Finance Act 1982

• (a) in subsection (3) (a) (claim for relief not allowed until company has traded for twelve months) for the words " twelve months " there shall be substituted the words " four months ";

• (b) in subsection (6) (effect of subsection (3)(a) where company is wound up before expiry of the twelve month period) for the words " twelve months " there shall be substituted the words " four months "; and

• (c) after subsection (8) there shall be inserted the following subsection—

(8A) No account shall be taken of the relief, in so far as it is not withdrawn, in determining whether any sums are excluded by virtue of section 33 of the Capital Gains Tax Act 1979 (exclusion of expenditure by reference to tax on income) from the sums allowable as a deduction in the computation of gains and losses for the purposes of that Act.

• (2) In section 53 of that Act (limits of the relief) for subsection (2) there shall be substituted the following subsection—

(2) The relief shall not be given— (a) to the extent that the amount or total amount subscribed by an individual for ordinary shares issued to him (whether or not by the same company) in the years 1981-82 and 1982-83 exceeds £30,000; and (b) to the extent that the amount or total amount subscribed by an individual for ordinary shares issued to him (whether or not by the same company) in the year 1983-84 exceeds £20,000 ; but paragraph (a) above shall not authorise relief to be given to an individual in respect of so much of the total amount subscribed by him for shares issued to him in the year 1981-82 as exceeds £10,000.

• (3) In subsection (7) of section 55 of the Finance Act 1981 (restrictions as to share capital for qualifying company for purposes of section 52 of that Act) for the words " at any time in the relevant period include" there shall be substituted the words " include at any time in the period of three years beginning with the date of issue of the shares in respect of which relief is claimed ".

• (4) In subsection (1) of section 64 of that Act (reduction of sums allowable as deductions for capital gains tax) for the words from " reduced" to the end of paragraph (b) there shall be substituted the words

determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to— (a) the amount of that relief, or (b) the excess, whichever is the less

.

Subsidiaries of qualifying companies

52

• (1) In subsection (1) of section 65 of the Finance Act 1981 (application of sections 52 to 67 of that Act to subsidiaries) for the words from " did not commence business " to the end there shall be substituted the words

and if any subsidiary commenced business before the qualifying company did so, it was incorporated or (if later) commenced business not more than five years before the date of issue of the shares in respect of which relief is claimed; and (c) the subsidiary or each subsidiary complies with the requirements of subsections (2) to (6) of section 55 above

.

• (2) In paragraph 2(1) of Schedule 12 to that Act (modification of section 54 of that Act in relation to subsidiaries of qualifying companies) for the words from the beginning to " company if " there shall be substituted the following—

(1) In subsections (2), (4) and (6) of section 54, references to the company (except, in each subsection, the first such reference) include references to a company which is during the relevant period a subsidiary of that company, whether it becomes a subsidiary before, during or after the year of assessment in respect of which the individual concerned claims relief and whether or not it is such a subsidiary while he is such an employee, partner or director as is mentioned in subsection (2) or while he has or is entitled to acquire such capital or voting power or rights as are mentioned in subsections (4) and (6). (1B) Without prejudice to the provisions of section 54 (as it has effect in accordance with sub-paragraph (1) above), an individual shall be treated as connected with a company if— (a) he has at any time in the relevant period had control (within the meaning of section 534 of the Taxes Act) of another company which has since that time and before the end of the relevant period become a subsidiary of the company ; or (b)

.

• (3) In paragraph 4 of that Schedule (modification of sections 58 and 59 in relation to subsidiaries of qualifying companies) for the words " a subsidiary of the company " there shall be substituted the words " any company which during the relevant period is a subsidiary of that company, whether it becomes a subsidiary before or after the individual concerned receives any value from it, ".

• (4) After that paragraph there shall be inserted the following paragraph—

(4A) In subsection (2) of section 59 (redemption etc. of shares by company) the references to the company (except the first) shall include references to a company which during the relevant period is a subsidiary of the company whether it becomes a subsidiary before or after the redemption, repayment, repurchase or payment referred to in that subsection.

Purchase of own shares by unquoted trading company

53

• (1) References in the Corporation Tax Acts to distributions of a company shall not include references to a payment made by a company on the redemption, repayment or purchase of its own shares if—

• (a) the company is an unquoted company and either a trading company or the holding company of a trading group; and

• (b) the redemption, repayment or purchase is made wholly or mainly for the purpose of benefiting a trade carried on by the company or by any of its 75 per cent, subsidiaries, and does not form part of a scheme or arrangement the main purpose or one of the main purposes of which is—

• (i) to enable the owner of the shares to participate in the profits of the company without receiving a dividend, or

• (ii) the avoidance of tax ; and

• (c) the conditions in paragraphs 1 to 9 of Schedule 9 to this Act, so far as applicable, are satisfied in relation to the owner of the shares.

• (2) References in the Corporation Tax Acts to distributions of a company shall not include references to a payment made by a company on the redemption, repayment or purchase of its own shares if—

• (a) the company is within subsection (1)(a) above, and

• (b) the whole or substantially the whole of the payment (apart from any sum applied in paying capital gains tax charged on the redemption, repayment or purchase) is applied by the person to whom it is made in discharging a liability of his for capital transfer tax charged on a death, and is so applied within the period of two years after the death ;

but this subsection shall not apply to the extent that the liability could without undue hardship have been discharged otherwise than through the redemption, repayment or purchase of shares in the company or another company within subsection (1)(a) above.

• (3) Schedule 9 to this Act shall have effect for supplementing this section ; and in that Schedule " the purchase " means the redemption, repayment or purchase referred to in subsection (1) above, and " the vendor " means the owner of the shares at the time it is made.

• (4) This section has effect in relation to payments made on or after 6th April 1982.

Purchase of company's own shares from dealer

54

• (1) Where on or after 6th April 1982 a company purchases its own shares from a dealer, the purchase price shall be taken into account in computing the profits of the dealer chargeable to tax under Case I or II of Schedule D ; and accordingly—

• (a) tax shall not be chargeable under Schedule F in respect of any distribution represented by any part of the price, and

• (b) the dealer shall not be entitled in respect of the distribution to a tax credit under section 86 of the Finance Act 1972, and

• (c) sections 232(4) (duty to provide statements) and 239 (distributions not chargeable to corporation tax) of the Taxes Act shall not apply to the distribution.

• (2) For the purposes of subsection (1) above a person is a dealer in relation to shares of a company if the price received on their sale by him otherwise than to the company would be taken into account in computing his profits chargeable to tax under Case I or II of Schedule D.

• (3) In subsection (1) above.—

• (a) the reference to the purchase of shares includes a reference to the redemption or repayment of shares and to the purchase of rights to acquire shares, and

• (b) the reference to the purchase price includes a reference to any sum payable on redemption or repayment;

but subject to subsection (4) below.

• (4) Subsection (1) above shall not apply in relation to—

• (a) the redemption of fixed-rate preference shares, or

• (b) the redemption, on terms settled or substantially settled before 6th April 1982, of other preference shares issued before that date,

if (in either case) the shares were issued to and continuously held by the person from whom they are redeemed.

• (5) In this section—

• " fixed-rate preference shares " means shares which— were issued wholly for new consideration, and do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and do not carry any right to dividends other than dividends which— are of a fixed amount or at a fixed rate percent, of the nominal value of the shares, and together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued ;

• " new consideration " has the same meaning as in Part X of the Taxes Act; and

• " shares " includes stock.

Application of advance corporation tax on purchase of company's own shares

55

In section 92 of the Finance Act 1972 (setting of company's advance corporation tax in respect of dividends against subsidiary's liability) after subsection (7) there shall be inserted—

(7A) References in this section to dividends shall be construed as including references to distributions made on or after 6th April 1982 on the redemption, repayment or purchase by a company of its own shares, and references to the payment of dividends shall be construed accordingly.

Close companies: apportionment of income

56

• (1) In Schedule 16 to the Finance Act 1972 references to distributions shall be construed as including references to anything that would be a distribution but for one or both of—

• (a) paragraph 1 of Schedule 18 to the Finance Act 1980 (demergers), and

• (b) section 53 of this Act.

• (2) In paragraph 12 of that Schedule, after sub-paragraph (2A) there shall be inserted—

(2B) References in sub-paragraphs (1)(a) and (2)(b) above to the redemption or repayment of a company's share capital shall be construed as including references to the purchase by the company of its own shares.

• (3) This section has effect in relation to events occurring on or after 6th April 1982.

Eurobond dealers: exemption from bond-washing provisions

57

Section 472 of the Taxes Act (application of bond-washing provisions to dealers in securities) shall have effect, and be deemed always to have had effect, with the addition, at the end of the section, of the following subsection: —

(5) Subsection (1) of this section shall not apply if the securities are Eurobonds bought by the first buyer in the ordinary course of his trade as a dealer in Eurobonds ; and in this subsection " Eurobond " means a security— (a) which is neither preference stock nor preference share capital; and (b) which is issued in bearer form; and (c) which carries a right to interest either at a fixed rate or at a rate bearing a fixed relationship to a standard published base rate ; and (d) which does not carry a right to any other form of benefit, whether in the nature of interest, participation in profits or otherwise ; and (e) the interest on which is payable without any deduction in respect of income tax or of any tax of a similar character imposed by the laws of a territory outside the United Kingdom ; but, notwithstanding anything in paragraph (d) above, a security is not prevented from being a Eurobond by reason only that it carries a right to convert into a security of another description or to subscribe for further securities (whether of the same description or not).

Index-linked Treasury Stock

58

• (1) This section has effect with respect to the following Treasury Stock, namely—

• (a) 2 per cent. Index-linked Treasury Stock 1996 ; and

• (b) 2 per cent. Index-linked Treasury Stock 2006 ; and

• (c) 2½ per cent. Index-linked Treasury Stock 2011;

and in this section any such stock is referred to as " existing index-linked stock ".

• (2) The variation of the prospectuses relating to existing index-linked stock which was effected by a supplement to those prospectuses dated 9th March 1982 shall not be regarded as having affected the status of such stock as restricted government securities for the purposes of section 41 of the Finance Act 1981 (treatment of any income, gains or losses of insurance companies relating to such securities).

• (3) Subject to subsection (4) below, on or after 27th March 1982 existing index-linked stock shall not be regarded as restricted government securities for the purposes of section 41 of the Finance Act 1981.

• (4) If any existing index-linked stock was on 27th March 1982 held by an insurance company against and applied solely towards meeting the liabilities of its pension business, then, if and so long as the stock continues to be so held by that company, it shall continue to be treated as restricted government securities for the purposes of section 41 of the Finance Act 1981.

• (5) If, on or after 27th March 1982, any existing index-linked stock which on that date was held by an insurance company ceases to be restricted government securities for the purposes of section 41 of the Finance Act 1981, otherwise than by virtue of being actually disposed of or being redeemed, then, on the day on which it so ceases, the stock shall be deemed for the purposes of corporation tax, including, subject to subsection (6) below, corporation tax on chargeable gains, to have been disposed of and immediately re-acquired at its market value on that date.

• (6) For the purposes of sections 67 and 68 of the Capital Gains Tax Act 1979 (gilt-edged securities)—

• (a) in ascertaining the date on which securities were acquired, no account shall be taken of any deemed disposal and re-acquisition resulting from subsection (5) above ; and

• (b) so long as any existing index-linked stock continues, by virtue of subsection (4) above, to be treated on and after 27th March 1982 as restricted government securities for the purposes of section 41 of the Finance Act 1981, it shall be regarded as being stock of a different kind from existing index-linked stock which is not so treated.

• (7) In this section " insurance company " and " pension business " have the same meaning as in section 323 of the Taxes Act.

Manufactured dividends: extension to certain securities issued by building societies

59

• (1) In section 477 of the Taxes Act (manufactured dividends: treatment of tax deducted) in subsection (2) (exclusion of cases where interest is payable without deduction of tax) after the word " where ", in the first place where it occurs, there shall be inserted the words " otherwise than by virtue of section 343(3)(a) of this Act ".

• (2) This section has effect in relation to contracts for the sale of securities entered into after 9th March 1982.

Limitation on meaning of " distribution " for corporation tax

60

• (1) Any interest or other distribution which—

• (a) is paid out of the assets of a company (in this section referred to as " the borrower ") on or after the relevant day to another company which is within the charge to corporation tax, and

• (b) which is so paid in respect of securities of the borrower which fall within any of sub-paragraphs (i) to (iii) and (v) of paragraph (d) of subsection (2) of section 233 of the Taxes Act (meaning of " distribution "),

shall not be a distribution for the purposes of the Corporation Tax Acts unless the application of this subsection is excluded by subsection (2), subsection (3) or subsection (4) below.

• (2) Subsection (1) above does not apply in a case where the consideration given by the borrower for the use of the principal secured represents more than a reasonable commercial return for the use of that principal; but, where this subsection does apply, nothing in section 23 3 (2) (a) of the Taxes Act shall operate so as to treat as a distribution for the purposes of the Corporation Tax Acts so much of the interest or other distribution as represents a reasonable commercial return for the use of that principal.

• (3) Subsection (1) above does not apply in the case of any interest or other distribution which is paid in respect of a security of the borrower falling within section 233(2)(d)(iii) of the Taxes Act if—

• (a) the principal secured does not exceed £100,000 ; and

• (b) the borrower is under an obligation to repay the principal and interest before the expiry of the period of five years beginning on the date on which the principal was paid to the borrower ; and

• (c) that obligation either was entered into before 9th March 1982 or was entered into before 1st July 1982 pursuant to negotiations which were in progress on 9th March 1982 ; and

• (d) where the period for repayment of either principal or interest is extended on or after 9th March 1982 (but paragraph (b) above still applies), the interest or other distribution is paid within the period which was applicable immediately before that date ;

and for the purposes of paragraph (c) above negotiations shall not be regarded as having been in progress on 9th March 1982 unless, before that date, the borrower had applied to the lender for a loan and had supplied the lender with any documents required by him to support the application.

• (4) Subsection (1) above does not apply in a case where the company to which the interest or other distribution is paid is entitled under any enactment, other than section 239 of the Taxes Act (U.K. company distributions not chargeable to corporation tax), to an exemption from tax in respect of that interest or distribution.

• (5) In subsection (1)(a) above " the relevant day " means—

• (a) in the case of any interest or other distribution which is payable before 1st April 1983 pursuant to an obligation entered into before 9th March 1982, 1st April 1983 ; and

• (b) in any other case, 9th March 1982.

• (6) This section shall be construed as if it were included in Part X of the Taxes Act.

Maintenance funds for historic buildings: reimbursement of settlor

61

• (1) This section applies to income arising from settled property in respect of which a direction under section 93 below has effect if the income—

• (a) is treated by virtue of Part XVI of the Taxes Act as income of the settlor for the year 1982-83 or a subsequent year of assessment, and

• (b) is applied in reimbursing the settlor for expenditure incurred by him for a purpose within subsection (3)(a)(i) of section 93, and if that expenditure is (or would apart from the reimbursement be) deductible in computing the profits of a trade carried on by the settlor.

• (2) Income to which this section applies shall not be treated as reducing the expenditure deductible in computing the profits referred to in subsection (1) above, and shall not be regarded as income of the settlor otherwise than by virtue of Part XVI of the Taxes Act.

Maintenance funds: miscellaneous amendments

62

• (1) Where settled property in respect of which a direction has effect under section 93 below constitutes part only of the property comprised in a settlement, it and the other property shall be treated as comprised in separate settlements for the purposes of the enactments specified in subsection (2) below.

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

• (a) sections 168 to 173 of the Taxes Act;

• (b) Part XVI of the Taxes Act;

• (c) sections 16 and 17 of the Finance Act 1973 ;

• (d) section 38 of the Finance Act 1977 ;

• (e) sections 52 and 53 of the Finance Act 1980.

• (3) Schedule 10 to this Act (which makes amendments relating to maintenance funds) shall have effect.

Sums paid to settlor otherwise than as income

63

• (1) In section 451 of the Taxes Act (sums paid to settlor otherwise than as income) subsection (1) shall have effect in accordance with subsections (2) and (3) below and shall be presumed so to have had effect in relation to any capital sum paid to the settlor on or after 6th April 1981.

• (2) In paragraph (b) the amendment made by section 42(2)(c) of the Finance Act 1981 shall be presumed not to have been made and, accordingly, the words following " up to the end of " shall read " the next following year, be treated for the purposes aforesaid as income of the settlor for the next following year ".

• (3) In the words following paragraph (b) (as amended by section 42(2)(6) of the Finance Act 1981) after the words " each subsequent year " there shall be inserted the words " up to a maximum of ten subsequent years ".

• (4) Where a capital sum was paid in a relevant year ending before 6th April 1981 (the operative date for sections 42 and 43 of the Finance Act 1981) and the circumstances are such that—

• (a) subsection (1) of section 451 of the Taxes Act applies to that sum, but

• (b) on that date the whole or some part of that sum (in this subsection referred to as " the balance ") had not been treated, in accordance with that subsection, as the income of the settlor for any relevant year ending before that date,

the balance shall be deemed for the purposes of that section to have been paid not at the time the capital sum was in fact paid but on 6th April 1981.

• (5) Expressions used in subsections (1) and (4) above have the same meaning as in section 451(1) of the Taxes Act.

Payments of interest in currencies other than sterling

64

• (1) In section 131 (2)(c)(ii) (deduction of certain interest payments to non-residents in computing profits or gains) and section 249(1)(c)(ii) (similar provision in relation to corporation tax) of the Taxes Act, for the words " the currency of a territory outside the scheduled territories " there shall be substituted, in each case, the words " a currency other than sterling ".

• (2) In section 416(1) of the Taxes Act (local authority borrowing in foreign currencies) for the words from " the currency " to " territories " there shall be substituted the words " a currency other than sterling ".

• (3) Subsection (1) has effect in relation to payments of interest made, and subsection (2) has effect in relation to securities issued, on or after 6th April 1982.

Double taxation relief: interest on certain overseas loans

65

• (1) This section applies in a case where—

• (a) in any chargeable period the profits of any person (in this section referred to as " the lender") which are brought into charge to income tax or corporation tax include an amount, computed in accordance with section 503 of the Taxes Act, in respect of interest (in this section referred to as " foreign loan interest") on a loan made to a person resident in a territory outside the United Kingdom; and

• (b) in determining the liability of the lender to income tax or corporation tax, expenditure related to the earning of the foreign loan interest is deductible in computing the profits referred to in paragraph (a) above ; and

• (c) the lender is entitled in accordance with Chapter II of Part XVIII of the Taxes Act (double taxation relief) to credit for foreign tax chargeable on or by reference to the foreign loan interest.

• (2) If, in a case where this section applies, the foreign tax referred to in subsection (1)(c) above is or includes an amount of spared tax, then, for the purposes of income tax or corporation tax, the amount which, apart from this subsection, would be the amount of the foreign loan interest shall be treated as increased by so much of the spared tax as does not exceed the permitted amount, as defined in subsection (3) below; but nothing in this subsection prejudices the operation of section 503 of the Taxes Act in relation to foreign tax which is not spared tax.

• (3) In this section " spared tax " means foreign tax which, although not payable, falls to be taken into account for the purposes of credit by virtue of section 497(3) of the Taxes Act; and the permitted amount, in relation to spared tax which is referable to the whole or any part of the foreign loan interest, is an amount which does not exceed—

• (a) 15 per cent, of the interest to which the spared tax is referable, computed without regard to any increase under subsection (2) above ; or

• (b) if it is less, the amount of that spared tax for which, in accordance with any arrangements applicable to the case in question, credit falls to be given as mentioned in subsection (1)(c) above.

• (4) If, in a case where this section applies.—

• (a) the foreign tax referred to in subsection (1)(c) above is or includes an amount of tax which is not spared tax, and

• (b) that amount of tax exceeds the amount of the credit which, by virtue of Chapter II of Part XVIII of the Taxes Act and subsection (5) below, is allowed for that foreign tax against income tax or corporation tax,

then, for the purposes of income tax or corporation tax, the amount which, apart from this subsection, would be the amount of the foreign loan interest shall be treated as reduced by a sum equal to the excess.

• (5) Where this section applies, the amount of the credit for foreign tax referred to in subsection (1)(c) above which, in accordance with Chapter II of Part XVIII of the Taxes Act, is to be allowed against income tax or corporation tax shall not exceed 15 per cent, of the foreign loan interest, computed without regard to any increase under subsection (2) or any reduction under subsection (4) above.

• (6) This section shall be construed as if it were included in Chapter II of Part XVIII of the Taxes Act.

• (7) Where the loan on which the foreign loan interest is payable was made pursuant to an agreement entered into before 1st April 1982, this section does not apply in relation to interest payable before 1st April 1983, but subject thereto, this section applies in relation to interest payable on or after 1st April 1982.

Double taxation relief: underlying tax reffecting interest on loans

66

• (1) This section applies in a case where

• (a) a bank or a company connected with a bank makes a claim for an allowance by way of credit in accordance with Chapter II of Part XVIII of the Taxes Act; and

• (b) the claim relates to underlying tax on a dividend paid by the overseas company, within the meaning of section 508 of that Act; and

• (c) that underlying tax is or includes tax payable under the law of a territory outside the United Kingdom on or by reference to interest on a loan made in the course of its business by that overseas company or by such a third, fourth or successive company as is referred to in subsection (2) or subsection (3) of that section; and

• (d) if the company which made the loan had been resident in the United Kingdom, then, in determining its liability to corporation tax, expenditure related to the earning of the interest on the loan would be deductible in computing the profits of the company brought into charge to tax.

• (2) If, in a case where this section applies, the underlying tax is or includes an amount of spared tax, then, for the purposes of corporation tax, the amount which, apart from this subsection, would be the amount of the dividend shall be treated as increased by an amount equal to so much of that spared tax as does not exceed the permitted amount, as defined in subsection (3) below; but nothing in this subsection prejudices the operation of section 503 of the Taxes Act in relation to foreign tax which is not spared tax.

• (3) In this section " spared tax " has the same meaning as in section 65 above; and the permitted amount, in relation to spared tax which is referable to the whole or any part of the interest referred to in subsection (1)(c) above, is an amount which does not exceed—

• (a) 15 per cent, of the interest to which that spared tax is referable ; or

• (b) if it is less, the amount of that spared tax which under any arrangements is to be taken into account for the purpose of allowing credit against corporation tax in respect of the dividend concerned.

• (4) If, in a case where this section applies.—

• (a) the underlying tax is or includes an amount of tax which is not spared tax, and

• (b) that amount of tax exceeds 15 per cent, of the interest to which it is referable, then, for the purposes of corporation tax, the amount which,

apart from this subsection, would be the amount of the dividend shall be treated as reduced by a sum equal to the excess.

• (5) Where this section applies, the amount of the credit referred to in paragraph (a) of subsection (1) above which is referable to the underlying tax payable as mentioned in paragraph (c) of that subsection shall not exceed 15 per cent, of so much of the interest referred to in that paragraph as is included in the relevant profits of the company paying the dividend; and for the purposes of this subsection—

• (a) " relevant profits " has the same meaning as, by virtue of section 506 of the Taxes Act, it has for the purposes of the computation of underlying tax ; and

• (b) the amount of the interest shall be determined without making any deduction in respect of any foreign tax.

• (6) In subsection (1) above " bank " means a company carrying on, in the United Kingdom or elsewhere.—

• (a) a banking business ; or

• (b) another business which includes the making of loans where the circumstances of the business are such that, in determining the liability of the company to corporation tax, expenditure related to the earning of the interest on those loans is deductible in computing the profits brought into charge to tax ;

and section 533 of the Taxes Act (connected persons) applies for the purposes of subsection (1) above.

• (7) This section shall be construed as if it were included in Chapter II of Part XVIII of the Taxes Act.

• (8) Where the loan referred to in subsection (1)(c) above was made pursuant to an agreement entered into before 1st April 1982 this section does not apply to any underlying tax which is referable to interest on that loan payable before 1st April 1983 but, subject thereto, this section applies where the underlying tax is referable to interest payable on or after 1st April 1982.

Double taxation relief: branches of non-resident banks

67

At the end of paragraph (b) of the proviso to section 502 of the Taxes Act (exceptions, in relation to unilateral relief, from the requirement that the person claiming relief must be resident in the United Kingdom) there shall be added

and (c) for tax paid under the law of any territory in respect of interest on a loan where the following conditions are fulfilled, namely.— (i) that the person in question is a company which, for the chargeable period in question, carries on a banking business in the United Kingdom through a branch or agency ; and (ii) that the loan was made by the company through the branch or agency in the United Kingdom ; and (iii) that the territory under whose law the tax was paid is not one in which the company is liable to tax by reason of domicile, residence or place of management; and (iv) that the amount of relief claimed does not exceed (or is by the claim expressly limited to) that which would have been available if the branch or agency had been a company resident in the United Kingdom and the loan had been made by it in the course of its banking business.

Postponement of recovery of tax

68

• (1) In section 55 of the Taxes Management Act 1970 (postponement of recovery of tax) in subsection (2) for the words “If no application is made under subsection (3) below” there shall be substituted the words “ Except as otherwise provided by the following provisions of this section ”.

• (2) After subsection (3) of that section there shall be inserted the following subsection—

(3A) An application under subsection (3) above may be made more than thirty days after the date of the issue of the notice of assessment if there is a change in the circumstances of the case as a result of which the appellant has grounds for believing that he is over-charged to tax by the assessment.

• (3) In subsection (6) of that section (determination of application) in paragraph (a) after the words “subsection (3) above” there shall be inserted the words “ other than an application made by virtue of subsection (3A) above ”.

• (4) This section has effect in relation to notices of assessment to tax issued after the passing of this Act.

Interest on unpaid tax

69

• (1) In section 86 of the Taxes Management Act 1970 (interest on overdue tax) in subsection (3) (date when interest becomes payable)—

• (a) the following paragraph shall be inserted after paragraph (a)—

(aa) in relation to any tax payable in accordance with the determination of an appeal against an assessment but which had not been charged by the assessment, the date which if it had been charged would by virtue of paragraph (a) above have been the reckonable date; and

; and

• (b) in paragraph (b) after the words “paragraph (a)” there shall be inserted the words “ or paragraph (aa) ”.

• (2) This section has effect in relation to notices of assessment to tax issued after the passing of this Act.

Chapter II

Allowances for assets leased outside the United Kingdom

70–79

Restriction on first-year allowances in respect of ships and aircraft let on charter

71

• (1) In subsection (5) of section 64 of the Finance Act 1980 (first-year allowances to be available in respect of ships and aircraft let out on certain charters) after the words " subsection (2) above " there shall be inserted the words " but subject to subsection (6A) below ".

• (2) At the end of subsection (6) of that section there shall be inserted the following subsection: —

(6A) Subsection (5) above does not apply if the main object, or one of the main objects, of the letting of the ship or aircraft on charter, or of a series of transactions of which the letting on charter was one, or of any of the transactions in such a series was to obtain a first-year allowance in respect of expenditure incurred on the provision of the ship or aircraft, whether by the person referred to in subsection (5) (a) above or some other person.

• (3) This section applies in relation to expenditure incurred on or after 10th March 1982 unless—

• (a) the expenditure consists of the payment of sums payable under a contract entered into before that date by the person incurring the expenditure ; and

• (b) the ship or aircraft concerned is brought into use not later than 31st March 1984.

Expenditure on production and acquisition of films etc.

72

• (1) Expenditure which—

• (a) is incurred on or after 10th March 1982 on the production or acquisition of a film, tape or disc, and

• (b) would, apart from this subsection, constitute capital expenditure on the provision of machinery or plant for the purposes of Chapter I of Part III of the Finance Act 1971 (first-year and other allowances in respect of machinery and plant),

shall be regarded for the purposes of the Tax Acts as expenditure of a revenue nature unless it is expenditure falling within subsection (7) below.

• (2) In this section—

• (a) any reference to a film is (except where, in subsection (8) below, the context otherwise requires) a reference to an original master negative of the film and its soundtrack (if any);

• (b) any reference to a tape is a reference to an original master film tape or original master audio tape ; and

• (c) any reference to a disc is a reference to an original master film disc or original master audio disc;

and any reference to the acquisition of a film, tape or disc includes a reference to the acquisition of any description of rights in a film, tape or disc.

• (3) Subject to the following provisions of this section, in computing the profits or gains accruing to any person from a trade or business which consists of or includes the exploitation of a film, tape or disc, expenditure which—

• (a) is incurred on or after 10th March 1982 on the production or acquisition of a film, tape or disc, and

• (b) is expenditure of a revenue nature (whether by virtue of subsection (1) above or otherwise),

shall be allocated to relevant periods in accordance with subsection (4) below ; and in this subsection and subsection (4) below " relevant period " means a period for which the accounts of the trade or business concerned are made up or, if those accounts are not made up for any period, a period the profits or gains of which are taken into account in assessing the income of the trade or business for any chargeable period.

• (4) The amount of expenditure falling within subsection (3) above which falls to be allocated to any relevant period shall be such as is just and reasonable, having regard to—

• (a) the amount of that expenditure which remains un allocated at the beginning of that period;

• (b) the proportion which the estimated value of the film, tape or disc which is realised in that period (whether by way of income or otherwise) bears to the aggregate of the value so realised and the estimated remaining value of the film, tape or disc at the end of that period ; and

• (c) the need to bring the whole of the expenditure falling within subsection (3) above into account over the time during which the value of the film, tape or disc is expected to be realised.

• (5) Subsections (3) and (4) above do not apply to the profits or gains of a trade in which the film, tape or disc concerned constitutes trading stock, as defined in section 137(4) of the Taxes Act.

• (6) In a case where any expenditure on the production or acquisition of a film, tape or disc is expenditure to which subsection (1) above applies, sums received from the disposal of that film, tape of disc shall be regarded for the purposes of the Tax Acts as receipts of a revenue nature (if they would not be so regarded apart from this subsection); and the reference in this subsection to sums received from the disposal of any film, tape or disc shall be construed as including—

• (a) sums received from the disposal of any interest or right in or over the film, tape or disc, including an interest or right created by the disposal; and

• (b) insurance or compensation moneys and other moneys of a like nature which are derived from the film, tape or disc.

• (7) The preceding provisions of this section do not apply to expenditure which is incurred by any person on or before 31st March 1984 if it consists of the payment of sums payable under a contract entered into by him before 10th March 1982 or it is incurred—

• (a) by a person who carries on a trade or business which consists of or includes the exploitation of films, tapes or discs; and

• (b) on the production or acquisition of a film, tape or disc which is certified by the Secretary of State for the purposes of this section as a qualifying film, tape or disc and the value of which is expected to be realisable over a period of not less than two years.

• (8) The Secretary of State shall not certify a film, tape or disc as a qualifying film, tape or disc for the purposes of this section unless he is satisfied that it is the master negative, master tape or master disc of a film which, in his opinion.—

• (a) is an eligible film for the purposes of regulations made or having effect as if made under section 6 of the Film Levy Finance Act 1981 (payments by the British Film Fund Agency to the makers of British films) and in force immediately before the passing of this Act; or

• (b) would be such an eligible film if it were not a television film within the meaning of those regulations.

• (9) In this section " expenditure of a revenue nature " means expenditure which, if it were incurred in the course of a trade the profits or gains of which are chargeable to tax under Case i of Schedule D, would be taken into account for the purpose of computing the profits, gains or losses of the trade; and " receipts of a revenue nature" means receipts which, if they were receipts of such a trade, would be taken into account for that purpose.

Industrial buildings allowance: very small workshops

73

• (1) Chapter I of Part I of the Capital Allowances Act 1968 (industrial buildings allowances) shall apply with the modifications specified in paragraphs 1 to 3 of Schedule 13 to the Finance Act 1980 in relation to capital expenditure on the construction of an industrial building to which this section applies if the expenditure is incurred after 26th March 1983 and before 27th March 1985.

• (2) This section applies to an industrial building if the gross internal floor space of the whole building will not exceed 1,250 square feet.

• (3) Subsections (3) to (6) of section 75 of the Finance Act 1980 (small workshops allowance) shall apply for the purposes of this section as they apply for the purposes of that section and accordingly—

• (a) in subsection (3) the reference to subsection (2) of that section shall be construed as including a reference to subsection (2) of this section ; and

• (b) in subsections (4) and (5) the references to subsection (1) of that section shall be construed as including a reference to subsection (1) of this section.

• (4) The Tax Acts shall have effect as if this section were contained in Chapter I of Part I of the said Act of 1968.

Industrial buildings allowance: licensees

74

• (1) In section 1 of the Capital Allowances Act 1968 (initial allowances) the following subsection shall be inserted after subsection (1)—

(1A) The reference in subsection (1) above to the occupation of a building or structure for the purposes of a trade carried on by the person who incurred the capital expenditure on that building or structure shall include a reference to the use of that building or structure for the purposes of a trade carried on by a licensee of that person or of a lessee of that person.

• (2) Section 6 of that Act (method of making allowances and charges) shall apply where the building or structure in question is used by a licensee of the person entitled to the relevant interest as if that interest were subject to a lease.

• (3) In section 7 of that Act (definition of " industrial building or structure ") the following subsection shall be inserted after subsection (3)—

(3A) Where a building or structure is used by more than one licensee of the same person that building or structure shall not be an industrial building or structure unless each of the licensees uses the building or that part of it to which his licence relates for the purposes of a trade which falls within subsection (1) above.

• (4) Subsections (1) and (3) above shall apply in relation to licences granted on or after 10th March 1982.

Industrial buildings allowance: maintenance of goods etc.

75

• (1) In section 7 of the Capital Allowances Act 1968 (definition of " industrial building or structure ") the following subsection shall be inserted after subsection (2)—

(2A) The reference in paragraph (e) of subsection (1) above to the subjection of goods or materials to any process shall include a reference to the maintaining or repairing of any goods or materials but, notwithstanding subsection (2) above, paragraph (e) shall not apply to the maintenance or repair by any person of goods or materials employed by that person in any trade or undertaking unless that trade or undertaking itself falls within any of the paragraphs of that subsection (including paragraph (e)).

• (2) In subsection (3) of that section (retail shops etc. not to constitute industrial buildings or structures) for the words " subsection (1) or subsection (2)" there shall be substituted the words " the preceding provisions ".

• (3) This section shall be deemed to have come into force on 10th March 1982.

Allowances for dwelling houses let on assured tenancies

76

• (1) The provisions of Schedule 12 to this Act shall have effect to provide for reliefs in respect of expenditure incurred on the construction of buildings consisting of or including dwelling-houses let on assured and certain other tenancies.

• (2) Schedule 12 to this Act has effect only where the expenditure concerned is incurred on or after 10th March 1982 and before 1st April 1987 or is deemed to have been so incurred by virtue of paragraph 8 of that Schedule.

Teletext receivers and teletext and viewdata adaptors

77

• (1) Paragraph 7 of Schedule 12 to the Finance Act 1980 (transitional period for 100 per cent, first year allowances for television sets) shall be amended in accordance with the following provisions of this section.

• (2) In sub-paragraph (2) (definition of "the transitional period ") in paragraph (a) after the words " other than " there shall be inserted the words " a teletext receiver or " and at the end of paragraph (a) there shall be inserted: —

(aa) in relation to expenditure on the provision of a teletext receiver, the period of five years beginning with that date

.

• (3) In sub-paragraph (3) (definition of "viewdata receiver") after the words " television set" in the first place where they occur, there shall be inserted the words " which is not a teletext receiver but which is " and the words from "and a television set" to the end of the sub-paragraph shall be omitted.

• (4) After sub-paragraph (3) there shall be inserted the following sub-paragraphs:—

(4) In this Part of this Schedule " a teletext receiver " means a television set— (a) which is constructed for receiving teletext transmissions, that is to say, transmissions intended for general reception and consisting of a succession of visual displays (with or without accompanying sound) each capable of being selected and held for separate viewing or other use; and (b) which is not also constructed for displaying information received as mentioned in sub-paragraph (3) above. (5) In relation to expenditure incurred after 9th March 1982— (a) this Part of this Schedule, other than sub-paragraph (6) below, shall have effect as if any reference to a television set included a reference to a teletext adaptor or a viewdata adaptor; and (b) sub-paragraph (2) above shall have effect as if any reference to a teletext receiver included a reference to a teletext adaptor and as if any reference to a viewdata receiver included a reference to a viewdata adaptor. (6) In this Part of this Schedule (a) " teletext adaptor " means a device external to a television set which, after it is connected to that television set, allows the set to display transmissions in the same manner as a teletext receiver; and (b) " viewdata adaptor" means a device external to a television set which, after it is connected to that television set, allows the set to display information received in the same manner as a viewdata receiver.

Extension of section 515 relief to Case V of Schedule D

78

• (1) In section 515(1) of the Taxes Act (postponement of capital allowances to secure double taxation relief) for the words " tax in respect of a trade under Case I of Schedule D " there shall be substituted the words " tax under Schedule D in respect of a trade ".

• (2) This section applies in relation to claims made on or after 6th April 1982.

Capital allowances and stock relief

79

• (1) This section applies in any case where a person is entitled to an allowance or relief for a year of assessment and—

• (a) he and the inspector have come to an agreement, in writing, as to the extent to which the allowance or relief is to be given effect in that year (whether by deduction from profits or gains or by discharge or repayment of tax, or both); and

• (b) no assessment giving effect to the allowance or relief is made for that year.

• (2) In a case to which this section applies the allowance or relief shall be taken to have been given effect in the year of assessment in question, as if an assessment had been made, to the extent set out in the agreement mentioned in subsection (1) above.

• (3) In this section—

• " allowance " means an allowance to which section 70 or 71 of the Capital Allowances Act 1968 applies (income tax allowances in taxing a trade); and

• " relief " means a relief to which Part II of Schedule 9 to the Finance Act 1981 applies (income tax: stock relief).

• (4) This section has effect in relation to agreements made on or after 6th April 1982.

Chapter III — Capital Gains

Increase and indexation of annual exempt amount

80

Increase of chattel exemption

81

• (1) In the following enactments, namely,—

• (a) section 128 of the Capital Gains Tax Act 1979 (chattel exemption by reference to consideration of £2,000),

• (b) section 12(2)(b) of the Taxes Management Act 1970 (information about assets acquired), and

• (c) section 25(7) of that Act (information about assets disposed of),

for “£2,000”, in each case where it occurs, there shall be substituted “ £3,000 ”.

• (2) This section applies to disposals on or after 6th April 1982 and, accordingly, in relation to subsection (1)(b) above, to assets acquired on or after that date.

Extension of general relief for gifts

82

• (1) Section 79 of the Finance Act 1980 (which gives relief for disposals between individuals and, by virtue of section 78 of the Finance Act 1981, disposals by individuals to trustees) shall have effect as if references to an individual included references to the trustees of a settlement; but a claim for relief under that section in respect of a disposal to the trustees of a settlement shall be made by the transferor alone (instead of by the transferor and the transferee).

• (2) In subsection (4) of that section, the words from “or” onwards shall cease to have effect.

• (3) In subsection (5) of that section—

• (a) in paragraph (a), for the words from “chargeable” to “purposes” there shall be substituted the words “ attributable to the value of the asset ”; and

• (b) the words from “and where” onwards shall cease to have effect.

• (4) In section 78 of the Finance Act 1981 (subsections (1) and (3) of which are superseded by this section) in subsection (2) for the words “that section” there shall be substituted the words “ section 79 of the Finance Act 1980 ”.

• (5) This section applies to disposals on or after 6th April 1982.

Relief on compulsory purchase

83

Termination of life interest etc.

84

Maintenance funds for historic buildings

85

Indexation allowance on certain disposals

86

Calculation of indexation allowance

87

Identification of securities etc. disposed of: general rules

88

Identification of securities: special rules

89

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

• (a) disposes of securities to his wife or her husband on or after 6th April 1982, and

• (b) disposes of other securities, which are of the same kind as those disposed of to the wife or husband, to another person (in this section referred to as “a third party”), the provisions of subsections (3) and (4) below have effect with respect to any securities acquired by the person making those disposals which, but for the provisions of section 88 above, could have been comprised in either of those disposals.

• (2) Where a company which is a member of a group of companies—

• (a) disposes of securities to another member of the group on or after 1st April 1982, and

• (b) disposes of other securities, which are of the same kind as those disposed of to that other company, to another person (in this section referred to as a “third party”) not being another member of the same group, the provisions of subsections (3) and (4) below have effect with respect to any securities acquired by the company making those disposals which, but for the provisions of section 88 above, could have been comprised in either of those disposals.

• (3) If, apart from the provisions of this subsection, securities disposed of to a third party—

• (a) would be indexed securities, and

• (b) but for the disposal referred to in subsection (1)(a) or, as the case may be, subsection (2)(a) above would be unindexed securities,

the identification shall be reversed so that the securities disposed of to the third party (or, if the quantity disposed of to the third party was greater than the quantity disposed of to the wife or husband or, as the case may be, to the other company, a part of them equal to the quantity so disposed of) shall be unindexed securities.

• (4) If there is more than one disposal falling within subsection (1)(a) or, as the case may be, subsection (2)(a) above, or more than one disposal to a third party, the provisions of subsection (3) above shall be applied to securities disposed of on an earlier date before being applied to securities disposed of on a later date, and the re-identification of the securities first disposed of shall accordingly determine the way in which this section applies to the securities comprised in the later disposal.

• (5) In this subsection “indexed securities” means securities which were acquired or provided more than twelve months before the date of the disposal concerned and “unindexed securities” shall be construed accordingly.

• (6) Section 272 of the Taxes Act (groups of companies) shall apply for the purpose of this section as it applies for the purposes of sections 273 to 281 of that Act.

• (7) Subsection (9) of section 88 above applies for the purposes of this section as it applies for the purposes of that.

Part IV

CHAPTER I — General

Reduction of tax

90

Indexation of rate bands

91

• (1) If the retail prices index for the month of December in 1982 or any later year is higher than it was for the previous December, then, unless Parliament otherwise determines, section 37 of the Finance Act 1975 shall apply to chargeable transfers made on or after 6th April in the following year with the substitution in subsection (3) of new Tables for the Tables applying (whether by virtue of this section or otherwise) to earlier chargeable transfers.

• (2) The new Tables shall differ from the Tables they replace in that for each of the amounts specified in the first and second columns there shall be substituted amounts arrived at by increasing the previous amounts by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of £1,000, rounding it up to the nearest amount which is such a multiple.

• (3) The references in this section to the retail prices index are references to the general index of retail prices (for all items) published by the Department of Employment; and if that index is not published for a month of December those references shall be construed as references to any substituted index or index figures published by that Department.

• (4) The Treasury shall before 6th April 1983 and each subsequent 6th April make an order specifying the amounts which by virtue of this section will be treated, in relation to chargeable transfers on or after that date, as specified in the Tables in section 37(3) of the Finance Act 1975 ; and any such order shall be made by statutory instrument.

• (5) In section 85(3) of the Finance Act 1980 (transitional provisions on reduction of tax by that section or subsequent enactments) for the words " which reduces tax by substituting " there shall be substituted the words " by virtue of which tax is reduced by the substitution of ".

Exemptions

92

• (1) In paragraph 1(2) of Schedule 6 to the Finance Act 1975 (exemption limit for transfers to non-domiciled spouses) for " £50,000 " there shall be substituted " £55,000 ".

• (2) In paragraph 10(1)(b) of that Schedule (limit on exempt gifts made to charities on or within one year of death) for " £200,000 " there shall be substituted " £250,000 ".

• (3) This section applies to any transfer of value made on or after 9th March 1982.

Maintenance funds: Treasury directions

93

• (1) On a claim made for the purpose, the Treasury shall give a direction under this section in respect of property comprised in a settlement if the conditions mentioned in subsection (2) below are fulfilled.

• (2) The conditions are—

• (a) that the Treasury are satisfied—

• (i) that the trusts on which the property is held comply with the requirements mentioned in subsection (3) below, and

• (ii) that the property is of a character and amount appropriate for the purposes of those trusts ; and

• (b) that the trustees—

• (i) are approved by the Treasury,

• (ii) include a trust corporation (as defined in section 94(1) below) or a solicitor or an accountant (as so defined) or a member of such other professional body as the Treasury may allow in the case of the property concerned, and

• (iii) are, at the time the direction is given, resident in the United Kingdom (as specified in section 94(1) below).

• (3) The requirements are—

• (a) that none of the property held on the trusts can at any time in the period of six years beginning with the date on which it became so held be applied otherwise than—

• (i) for the maintenance, repair or preservation of, or making provision for public access to, property which is for the time being qualifying property (as defined in section 94(2) below), for the maintenance, repair or preservation of property held on the trusts or for such improvement of property so held as is reasonable having regard to the purposes of the trusts, or for defraying the expenses of the trustees in relation to the property so held;

• (ii) as respects income not so applied and not accumulated, for the benefit of a body mentioned in paragraph 12 of Schedule 6 to the Finance Act 1975 (museums etc.) or of a qualifying charity (as defined in section 94(4) below); and

• (b) that none of the property can, on ceasing to be held on the trusts at any time in that period or, if the settlor dies in that period, at any time before his death, devolve otherwise than on any such body or charity; and

• (c) that income arising from property held on the trusts cannot at any time after the end of that period be applied except as mentioned in paragraph (a)(i) or (ii) above.

• (4) Subject to subsection (5) below, paragraphs (a) and (b) of subsection (3) above do not apply to property which—

• (a) was previously comprised in another settlement; and

• (b) ceased to be comprised in that settlement and became comprised in the current settlement in circumstances such that by virtue of paragraph 3(1) of Schedule 16 to this Act there was no charge (or, but for paragraph 3(4) of that Schedule, there would have been no charge) to tax in respect of it;

and in relation to any such property paragraph (c) of that subsection shall apply with the omission of the words " at any time after the end of that period ".

• (5) Subsection (4) above shall not have effect if the time when the property comprised in the previous settlement devolved otherwise than on any such body or charity as is mentioned in paragraph (a) of subsection (3) above fell before the expiration of the period of six years mentioned in that paragraph; but in such a case subsection (3) above shall apply to the current settlement as if for the references to the period of six years there mentioned there were substituted references to the period beginning with the date on which the property became comprised in the current settlement and ending six years after the date on which it became held on the relevant trusts of the previous settlement (or, where this subsection has already had effect in relation to the property, the date on which it became held on the relevant trusts of the first settlement in the series).

• (6) If in the Treasury's opinion the facts concerning any property or its administration cease to warrant the continuance of the effect of a direction given under this section in respect of the property, they may at any time by notice in writing to the trustees withdraw the direction on such grounds, and from such date, as may be specified in the notice; and the direction shall cease to have effect accordingly.

• (7) Where a direction under this section has effect in respect of property, the trustees shall from time to time furnish the Treasury with such accounts and other information relating to the property as the Treasury may reasonably require.

• (8) Where a direction under this section has effect in respect of property, the trusts on which the property is held shall be enforceable at the suit of the Treasury and the Treasury shall, as respects the appointment, removal and retirement of trustees, have the rights and powers of a beneficiary.

• (9) The Treasury may give a direction under this section in respect of property proposed to be comprised in a settlement or to be held on particular trusts, and the preceding provisions of this section shall be read accordingly.

• (10) This section shall have effect in relation to events after 8th March 1982.

Provisions supplementary to section 93

94

• (1) For the purposes of section 93(2) above—

• (a) " accountant" means a member of an incorporated society of accountants;

• (b) " trust corporation " means a person that is a trust corporation for the purposes of the Law of Property Act 1925 or for the purposes of Article 9 of the Administration of Estates (Northern Ireland) Order 1979;

• (c) trustees shall be regarded as resident in the United Kingdom at any particular time if the general administration of the trusts is ordinarily carried on in the United Kingdom and the trustees or a majority of them (and, where there is more than one class of trustees, a majority of each class) are resident in the United Kingdom ;

and, where a trustee is a trust corporation, the question whether the trustee is resident in the United Kingdom shall, for the purposes of paragraph (c) above, be determined as for the purposes of corporation tax.

• (2) Property is qualifying property for the purposes of section 93(3) above if—

• (a) it has been designated under section 34(1) of the Finance Act 1975 or section 77(1)(b), (c),(d) or (e) of the Finance Act 1976; and

• (b) the requisite undertaking has been given with respect to it under the said section 34 or under section 76, 78(5) (b) or 82(3) of the Finance Act 1976 ; and

• (c) tax has not (since the last occasion on which such an undertaking was given) become chargeable with respect to it under the said section 34 or under section 78 or 82(3) of the Finance Act 1976.

• (3) If it appears to the Treasury that provision is, or is to be, made by a settlement for the maintenance, repair or preservation of any such property as is mentioned in subsection (1) (b). (c), (d) or (e) of section 77 of the Finance Act 1976, they may, on a claim made for the purpose—

• (a) designate that property under this subsection ; and

• (b) accept with respect to it an undertaking such as is described in subsection (4) of that section ;

and, if they do so, subsection (2) above shall have effect as if the designation were under that section and the undertaking under section 76 of the Finance Act 1976 and as if the reference to tax becoming chargeable were a reference to the occurrence of an event on which tax would become chargeable under section 78 of that Act if there had been a conditionally exempt transfer of the property when the claim was made and the undertaking had been given under the said section 76.

• (4) A charity is a qualifying charity for the purposes of section 93(3) above if it exists wholly or mainly for maintaining, repairing or preserving for the public benefit buildings of historic or architectural interest, land of scenic, historic or scientific interest or objects of national, scientific, historic or artistic interest; and in this subsection " national interest" includes interest within any part of the United Kingdom.

• (5) Property comprised in a settlement by virtue of a transfer of value made before the coming into force of this section and exempt under section 84 of the Finance Act 1976 shall be treated as property in respect of which a direction has been given under section 93 above.

• (6) Designations, undertakings and acceptances made under section 84(6) of the Finance Act 1976 shall be treated as made under subsection (3) above and, in relation to them, subsections (2) and (3) above shall be treated as having been in force when they were made.

Maintenance funds: exempt transfers

95

• (1) Subject to the provisions of Part II of Schedule 6 to the Finance Act 1975 as applied by this section, a transfer of value is an exempt transfer to the extent that the value transferred by it is attributable to property which by virtue of the transfer becomes, or immediately after the transfer remains, comprised in a settlement and in respect of which—

• (a) a direction under section 93 above has effect at the time of the transfer, or

• (b) such a direction is given after the time of the transfer.

• (2) Sub-paragraphs (1), (2), (2A), (3)(a), (b) and (ba) and (4B) of paragraph 15 of Schedule 6 to the Finance Act 1975 shall apply to this section as they apply to paragraphs 10 to 13 of that Schedule, and for the purposes of the said sub-paragraph (4B) the trustees of a settlement in relation to which a direction under section 93 above has effect shall be treated as a body within paragraph 13 of that Schedule.

• (3) In paragraph 16 of Schedule 6 to the Finance Act 1975 for the words " sections 76 and 84 of the Finance Act 1976 " there shall be substituted the words " section 76 of the Finance Act 1976 and section 95 of the Finance Act 1982 ".

• (4) This section shall have effect in relation to events after 8th March 1982.

Non-residents' bank accounts

96

• (1) In determining for the purposes of capital transfer tax the value of the estate immediately before his death of a person to whom this section applies there shall be left out of account the balance on—

• (a) any qualifying foreign currency account of his, and

• (b) subject to subsection (3) below, any qualifying foreign currency account of the trustees of settled property in which he is beneficially entitled to an interest in possession.

• (2) This section applies to a person who is not domiciled in the United Kingdom immediately before his death, and is neither resident nor ordinarily resident there at that time.

• (3) Subsection (1)(b) above does not apply in relation to settled property if the settlor was domiciled in the United Kingdom when he made the settlement, or if the trustees are domiciled, resident or ordinarily resident in the United Kingdom immediately before the beneficiary's death.

• (4) For the purposes of this section—

• (a) the question whether a person is resident or ordinarily resident in the United Kingdom shall, subject to paragraph (b) below, be determined as for the purposes of income tax; but

• (b) the trustees of a settlement shall be regarded as not resident or ordinarily resident in the United Kingdom unless the general administration of the settlement is ordinarily carried on in the United Kingdom and the trustees or a majority of them (and, where there is more than one class of trustees, a majority of each class) are resident and ordinarily resident there.

• (5) In this section " qualifying foreign currency account" means a foreign currency account with the Bank of England, the Post Office, a recognised bank or licensed institution; and for this purpose—

• (a) " foreign currency account" means any account other than one denominated in sterling, and

• (b) " recognised bank " and " licensed institution " have the same meanings as in the Banking Act 1979.

• (6) This section has effect in relation to deaths occurring after 8th March 1982.

Scottish agricultural leases

97

• (1) Subject to subsections (2) and (3) below, where any part of the value of a person's estate immediately before his death is attributable to the value of the interest of a tenant of agricultural property in Scotland, being an interest held by virtue of tacit relocation; and

• (a) either he had been tenant of the said property continuously for a period of at least two years immediately preceding his death or he had become tenant of the said property by succession ; and

• (b) the said interest is acquired on his death by a new tenant,

the value of the said interest shall be left out of account in determining the value transferred on the death.

• (2) The value to be left out of account under subsection (1) above shall not include the value of any rights to compensation in respect of tenant's improvements.

• (3) Subsections (1) and (2) above apply to deaths on or after 15th November 1976.

• (4) The Finance Act 1981 shall be amended as follows—

• (a) in section 98 at the beginning there shall be inserted " (1) " , and at the end there shall be inserted the following new subsection—

(2) This section applies to deaths on or after 15th November 1976.

;

• (b) section 99 and Schedule 15 shall cease to have effect.

Employee and newspaper trusts

98

• (1) Paragraph 17 of Schedule 5 to the Finance Act 1975 shall be amended in accordance with subsections (2) to (5) below.

• (2) In sub-paragraph (1)(a) for the words " profession or undertaking " (where they first occur) there shall be substituted the words " or profession ".

• (3) In sub-paragraph (1) the words "or (c) charities" shall be omitted.

• (4) After sub-paragraph (1) there shall be inserted—