow or a dependant of his and are for the purposes of income tax income of the person for whose benefit they are made, the payments shall be treated as earned income of that person, except to the extent that they exceed the limit specified in subsection (2) below, and shall not reduce the income which is chargeable as investment income of any other person.

• (2) The limit mentioned in subsection (1) above is 50 per cent, of the average of the amounts which, in the best three of the relevant years of assessment, were the former partner's shares of the relevant profits or gains; and for this purpose—

• (a) the former partner's share in any year of the relevant profits or gains is so much of the relevant profits or gains as fell to be included in a return of his income for that year; and

• (b) the relevant profits or gains are the profits or gains of any trade, profession or vocation on which the partnership or any other partnership of which the former partner was a member was assessed to income tax; and

• (c) the relevant years of assessment are the last seven years of assessment in which he was required to devote substantially the whole of his time to acting as a partner in the partnership or those partnerships ; and