Finance Act 1977

Part I — Customs and excise

Spirits, beer, wine, made-wine, cider and tobacco

1

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

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Tobacco products

2

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

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

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Replacement by tobacco products duty of other tobacco duties

3

Hydrocarbon oil etc.

4

Vehicles excise duty: Great Britain

5

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

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

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

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Vehicles excise duty: Northern Ireland

6

Units and methods of measurement in customs and excise Acts

7

• (1) The Treasury may by order amend the customs and excise Acts for the purpose of—

• (a) replacing any unit of measurement by a metric unit;

• (b) replacing the proof system of ascertaining the alcoholic strength of spirits and other liquids by a system of measurement by reference to percentages of alcohol by volume;

• (c) replacing any temperature expressed in degrees Fahrenheit by a temperature expressed in degrees Celsius;

• (d) replacing any pressure expressed in atmospheres by a pressure expressed in millibars.

• (2) Any amendment of an enactment under this section shall be such as to preserve the effect of the enactment except to such extent as the Treasury consider necessary to enable a substituted unit or method of measurement to be applied in a convenient and suitable manner.

• (3) An order under this section may contain such transitional and other supplementary provisions as the Treasury think necessary.

• (4) The power to make orders under this section includes power to vary or revoke a previous order and shall be exercisable by statutory instrument.

• (5) Subject to subsection (6) below, any order under this section shall be laid before the House of Commons after being made; and unless it is approved by that House before the expiration of twenty-eight days beginning with the date on which it was made, it shall cease to have effect on the expiration of that period, but without prejudice to anything previously done thereunder or to the making of a new order.

In reckoning any such period no account shall be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than four days.

• (6) Subsection (5) above shall not apply to any order containing a statement by the Treasury that the order does not involve a greater charge to duty or a reduction of any relief, drawback, rebate or allowance; and any such order shall be subject to annulment in pursuance of a resolution of the House of Commons.

Regulations where duty depends on use

8

Forfeiture of goods relieved from duty

9

• (1) Section 257 of the Customs and Excise Act 1952 (forfeiture of goods relieved from duty) shall be amended in accordance with subsections (2) and (3) below.

• (2) For subsection (1) there shall be substituted—

(1) Where— (a) any goods have been relieved from customs duty or have been charged with duty at a reduced rate; and (b) any condition or other obligation required to be complied with in connection with the relief or with the charge of duty at that rate is not complied with, the goods shall be liable to forfeiture.

• (3) In subsection (2) for the words "the observance of the condition " there shall be substituted the words " compliance with the condition or obligation ".

• (4) Section 10(2) of the Import Duties Act 1958 and paragraph 1(3)(b) of the Schedule to the Agriculture and Horticulture Act 1964 (which become unnecessary in consequence of the above amendments) shall cease to have effect.

Duties or levies on goods passing into free circulation etc.

10

• (1) In any case where—

• (a) goods which are not for the time being in free circulation in member States are imported into the United Kingdom from another member State, and

• (b) in accordance with the Treaties the goods either are allowed to be put on the market in the United Kingdom or to be destroyed or otherwise cease to be subject to special arrangements involving the suspension of, or the giving of relief from, duties or levies in another member State,

then, in such circumstances as may be prescribed, duties of customs or levies shall be charged on or in respect of the goods by virtue of this section.

• (2) Any question whether goods are at any time in free circulation in member States shall be determined in accordance with the Treaties.

• (3) The amount of the duty of customs or levy which, in any particular prescribed circumstances, is charged on or in respect of any goods by virtue of this section shall be such as, in accordance with the Treaties, may either be prescribed or determined in a prescribed manner.

• (4) Duties of customs charged by virtue of this section shall be treated as EU customs duties charged under subsection (1) of section 5 of the European Communities Act 1972 and levies charged by virtue of this section shall be treated as agricultural levies, as defined in subsection (8) of section 6 of that Act; and the provisions of, and of the enactments referred to in, the said section 6 shall apply accordingly.

• (5) In this section “prescribed” means prescribed by regulations made by statutory instrument by the Commissioners which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

• (6) This section and, except in so far as any such regulations otherwise provide, any regulations made under it shall have effect in relation to goods imported into the United Kingdom on or after 1st July 1977.

Recovery of duty etc. due in other member States

11

Conditional reliefs from import duty

12

Continuation of powers under Finance Act 1961 s. 9

13

Part II

Restatement of value added tax

14

Registration limits

15

Goods imported for private purposes

16

PART III — INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX

Charge of income tax for 1977-78

17–39

Charge of corporation tax for financial year 1976

18

Corporation tax shall be charged for the financial year 1976 at the rate of 52 per cent.

Rate of advance corporation tax for financial year 1977

19

The rate of advance corporation tax for the financial year 1977 shall be thirty-four sixty-sixths.

Corporation tax: small companies

20

• (1) The small companies rate for the financial year 1976 shall be 42 per cent., and for that year the fraction mentioned in subsection (2) of section 95 of the Finance Act 1972 (marginal relief for small companies) shall be four twenty-fifths.

• (2) For the financial year 1976 and subsequent financial years subsection (3) of the said section 95 shall have effect with the substitution for any reference to £30,000 of a reference to £40,000 and with the substitution for any reference to £50,000 of a reference to £65,000.

• (3) Where by virtue of subsection (2) above the said section 95 has effect with different relevant amounts in relation to different parts of the same accounting period, those parts shall be treated for the purposes of that section as if they were separate accounting periods, and the profits and income of the company for that period (as defined in that section) shall be apportioned between those parts.

Relief for interest: limit for 1977-78

21

In paragraph 5(1) of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for purchase or improvement of land used as an only or main residence) the references to £25,000 shall have effect for the year 1977-78 as well as for previous years of assessment.

Alteration of personal reliefs

22

• (1) In section 8 of the Taxes Act (personal reliefs)—

• (a) in subsection (1)(a) (married) for " £1,085 " there shall be substituted " £1,295 ";

• (b) in subsection (1)(b) (single) and (2) (wife's earned income relief) for " £735 " there shall be substituted " £845 ";

• (c) in subsection (1A) (age allowance) for " £1,555 " and "£1,010" there shall be substituted " £1,765 " and " £1,120 " respectively, and after the paragraphs in that subsection there shall be inserted the words " and for the purposes of this subsection a person who would have been of the age of sixty-five or upwards within the year of assessment if he had not died in the course of it shall be treated as having been of that age within that year. ";

• (d) in subsection (1B) for "£3,250" there shall be substituted " £3,500 ";

• (e) in subsection (2)(b) (Category A retirement pension eligible for wife's earned income relief) after the word " pension" there shall be inserted the words " or mobility allowance ".

• (2) In the year 1978-79 and subsequent years the personal reliefs allowed in this section shall be changed by not less than the same percentage as the increase in the retail price index for the previous calendar year :

Provided that the Treasury may by order, subject to approval before coming into effect by resolution of the House of Commons, prescribe a lesser relief in respect of any financial year, so long as those reliefs are not less than the levels provided for in subsection (1) above.

• (3) In section 14(2) and (3) of that Act (additional relief for widows and others in respect of children) for " £350 " there shall be substituted " £450 " ; and in the year 1978-79 and subsequent years the additional relief allowed in this section shall be increased by not less than the same percentage as the increase in the retail price index for the previous calendar year :

Provided that the Treasury may by order, subject to approval before coming into effect by resolution of the House of Commons, prescribe a lesser relief in respect of any financial year, so long as that lesser relief is not less than £420.

Child benefit and other benefits in respect of children

23

• (1) In section 219(2) of the Taxes Act (social security benefits exempt from tax) the word " and " shall be omitted and after " 1971 " there shall be inserted the words " and payments of child benefit ".

• (2) The amendments of the Income Tax Acts made by section 32(2), (3)(a) and (d), (4), (5) and (6) of the Finance Act 1976 shall not have effect.

• (3) Where for the year 1977-78 an individual is (or apart from this subsection would be) assessable to income tax in respect of payments in respect of a child, being payments to which this subsection applies, his income shall for the purposes of the Income Tax Acts be deemed to include only so much, if any, of the payments in respect of that child as exceeds £52 or, if the payments in question are payments for a part only of the year, a proportionate part of that amount.

• (4) Subsection (3) above applies to payments by way of—

• (a) child's special allowance or guardian's allowance under the Social Security Act 1975 or the Social Security (Northern Ireland) Act 1975 ; or

• (b) an allowance under section 70 of either of those Acts; or

• (c) an increase under Chapter III of Part II of either of those Acts of a widow's allowance, widowed mother's allowance, child's special allowance, retirement pension or invalid care allowance.

• (5) Subsections (1) and (2) above shall be deemed to have come into force on 4th April 1977.

Child tax allowances for 1977-78

24

• (1) Except in the case of a child to whom section 25 or 26 below applies, the appropriate amount to be deducted from the claimant's total income under subsection (1) of section 10 of the Taxes Act (children) for the year 1977-78 shall, instead of being determined in accordance with subsection (3) of that section, be determined in accordance with subsections (2) and (3) below; and in those subsections " first child " means a child shown by the claimant to be the only or eldest child in respect of whom he is entitled under that section to a deduction of an amount determined in accordance with those subsections.

• (2) The appropriate amount for the child shall vary according to the age of the child at the commencement of the year of assessment and according to whether or not he is a first child and, subject to subsection (5) of the said section 10—

• (a) for a child shown by the claimant to have been over the age of sixteen at the commencement of that year, shall be £261 in the case of a first child and £235 in the case of any other child:

• (b) for a child not so shown but shown by the claimant to have been then over the age of eleven, shall be £231 in the case of a first child and £205 in the case of any other child ;

• (c) for a child not falling within the foregoing paragraphs, shall be £196 in the case of a first child and £170 in the case of any other child.

• (3) Where the appropriate amount for a child is required to be apportioned under section 11 of the Taxes Act between two or more individuals and the child is the first child in relation to any but not each of them, that amount shall be determined as if he were the first child in relation to each of them.

Child tax allowances: children living abroad

25

• (1) If in the case of a child in respect of whom a claim is made under section 10 of the Taxes Act (children) the claimant proves that the conditions in subsection (2) below are fulfilled, the appropriate amount to be deducted from the claimant's income under subsection (1) of that section for the year 1977-78 shall be determined in accordance with subsection (3) of that section as amended for the year 1976-77 by section 29(2) of the Finance Act 1976.

• (2) The conditions referred to in subsection (1) above are—

• (a) that the child is outside the United Kingdom throughout the year of assessment (apart from any visit which does not exceed, or visits which together do not exceed, 30 days) and does not in that year normally live in a country or territory specified in subsection (3) below; and

• (b) that he is under the age of nineteen years at the end of that year ; and

• (c) that no child benefit is paid in respect of the child for any week (as defined in the child benefit legislation) beginning in that year; and

• (d) that no child benefit for any such week is (or if a claim were made would be) payable in respect of the child by virtue of Part II of the Child Benefit (Residence and Persons Abroad) Regulations 1976 or Part II of the Child Benefit (Residence and Persons Abroad) Regulations (Northern Ireland) 1976.

• (3) The countries and territories referred to in subsection (2)(a) above are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany (Federal Republic), Gibraltar, the Irish Republic, the Isle of Man, Israel, Italy, Jersey, Luxembourg, the Netherlands, New Zealand, Norway, Spain and Sweden.

Child tax allowances: students

26

• (1) If in the case of a child in respect of whom a claim is made under section 10 of the Taxes Act (children) the claimant proves that the conditions in subsection (2) below are fulfilled, the appropriate amount to be deducted from the claimant's income under subsection (1) of that section for the year 1977-78 and the three following years of assessment shall be determined in accordance with subsection (3) of that section as amended for the year 1976-77 by section 29(2) of the Finance Act 1976.

• (2) The conditions referred to in subsection (1) above are—

• (a) that on 31st December 1976 the child was following a full-time course at a university, college, school or other educational establishment; and

• (b) that he was then over the age of nineteen years or that the course was an advanced course ; and

• (c) that he is following such a course as is mentioned in paragraph (a) above in an academic year beginning in the year of assessment and either—

• (i) is not in receipt of a grant from a government department or local authority or otherwise out of public funds in respect of that course for that academic year or any period determined by reference to it; or

• (ii) is in receipt of such a grant as aforesaid, being a grant which is calculated in accordance with provisions for taking account of parental income but the amount of which does not fall to be reduced under those provisions.

• (3) In subsection (2)(b) above " advanced course " means—

• (a) a course in preparation for a degree, a diploma of higher education, a higher national diploma or a teaching qualification;

• (b) a course of post-graduate or post-diploma instruction; or

• (c) any other course, being a course of a standard above ordinary national diploma, general certificate of education (advanced level) or Scottish certificate of education (higher level);

and if any question arises whether a course falls within the above definition, the Board may consult the Secretary of State for Education and Science.

• (4) In the application of subsection (3) above to Scotland and Northern Ireland the Secretary of State and the Department of Education for Northern Ireland shall respectively be substituted for the Secretary of State for Education and Science.

• (5) In its application to the year 1977-78 subsection (1) above shall have effect as if in subsection (2) above there were inserted after paragraph (c)(ii) the words

or (iii) is in receipt of such a grant as is mentioned in sub-paragraph (i) above, being a grant under section 2 of the Education Act 1962, section 49(1) or 51(1)(c) of the Education (Scotland) Act 1962 or regulation 7 of the Students Awards Regulations (Northern Ireland) 1975.

.

Retirement annuities

27

• (1) Sections 227 and 228 of the Taxes Act (which prescribe limits subject to which relief is available for premiums paid under approved retirement annuity contracts etc.) shall be amended as follows—