Finance Act 1983

PART I — Customs and Excise

Duties on spirits, beer, wine, made-wine and cider

1

• (1) In section 5 of the Alcoholic Liquor Duties Act 1979 (excise duty on spirits) for “£14·47” there shall be substituted “ £15·19 ”.

• (2) In section 36 of that Act (excise duty on beer) for “£20·40” and “£0·68” there shall be substituted “ £21·60 ” and “ £0·72 ” respectively.

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

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

• (5) In section 62(1) of that Act (excise duty on cider) for “£8·16” there shall be substituted “ £9·69 ”.

• (6) This section shall be deemed to have come into force on 16th March 1983.

Tobacco products

2

Hydrocarbon oil

3

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

Vehicles excise duty

4

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

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

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

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

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

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

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Bingo duty and gaming machine licence duty

5

• (1) In paragraph 2 of Schedule 3 to the Betting and Gaming Duties Act 1981 (exemption limits for smallscale bingo) after subparagraph (1) there shall be inserted the following subparagraph—

(1A) Where the total value of the card money taken in the bingo in question played at any premises exceeds during, or on any day in, a relevant week the total value of the prizes won in that bingo during that week or, as the case may be, on that day, any reference in subparagraph (1) above to the total value of the prizes so won shall be read as a reference to the total of the card money so taken. In this subparagraph “card money” means money taken by or on behalf of the promoter of the bingo as payment by players for their cards (within the meaning of section 17(3) of this Act)

• (2) In Schedule 4 to the Act of 1981, in paragraph 1, for subparagraph (3) (meaning of private gain in relation to exemption from gaming machine licence duty for charitable entertainments etc.) there shall be substituted the following—

(3) In construing subparagraph (2)(a) above, proceeds of an entertainment promoted on behalf of a society falling within this subparagraph which are applied for any purpose calculated to benefit the society as a whole shall not be held to be applied for purposes of private gain by reason only that their application for that purpose results in benefit to any person as an individual. (4) A society falls within subparagraph (3) above if it is established and conducted either— (a) wholly for purposes other than purposes of any commercial undertaking, or (b) wholly or mainly for the purpose of participation in or support of athletic sports or athletic games; and in this paragraph “society” includes any club, institution, organisation or association of persons, by whatever name called, and any separate branch or section of such a club, institution, organisation or association.

Deferred payment of excise duty on goods

6

The following section shall be inserted in Part X of the Customs and Excise Management Act 1979 (duties and drawbacks: general provisions), after section 127—

(127A) (1) The Commissioners may by regulations make provision for the payment of any excise duty on goods of a prescribed kind to be deferred, in prescribed cases, subject to such conditions or requirements as may be imposed— (a) by the regulations; or (b) where the regulations so provide, by the Commissioners. (2) Any duty payment of which is deferred under the regulations shall be treated, for prescribed purposes, as if it had been paid. (3) Where— (a) any excise duty to which an application for deferment of duty made under the regulations relates is payable on goods on their removal from an excise warehouse; and (b) the Commissioners are not satisfied— (i) that the conditions imposed under section 92(1) above in relation to the warehouse have been complied with by the occupier of the warehouse; or (ii) that the warehousing regulations made by virtue of section 93(2)(g) above have been complied with by the occupier or by the proprietor of the goods; the Commissioners may, notwithstanding any provision of the regulations, refuse the application or refuse it in so far as it relates to those goods. Nothing in this subsection shall be taken to prejudice the power of the Commissioners to prescribe the cases in which excise duty may be deferred. (4) Regulations under this section may make different provision for goods of different descriptions or for goods of the same description in different circumstances. (5) In this section “prescribed” means prescribed by regulations made under this section.

Imports to and exports from Northern Ireland

7

• (1) In section 26 of the Customs and Excise Management Act 1979 (power to regulate movement of goods into and out of Northern Ireland by land),—

• (a) in paragraph (a) of subsection (1) after the words “approved routes”) there shall be inserted the words “ or at such places on the boundary ”; and

• (b) at the end of subsection (1) there shall be added the words “ and any such regulations may make different provision in relation to different classes or descriptions of goods and, in particular, in relation to different classes or descriptions of vehicles ”.

(1A) In such cases and subject to compliance with such conditions as appear to the Commissioners to be appropriate, the Commissioners may dispense with any requirement of a regulation made under subsection (1) above

• (3) In subsection (2) of that section (penalties) after the words “subsection (1) above” there shall be inserted the words “ or any condition of a dispensation given under subsection (1A) above ”.

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

• (5) In section 51(1) of that Act (control of importation: special provisions as to proof where goods are within the prescribed area in Northern Ireland) the words “within the prescribed area” shall be omitted.

Export from Northern Ireland of goods chargeable with agricultural levies

8

At the end of Part V of the Customs and Excise Management Act 1979 (control of exportation), after section 68A, there shall be inserted the following section—

(68B) (1) If goods of any class or description chargeable with agricultural levies on their exportation from the United Kingdom are found in the possession or control of any person within the prescribed area in Northern Ireland, any officer or any person having by law in Northern Ireland the powers of an officer may require that person to furnish proof either— (a) that the goods are not intended for such exportation; or (b) that the goods are intended for such exportation and any entry required to be made or security required to be given in connection with that exportation has been or will be made or given. (2) If proof of any matter is required to be furnished in relation to any goods under subsection (1) above but is not so furnished, the goods shall be liable to forfeiture.

Miscellaneous customs and excise repeals

9

• (1) Subsection (5) of section 30 of the Licensing Act 1964 (duty of clerk to licensing justices to supply to Collector of Customs and Excise a list of new licences granted and licences not renewed) and section 22 of the Licensing (Scotland) Act 1976 (which makes corresponding provision for Scotland) shall cease to have effect.

• (2) Paragraph 1 of Schedule 7 to the Finance Act 1969 (definition of “whisky” or “whiskey” for customs and excise purposes) and section 92(7) of the Alcoholic Liquor Duties Act 1979 (saving in relation to spirits distilled before 1st August 1969) shall cease to have effect on the appointed day.

• (3) In subsection (2) above, “the appointed day” means such day as the Treasury may by order made by statutory instrument appoint; but the Treasury may not so appoint a day unless they are satisfied that on that day there will be in force as part of the law of each part of the United Kingdom a definition given by or under any enactment of the expressions “whisky” and “whiskey”.

PART II — Income Tax, Corporation Tax and Capital Gains Tax

Chapter I

Charge of income tax for 1983-84

10–28

Charge of corporation tax for financial year 1982

11

Corporation tax shall be charged for the financial year 1982. at the rate of 52 per cent.

Rate of advance corporation tax for financial year 1983

12

The rate of advance corporation tax for the financial year 1983. shall be three-sevenths.

Corporation tax: small companies

13

The small companies rate for the financial year 1982 shall be 38 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 seven seventy-fifths.

Personal reliefs

14

• (1) Section 24(5) of the Finance Act 1980 (increase of personal reliefs) shall not apply for the year 1983-84.

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

• (a) in subsection (1)(a) (married) for " £2,445 " there shall be substituted " £2,795 " ;

• (b) in subsections (1)(b) (single) and (2) (wife's earned in come relief) for " £1,565 " there shall be substituted " £1,785 " ;

• (c) in subsection (1A) (age allowance) for " £3,295 " and " £2.070 " there shall be substituted " £3,755 " and " £2,360 " respectively ; and

• (d) in subsection (1B) (income limit for age allowance) for " £6,700 " there shall be substituted " £7,600

Widow's bereavement allowance

15

• (1) In section 15A of the Taxes Act (widow's bereavement allowance) for the words " for that year " there shall be substituted the following paragraphs—

(a) for that year of assessment, and (b) unless she marries again before the beginning of it, for the next following year of assessment

.

• (2) In section 3 6 (8)(b)(i) of the Finance Act 1976 (deductions which are not transferable between husband and wife) for the words " and 14 " there shall be substituted the words " 14 and 15A " .

• (3) Subsection (1) above has effect in any case where the widow's bereavement occurred or occurs in the year 1982-83 or in any subsequent year of assessment and subsection (2) above has effect for the year 1983-84 and subsequent years of assessment.

Relief for interest

16

• (1) In sub-paragraph (1) of paragraph 5 of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for the purchase or improvement of land) the references to £25,000 shall have effect for the year 1983-84.

• (2) Nothing in this section requires any change to be made in the amounts deductible or repayable under section 204 of the Taxes Act (pay as you earn) before 31st August 1983.

• (3) Notwithstanding anything in the preceding provisions of this section, the amounts deductible or repayable under section 204 of the Taxes Act on and after 11th May 1983 and before 31st August 1983 may be such as would be requisite to give effect to the provisions as to relief for interest contained in a Resolution passed by the House of Commons on 21st March 1983.

Loan interest paid under deduction of tax

17

• (1) In paragraph 4 of Schedule 7 to the Finance Act 1982 (interest on home improvement loans to qualify as relevant loan interest only if certain conditions are fulfilled) at the end of paragraph (b) of sub-paragraph (1) there shall be added the words

or (c) it is interest to which sub-paragraph (3) of paragraph 2 above applies

.

• (2) In paragraph 5 of that Schedule (loans over the tax relief limit) after sub-paragraph (3) there shall be inserted the following sub-paragraph: —

(3A) The reference in sub-paragraph (1) above to a loan only part of the interest on which would (apart from the principal section) be eligible for relief under section 75 of the Finance Act 1972 includes a reference to each of two or more loans if, by virtue of sub-paragraph (4)(b) of paragraph 5 of the 1974 Schedule, the interest on the loans falls to be treated for the purposes of that paragraph as payable on one loan; but, notwithstanding that each of those loans is accordingly a limited loan for the purposes of this paragraph, none of the interest on any of them is relevant loan interest unless each of the loans was made by the same qualifying lender

;

and in sub-paragraph (4) of that paragraph after the words " sub-paragraph (3) " there shall be inserted the words " or sub-paragraph (3A) " .

• (3) In paragraph 14 of that Schedule (qualifying lenders for the purposes of deduction of tax from certain loan interest) after paragraph (a) of sub-paragraph (1) there shall be inserted the following paragraph: —

(nn) the Church of England Pensions Board

;

and at the end of paragraph (o) of sub-paragraph (1) there shall be added the words " and any other body whose activities and objects appear to the Treasury to qualify it for inclusion in this paragraph ".

• (4) In sub-paragraph (2) of paragraph 14 of that Schedule (Treasury orders) after the words "by order" there shall be inserted the words " made by statutory instrument " .

• (5) In paragraph 1 of Schedule 9 to the Finance Act 1972 (interest eligible for relief on loans for purchase or improvement of land) at the end of sub-paragraph (c) (replacement loans) there shall be added the words " or would have been so eligible apart from section 26 of the Finance Act 1982 " .

• (6) This section has effect with respect to interest due on or after 6th April 1983 or, where sub-paragraph (3) or sub-paragraph (4) of paragraph 2 of Schedule 7 to the Finance Act 1982 applies, on or after 1st April 1983.

Assigned life policies and annuity contracts

18

• (1) Subsection (4) of section 394 of the Taxes Act (no chargeable event where life policy has previously been assigned for money or money's worth) shall be amended as follows: —

• (a) at the beginning mere shall be inserted the words " Except as provided by Schedule 4 to the Finance Act 1983 " ;

• (b) after the word " policy ", where it first occurs, there shall be inserted the words " issued in respect of an insurance made before 26th June 1982 " ; and

• (c) after the words " at any time " there shall be inserted the words " before that date and " .

• (2) Subsection (2) of section 396 of the Taxes Act (which makes corresponding provision in relation to life annuity contracts) shall be amended as follows: —

• (a) at the beginning there shall be inserted the words " Except as provided by Schedule 4 to the Finance Act 1983 " ;

• (b) after the word " contract", where it first occurs, there shall be inserted the words " made before 26th June 1982 " ; and

• (c) after the words " at any time " there shall be inserted the words " before that date and " .

• (3) Schedule 4 to this Act shall have effect for the purposes of this section and in that Schedule "the relevant provision" means.—

• (a) in relation to a life policy, section 394(4) of the Taxes Act; and

• (b) in relation to a contract for a life annuity, section 396(2) of that Act.

• (4) Expressions used in this section and in Schedule 4 to this Act have the same meaning as in Chapter III of Part XIV of the Taxes Act.

• (5) This section and Schedule 4 to this Act shall be deemed to have come into force on 26th June 1982.

Retirement annuity relief: early retirement

19

• (1) In section 226 of the Taxes Act (approval of retirement annuity contracts and trust schemes) in subsection (3)(c) (occupations from which retirement before attaining the age of sixty is customary) the words " (but not before he attains the age of fifty) " shall cease to have effect.

• (2) This section shall be deemed to have come into force on 6th April 1983.

Scholarships

20

• (1) In Chapter II of Part III of the Finance Act 1976 (benefits derived by company directors and others from their employment), the following section shall be inserted after section 62—

(62A) (1) Nothing in section 375 of the Taxes Act (scholarship income not to be taken into account as income for income tax purposes) shall be construed as conferring on any person other than the person holding the scholarship in question any exemption from the charge to tax under section 61 above. (2) For the purposes of this Chapter, any scholarship provided for a member of a person's family or household shall, without prejudice to any other provision of this Chapter, be taken to have been provided by reason of that person's employment if it is provided under arrangements entered into by, or by any person connected with, his employer (whether or not those arrangements require the employer or connected person to contribute directly or indirectly to the cost of providing the scholarship). (3) Section 61 above does not apply to a benefit consisting in a payment in respect of a scholarship— (a) provided from a trust fund or under a scheme; and (b) held by a person receiving full-time instruction at a university, college, school or other educational establishment; if, in the year in which the payment is made, not more than 25 per cent, of the total amount of the payments made from that fund, or under that scheme, in respect of scholarships so held would (apart from this subsection) represent benefits chargeable to tax under section 61 above. (4) In this section " scholarship " includes an exhibition, bursary or other similar educational endowment ; and section 533 of the Taxes Act (connected persons) applies for the purposes of this section.

.

• (2) This section has effect in relation to payments made on or after 15th March 1983, but does not apply in relation to any payment made at a time when the conditions mentioned in subsection (3) below are satisfied.

• (3) The conditions are that—

• (a) the scholarship was awarded before 15th March 1983 ;

• (b) the first payment in respect of the scholarship is made before 6th April 1984 ; and

• (c) the person holding the scholarship is receiving full-time instruction at the university, college, school or other educational establishment at which he was receiving that instruction at the time when the first such payment was made.

• (4) For the purpose of ascertaining, in accordance with subsection (3) of the section inserted by subsection (1) above, the percentage of the total amount of the payments made in any year of assessment beginning after 5th April 1982 in respect of scholarships from any fund or under any scheme which (apart from subsection (3)) would represent benefits chargeable to tax under section 61 of the Act of 1976, this section shall be deemed to have had effect in relation to all such payments made in that year.

Living accommodation provided for employee

21

• (1) The following section shall be inserted in the Finance Act 1977, after section 33—

(33A) (1) This section applies where— (a) living accommodation is provided for a person in any period, by reason of his employment ; (b) by virtue of section 33 above he is treated for Schedule E purposes as being in receipt of emoluments of an amount calculated by reference to the value to him of that accommodation, or would be so treated if there were disregarded any sum made good by him to those at whose cost the accommodation is provided; and (c) the cost of providing the accommodation exceeds £75,000. (2) Where this section applies, the employee shall be treated for Schedule E purposes as being in receipt of emoluments (in addition to those which he is treated as receiving by virtue of section 33) of an amount equal to the additional value to him of the accommodation for the period, less so much of any rent paid by the employee, in respect of the accommodation, to the person providing it as exceeds the value to the employee of the accommodation for the period (as determined under section 33). (3) The additional value of the accommodation to the employee in any period is the rent which would have been payable for that period if the premises had been let to him at an annual rent equal to the appropriate percentage of the amount by which the cost of providing the accommodation exceeds £75,000. (4) For the purposes of this section, the cost of providing any living accommodation shall be taken to be title aggregate of— (a) the amount of any expenditure incurred in acquiring the estate or interest in the property held by any relevant person; and (b) the amount of any expenditure incurred by any relevant person before the year of assessment in question on improvements to the property. (5) The aggregate amount mentioned in subsection (4) above shall be reduced by the amount of any payment made by the employee to any relevant person, so far as that amount represents a reimbursement of any such expenditure as is mentioned in paragraph (a) or (b) of that subsection or represents consideration for the grant to the employee of a tenancy of the property. (6) Subject to subsection (8) below, where throughout the period of six years ending with the date when the employee first occupied the property, any estate or interest in the property was held by any relevant person (whether or not it was the same estate, interest or person throughout), the additional value shall be calculated as if in subsection (4) above (a) the amount referred to in paragraph (a) were the market value of the property as at that date; and (b) the amount referred to in paragraph (b) did not include expenditure on improvements made before that date. (7) " Relevant person " means any of the following— (a) the person providing the accommodation; (b) where the person providing the accommodation is not the employee's employer, that employer; and (c) any person, other than the employee, who is connected with a person falling within paragraph (a) or (b) above. (8) Subsection (6) above does not apply where the employee first occupied the property before 31st March 1983. (9) Any amount which is deductible, by virtue of subsection (3) of section 33, from an amount to be treated as emoluments under that section may, to the extent to which it exceeds the amount of those emoluments, be deductible from the amount to be treated as emoluments under this section. (10) For the purposes of this section, living accommodation shall be treated as provided for a person by reason of his employment if it is so treated for the purposes of section 33 ; and in this section " employment " has the same meaning as in that section. (11) In this section— - " the appropriate percentage " means the rate prescribed by the Treasury under section 66(9) of the Finance Act 1976 (beneficial loan arrangements etc.) as at the beginning of the year of assessment in question; - " property ", in relation to any living accommodation, means the property consisting of that accommodation; - " market value ", in relation to any property, means the price which that property might reasonably be expected to fetch on a sale in the open market with vacant possession, no reduction being made, in estimating the market value, on account of any option in respect of the property held by the employee, or a person connected with him, or by any of the persons mentioned in subsection (7) above; and - " tenancy " includes a sub-tenancy. (12) Section 533 of the Taxes Act (connected persons) shall apply for the purposes of this section.

.

• (2) This section has effect for the year 1984-85 and for subsequent years of assessment.

Benefits derived by directors: Schedule E payments

22

• (1) The following section shall be inserted in Chapter II of Part III of the Finance Act 1976 (benefits derived by company directors and others from their employment), after section 66—

(66A) (1) Subject to the provisions of this Chapter, where in any year a person (the " recipient") is employed as a director of a company and— (a) a payment of, or on account of, income assessable to income tax under Schedule E as emoluments of that employment is made to him in circumstances in which the person making the payment is required, by regulations made under section 204 of the Taxes Act (pay as you earn), to deduct an amount of income tax on making the payment ; and (b) the whole of that amount is not so deducted but is, or any part of it is, accounted for to the Board by someone other than the recipient; the amount so accounted for to the Board, less so much (if any) as is made good by the recipient to that other person or so deducted, shall be treated as emoluments of the employment and accordingly chargeable to income tax under Schedule E. (2) A person shall not be treated, for the purposes of subsection (1) above, as employed as a director of a company if he has no material interest in the company and either paragraph (a) or paragraph (b) of section 69(5) of this Act is satisfied. (3) Where an amount treated as emoluments of a person's employment, by subsection (1) above, is accounted for to the Board at a time when the employment has come to an end, those emoluments shall be treated, for the purposes of the Income Tax Acts, as having arisen in the year of assessment in which the employment ended; but that subsection shall not apply in relation to any amount accounted for to the Board after the death of the director in question.

• (2) This section has effect in relation to amounts accounted for on or after 6th April 1983.

Covenanted payments to charity: increase of exemption from excess tax liability

23

• (1) In section 457 of the Taxes Act, in subsection (1A) (covenanted payments to charity: first £3,000 exempt from excess liability) for " £3,000 " there shall be substituted " £5,000 " .

• (2) In Schedule 16 to the Finance Act 1972 (close companies: apportionment of income) in paragraph 5, in sub-paragraph (5A) (total income reduced by amount of covenanted payments to charities, subject to the £3,000 limit) for "£3,000" there shall be substituted " £5,000 " .

• (3) This section has effect for the year 1983-84 and subsequent years of assessment in relation to payments made after 5th April 1983.

Relief for interest: money borrowed for investment in employee-controlled company

24

• (1) In Part III of Schedule 1 to the Finance Act 1974 (interest eligible for relief), the following shall be inserted after paragraph 10B—

(10C) Subject to the following provisions of this Part of this Schedule, interest is eligible for relief under section 75 of the Finance Act 1972 if it is interest on a loan to an individual to defray money applied— (a) in acquiring any part of the ordinary share capital of an employee-controlled company; or (b) in paying off another loan, interest on which would have been eligible for relief under section 75 of the Act of 1972 had the loan not been paid off (on the assumption, if the loan was free of interest, that it carried interest); and the conditions stated in paragraph 10D below are satisfied. (10D) (1) The conditions referred to in paragraph 10C above are that— (a) the company is, throughout the period beginning with the date on which the shares are acquired and ending with the date on which the interest is paid.— (i) an unquoted company resident in the United Kingdom and not resident elsewhere ; and (ii) a trading company or the holding company of a trading group ; (b) the shares are acquired before, or not later than twelve months after, the date on which the company first becomes an employee-controlled company ; (c) during the year of assessment in which the interest is paid the company either— (i) first becomes an employee-controlled company ; or (ii) is such a company throughout a period of at least nine months ; (d) the individual or his spouse is a full-time employee of the company throughout the period beginning with the date on which the proceeds of the loan are applied and ending with the date on which the interest is paid or, if at that date he has ceased to be such an employee, ending with whichever is the later of— (i) the date on which he ceased to be such an employee; (ii) the date twelve months before the payment of the interest; and (e) the individual shows that in the period from the application of the proceeds of the loan to the payment of the interest he has not recovered any capital from the company, apart from any amount taken into account under paragraph 13 below. (2) For the purposes of paragraph IOC above and this paragraph, a company is employee-controlled at any time when at least 75 per cent.— (a) of the issued ordinary share capital of the company ; and (b) of the voting power in the company ; is beneficially owned by persons who, or whose spouses, are full-time employees of the company. (3) Where an individual owns beneficially, or he and his spouse together own beneficially, more than 5 per cent, of the issued ordinary share capital of, or voting power in, a company, the excess shall be treated for the purposes of sub-paragraph (2) above as being owned by an individual who is neither a full-time employee of the company nor the spouse of such an employee. (4) In this paragraph— - " full-time employee ", in relation to a company, means a person who works for the greater part of his time as an employee or director of the company or of a 51 per cent, subsidiary of the company; - " holding company " means a company whose business (disregarding any trade carried on by it) consists wholly or mainly of the holding of shares or securities of one or more companies which are its 75 per cent, subsidiaries; - " trading company " means a company whose business consists wholly or mainly of the carrying on of a trade or trades; - " trading group " means a group the business of whose members, taken together, consists wholly or mainly of the carrying on of a trade or trades, and for this purpose " group " means a company which has one or more 75 per cent, subsidiaries, together with those subsidiaries; and - " unquoted company" means a company none of whose shares are listed in the Official List of the Stock Exchange.

.

• (2) Paragraphs 13 to 15 of Part III of Schedule 1 to the Act of 1974 shall be amended as follows—

• (a) in paragraphs 13 and 14, after the words "cooperative", wherever they occur, there shall be inserted the words " employee-controlled company " ; and

• (b) in paragraph 15, after " 10B " there shall be inserted " 10D " and after " 10A(c)" there shall be inserted " 10C(b) " .

• (3) This section has effect in relation to interest paid after 5th April 1983.

Profit sharing schemes

25

• (1) In Chapter III of Part III of the Finance Act 1978 (approved profit sharing schemes) for the sum of money specified in section 58(1), section 58(2) and paragraph 1(4) of Schedule 9 (each of which relates to the limit on the initial market value of shares in any year) there shall be substituted the words " the relevant amount " ; and in section 61(1) of that Act (interpretation) after the definition of " the release date " there shall be inserted—

• ' the relevant amount', in relation to a participant, means an amount which is not less than £1,250 and not more than £5,000 but which, subject to that, is 10 per cent, of his salary (determined under subsection (4) below) for the year of assessment in question or the preceding year of assessment, whichever is the greater

.

• (2) At the end of section 61 of the Finance Act 1978 (interpretation) there shall be inserted the following subsection: —

(4) For the purposes of subsection (1) above, a participant's salary for a year of assessment means such of the emoluments of the office or employment by virtue of which he is entitled to participate in the scheme as are liable to be paid in that year under deduction of tax pursuant to section 204 of the Taxes Act (pay as you earn) after deducting therefrom amounts included by virtue of Chapter II of Part III of the Finance Act 1976 (benefits derived by directors and others from their employment).

• (3) As respects subsections (1) and (2) of section 58 of the Finance Act 1978, the amendments effected by subsections (1) and (2) above apply in relation to shares appropriated on or after 6th April 1983 and, as respects paragraph 1(4) of Schedule 9 to that Act, those amendments shall be deemed to have come into force on that date.

• (4) In paragraph 2 of Schedule 9 to the Finance Act 1978 (matters as to which the Board must be satisfied for approval of schemes)—

• (a) at the end of sub-paragraph (1) there shall be added the words " and that those who do participate in the scheme actually do so on similar terms " ; and

• (b) ait the end of sub-paragraph (2) there shall be added the words " or do not actually do so " .

• (5) At the end of the said paragraph 2 there shall be inserted the following sub-paragraphs: —

(3) The Board must also be satisfied— (a) that there are no features of the scheme which have or would have the effect of discouraging any description of employees or former employees who fulfil the conditions in sub-paragraph (1) above from actually participating in the scheme (subject to Part III below); and (b) where the company concerned is a member of a group of companies, that the scheme does not and would not have the effect of conferring benefits wholly or mainly on directors of companies in the group or on those employees of companies in the group who are in receipt of the higher or highest levels of remuneration. (4) For the purposes of sub-paragraph (3) above a group of companies means a company and any other companies of which it has control.

• (6) In paragraph 3(1) of Schedule 9 to the Finance Act 1978 (grounds for withdrawing approval) at the end of paragraph (d) there shall be added

or (e) the trustees, the company concerned or, in the case of a group scheme, a company which is or has been a participating company fail or fails to furnish any information which they are or it is required to furnish pursuant to section 53(7) of this Act

.

Relief for investment in corporate trades

26

• (1) Part I of Schedule 5 to this Act shall have effect, in relation to shares issued in the year of assessment 1983-84 or in any of the next three years of assessment, for the purpose of making provision with respect to relief from income tax for investment in corporate trades, in place of that made by Chapter II of Part IV of the Finance Act 1981.

• (2) The provisions of Chapter II of Part IV of the Act of 1981 (relief for investment in new corporate trades) shall continue to have effect in relation to shares issued in the years of assessment 1981-82 and 1982-83, but subject to the amendments set out in Part II of Schedule 5 to this Act.

• (3) The Table in section 98 of the Taxes Management Act 1970 (penalties) shall be amended as follows—

• (a) at the end of the first column there shall be inserted—

Paragraph 15(3) and (4) of Schedule 5 to the Finance Act 1983.

; and

• (b) at the end of the second column there shall be inserted—

Paragraph 15(1) and (2) of Schedule 5 to the Finance Act 1983.

Public lending right

27

The following enactments shall have effect in relation to public lending right as they have effect in relation to copyright—

• (a) section 16 of the Taxes Management Act 1970 (returns of periodical or lump sum payments);

• (b) sections 143 (3)(b) (charge on receipts after discontinuance of trade, etc. not to apply to lump sum paid to personal representatives for assignment), 389 and 390 (reliefs), 391 (taxation of royalties where owner's usual place of abode is abroad), and 521 (under-deductions from payments) of the Taxes Act.

Employees seconded to charities

28

• (1) If a company makes available to a charity, on a basis which is expressed and intended to be of a temporary nature, the services of a person in the employment of the company then, notwithstanding anything in—

• (a) section 130 of the Taxes Act (general rules as to deductions not allowable in computing profits or gains), or

• (b) section 304 of that Act (expenses of management of investment companies etc.),

any expenditure incurred (or disbursed) by the company which is attributable to the employment of that person shall continue to be deductible in the manner and to the like extent as if, during the time that his services are so made available to the charity, they continued to be available for the purpose of the company's trade or business.

• (2) In subsection (1) above—

• " charity " has the same meaning as in section 360 of the Taxes Act; and

• " deductible " means deductible as an expense in computing the profits or gains of the company concerned to be charged under Case I of Schedule D or, as the case may be, deductible as expenses of management for the purposes of section 304 of the Taxes Act.

• (3) This section applies to expenditure attributable to the employment of a person on or after 1st April 1983.

Building societies: interest to be payable gross on certificates of deposit

29

Chapter II

Industrial building or structure

30–33

Buildings converted into very small workshops

31

• (1) Where the conditions mentioned in subsection (2) below are satisfied in relation to an industrial building, section 73 of the Finance Act 1982 (industrial buildings allowance: very small workshops) shall apply in relation to capital expenditure on the construction of that building notwithstanding that the gross internal floor space of the whole building will exceed 1,250 square feet.

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

• (a) the industrial building has been constructed by means of the conversion of a building (the " existing building ") into two or more industrial buildings;

• (b) each of those industrial buildings is—

• (i) permanently separated from the remainder of the existing building;

• (ii) intended for occupation separately from the remainder of the existing building; and

• (iii) suitable for being so occupied; and

• (c) the average gross internal floor space does not exceed 1,250 square feet.

• (3) For the purposes of subsection (2)(c) above, the average gross internal floor space shall be calculated—

• (a) as at the date at which the following condition is first satisfied, namely that all the buildings which have been constructed by means of the conversion have come into use ; or

• (b) if that condition is not satisfied before 27th March 1986, as at that date ;

and shall be taken to be the average of the gross internal floor space of all those parts of the existing building which are industrial buildings at that date.

• (4) This section does not apply where the existing building, or any part of it, remained unused throughout the period before the conversion.

• (5) Where—

• (a) in anticipation of the conditions mentioned in subsection (2) above being complied with in relation to an industrial building, section 73 of the Act of 1982 has been taken to apply in relation to capital expenditure on the construction of that building ; and

• (b) those conditions have not been complied with in relation to that industrial building ;

all such assessments shall be made as are necessary to secure that the Capital Allowances Act 1968 shall have effect in relation to that expenditure as if it had never been expenditure to which section 73 applies.

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

Capital allowances for expenditure on production or acquisition of certain films etc.

32

• (1) In section 72 of the Finance Act 1982 (expenditure on production and acquisition of films etc.) in subsection (7) (transitional relief for expenditure incurred on or before 31st March 1984 either pursuant to a contract entered into before 10th March 1982 or on the production or acquisition of certain qualifying films, tapes or discs) for the words "or it is incurred " there shall be substituted the words " nor to expenditure which is incurred by any person on or before 31st March 1987 if it is incurred " .

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

(10) Section 50(4) of the Finance Act 1971 (construction of references to the date on which expenditure is incurred for the purposes of Chapter I of Part III of that Act) applies in relation to the preceding provisions of this section as though they were comprised in that Chapter.

Extended transitional period for teletext receivers etc.

33

In paragraph 7 of Schedule 12 to the Finance Act 1980 (transitional period for 100 per cent, first year allowances for television sets) sub-paragraph (2) (definition of " the transitional period ") shall be amended as follows: —

• (a) paragraph (aa) (which provides for a five year period for teletext receivers and adaptors) shall be omitted; and

• (b) in paragraph (b) (which provides for a six year period for viewdata receivers and adaptors) after the words " the provision of " there shall be inserted the words " a teletext receiver or " ;

and sub-paragraph (5) of paragraph 7 (which, among other matters, extends, in relation to certain expenditure, references in sub-paragraph (2) to teletext receivers to include references to teletext adaptors) shall apply accordingly.

Chapter III — Capital Gains

Election for pooling: indexation

34

PART III — Oil Taxation

Phasing out of APRT

35

• (1) In section 139 of the Finance Act 1982 (liability for APRT etc.) in subsection (1) (the periods for which the liability arises)—

• (a) in paragraph (a) after the words “after 31st December 1982” there shall be inserted the words “ and before 1st January 1987 ”; and

• (b) in paragraph (b) for the words “nine immediately succeeding chargeable periods” there shall be substituted the words “ immediately succeeding chargeable periods (if any) which ends before 1st January 1987 and ”.

• (2) In subsection (2) of that section (the rate of APRT) for the words “at the rate of 20 per cent.” there shall be substituted the following paragraphs:—

(a) for the chargeable period ending on 30th June 1983, at the rate of 20 per cent.; (b) for subsequent chargeable periods ending on or before 31st December 1984, at the rate of 15 per cent.; (c) for chargeable periods ending in 1985, at the rate of 10 per cent.; and (d) for chargeable periods ending in 1986, at the rate of 5 per cent.

• (3) In consequence of subsections (1) and (2) above—

• (a) in each of subsections (3)(a) and (4)(a) of section 139 of the Finance Act 1982, for the words “the APRT which is paid” there shall be substituted the words “ any APRT which is payable and paid ”;

• (b) in subsection (4) of that section for the words “the APRT paid”, in each place where they occur, there shall be substituted the words “ any APRT paid ”; and

• (c) Schedule 19 to that Act shall have effect subject to the modifications set out in Schedule 7 to this Act.

Increased oil allowance for certain new fields

36

• (1) For all the relevant new fields, as defined in subsection (2) below, section 8 of the principal Act (the oil allowance) shall have effect subject to the following modifications:—

• (a) in subsection (2) (the amount of the allowance for each chargeable period) for “250,000 metric tonnes” there shall be substituted “ 500,000 metric tonnes ”; and

• (b) in subsection (6) (the total allowance for a field) for “5 million metric tonnes” there shall be substituted “ 10 million metric tonnes ”.

• (2) Subject to subsection (3) below, in this section “relevant new field” means an oil field—

• (a) no part of which lies in a landward area, within the meaning of the Petroleum (Production) Regulations 1982 or in an area to the East of the United Kingdom and between latitudes 52°and 55°North; and

• (b) for no part of which consent for development has been granted to the licensee by the Secretary of State before 1st April 1982; and

• (c) for no part of which a programme of development had been served on the licensee or approved by the Secretary of State before that date.

• (3) In determining, in accordance with subsection (2) above, whether an oil field (in this subsection referred to as “the new field”) is a relevant new field, no account shall be taken of a consent for development granted before 1st April 1982 or a programme of development served on the licensee or approved by the Secretary of State before that date if—

• (a) in whole or in part that consent or programme related to another oil field for which a determination under Schedule 1 to the principal Act was made before the determination under that Schedule for the new field; and

• (b) on or after 1st April 1982, a consent for development is or was granted or a programme of development is or was served on the licensee or approved by the OGA and that consent or programme relates, in whole or in part, to the new field.

• (4) In subsections (2) and (3) above “development” means—

• (a) the erection or carrying out of permanent works for the purpose of getting oil from the field or for the purpose of conveying oil won from the field to a place on land; or

• (b) winning oil from the field otherwise than in the course of searching for oil or drilling wells;

and consent for development does not include consent which is limited to the purpose of testing the characteristics of an oil-bearing area and does not relate to the erection or carrying out of permanent works.

• (5) In subsection (4) above “permanent works” means any structures or other works whatsoever which are intended by the licensee to be permanent and are neither designed to be moved from place to place without major dismantling nor intended by the licensee to be used only for searching for oil.

Reliefs for exploration and appraisal expenditure etc.

37

• (1) The section set out in Part I of Schedule 8 to this Act shall be inserted in the principal Act after section 5 for the purpose of setting up a new allowance by virtue of which a participator in an oil field may obtain relief for certain expenditure which is incurred otherwise than in connection with that field.

• (2) For the purpose of giving effect to, and in consequence of, the new allowance, the enactments specified in Part II of Schedule 8 to this Act shall have effect subject to the amendments there specified.

• (3) Part III of Schedule 8 to this Act shall have effect with respect to sums received after 15th March 1983 and falling to be set off against expenditure which would otherwise be allowable under section 5 of the principal Act or under the new section set out in Part I of that Schedule.

• (4) In paragraph 1 of Schedule 7 to the principal Act (claims for certain allowances)—

• (a) in sub-paragraph (1) the words from “but may not” to the end of the sub-paragraph (which impose a time limit on claims) shall be, and shall be deemed always to have been, omitted; and

• (b) in sub-paragraph (2) the words “within the time allowed for making the original claim” shall be, and shall be deemed always to have been, omitted;

and, accordingly, any claim which, immediately before the passing of this Act, could not have been made by virtue of the time bar may be made thereafter.

Terms of payment to be implied in determining market value

38

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

Exclusion of oil appropriated for production purposes in other fields

39

• (1) In section 12(1) of the principal Act (interpretation of Part I) in the definition of “relevantly appropriated” (which, among other matters, excludes oil appropriated for production purposes) after the word “purposes” there shall be added the words “ in relation to that or any other oil field ”.

• (2) This section has effect, and shall be deemed to have had effect, for chargeable periods ending after 31st December 1977.

Variation of decisions on claims for allowable expenditure

40

• (1) At the end of Schedule 5 to the principal Act (allowance of expenditure under section 3 or 4 of that Act) there shall be inserted the following paragraph—

(9) (1) If, within the period of three years commencing with the date on which notice of a decision of the Board under paragraph 3 above was given to the responsible person for an oil field, it appears to the Board that the relevant amount was incorrectly stated in the notice, the Board may before the expiry of that period serve on the responsible person a notice stating what appears to the Board to be the correct amount (referred to below as “the notice of variation”). (2) In this paragraph “the relevant amount”, in relation to a notice of a decision on a claim under paragraph 3 above, means any one or more of the following— (a) the amount of expenditure allowed on the claim; (b) the amount of that expenditure allowed as qualifying for supplement under section 2(9)(b)(ii) of this Act; (c) where different percentages were stated in that notice to apply to different parts of that expenditure for the purpose of calculating the supplement, each of those parts of that expenditure. (3) The responsible person may, by notice in writing given to the Board not more than thirty days after the notice of variation was served on him, appeal to the Special Commissioners against the notice of the variation. (4) A notice of appeal under sub-paragraph (3) shall state the grounds on which the appeal is brought. (5) An appeal under this paragraph may at any time be abandoned by notice in writing given to the Board by the responsible person. (6) A notice of variation may be withdrawn at any time before it becomes effective. (7) In any case where— (a) the responsible person gives notice of appeal against a notice of variation, and (b) before the appeal is determined by the Special Commissioners, the Board and the responsible person agree as to what the relevant amount ought to be, the notice of variation shall have effect subject to such modifications as may be necessary to give effect to that agreement; and thereupon the appeal shall be treated as having been abandoned. (8) On an appeal against a notice of variation the Special Commissioners may vary the notice, quash the notice or dismiss the appeal; and the notice may be varied whether or not the variation is to the advantage of all or any of the participators in the oil field in question. (9) Where a notice of variation relating to a decision on a claim becomes effective, the relevant amount shall be taken for the purposes of this Part of this Act as having been reduced or increased, as the case may require, on the date on which notice of the decision was given, by such amount as may be necessary to give effect to that notice, and the Board may make such computations under section 2 of this Act and such assessments or determinations or such amendments of assessments or determinations as may be necessary in consequence of that reduction or increase. (10) A notice of variation becomes effective for the purposes of this paragraph either— (a) on the expiry of the period during which notice of appeal against the notice of variation may be given to the Special Commissioners under sub-paragraph (3) above without such notice of appeal being given; or (b) where such notice of appeal is given, when the notice of variation can no longer be varied or quashed by the Special Commissioners or by the order of any court. (11) This paragraph has effect in relation to notices of decisions of the Board under paragraph 3 above given after 15th March 1983.

• (2) In Schedule 6 to the principal Act (allowance of expenditure on claim by participator) at the end of the first column of the Table set out in paragraph 2 (application of provisions of Schedule 5) there shall be added “ 9 ”.

Transfers of interests in fields

41

• (1) In sub-paragraph (1) of paragraph 7 of Schedule 17 to the Finance Act 1980 (transfers of unused losses from old participator to new in cases of transfers of interests in fields) for the words “in any chargeable period before the transfer period” there shall be substituted the words “ in the transfer period or any earlier chargeable period ”.

• (2) In sub-paragraph (2) of that paragraph at the end there shall be added the words “ and, for the purposes of effecting such relief, subsection (1) of section 7 shall have effect as if the word “succeeding” were omitted ”.

• (3) This section has effect in relation to transfer periods (within the meaning of paragraph 1 of Schedule 17 to the Finance Act 1980) ending after 31st December 1982.

PART IV — Miscellaneous and Supplementary

National insurance surcharge

Reduction of national insurance surcharge

42

Miscellaneous

National savings: supplements

43

• (1) Where any sum has been borrowed by the Treasury on terms set out—

• (a) in the prospectus for Save As You Earn Savings Contracts (Third Issue); or

• (b) in the prospectus for IndexLinked National Savings Certificates Retirement Issue;

that prospectus shall (whether the sum was borrowed before or after the passing of this Act) be taken to have included a provision empowering the Treasury to supplement, from time to time, the due amount and requiring any such supplement to be paid on such terms as may be notified by the Treasury in the London, Edinburgh and Belfast Gazettes.

• (2) “The due amount” means—

• (a) in the case of the prospectus mentioned in subsection (1)(a) above, the amount due under paragraph 7, 8, 9 or 10; and

• (b) in the case of the other prospectus, the amount due under paragraph 4.

Rates of interest for government lending

44

• (1) Section 5 of the National Loans Act 1968 (which, as set out in section 153 of the Finance Act 1982, provides for the determination of rates of interest for government lending) shall be amended in accordance with this section.

• (2) In subsection (5) (withdrawal of determination or approval of rate of interest which no longer fulfils the requirements of the section)—

• (a) for the words from “approved for” to “not yet made” there shall be substituted the words “ approved for a class of loans ”; and

• (b) for the words from “withdrawn” to the end of the subsection there shall be substituted the words “ withdrawn at the earliest convenient time, and, subject to subsection (5A) below, from that or such later time as may be convenient another rate determined or approved in accordance with subsection (3) or, as the case may be, subsection (4) above shall come into force for further loans of that class ”.

• (3) After subsection (5) there shall be inserted the following subsections:—

(5A) If, in the case of a loan of any class,— (a) an undertaking was given to the person to whom the loan was to be made that the rate of interest which would apply to that loan would be that which, at a time specified in or determined in accordance with the undertaking, was or would be in force for loans of that class, and (b) before the loan was in fact made, the determination or approval of that rate of interest was withdrawn by virtue of subsection (5) above or otherwise ceased to be effective, the rate of interest which applies to that loan shall be that which was in force for loans of that class at the time specified in, or as the case may be determined in accordance with, the undertaking. (5B) In subsection (5A) above “undertaking” means an undertaking given by the person by whom the loan in question was to be made and, where that person is not the Treasury, given by that person with the consent of the Treasury.

Suspension of certain payments into National Loans Fund in respect of new towns

45

• (1) Subject to subsection (4) below, the Treasury may, on the recommendation of the Secretary of State, by order specify any new town development loan as a loan the repayment of which to the Secretary of State (and subsequently into the National Loans Fund) is to be suspended by virtue of this section.

• (2) Where a loan is specified by an order under subsection (1) above—

• (a) the terms of the loan shall have effect as if any payment by way of repayment of or interest on the loan which (apart from this section) would fall due at any time within the unexpired period for repayment of the loan fell due instead at the corresponding time within the period of the same duration beginning with 1st October 1986; and

• (b) no interest shall accrue in respect of the loan during the period beginning with the coming into force of the order and ending with 30th September 1986.

• (3) In this section, “new town development loan” means any sum—

• (a) falling within section 60(a) of the New Towns Act 1981 (sums advanced by Secretary of State to development corporations in England and Wales for the purpose of enabling them to meet expenditure properly chargeable to capital account or to make good to revenue account sums applied in meeting liabilities so chargeable); . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

and “the unexpired period for repayment of the loan”, in relation to any loan specified by an order under subsection (1) above, means the period beginning with the coming into force of the order and ending with the date which (apart from this section) would be the last date on which any payment by way of repayment of or interest on the loan would fall due under the terms of the loan.

• (4) The aggregate amount of new town development loans specified by order under subsection (1) above shall not exceed £1,250 million.

• (5) The power to make an order under subsection (1) above shall be exercisable by statutory instrument.

Historic Buildings and Monuments Commission for England

46

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

• (3) For the purposes of the enactments set out below, the commission shall be treated as a charitable company:—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . section 129 of the Finance Act 1982 (reliefs from stamp duty).

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

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

Pre-consolidation amendments

47

Short title, interpretation, construction and repeals

48

• (1) This Act may be cited as the Finance Act 1983.

• (2) In this Act “the Taxes Act” means the Income and Corporation Taxes Act 1970.

• (3) Part II of this Act, so far as it relates to income tax, shall be construed as one with the Income Tax Acts, so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts and, so far as it relates to capital gains tax, shall be construed as one with the Capital Gains Tax Act 1979.

• (4) Part III of this Act shall be construed as one with Part I of the Oil Taxation Act 1975 and references in Part III to the principal Act are references to that Act.

• (5) The enactments specified in Schedule 10 to this Act are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

SCHEDULE 1

SCHEDULE 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 3

Part I — Provisions Substituted in Part II of Schedules 1 to 5 to the Vehicles (Excise)Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972

1

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

2

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3

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

4

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

5

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6

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7

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

Part II — Amendment of Part I of Schedule 4 to The Vehicles (Excise) Act 1971 and The Vehicles (Excise) Act (Northern Ireland) 1972

Amendments made in both Acts

8

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

Amendments made only in the Act of 1971

9

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

10

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

11

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

Amendments made only in the Act of 1972

12

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

SCHEDULES 4, 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

• (1) In this Schedule " assigned policy " means a policy of life assurance—

• (a) which was issued in respect of an insurance made before 26th June 1982 ; and

• (b) the rights conferred by which have been assigned for money or money's worth before that date; and

• (c) in relation to which an event occurring on or after that date would not, apart from the provisions of this Schedule, be a chargeable event

• (2) In this Schedule " assigned contract" means a contract for a life annuity—

• (a) which was made before 26th June 1982 ; and

• (b) the rights conferred by which have been assigned for money or money's worth before that date; and

• (c) in relation to which an event occurring on or after that date would not, apart from the provisions of this Schedule, be a chargeable event

2

• (1) The relevant provision shall cease to apply to an assigned policy or assigned contract if, after 23rd August 1982.—

• (a) the rights conferred by the policy or contract are again assigned for money or money's worth; or

• (b) a payment is made by way of premium or as lump sum consideration under the policy or contract; or

• (c) subject to paragraph 3 below, a sum is lent by or by arrangement with the body issuing the policy or, as the case may be, the body with which the contract was made.

• (2) No account shall be taken for the purposes of sub-paragraph (1)(a) above of any assignment effected by way of security for a debt, or on the discharge of a debt secured by the rights concerned, or of an assignment between spouses living together.

3

• (1) Paragraph 2(1)(c) above does not apply unless—

• (a) the policy was issued in respect of an insurance made after 26th March 1974 or, as the case may be, the contract was made after that date ; and

• (b) the sum concerned is lent to or at the direction of the individual who, in accordance with sub-paragraph (2) below, is at the time of the loan the chargeable individual.

• (2) The individual who is at any time the chargeable individual for the purposes of sub-paragraph (1)(b) above shall be determined as follows.—

• (a) if at the time the rights conferred by the policy or contract are vested in an individual as beneficial owner or are held on trusts created by an individual (including such trusts as are referred to in section 399(1)(a) of the Taxes Act), that individual is the chargeable individual; and

• (b) if at the time those rights are held as security for a debt owed by an individual, that individual is the chargeable individual.

• (3) Paragraph 2(1)(c) above does not apply in relation to a policy if—

• (a) it is a qualifying policy within the meaning of Schedule 1 to the Taxes Act; and

• (b) either interest at a commercial rate is payable on the sum lent or the sum is lent to a full-time employee of the body issuing the policy for the purpose of assisting him in the purchase or improvement of a dwelling-house to be used as his only or main residence.

4

Where the relevant provision ceases to apply to an assigned policy or assigned contract by virtue of paragraph 2(1)(c) above, the lending of the sum concerned shall be regarded for the purposes of the Income Tax Acts (other than that paragraph) as taking place immediately after the time at which the relevant provision ceases so to apply.

SCHEDULE 5

PART I — Investment After 5th April 1983 in Unquoted Trading Companies

1

• (1) In this Part of this Schedule " Chapter II" means Chapter II of Part IV of the Finance Act 1981 (relief for investment in new corporate trades).

• (2) Any provision of this Part which applies provisions of Chapter II shall be construed as applying those provisions for the purposes of this Part as they apply for the purposes of Chapter II; and references in any provision so applied to any other provision of Chapter II shall, except where this Part otherwise requires, be construed as references to that other provision as so applied.

The relief

2

• (1) This Part of this Schedule has effect for affording relief from income tax where—

• (a) an individual who qualifies for the relief subscribes for eligible shares in a qualifying company ; and

• (b) those shares are issued to him for the purpose of raising money for a qualifying trade which is being carried on by the company or which it intends to carry on.

• (2) In this Part " eligible shares" means new ordinary shares which, throughout the period of five years beginning with the date on which they are issued, carry no present or future preferential right to dividends or to a company's assets on its winding up and no present or future preferential right to be redeemed.

• (3) The relief in respect of the amount subscribed by an individual for any eligible shares shall be given as a deduction of that amount from his total income for the year of assessment in which the shares are issued, and references in this Part to the amount of the relief are references to the amount of that deduction.

• (4) The relief shall be given on a claim and shall not be allowed—

• (a) unless and until the company has carried on the trade for four months; and

• (b) if the company is not carrying on that trade at the time when the shares are issued, unless the company begins to carry it on within two years after that time.

• (5) A claim for the relief may be allowed at any time after the trade has been carried on by the company for four months if the conditions for the relief are then satisfied; but no claim shall be allowed before 1st January 1984.

• (6) In the case of a claim allowed before the end of the relevant period, the relief shall be withdrawn if by reason of any subsequent event it appears that the claimant was not entitled to the relief allowed.

• (7) In this Part, " the relevant period ", in relation to relief in respect of any eligible shares issued by a company, means—

• (a) as respects paragraphs 4, 7, 8, 9 and 10 below, the period beginning with the incorporation of the company (or, if the company was incorporated more than two years before the date on which the shares were issued, beginning two years before that date) and ending five years after the issue of the shares; and

• (b) as respects paragraphs 5, 6 and 17 below, the period beginning with the date on which the shares were issued and ending either three years after that date or, where the company was not at that date carrying on a qualifying trade, three years after the date on which it subsequently began to carry on such a trade.

• (8) Where by reason of its being wound up, or dissolved without winding up, the company carries on the qualifying trade for a period shorter than four months, sub-paragraph (4)(a) above shall have effect as if it referred to that shorter period but only if it is shown that the winding up or dissolution was for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which was the avoidance of tax.

• (9) Section 52(7) to (8A) of Chapter II shall apply, but in the case of subsection (7) with the deletion of the reference to section 204(3) of the Taxes Act (pay as you earn) and, in the case of subsection (8), with the substitution for the reference to subsection (3)(a) of section 52 of a reference to sub-paragraph (4)(a) above.

Limits on relief

3

• (1) Subject to paragraph 19 below, the relief shall not be given in respect of any amount subscribed by an individual for eligible shares issued to him by any company in any year of assessment unless the amount or total amount subscribed by him for the eligible shares issued to him by the company in that year is £500 or more.

• (2) The relief shall not be given to the extent to which the amount or total amount subscribed by an individual for eligible shares issued to him in any year of assessment (whether or not by the same company) exceeds £40,000.

Individuals qualifying for relief

4

• (1) An individual qualifies for the relief if he subscribes for the eligible shares on his own behalf, is resident and ordinarily resident in the United Kingdom throughout the year of assessment in which they are issued and is not at any time in the relevant period connected with the company.

• (2) Section 54(2) to (8) of Chapter LI shall apply.

• (3) In determining, for the purposes of this paragraph, whether an individual is connected with a company, no debt incurred by the company by overdrawing an account with a person carrying on a business of banking shall be treated as loan capital of the company if the debt arose in the ordinary course of that business.

• (4) Where an individual subscribes for shares in a company with which he is not connected (either within the meaning of this paragraph or by virtue of paragraph 2(1B)(b) of Schedule 12, as applied by paragraph 18(5) below) he shall nevertheless be treated as connected with it if he subscribes for the shares as part of any arrangement which provides for another person to subscribe for shares in another company with which that or any other individual who is a party to the arrangement is connected (within the meaning of this paragraph or by virtue of that paragraph).

Qualifying companies

5

• (1) A company is a qualifying company if it is incorporated in the United Kingdom and complies with the requirements of this paragraph.

• (2) The company must, throughout the relevant period, be an unquoted company which is resident in the United Kingdom and not resident elsewhere, and be—

• (a) a company which exists wholly, or substantially wholly, for the purpose of carrying on wholly or mainly in the United Kingdom one or more qualifying trades ; or

• (b) a company whose business consists wholly of—

• (i) the holding of shares or securities of, or the making of loans to, one or more qualifying subsidiaries of the company; or

• (ii) both the holding of such shares or securities, or the making of such loans and the carrying on of one or more qualifying trades.

• (3) In this paragraph "qualifying subsidiary", in relation to a company, means a subsidiary of that company of a kind which may be held by virtue of paragraph 17 below.

• (4) Without prejudice to the generality of sub-paragraph (2) above, but subject to sub-paragraph (5) below, a company ceases to comply with that sub-paragraph if before the end of the relevant period a resolution is passed, or an order is made, for the winding up of the company (or, in the case of a winding up otherwise than under the Companies Act 1948 or the Companies Act (Northern Ireland) 1960, any other act is done for the like purpose) or the company is dissolved without winding up.

• (5) A company shall not be regarded as ceasing to comply with sub-paragraph (2) above if it does so by reason of being wound up or dissolved without winding up and—

• (a) it is shown that the winding up or dissolution is for bonafide commercial reasons and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax ; and

• (b) the company's net assets, if any, are distributed to its members or dealt with as bona vacantia before the end of the relevant period or, in the case of a winding up, the end (if later) of three years from the commencement of the winding up.

• (6) The company's share capital must not, at any time in the relevant period, include any issued shares that are not fully paid up.

• (7) Subject to paragraph 17 below, the company must not at any time in the relevant period—

• (a) control (or together with any person connected with it control) another company or be under the control of another company (or of another company and any person connected with that other company); or

• (b) be a 51 per cent, subsidiary of another company or itself have a 51 per cent subsidiary ;

and no arrangements must be in existence at any time in that period by virtue of which the company could fall within paragraph (a) or (b) above.

• (8) A company is not a qualifying company if—

• (a) an individual has acquired a controlling interest in the company's trade after 5th April 1983 ; and

• (b) at any time in the period mentioned in sub-paragraph (10) below he has, or has had, a controlling interest in another trade; and

• (c) the trade carried on by the company, or a substantial part of it—

• (i) is concerned with the same or similar types of property or parts thereof or provides the same or similar services or facilities as the other trade ; or

• (ii) serves substantially the same or similar outlets or markets as the other trade.

• (9) Section 56(8) and (9) of Chapter II shall apply for the purposes of sub-paragraph (8) above.

• (10) The period referred to in sub-paragraph (8) above is the period beginning two years before and ending three years after—

• (a) the date on which the shares were issued; or

• (b) if later, the date on which the company began to carry on the trade.

Qualifying trades

6

• (1) A trade is a qualifying trade if it complies with the requirements of this paragraph,

• (2) The trade must not at any time in the relevant period consist to any substantial extent of any of the activities mentioned in section 56(2) of Chapter II (as read with section 56(3) and Schedule 11).

• (3) The trade must, during the relevant period, be conducted on a commercial basis and with a view to the realisation of profits.

• (4) Section 56(10) of Chapter II shall apply.

Disposal of shares

7

• (1) Where an individual disposes of any eligible shares before the end of the relevant period, then—

• (a) if the disposal is otherwise than by way of a bargain made at arm's length, he shall not be entitled to any relief in respect of those shares; and

• (b) in any other case, the amount of relief to which he is entitled in respect of those shares shall be reduced by the amount or value of the consideration which he receives for them.

• (2) Where an individual holds ordinary shares in a company and the relief has been given in respect of some but not others, any disposal by him of ordinary shares in the company shall be treated for the purposes of this paragraph as relating—

• (a) first, to those (if any) in respect of which relief has been given under Chapter II rather than to others ; and

• (b) then, to those in respect of which relief has been given under this Part rather than to others.

• (3) Section 57(3) and (4) of Chapter II shall apply but, in the case of subsection (4), with the substitution for the reference to subsection (2) of a reference to sub-paragraph (2) above.

Value received from company

8

• (1) Where an individual who subscribes for eligible shares in a company—

• (a) has, before the issue of the shares but within the relevant period, received any value from the company ; or

• (b) after their issue but before the end of the relevant period, receives any such value ;

the amount of the relief to which he is entitled in respect of the shares shall be reduced by the value received ; but the value received shall be disregarded to the extent to which relief under Chapter II has, by virtue of section 58(1) of that Chapter, been reduced on its account.

• (2) Subject to sub-paragraph (3) below, section 58(2) to (9) of Chapter II shall apply but, in the case of subsection (3), with the substitution for the reference to section 55(5) of a reference to paragraph 5(5) above.

• (3) For the purposes of this paragraph an individual also receives value from the company if any person connected with the company (within the meaning of section 54 of Chapter II)—

• (a) purchases any of its share capital or securities which belong to the individual; or

• (b) makes any payment to him for giving up any right in relation to any of the company's share capital or securities,

and the value received by the individual is the amount receivable by the individual or, if greater, the market value of the shares or securities in question.

Replacement capital

9

• (1) An individual is not entitled to relief in respect of any shares in a company where—

• (a) at any time in the relevant period, the company or any of its subsidiaries—

• (i) begins to carry on a trade which was previously carried on at any time in that period by a person other than the company or any of its subsidiaries ; or

• (ii) acquires the whole, or greater part, of the assets used for the purposes of a trade previously so carried on; and

• (b) sub-paragraph (2) below applies in relation to that individual.

• (2) This sub-paragraph applies in relation to an individual where—

• (a) the person or persons to whom an interest amounting in the aggregate to more than a half share in the trade (as previously carried on) belonged, at any time in the relevant period, is or are the person or persons to whom such an interest in the trade (as transferred) belongs or has, at any such time, belonged ; or

• (b) the person or persons who control or, at any such time, have controlled the company are the person or persons who, at any such time, controlled another company which previously carried on the trade ;

and the individual is that person or one of those persons.

• (3) An individual is not entitled to relief in respect of any shares in a company where—

• (a) the company comes to acquire all of the issued share capital of another company, at any time in the relevant period ; and

• (b) the person or persons who control or have, at any such time, controlled the company are the person or persons who, at any such time, controlled that other company ;

and the individual is that person, or one of those persons.

• (4) For the purposes of sub-paragraph (2) above—

• (a) the persons to whom a trade belongs and, where a trade belongs to two or more persons, their respective shares in that trade shall be determined in accordance with subsections (1)(a) and (b), (2) and (3) of section 253 of the Taxes Act; and

• (b) any interest, rights or powers of a person who is an associate (as denned by section 67(1) of Chapter II) of another person shall be treated as those of that other person.

• (5) In this paragraph—

• " subsidiary " means a subsidiary of a kind which a qualifying company may have by virtue of paragraph 17 below ; and

• " trade " includes any business, profession or vocation and any part of a trade.

Value received by persons other than claimants

10

• (1) The relief to which an individual is entitled in respect of any shares in a company shall be reduced in accordance with section 59(3) of Chapter II, as applied by sub-paragraph (2) below, if at any time in the relevant period the company repays, redeems or repurchases any of its share capital which belongs to any member other than—

• (a) that individual; or

• (b) another individual whose relief is thereby reduced by virtue of section 58(2)(a) of Chapter II as applied by paragraph 8 above,

or makes any payment to any such member for giving up his right to any of the company's share capital on its cancellation or extinguishment.

• (2) Section 59(3) to (8) of Chapter II shall apply, but with the deletion, in subsection (4), of the reference to section 53(3) and (7) and, in subsection (6), of paragraphs (a) and (b).

• (3) Sub-paragraph (1) above does not apply in relation to the redemption of any share capital for which the redemption date was fixed before 15th March 1983.

• (4) Where—

• (a) after 5th April 1983 a company issues share capital (" the original shares ") of nominal value equal to the authorised minimum (within the meaning of the Companies Act 1980) for the purposes of complying with the requirements of section 4 of that Act (public company not to do business unless requirements as to share capital complied with) ; and

• (b) after the registrar of companies has issued the company with a certificate under section 4 it issues eligible shares,

sub-paragraph (1) above shall not apply in relation to any redemption of any of the original shares within 12 months of the date on which those shares were issued.

• (5) Where—

• (a) a company has issued shares in respect of which one or more individuals are entitled to relief under this Part and has also issued shares in respect of which one or more individuals are entitled to relief under Chapter II; and

• (b) sub-paragraph (1) above applies ;

then, for the purposes of section 59(3) of Chapter LT (as it applies both to this Part and to Chapter II), the relief given under Chapter II shall be treated as if it were relief given under this Part.

Prevention of misuse

11

An individual is not entitled to relief in respect of any shares unless the shares are subscribed for and issued for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.

Husband and wife

12

• (1) In the case of any amount subscribed by a married woman for eligible shares issued to her at a time—

• (a) when she is living with her husband ; and

• (b) which falls in a year of assessment for which his income includes (or, if there were any, would include) any of hers,

the deduction under paragraph 2(3) above shall, subject to sub-paragraph (2) below, be made from his total income, and references in this Part to the relief to which an individual is entitled in respect of any shares shall be construed accordingly.

• (2) Section 60(2) to (7) of Chapter II shall apply, with the substitution, for references to sections 52(2), 53(1) and (2) and 57(1) of references to, respectively, paragraphs 2(3), 3(1) and (2) and 7(1) above.

Claims

13

• (1) A claim for the relief in respect of eligible shares issued by a company in any year of assessment shall be made—

• (a) not earlier than 1st January 1984 or, if later, the end of the period of four months mentioned in paragraph 2(4)(a) above; and

• (b) not later than two years after the end of that year of assessment or, if that period of four months ended after the end of that year, not later than two years after the end of that period.

• (2) A claim for relief in respect of eligible shares in a company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Board may direct and certifying that the conditions for the relief, so far as applying to the company and the trade, are satisfied in relation to those shares.

• (3) Before issuing a certificate for the purposes of sub-paragraph (2) above a company shall furnish the inspector with a statement to the effect that it satisfies the conditions for the relief, so far as they apply in relation to the company and the trade, and has done so at all times since the beginning of the relevant period.

• (4) No such certificate shall be issued without the authority of the inspector or where the company, or a person connected with the company, has given notice to the inspector under paragraph 15(2) below.

• (5) Any statement under sub-paragraph (3) above shall contain such information as the Board may reasonably require, shall be in such form as the Board may direct and shall contain a declaration that it is correct to the best of the company's knowledge and belief.

• (6) Where a company has issued a certificate for the purposes of sub-paragraph (2) above, or furnished a statement under sub-paragraph (3) above and—

• (a) the certificate or statement is made fraudulently or negligently ; or

• (b) the certificate was issued in contravention of sub-paragraph (4) above;

the company shall be liable to a penalty not exceeding £250 or, in the case of fraud, £500.

• (7) For the purpose of regulations made under section 204 of the Taxes Act (pay as you earn), no regard shall be had to the relief unless a claim for it has been duly made and admitted.

• (8) Section 61(6) of Chapter II shall apply.

• (9) For the purposes of section 86 of the Taxes Management Act 1970 (interest on overdue tax), tax charged by an assessment—

• (a) shall be regarded as due and payable notwithstanding that relief from the tax (whether by discharge or repayment) is subsequently given on a claim for the relief; but

• (b) shall, unless paid earlier or due and payable later, be regarded as paid on the date of the making of the claim on which the relief is given ;

and section 91 of that Act (effect on interest of reliefs) shall not apply in consequence of any discharge or repayment for giving effect to the relief.

Assessments for withdrawing relief

14

• (1) Where any relief has been given which is subsequently found not to have been due, it shall be withdrawn by the making of an assessment to tax under Case VI of Schedule D for the year of assessment for which the relief was given.

• (2) Section 62(2) to (7) of Chapter II shall apply but, in the case of subsection (4), with the substitution for the reference to section 57(1)(b) of a reference to paragraph 7(1)(b) above and, in the case of subsection (6), with the substitution for paragraphs (a) to (d) of the following paragraphs—