Legalize / United Kingdom / Public General Act

Finance Act 1985

Type Public General Act

Publication 1985-07-25

Last updated 2022-04-06

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(b) that a notice is served on the fund under paragraph 6(1) above, and

(3) In this paragraph " offshore fund ", " United Kingdom equivalent profits " and " account period " have the meanings they have in Schedule 19 to the Finance Act 1984 ; and " the appropriate day " shall be construed in accordance with paragraph 4(6) above.

SCHEDULE 23

PART I — General Interpretation

Securities

1

(1) For the purposes of this Chapter " securities " does not include shares in a company but, subject to sub-paragraph (2) below, includes any loan stock or similar security—

(a) whether of the Government of the United Kingdom, any other government, any public or local authority in the United Kingdom or elsewhere, or any company or other body, and

(b) whether or not secured, whether or not carrying a right to interest of a fixed amount or at a fixed rate per cent, of the nominal value of the securities, and whether or not in bearer form.

(2) For the purposes of this Chapter " securities " does not include—

(a) securities on which the whole of the return is a distribution by virtue of paragraph (d)(iv) of section 233(2) of the Taxes Act;

(b) national savings certificates (including Ulster savings certificates) ;

(d) certificates of deposit (which expression has here the same meaning as in section 55 of the Finance Act 1968);

(e) any security which fulfils the following conditions, namely, it is redeemable, the amount payable on its redemption exceeds its issue price, and no return other than the amount of that excess is payable on it.

(3) For the purposes of this Chapter securities are of the same kind if they are treated as being of the same kind by the practice of a recognised stock exchange in the United Kingdom or elsewhere, or would be so treated if dealt with on such a stock exchange.

Transfers, holding etc.

2

(1) This paragraph applies for the purposes of this Chapter.

(2) "Transfer", in relation to securities, means transfer by way of sale, exchange, gift or otherwise.

(3) Where an agreement for the transfer of securities is made, they are transferred, and the person to whom they are agreed to be transferred becomes entitled to them, when the agreement is made and not on a later transfer made pursuant to the agreement.

(4) " Entitled", " transfer" and cognate expressions, except in sub-paragraph (3) above, shall be construed in accordance with that sub-paragraph.

(5) A person holds securities at a particular time if he is entitled to them at the time.

(6) A person holds securities on a day if he is entitled to them throughout the day, or he becomes and does not cease to be entitled to them on the day.

(7) A person acquires securities when he becomes entitled to them.

(8) Where—

(a) one individual holds securities at a particular time, and

(b) any interest on them would, if it became payable at that time, be treated for the purposes of the Tax Acts as part of another individual's income,

then, for the purposes of the provisions mentioned in sub-paragraph (9) below, each of them shall be treated as holding at that time the securities which the other holds as well as those which he actually holds.

(9) The provisions are—

(a) section 75(1)(b) of this Act,

(b) section 75(2)(b) of this Act, so far as relating to section 75(1)(b), and

(10) Where, in Scotland, two or more persons carry on a trade or business in partnership, any partnership dealings shall be treated as dealings by the partners and not by the firm as such and the partners as being entitled to securities held by the firm.

3

(1) This paragraph applies for the purposes of this Chapter.

(2) An interest payment day, in relation to securities, is a day on which interest on them is payable; and, in a case where a particular payment of interest may be made on one of a number of days, the interest is for the purposes of this sub-paragraph payable on the first of those days.

(3) Subject to sub-paragraph (4) below, the following are interest periods in relation to securities—

(a) the period beginning with the day following that on which they are issued and ending with the first interest payment day to fall;

(b) the period beginning with the day following one interest payment day and ending with the next to fall.

(4) A period which would (apart from this sub-paragraph) be an interest period exceeding 12 months (a long period) is not an interest period, but the following shall apply to it-

(a) the period of 12 months beginning with the day on which it begins is an interest period ;

(b) each successive period (if any) of 12 months falling within it is an interest period ;

(5) Securities are transferred with accrued interest if they are transferred with the right to receive interest payable on—

(a) the settlement day, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after the settlement day, in any other case,

and they are transferred without accrued interest if they are transferred without that right.

(6) The interest applicable to securities for an interest period is (subject to sub-paragraph (7) below) the interest payable on them on the interest payment day with which the period ends.

(7) In the case of a period which is an interest period by virtue only of sub-paragraph (4) above or paragraph 26(3) below—

(a) the interest applicable to securities for the period is the interest payable on them on the interest payment day with which the long or straddling period concerned ends, and

(b) section 73(8) of this Act shall have effect as if the references to the period were to the long or straddling period concerned.

(8) "Interest" includes dividends and any other return (however described) except a return consisting of an amount by which the amount payable on a security's redemption exceeds its issue price.

Settlement day

4

(1) This paragraph has effect to determine, for the purposes of this Chapter, the settlement day in relation to a transfer of securities.

(2) Where the securities are transferred in accordance with the rules of a recognised market the settlement day is the day on which the transferee agrees to settle or, if he may settle on one of a number of days, the day on which he settles; and, where they are transferred otherwise, sub-paragraphs (3) to (5) below apply.

(3) Where the consideration for the transfer is money alone, and the transferee agrees to pay the whole of it on or before the next (or first) interest payment day to fall after an agreement for transfer is made, the settlement day is the day on which he agrees to make the payment or, if payment may be made on one of a number of days, or on a number of different days, the latest of them to fall.

(4) Where there is no consideration for the transfer, or the transfer is a transfer by virtue of paragraph 7, 12, 13, 14 or 31 below, the settlement day is the day on which the securities are transferred.

(5) In any other case, the settlement day is such day as an inspector decides ; and the jurisdiction of the General Commissioners or the Special Commissioners on any appeal shall include jurisdiction to review such a decision of the inspector.

Nominal value

5

For the purposes of this Chapter the nominal value of securities is—

(a) where the interest on them is expressed to be payable by reference to a given value, that value, and

(b) in any other case, the price of the securities when they were issued.

PART II — Special Cases

Nominees and trustees

6

(1) Where securities are transferred by or to a person as nominee for another person, or as trustee for another person absolutely entitled as against the trustee, or for any person who would be so entitled but for being an infant or other person under disability, or for two or more persons who are or would be jointly so entitled, sections 73 and 75 of this Act apply as if references to the transferor or the transferee (as the case may be) were to the person or persons for whom the nominee or trustee disposes or acquires.

(2) It is hereby declared that for the purposes of sub-paragraph (1) above—

(a) securities are transferred by a person as trustee for another person absolutely entitled as against the trustee if that other person has immediately before the transfer the exclusive right to direct how the securities shall be dealt with, subject only to satisfying any outstanding charge, hen or other right of the trustee to resort to the securities for payment of duty, taxes, costs or other outgoings, and

(b) securities are transferred to a person as trustee for another person so entitled if that other person has that right immediately after the transfer.

7

(1) Where a person who is entitled to securities becomes trustee of them, he shall be treated for the purposes of this Chapter as transferring them (in a capacity other than trustee) to himself (in his capacity as trustee), or to himself and any other trustees, at the time he becomes trustee.

(2) The securities shall be treated as transferred with accrued interest if the person was entitled to receive in respect of them interest payable on—

(a) the day the transfer is treated as made, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after that day, in any other case,

and they shall be treated as transferred without accrued interest if he was not so entitled.

8

(1) Annual profits or gains which by virtue of any of the provisions mentioned in sub-paragraph (2) below are treated as received in a year of assessment by trustees shall be chargeable to income tax at a rate equal to the sum of the basic rate and the additional rate for that year.

(2) The provisions are—

(a) section 74(2) of this Act,

(b) paragraph 2(2) or (3) of Schedule 22 to this Act, and

(3) In section 17 of the Finance Act 1973 (payments under discretionary trusts) in subsection (3) (amounts to be set against tax assessable on trustees in connection with such payments) at the end of paragraph (f) there shall be inserted

and (g) the amount of any tax on annual profits or gains treated as received by trustees by virtue of section 74(2) of the Finance Act 1985, paragraph 2(2) or (3) of Schedule 22 to that Act or paragraph 15(3) of Schedule 23 to that Act (securities) and charged at a rate equal to the sum of the basic rate and the additional rate by virtue of paragraph 8(1) of Schedule 23 to that Act;

9

(1) Sub-paragraph (2) below applies where—

(a) a trustee of a settlement is treated as receiving annual pro fits or gains under section 74(2) of this Act, or

(b) a trustee of a settlement who is resident or domiciled outside the United Kingdom throughout any chargeable period in which an interest period (or part of it) falls would, at the end of the interest period, have been treated under section 74(2) of this Act as receiving annual profits or gains or annual profits or gains of a greater amount if he had been resident or domiciled in the United Kingdom during a part of each such chargeable period.

(2) Chapters II to IV of Part XVI of the Taxes Act (settlements) shall have effect as if the amount which the trustee is or would be treated as receiving were income (within Chapter II) or income arising under the settlement (within Chapter III or IV).

(3) Sub-paragraph (4) below applies where income of a trustee of a settlement who is resident or domiciled outside the United Kingdom throughout any chargeable period in which an interest period (or part of it) falls consists of interest which falls due at the end of the interest period and which would have been treated under section 74(5) of this Act as reduced by an allowance or an allowance of a greater amount if he had been resident or domiciled in the United Kingdom during a part of each such chargeable period.

(4) For the purposes of Chapters II to IV of Part XVI of the Taxes Act, the interest shall be treated as being reduced by the amount of the allowance or by the additional amount (as the case may be).

(5) In this paragraph—

(a) " settlement" means settlement within the meaning of Chapter II, III or IV of Part XVI of the Taxes Act (as the case may be), and

(b) references to a trustee of a settlement are, where there is no trustee of the settlement, to any person entitled to securities comprised in the settlement.

Foreign currency

10

(1) Sub-paragraphs (2) to (4) below apply where the interest on securities is payable in a currency other than sterling.

(2) For the purposes of section 73(2) of this Act the accrued amount is to be determined as follows—

(a) if section 73(4)(a) applies and the sterling equivalent of the amount of gross interest there mentioned is shown in an agreement for transfer, the accrued amount is the sterling equivalent so shown;

(b) if section 73(4)(a) applies but sub-paragraph (a) above does not, or if section 73(4)(b) applies, the accrued amount is the sterling equivalent on the settlement day of the amount found by virtue of section 73(4)(a) or ((b) (as the case may be).

(3) For the purposes of section 73(3) of this Act the rebate amount is to be determined as follows—

(a) if section 73(5)(a) applies and the sterling equivalent of the amount of gross interest there mentioned is shown in an agreement for transfer, the rebate amount is the sterling equivalent so shown;

(b) if section 73(5)(a) applies but sub-paragraph (a) above does not, or if section 73(5)(b) applies, the rebate amount is the sterling equivalent on the settlement day of the amount found by virtue of section 73(5)(a) or (b) (as the case may be).

(4) For the purposes of paragraph 2(3) of Schedule 22 to this Act, the amount of interest! received on any day shall be taken to be the sterling equivalent on that day of the amount actually received.

(5) Where securities are denominated in a currency other than sterling the amount of the deemed interest for the purposes of paragraph 2(2) and (3) of Schedule 22 to this Act is the sterling equivalent on the second date (within the meaning of that Schedule) of the deemed interest.

(6) Where, apart from this sub-paragraph, the nominal value of securities would be a value (the foreign value) expressed in a currency other than sterling, then, for the purposes of section 75 of this Act and Schedule 22 to this Act, their nominal value on a particular day is the sterling equivalent on that day of the foreign value.

(7) For the purposes of sub-paragraphs (2)(b), (3)(b) and (4) to (6) above, the sterling equivalent of an amount or value on a particular day is the sterling equivalent calculated by reference to the London closing rate of exchange for that day.

Foreign securities: delayed remittances

11

(1) This paragraph applies where in an interest period a person is treated as entitled to a sum or sums under section 73(2)(a) of this Act in respect of a transfer or transfers of securities of a particular kind which are situated outside the United Kingdom.

(2) Subject to sub-paragraph (3) below, the amount of any annual profits or gains which the person is treated under section 74 of this Act as receiving on the day the period ends in respect of securities of that kind shall be reduced—

(a) if the amount of the sum or aggregate of the sums exceeds the amount of the profits or gains, to nil, or

(b) in any other case, by the amount of the sum or aggregate.

(3) No reduction shall be made unless the person makes a claim and shows that the conditions in sub-paragraph (5) below are, so far as applicable, satisfied in the chargeable period in which the profits or gains are treated as received.

(4) The claimant (or his personal representatives) shall be charged to tax under Case VI of Schedule D on the amount of the reduction for the chargeable period in which the conditions in sub-paragraph (5) below cease to be satisfied.

(5) The conditions are—

(a) that the claimant was unable to remit the proceeds of the transfer or transfers to the United Kingdom,

(b) that the inability was due to the laws of the territory in which the securities are situated, or to the executive action of its government, or to the impossibility of obtaining foreign currency in that territory, and

(6) No claim under this paragraph shall be made in respect of a transfer more than six years after the end of the interest period in which the transfer occurred.

(7) The personal representatives of a deceased person may make any claim which he might have made under this paragraph if he had not died.

(8) For the purposes of this paragraph the place where securities are situated shall be determined in accordance with section 18(4) of the Capital Gains Tax Act 1979.

Death

12

(1) Where an individual who is entitled to securities dies, he shall be treated for the purposes of this Chapter as transferring the securities to his personal representatives immediately before his death.

(2) The securities shall be treated as transferred with accrued interest if the deceased was entitled to receive in respect of them interest payable on—

(a) the day of death, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after the day of death, in any other case,

and they shall be treated as transferred without accrued interest if he was not so entitled.

(3) Where the securities are transferred with accrued interest by the personal representatives to a legatee in the interest period in which the individual died—

(a) section 73 of this Act shall not apply to the transfer, and

(b) the transfer of the securities which the individual is treated as making by virtue of sub-paragraph (1) above shall be treated as made to the legatee (and not to the personal representatives).

(4) In sub-paragraph (3) above "legatee" includes any person taking (whether beneficially or as trustee) under a testamentary disposition or on an intestacy or partial intestacy, including any person taking by virtue of an appropriation by the personal representatives in or towards satisfaction of a legacy or other interest or share in the deceased's property.

(5) In the case of an individual who dies in an interest period, section 74(2) of this Act shall have effect as if the reference to the day the period ends were to the day he dies.

Trading stock: appropriations

13

(1) Where securities acquired by a person otherwise than as trading stock of a trade carried on by him are appropriated by him for the purposes of the trade as trading stock (whether on the commencement of the trade or otherwise), he shall be treated for the purposes of this Chapter as transferring them otherwise than in the course of the trade and re-acquiring them in the course of the trade on the day the appropriation is made.

(2) Where securities forming part of the trading stock of a person's trade are appropriated by him for any other purpose, or are retained by him on his ceasing to carry on the trade, he shall be treated for the purposes of this Chapter as transferring them in the course of the trade and re-acquiring them otherwise than in the course of the trade on the day the appropriation is made or (as the case may be) he ceases to carry on the trade.

(3) Where sub-paragraph (1) or (2) above applies, the securities shall be treated as transferred with accrued interest if the person was entitled to receive in respect of them interest payable on—

(a) the day the transfer is treated as made, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after that day, in any other case,

and they shall be treated as transferred without accrued interest if he was not so entitled.

Conversions

14

(1) Where there is a conversion of securities the person who was entitled to them immediately before the conversion shall be treated for the purposes of this Chapter as transferring them on the day of the conversion (if there is no actual transfer).

(2) The transfer shall be treated as made with accrued interest if the person was entitled to receive in respect of the securities interest payable on—

(a) the day of the conversion, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after the day of the conversion, in any other case,

and they shall be treated as transferred without accrued interest if he was not so entitled.

(3) For the purposes of this Chapter the interest period in which the conversion is made shall be treated as ending on the day on which it would have ended had the conversion not been made.

(4) In this paragraph " conversion " means conversion within the meaning of section 82 of the Capital Gains Tax Act 1979.

Transfer of unrealised interest

15

(1) This paragraph applies where securities are transferred on or after 28th February 1986 with the right to receive interest (unrealised interest) payable on them on an interest payment day falling before the settlement day.

(2) Where the settlement day falls within an interest period, section 74 of this Act shall (subject to sub-paragraph (5) below) apply as if the transferor were entitled under section 73 to a sum on them in the period of an amount equal to the unrealised interest (in addition to any other sum to which he may be treated as so entitled).

(3) Where the settlement day falls after the end of the last interest period in relation to the securities, the transferor shall be treated as receiving on the settlement day annual profits or gains of an amount equal to the unrealised interest; and the profits or gains shall be chargeable to tax under Case VT of Schedule D for the chargeable period in which they are treated as received.

(4) Where the transferee receives the unrealised interest, and but for this sub-paragraph it would be taken into account in computing tax charged for the chargeable period in which the interest is received, it shall for the purposes of the Tax Acts be left out of account.

(5) Section 75(1) of this Act applies for the purposes of this paragraph as if the reference to section 73(2)(a) or (3)(a) were to subparagraph (2) or (3) above and references to the year of assessment in which the interest period ends were to the year in which the settlement day falls.

(6) Paragraph 6 above applies for the purposes of this paragraph as if the reference to section 73 were to this paragraph.

(7) Where sub-paragraph (2) or (3) above applies, section 31 of the Capital Gains Tax Act 1979 shall be disregarded in computing for capital gains tax purposes the gain accruing on the disposal concerned, but an amount equal to the amount of the unrealised interest shall be excluded from the consideration mentioned in paragraph 33(4) below.

(8) Where the unrealised interest is payable in a currency other than sterling its amount is for the purposes of this paragraph the sterling equivalent on the settlement day of the amount it would be apart from this sub-paragraph ; and for this purpose the sterling equivalent is to be calculated by reference to the London closing rate of exchange for that day.

Insurance companies

16

The references in section 75(1)(a) and (2)(a) of this Act and in paragraph 5(1) of Schedule 22 to this Act to computing the profits or losses of a trade shall not be taken as applying to a computation of income for the purposes of section 305(2) of the Taxes Act (expenses of management of insurance companies).

17

Where an insurance company carrying on life assurance business is treated as receiving annual profits or gains under section 74(2) of this Act, paragraph 2 of Schedule 22 to this Act or paragraph 15(3) above in respect of securities held as investments in connection with that business, the profits or gains shall be treated for the purposes of section 310 of the Taxes Act (rate relief: investment income reserved for policy holders) as if they were income from investments held in connection with that business.

18

(1) Section 73(2)(a) or (3)(a) of this Act (as the case may be) does not apply if the transferor is an insurance company and the transfer fails to be taken into account in computing its profits or losses for the purposes of section 312 of the Taxes Act (general annuity business or pension business).

(2) Section 73(2)(b) or (3)(b) of this Act (as the case may be) does not apply if sub-paragraph (1) above would apply if " transferor " read " transferee ".

(3) For the purposes of Schedule 22 to this Act an insurance company is to be treated as not entitled to securities on a day if, were it to transfer them on that day, that transfer would fall to be taken into account in computing its profits or losses for the purposes of section 312 of the Taxes Act.

19

(1) Section 73(2)(a) or (3)(a) of this Act (as the case may be) does not apply if the transferor is an insurance company which, if it became entitled to any interest on the securities transferred, would by virtue of section 315(1) of the Taxes Act (foreign life assurance funds) be liable, in respect of the interest, to tax computed by reference to the amount of income received in the United Kingdom.

(2) Section 73(2)(b) or (3)(b) of this Act (as the case may be) does not apply if sub-paragraph (1) above would apply if " transferor " read " transferee ".

(3) For the purposes of Schedule 22 to this Act an insurance company is to be treated as not entitled to securities in the case of which, if it became entitled to any interest on them, it would by virtue of section 315(1) of the Taxes Act be liable, in respect of the interest, to tax computed by reference to the amount of interest received in the United Kingdom.

(4) Section 73(2)(a) or (3)(a) of this Act (as the case may be) does not apply if the transferor is an insurance company which, if it became entitled to any interest on the securities transferred and applied it for the purposes of its foreign life assurance fund, would by virtue of section 315(2) of the Taxes Act not be liable to tax in respect of the interest.

(5) Section 73(2)(b) or (3)(b) of this Act (as the case may be) does not apply if sub-paragraph (4) above would apply if "transferor " read " transferee ".

(6) For the purposes of Schedule 22 to this Act an insurance company is to be treated as not entitled to securities in the case of which, if it became entitled to any interest on them and applied it for the purposes of its foreign life assurance fund, it would by virtue of section 315(2) of the Taxes Act not be liable to tax in respect of the interest.

20

(1) In section 316(1) of the Taxes Act (income of overseas life insurance companies) " income " does not include annual profits or gains chargeable to tax by virtue of section 74(2) of this Act or paragraph 2(4) of Schedule 22 to this Act or paragraph 15(3) above,

(2) Where an overseas life insurance company is entitled to an allowance under section 74(4) of this Act, section 74(5) and (6) shall not apply but sub-paragraphs (3) and (4) below shall apply.

(3) If the company is treated under section 74(2) of this Act as receiving annual profits or gains in an accounting period, the profits or gains shall be treated as reduced by any amount (the deductible amount) equal to the allowance or aggregate of the allowances, as the case may be, to which the company is entitled under section 74(4) of this Act in relation to an interest period or periods ending in the accounting period.

(4) Where the deductible amount exceeds the amount of those annual profits or gains, the company may claim to have the excess treated as reducing any annual profits or gains the company is treated as receiving under section 74(2) of this Act in the company's next accounting period or, if there is still an excess, the one after (and so on for future accounting periods).

(5) Sub-paragraphs (2) to (4) above do not apply to an overseas life insurance company if, by virtue of arrangements specified in an Order in Council under section 497 of the Taxes Act (double taxation relief), no charge to corporation tax under Case III of Schedule D arises under section 316 of that Act in respect of any income of the company.

(6) In this paragraph " overseas life insurance company " has the meaning given by section 323(2) of the Taxes Act (company with head office outside UK but carrying on life assurance business through UK branch or agency).

Underwriters

21

In paragraphs 22 to 28 below " approved association of underwriters ", " business " and " premiums trust fund " have the meanings given by paragraph 16(1) of Schedule 10 to the Taxes Act.

22

An underwriting member of Lloyd's or of an approved association of underwriters shall be treated for the purposes of this Chapter as absolutely entitled as against the trustees to the securities forming part of his premiums trust fund, his special reserve fund (if any) and any other trust fund required or authorised by the rules of Lloyd's or the association in question, or required by the underwriting agent through whom his business or any part of it is carried on, to be kept in connection with the business.

23

(1) In relation to securities forming part of a premiums trust fund, any reference in Schedule 22 to this Act to a date in the first column in sub-paragraph (3) below shall be read as a reference to that opposite it in the second.

(2) Where securities are transferred by or to the trustees of a premiums trust fund, this Chapter (other than Schedule 22) shall be read in relation to the trustees as if any reference to a date in the first column in sub-paragraph (3) below were a reference to that opposite it in the second, but without being so read in relation to the transferee or transferor (unless in turn constituting trustees of such a fund).

(3) The dates are—

28th February 1982	1st January 1982
27th February 1985	31st December 1984
28th February 1985	1st January 1985
27th February 1986	31st December 1985
28th February 1986	1st January 1986

24

(1) The securities forming part of a premiums trust fund at the beginning of 1st January 1986 or 1st January of any subsequent year shall be treated for the purposes of this Chapter as transferred on 1st January concerned to the trustees of the fund.

(2) In relation to such a transfer, the settlement day is the day preceding that of the transfer (notwithstanding paragraph 4 above).

(3) The securities shall be treated as transferred with accrued interest if the trustees are entitled to receive in respect of them interest payable on—

(a) the day of the transfer, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after that day, in any other case,

and they shall be treated as transferred without accrued interest if they are not so entitled.

(4) This paragraph does not apply as regards securities if the day preceding 1st January concerned is an interest payment day in relation to them.

25

(1) The securities forming part of a premiums trust fund at the end of 31st December 1986 or 31st December of any subsequent year shall be treated for the purposes of this Chapter as transferred on 31st December concerned by the trustees of the fund.

(2) In relation to such a transfer, the settlement day is the day of the transfer (notwithstanding paragraph 4 above).

(3) The securities shall be treated as transferred with accrued interest if the trustees were entitled to receive in respect of them interest payable on the next (or first) interest payment day to fall after the day of the transfer, and they shall be treated as transferred without accrued interest if they were not so entitled.

(4) This paragraph does not apply as regards securities if 31st December concerned is an interest payment day in relation to them.

26

(1) Where securities are transferred by or to the trustees of a premiums trust fund, this paragraph shall have effect in relation to the trustees, though not in relation to the transferee or transferor (unless in turn constituting trustees of such a fund).

(2) In this paragraph " straddling period " means a period which would (by virtue of paragraph 3(3) and (4) above and apart from this paragraph) be in relation to the securities an interest period beginning on or before and ending after 31st December 1986 or 31st December of any subsequent year.

(3) For the purposes of this Chapter a straddling period is not an interest period, but the following shall apply to it—

(a) the period beginning with the day on which the straddling period begins and ending with 31st December concerned is an interest period, and

(b) the period beginning with the day following 31st December concerned and ending with the day with which the straddling period ends is an interest period.

27

(1) Paragraph 12 above does not apply where the individual concerned is an underwriting member of Lloyd's or of an approved association of underwriters and the securities concerned form part of a premiums trust fund, a special reserve fund or any other trust fund required or authorised by the rules of Lloyd's or the association in question, or required by the underwriting agent through whom the individual's business or any part of it is carried on, to be kept in connection with the business.

(2) In such a case the deceased's personal representatives shall be treated for the purposes of this Chapter as the transferor or transferee in relation to transfers of securities as to which the deceased was the transferor or transferee (as the case may be) in the interest period in which he died.

28

(1) This paragraph applies where an underwriting member of Lloyd's or of an approved association of underwriters is entitled to securities forming part of a premiums trust fund or to different securities forming part of different premiums trust funds.

(2) Where there is one such fund, he shall be treated for the purposes of Schedule 22 to this Act as holding the securities forming part of it as one person and as holding as another person any other securities to which he is entitled.

(3) Where there is more than one such fund, he shall be treated for those purposes as holding the securities forming part of different funds as different persons and as holding as yet another person any other securities (not forming part of such a fund) to which he is entitled.

(4) In relation to the securities forming part of such a fund, four of die references in Schedule 22 to this Act to a person (where they would otherwise be to the member) shall be read as references to the underwriting agent through whom the business to which the fund relates is carried on; and the four references are the reference in paragraph 2(1), the first two in paragraph 6(1) and the first in paragraph 6(2).

(5) Where an underwriting member of Lloyd's or of an approved association of underwriters is entitled to securities forming part of a premiums trust fund, and different securities are attributable to his participation in different syndicates, the securities attributable to different syndicates shall be treated for the purposes of this paragraph as forming part of different premiums trust funds.

29

In paragraph 7(3)(o) of Schedule 10 to the Taxes Act (special reserve funds) " income " includes annual profits or gains chargeable to tax by virtue of section 74(2) of this Act or paragraph 2(4) of Schedule 22 to this Act or paragraph 15(3) above.

Charities

30

(1) Section 73(2)(a) or (3)(a) of this Act (as the case may be) does not apply where, if the transferor became entitled to any interest on the securities transferred and applied it for charitable purposes only, exemption could be granted under section 360(1)(c) of the Taxes Act (charities) in respect of the interest.

(2) Section 73(2)(b) or (3)(b) of this Act (as the case may be) does not apply if sub-paragraph (1) above would apply if " transferor " read " transferee ".

(3) For the purposes of Schedule 22 to this Act a person is to be treated as not entitled to securities in the case of which, if he became entitled to any interest on them and applied it for charitable purposes only, exemption could be granted under section 360(1)(c) of the Taxes Act in respect of the interest.

(4) Section 73(2)(a) or (3)(a) of this Act (as the case may be) does not apply where, if the transferor became entitled to any interest on the securities transferred and applied it for the purposes mentioned in paragraph (d) of section 360(1) of the Taxes Act, exemption could be granted under that paragraph in respect of the interest.

(5) Section 73(2)(b) or (3)(b) of this Act (as the case may be) does not apply if sub-paragraph (4) above would apply if " transferor " read " transferee ".

(6) For the purposes of Schedule 22 to this Act a person is to be treated as not entitled to securities in the case of which, if he became entitled to any interest on them and applied it for the purposes mentioned in paragraph (d) of section 360(1) of the Taxes Act, exemption could be granted under that paragraph in respect of the interest.

31

(1) If securities held on charitable trusts cease to be subject to charitable trusts the trustees shall be treated for the purposes of this Chapter as transferring the securities (in their capacity as charitable trustees) to themselves (in another capacity) at the time when the securities cease to be so subject.

(2) The securities shall be treated as transferred with accrued interest if the trustees were entitled to receive in respect of them interest payable on—

(a) the day the transfer is treated as made, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after that day, in any other case,

and they shall be treated as transferred without accrued interest if they were not so entitled.

Retirement schemes

32

(1) Section 73(2)(a) or (3)(a) of this Act (as the case may be) does not apply where, if the transferor became entitled to any interest on the securities transferred, exemption could be allowed under section 21(2) of the Finance Act 1970 (exempt approved retirement benefits schemes) in respect of the interest.

(2) Section 73(2)(b) or (3)(b) of this Act (as the case may be) does not apply if sub-paragraph (1) above would apply if " transferor " read " transferee ".

(3) For the purposes of Schedule 22 to this Act a person is to be treated as not entitled to securities in the case of which, if he became entitled to any interest on them, exemption could be allowed under section 21(2) of the Finance Act 1970 in respect of the interest.

PART III — Miscellaneous

Capital gains

33

(1) Where securities are transferred, then—

(a) if section 73(2)(a) or (3)(a) of this Act (as the case may be) applies, section 31 of the Capital Gains Tax Act 1979 shall be disregarded in computing for capital gains tax purposes the gain accruing on the disposal concerned ;

(b) if section 73(2)(b) or (3)(b) of this Act (as the case may be) applies, section 33 of the Capital Gains Tax Act 1979 shall be disregarded in computing for capital gains tax purposes the gain accruing to the transferee if he disposes of the securities,

but the following provisions of this paragraph shall apply.

(2) Where the securities are transferred with accrued interest, then—

(a) if section 73(2)(a) of this Act applies, an amount equal to the accrued amount (determined under that section) shall be excluded from the consideration mentioned in subparagraph (4) below;

(b) if section 73(2)(b) of this Act applies, an amount equal to that amount shall be excluded from the sums mentioned in sub-paragraph (5) below.

(3) Where the securities are transferred without accrued interest, then—

(a) if section 73(3)(a) of this Act applies, an amount equal to the rebate amount (determined under that section) shall be added to the consideration mentioned in sub-paragraph (4) below;

(b) if section 73(3)(b) of this Act applies, an amount equal to that amount shall be added to the sums mentioned m subparagraph (5) below.

(4) The consideration is the consideration, for the disposal of the securities transferred, which is taken into account in the computation for capital gains tax purposes of the gain accruing on the disposal.

(5) The sums are the sums allowable to the transferee as a deduction from the consideration in the computation for capital gains tax purposes of the gain accruing to him if he disposes of the securities.

34

(1) Where—

(a) there is a disposal of securities for capital gains tax purposes but the disposal is not a transfer for the purposes of this Chapter, and

(b) if the disposal were such a transfer one or more of the following paragraphs would apply, namely, paragraphs (a) and (b) of section 73(2) and paragraphs (a) and (b) of section 73(3) of this Act,

the securities shall be treated for the purposes of this paragraph as transferred on the day of the disposal.

(2) The securities shall be treated for those purposes as transferred with accrued interest if the person making the disposal was entitled to receive in respect of the securities interest payable on—

(a) the day of the disposal, if that is an interest payment day, or

(b) the next (or first) interest payment day to fall after that day, in any other case,

and they shall be treated for those purposes as transferred without accrued interest if he was not so entitled.

(3) Where the securities are treated for the purposes of this paragraph as transferred with accrued interest, then—

(a) if section 73(2)(a) of this Act would apply if the disposal were a transfer, an amount equal to the accrued amount (determined under that section) shall be excluded from the consideration mentioned in sub-paragraph (5) below ;

(b) if section 73(2)(b) of this Act would apply if the disposal were a transfer, an amount equal to that amount shall be excluded from the sums mentioned in sub-paragraph (6) below.

(4) Where the securities are treated for the purposes of this paragraph as transferred without accrued interest, then—

(a) if section 73(3)(a) of this Act would apply if the disposal were a transfer, an amount equal to the rebate amount (determined under that section) shall be added to the consideration mentioned in sub-paragraph (5) below ;

(b) if section 73(3)(b) of this Act would apply if the disposal were a transfer, an amount equal to that amount shall be added to the sums mentioned in sub-paragraph (6) below.

(5) The consideration is the consideration for the disposal of the securities which is taken into account in the computation for capital gains tax purposes of the gain accruing on the disposal.

(6) The sums are the sums allowable, to the person to whom the disposal is made, as a deduction from the consideration in the computation for capital gains tax purposes of the gain accruing to him if he disposes of the securities.

35

(1) In this paragraph " conversion " means conversion within the meaning of section 82 of the Capital Gains Tax Act 1979, and " exchange " means an exchange which by virtue of Chapter II of Part IV of that Act (reorganisations etc.) does not involve a disposal.

(2) Where on a conversion or exchange of securities a person is treated as entitled to a sum under section 73(2)(a) of this Act, an amount equal to the accrued amount (determined under that section) shall, for capital gains tax purposes, be treated as follows—

(a) to the extent that it does not exceed the amount of any consideration which the person receives (or is deemed to receive) or becomes entitled to receive on the conversion or exchange (other than his new holding), it shall be treated as reducing that consideration, and

(b) to the extent that it does exceed that amount, it shall be treated as consideration which the person gives on the conversion or exchange.

(3) Where on a conversion or exchange of securities a person is treated as entitled to relief under section 73(3)(a) of this Act, an amount equal to' the rebate amount (determined under that section) shall, for capital gains tax purposes, be treated as consideration which the person receives on the conversion or exchange.

36

Schedule 22 to this Act shall be disregarded in construing sections 31 and 33 of the Capital Gains Tax Act 1979.

Double taxation relief

37

(1) This paragraph applies where

(a) a person is treated under section 74(2) of this Act as receiving annual profits or gains on the day an interest period ends,

(b) assuming that, in the chargeable period in which the day falls he were to become entitled to any interest on the securities concerned, he would be liable in respect of the interest to tax chargeable under Case IV or Case V of Schedule D, and

(c) he is liable under the law of a territory outside the United Kingdom to tax in respect of interest payable on the securities at the end of the interest period or he would be so liable if he were entitled to that interest.

(2) Credit shall be allowed against any United Kingdom income tax or corporation tax computed by reference to the profits or gains, and shall be treated as if it were allowed under section 498(3) of the Taxes Act.

(3) The credit shall be of an amount equal to the relevant proportion of the profits or gains ; and the relevant proportion is the rate of tax to which the person is or would be liable as mentioned in sub-paragraph (1)(c) above.

38

(1) Sub-paragraph (2) below applies where—

(a) a person is entitled to credit against United Kingdom tax under section 498(3) of the Taxes Act or any corresponding provision of arrangements under section 497 of that Act, and

(b) the tax is computed by reference to income consisting of interest which falls due on securities at the end of an interest period and which is treated as reduced by virtue of section 74(5) of this Act.

(2) The amount of the credit shall be a proportion of the amount it would be apart from this sub-paragraph, and the proportion is to be found by applying the formula—

$$I−RI$ where I is the amount of the interest and R is the amount by which it is treated as reduced.$

(3) Where the person entitled to the credit is an individual, subparagraph (2) above does not apply unless the interest arises from securities to which the person either became or ceased to be entitled during the interest period.

(4) Where section 516(1) of the Taxes Act applies to any income (deduction where no credit allowable) and, if credit were allowable in respect of it the credit would be reduced by virtue of sub-paragraph (2) above, section 516(1) shall have effect in relation to the income as if the reference to any sum paid in respect of tax on it were a reference to the amount which would be the amount of the credit if it were allowable and sub-paragraph (2) above applied.

Transfer of assets abroad

39

(1) Sub-paragraph (2) below applies where a person resident or domiciled outside the United Kingdom throughout any chargeable period in which an interest period (or part of it) falls would, at the end of the interest period, have been treated under section 74(2) of this Act as receiving annual profits or gains or annual profits or gains of a greater amount if he had been resident or domiciled in the United Kingdom during a part of each such chargeable period.

(2) Section 478 of the Taxes Act and section 45 of the Finance Act 1981 (avoidance of tax by transfers abroad) shall have effect as if the amount which the person would be treated as receiving or the additional amount (as the case may be) were income becoming payable to him; and, accordingly, any reference in those enactments to income of (or payable or arising to) such a person shall be read as including a reference to such an amount.

(3) Sub-paragraph (4) below applies where income of a person resident or domiciled outside the United Kingdom throughout any chargeable period in which an interest period (or part of it) falls consists of interest which falls due at the end of the interest period and which would have been treated under section 74(5) of this Act as reduced by an allowance or an allowance of a greater amount if he had been resident or domiciled in the United Kingdom during a part of each such chargeable period.

(4) For the purposes of section 478 of the Taxes Act and section 45 of the Finance Act 1981, the interest shall be treated as being reduced by the amount of the allowance or by the additional amount (as the case may be).

Taxes Act: miscellaneous

40

(1) No notice served under section 30 of the Taxes Act (prevention of tax avoidance by sales cum dividend etc.) may specify a period which includes any time falling after 27th February 1986.

(2) Where a person is treated as receiving annual profits or gains by virtue of paragraph 2 of Schedule 22 to this Act, section 30 of the Taxes Act shall not apply, in relation to securities in which he has had a beneficial interest, as regards the period beginning with 28th February 1985 and ending with 27th February 1986.

41

Subsections (1) and (2) of section 469 of the Taxes Act (sale and repurchase of securities) shall not apply if the owner's agreement to sell or transfer constitutes a transfer to which section 73(2)(a) of this Act applies.

42

Section 474 of the Taxes Act (purchase and sale of securities by persons other than dealers in securities) does not apply to the extent that the interest is payable in respect of securities which are securities for the purposes of this Chapter and which are purchased by the first buyer on or after 28th February 1986.

43

(1) This paragraph applies where—

(a) securities are transferred to a person without accrued interest,

(b) a contract is made for the sale by that person (the seller) of securities of that kind, and

(2) Where the nominal value of the securities subject to the contract is greater than or equal to that of the securities transferred, the seller shall not be treated as entitled to any sum to which, but for this sub-paragraph, he would be treated as entitled under section 73(3)(b) of this Act on the securities transferred.

(3) Where the nominal value of the securities subject to the contract is less than that of the securities transferred, any sum (or the aggregate of any sums) to which he is treated as entitled under section 73(3)(b) on the securities transferred shall be reduced by the amount of any part of the sum (or aggregate) attributable to securities (relevant securities) of a nominal value equal to that of the securities subject to the contract.

(4) In determining which of the securities transferred are relevant securities for the purposes of sub-paragraph (3) above, those transferred to the seller earlier must be chosen before those transferred to him later.

(5) For the purposes of this Chapter the securities which the seller contracts to sell shall not be treated as transferred by him (though treated as transferred to the person to whom he contracts to sell).

Information

44

(1) In order to obtain for the purposes of this Chapter particulars relating to securities, an inspector may by notice in writing require a return under sub-paragraph (2) or (3) below; and such a notice may specify a period beginning on or after 28th February 1985.

(2) A member of the Stock Exchange, other than a jobber, may be required to make a return giving, in relation to any transactions effected by him in the course of his business in the period specified in the notice, such particulars as may be so specified.

(3) A person (other than a member of the Stock Exchange) who acts as an agent or broker in the United Kingdom in transactions in securities may be required to make a return giving, in relation to any such transactions effected by him in the period specified in the notice, such particulars as may be so specified.

(4) No person shall be required under sub-paragraph (2) or (3) above to include in a return particulars of any transaction effected more than three years before the service of the notice requiring him to make the return.

(5) In order to obtain for the purposes of this Chapter particulars relating to securities, the Board or an inspector may by notice in writing require any person in whose name any securities are registered to state whether or not he is the beneficial owner of those securities and, if he is not the beneficial owner of them or any of them, to furnish the name and address of the person or persons on whose behalf the securities are registered in his name.

(6) In the Table in section 98 of the Taxes Management Act 1970 (penalties for failure to comply with notices etc.) at the end of the first column there shall be inserted—

Paragraph 44 of Schedule 23 to the Finance Act 1985

SCHEDULE 24

a

The heading beginning " Agreement or contract made or entered into pursuant to the Highways Acts ".

b

The headings beginning " Appointment of a new trustee, and appointment in execution of a power of any property ".

c

The heading beginning " Charter of resignation ".

d

The heading beginning " Covenant. Any separate deed of covenant".

e

The heading " Deed of any kind whatsoever, not described in this schedule ".

f

The headings beginning " Letter of allotment and letter of renunciation " and " Scrip certificate, scrip ".

g

The heading beginning " Letter or power of attorney, and commission, factory, mandate ".

h

The heading beginning " Precept of clare constat".

i

The heading " Procuration, deed, or other instrument of ".

j

The heading beginning " Resignation ", together with the heading " instrument of resignation of any lands or other heritable subjects in Scotland not of burgage tenure ".

k

The heading " Revocation of any use or trust of any property by any writing, not being a will ".

l

The heading beginning "Seisin" and the heading "Notarial instrument to be expeded and recorded in any register of sasines ".

m

The heading " Warrant of attorney of any other kind ".

n

The heading beginning " Writ".

SCHEDULE 25

Part I — Provisions Supplementary to Abolition of Development Land Tax

1

(1) In this Part of this Schedule “the 1976 Act” means the Development Land Tax Act 1976.

(2) Expressions used in this Part of this Schedule have the same meaning as in the 1976 Act.

2

(1) In any case where—

(a) before 19th March 1985 there was a DLT disposal which was a deemed disposal, and

(b) by virtue of any provision of the 1976 Act, liability for development land tax on all or any of the realised development value which accrued on the DLT disposal stands deferred immediately before that date and, accordingly, is extinguished under section 93(3) of this Act,

then, except as respects the interaction of the DLT disposal with a CGT disposal or trading disposal occurring before 19th March 1985, for the purposes of Part I of Schedule 6 to the 1976 Act (interaction of development land tax with other taxes) so much of the realised development value as is referable to the deferred tax shall be assumed not to have accrued on the DLT disposal and, accordingly, no sum shall be regarded as being available or allowable as a deduction under any provision of that Part by virtue of that amount of realised development value.

(2) If, in a case falling within paragraphs (a) and (b) of sub-paragraph (1) above, liability for only some of the tax which accrued on the DLT disposal stands deferred as mentioned in paragraph (b), any reference in that sub-paragraph to the amount of realised development value which is referable to the deferred tax is a reference to that proportion of the whole of the realised development value accruing on the DLT disposal which the tax the liability for which stands so deferred bears to the whole of the tax the liability for which arose on the DLT disposal.

(3) In this paragraph, “DLT disposal”, “CGT disposal” and “trading disposal” have the meaning assigned by section 34(3) of the 1976 Act.

3

Where, by virtue of paragraph 21 or paragraph 22 of Schedule 2 to the 1976 Act (general rules for determining amount of consideration),—

(a) consideration is brought into account without any discount for postponed payment or without regard to any risk of irrecoverability, or

(b) consideration is determined without taking account of any contingent liability,

no further assessment to tax shall be raised by reason of anything occurring on or after 19th March 1985, but relief by way of discharge or repayment of tax or otherwise shall continue to be available on and after that date under sub-paragraph (2) of the paragraph in question.

Part II — Consequential Amendments

The Taxes Management Act 1970

4

In section 38 of the Taxes Management Act 1970 (modification of section 37 in relation to partnerships) in subsection (3) for the words “subsections (3A) and (5)” (which were substituted by paragraph 8 of Schedule 8 to the Development Land Tax Act 1976) there shall be substituted “subsection (5)”.

5

In section 40 of that Act (assessment on personal representatives) in subsection (3) for the words “subsections (1) and (2) above” (which were substituted by paragraph 9(1) of Schedule 8 to the said Act of 1976) there shall be substituted “this section”.

6

In section 70 of that Act (evidence) in subsection (2) for the words “86A or 87” (which were substituted by section 115 of the Finance Act 1980) there shall be substituted “or 87”.

The Taxes Act

7

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

8

In section 316 of the Taxes Act (overseas life insurance companies: charge on investment income) for subsection (1A) (which was inserted by paragraph 7 of Schedule 7 to the Finance Act 1974 and amended by the Finance Act 1984) there shall be substituted the following subsection—

(1A) In subsection (1) above, " income " shall not include income attributable to offshore income gains, within the meaning of Chapter VII of Part II of the Finance Act 1984 (but without prejudice to any claim under section 310 of this Act).

The Finance Act 1972

9

In Part II of Schedule 16 to the Finance Act 1972 (provisions for determining relevant income and distributions etc. of close companies) in paragraph 10(8), (which was amended by paragraph 5 of Schedule 7 to the Finance Act 1974) for paragraphs (b) onwards there shall be substituted—

(b) secondly, so far as it cannot be made under (a) above, from the company's estate or trading income so charged; and (c) thirdly, so far as it cannot be made under (a) or (b) above, from the amount included in the company's profits in respect of chargeable gains

The Finance Act 1981

10

In section 135 of the Finance Act 1981 (Chevening estate) in subsection (1) for the words “capital transfer tax and development land tax” there shall be substituted “and capital transfer tax”.

SCHEDULE 26

Principal amendments

1

In section 30 (1) (b) of the Capital Transfer Tax Act 1984 there shall be added at the end “or (where the property is an area of land within subsection (1) (d) of that section) with respect to which the requisite undertakings described in that section are given by such person or persons as the Treasury think appropriate in the circumstances of the case.”.

2

(1) Section 31 of that Act shall be amended as follows.

(2) For subsection (1) (d) (conditional exemption for land adjoining building) there shall be substituted—

(d) any area of land which in the opinion of the Treasury is essential for the protection of the character and amenities of such a building as is mentioned in paragraph (c) above.

(3) In subsections (2) (b) and (4) for “reasonable steps” there shall be substituted “such steps as are agreed between the Treasury and the person giving the undertaking, and are set out in it,”.

(4) The following shall be inserted after subsection (4)—

(4A) In the case of an area of land within subsection (1) (d) above (relevant land) there is an additional requisite undertaking, which is that, until the person beneficially entitled to property falling within subsection (4C) below dies, or it is disposed of, whether by sale or gift or otherwise, specified steps will be taken for its maintenance, repair and preservation and for securing reasonable access to the public; and “specified steps” means such steps as are agreed between the Treasury and the person giving the undertaking, and are set out in it. (4B) Where different persons are entitled (either beneficially or otherwise) to different properties falling within subsection (4C) below, subsection (4A) above shall have effect to require separate undertakings as to the maintenance, repair, preservation and access of each of the properties to be given by such persons as the Treasury think appropriate in the circumstances of the case. (4C) The following property falls within this subsection— (a) the building for the protection of whose character and amenities the relevant land is in the opinion of the Treasury essential; (b) any other area (or areas) of land which, in relation to the building, falls (or fall) within subsection (1) (d) above and which either lies (or lie) between the relevant land and the building or is (or are) in the opinion of the Treasury physically closely connected with the relevant land or the building. (4D) Where subsection (4A) above requires an undertaking for the maintenance, repair, preservation and access of property, such an undertaking for its maintenance, repair, preservation and access is effective. (4E) Any undertaking given in pursuance of subsection (4A) above is for the purposes of this Act given with respect to the relevant land. (4F) It is for the person seeking the designation of relevant land to secure that any undertaking required under subsection (4A) above is given.

3

(1) Section 32 of that Act (chargeable events for conditionally exempt property) shall be amended as follows.

(2) After subsection (5) there shall be inserted—

(5A) This section does not apply where section 32A below applies

(3) Subsections (6) and (7) shall be omitted.

4

The following shall be inserted after section 32 of that Act—

(32A) (1) For the purposes of this section the following properties are associated with each other, namely, a building falling within section 31 (1) (c) above and (to the extent that any of the following exists) an area or areas of land falling within section 31 (1) (d) above in relation to the building and an object or objects falling within section 31 (1) (e) above in relation to the building; and this section applies where there are such properties, which are referred to as associated properties. (2) Where there has been a conditionally exempt transfer of any property (or part), tax shall be charged under this section in respect of that property (or part) on the first occurrence after the transfer of an event which under this section is a chargeable event with respect to that property (or part). (3) If the Treasury are satisfied that at any time an undertaking given under section 30 above or this section for the maintenance, repair, preservation, access or keeping of any of the associated properties has not been observed in a material respect, then (subject to subsection (10) below) the failure to observe the undertaking is a chargeable event with respect to the whole of each of the associated properties of which there has been a conditionally exempt transfer. (4) If— (a) the person benefically entitled to property dies, or (b) property (or part of it) is disposed of, whether by sale or gift or otherwise, then, if the property is one of the associated properties and an undertaking for its maintenance, repair, preservation, access or keeping has been given under section 30 above or this section, the death or disposal is (subject to subsections (5) to (10) below) a chargeable event with respect to the whole of each of the associated properties of which there has been a conditionally exempt transfer. (5) Subject to subsection (6) below, the death of a person beneficially entitled to property, or the disposal of property (or part), is not a chargeable event if the personal representatives of the deceased (or, in the case of settled property, the trustees or the person next entitled) within three years of the death make or, as the case may be, the disposal is— (a) a disposal of the property (or part) concerned by sale by private treaty to a body mentioned in Schedule 3 to this Act, or to such a body otherwise than by sale, or (b) a disposal of the property (or part) concerned in pursuance of section 230 below. (6) Where a disposal mentioned in subsection (5) (a) or (b) above is a part disposal, that subsection does not make the event non-chargeable with respect to property other than that disposed of unless any undertaking previously given under section 30 above or this section for the maintenance, repair, preservation, access or keeping of the property (or part) concerned is replaced by a corresponding undertaking given by such person as the Treasury think appropriate in the circumstances of the case; and in this subsection “part disposal” means a disposal of property which does not consist of or include the whole of each property which is one of the asociated properties and of which there has been a conditionally exempt transfer. (7) Where, after a relevant disposal (that is, a disposal mentioned in subsection (5) (a) or (b) above made in circumstances where that subsection applies), a person beneficially entitled to the property (or part) concerned dies or the property (or part) concerned is disposed of, the death or disposal is not a chargeable event with respect to the property (or part) concerned unless there has again been a conditionally exempt transfer of the property (or part) concerned after the relevant disposal. (8) The death of a person beneficially entitled to property, or the disposal of property (or part) otherwise than by sale, is not a chargeable event if— (a) the transfer of value made on the death or the disposal is itself a conditionally exempt transfer of the property (or part) concerned, or (b) any undertaking previously given under section 30 above or this section for the maintenance, repair, preservation, access or keeping of anything falling within the associated properties is replaced by a corresponding undertaking given by such person as the Treasury think appropriate in the circumstances of the case. (9) If— (a) the whole or part of any property is disposed of by sale, and (b) any undertaking previously given under section 30 above or this section for the maintenance, repair, preservation, access or keeping of the property (or part) concerned is replaced by a corresponding undertaking given by such person as the Treasury think appropriate in the circumstances of the case, the disposal is a chargeable event only with respect to the whole or part actually disposed of (if it is a chargeable event with respect to such whole or part apart from this subsection). (10) If— (a) the Treasury are satisfied that there has been a failure to observe, as to one of the associated properties or part of it, an undertaking for the property’s maintenance, repair, preservation, access or keeping, or (b) there is a disposal of one of the associated properties or part of it, and it appears to the Treasury that the entity consisting of the associated properties has not been materially affected by the failure or disposal, they may direct that it shall be a chargeable event only with respect to the property or part as to which there has been a failure or disposal (if it is a chargeable event with respect to that property or part apart from this subsection).

Consequential amendments

5

In sections 33 (1), 34 (1), and 221 (6) (a) of that Act, and in paragraph 5 of Schedule 2 to that Act, after “32” there shall be inserted “or 32A”.

6

In sections 33 (6) and 34 (4) of that Act, at the end there shall be added “or, where the property has been disposed of as mentioned in section 32A (5) above, before any event which apart from section 32A (5) would have been such a chargeable event.”

7

For section 35 (2) (a) and (b) of that Act there shall be substituted—

(a) if there has been no conditionally exempt transfer of the property on death, tax shall be chargeable either— (i) under section 32 or 32A above (as the case may be), or (ii) under Schedule 5 to this Act, as the Board may elect; (b) if there has been such a conditionally exempt transfer, tax shall be chargeable under section 32 or 32A above (as the case may be) and not under that Schedule.

8

In section 78 of that Act—

(a) in subsection (1) (b) there shall be added at the end “ or (where the property is an area of land within subsection (1) (d) of that section) the requisite undertakings described in that section are given with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case. ”;

(b) in subsection (3) after “sections 32,” there shall be inserted “32A,” and after “section 32” there shall be inserted “or 32A”.

9

In section 79 (3) (b) of that Act after “given” there shall be inserted “with respect to the property” and after “case” there shall be inserted “or (where the property is an area of land within subsection (1) (d) of that section) the requisite undertakings described in that section have been given with respect to the property by such person or persons as the Treasury think appropriate in the circumstances of the case”.

10

After section 207 (2) of that Act there shall be inserted—

(2A) Where tax is chargeable under section 32A above on the occurrence of an event which is a chargeable event with respect to any property by virtue of subsection (3) or subsection (4) (a) of that section, the person liable for the tax is the person who, if the property were sold— (a) in a case within subsection (3) of that section, at the time the tax becomes chargeable, and (b) in a case within subsection (4) (a) immediately after the death, would be entitled to receive (whether for his benefit or not) the proceeds of sale or any income arising from them. (2B) Where tax is chargeable under section 32A above on the occurrence of an event which is a chargeable event with respect to any property by virtue of subsection (4) (b) of that section, the person liable for the tax is the person by whom or for whose benefit the property is disposed of.

11

In sections 216 (7), 226 (4) and 233 (1) (c) of that Act, after “32,” there shall be inserted “32A,”.

12

In paragraph 3 of Schedule 4 to that Act—

(a) in sub-paragraph (2) (b) after “32 (5) (b)” there shall be inserted “,32A (6), (8) (b) or (9) (b)”;

(b) in sub-paragraph (2) (c) after “32” there shall be inserted “,32A”;

(c) in sub-paragraph (3) after “(4)” there shall be inserted “, or (as the case may be) undertakings such as are described in subsections (4) and (4A),” , after “the undertaking” (in both places) there shall be inserted “or undertakings”, and after “32” there shall be inserted “or 32A”.

13

In paragraph 4 (2) of Schedule 6 to that Act, for paragraphs (a) and (b) there shall be substituted—

(a) if there has been no conditionally exempt transfer of the property on death, either— (i) tax shall be chargeable under section 32 or 32A of this Act (as the case may be), or (ii) estate duty shall be chargeable under those provisions, as the Board may elect, and (b) if there has been such a conditionally exempt transfer, there shall be a charge under section 32 or 32A of this Act (as the case may be) and not under those provisions;

14

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

SCHEDULE 27

Part I — Customs and Excise: Miscellaneous

Part II — Vehicles Excise Duty

Part III — Gaming Machine Licence Duty

Part IV — Value Added Tax

Part V — Income Tax and Corporation Tax: General

Part VI — Income Tax and Corporation Tax: Capital Allowances

Part VII — Capital Gains

Part VIII — Securities

Part IX — Stamp Duty

Part X — Development Land Tax and Tax on Development Gains

Part XI — Miscellaneous

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

13A

14A

14B

15A

17A

Gifts inter vivos.

Chargeable periods relevant to limit on tax payable and expenditure supplement.

Extension of Provisional Collection of Taxes Act 1968 to reduced and composite rates.

Abolition of development land tax and tax on development gains.

Extension of Provisional Collection of Taxes Act 1968 to reduced and composite rates.

1

The repeals in the Alcoholic Liquor Duties Act 1979 have effect on the coming into operation of regulations under section 71A of the Alcoholic Liquor Duties Act 1979.

2

The repeal in the Hydrocarbon Oil Duties Act 1979 has effect on the coming into operation of paragraph 4 of Schedule 4 to this Act.

These repeals apply in relation to licences taken out after 19th March 1985.

1

The repeals in the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972, the Finance Act 1980 and the Finance Act 1982 have effect from 1st October 1985.

2

The repeals in the Betting and Gaming Duties Act 1981 do not affect licences granted for periods beginning before 1st October 1985.

1

The repeal in Schedule 5 to the Value Added Tax Act 1983 has effect with respect to supplies made on or after 1st May 1985.

2

The repeals in paragraphs 4 and 7 of Schedule 8 to the Value Added Tax Act 1983 have effect on the coming into operation of Schedule 8 to this Act.

1

The repeal in section 263 of the Income and Corporation Taxes Act 1970 has effect in accordance with section 39(2)(b) of this Act.

2

The repeals in section 333 and 337 of the Income and Corporation Taxes Act 1970 have effect with respect to life or endowment business (as defined in section 337 of that Act) of friendly societies and branches thereof carried on on or after 1st June 1984.

3

The repeals in sections 334 and 335 of the Income and Corporation Taxes Act 1970, Schedule 9 to the Friendly Societies Act 1974 and section 73 of the Fianance Act 1984 have effect with respect to business of friendly societies and branches thereof carried on on or after 19th March 1985.

4

The repeals in section 343 of the Income and Corporation Taxes Act 1970, section 54 of the Finance Act 1978, section 29 of the Finance Act 1983 and section 34 of the Finance Act 1984 have effect for the year 1986–87 and subsequent years of assessment.

5

The repeals in section 1 of the Friendly Societies Act (Northern Ireland) 1970 and section 7 of the Friendly Societies Act 1974 and the repeal of Schedule 9 to the Finance (No 2) Act 1975 (except paragraphs 5, 9 and 10) and section 57(2)(a) of the Finance Act 1980 have effect in accordance with section 41(4) of this Act.

1

The repeals in section 68 of the Capital Allowances Act 1968 and section 39 of the Finance Act 1978 have effect with respect to capital expenditure incurred on or after 1st April 1986, other than expenditure which—

(a) consists of the payment of sums under a contract entered into on or before 13th March 1984 by the person incurring the expenditure; and

(b) is incurred before 1st April 1987.

2

The repeals in section 82 of the Capital Allowances Act 1968, section 50 of the Finance Act 1971 and paragraph 14 of Schedule 12 to the Finance Act 1982 have effect with respect to any chargeable period or its basis period ending on or after 18th December 1984.

3

The repeal in section 94 of the Capital Allowances Act 1968 has effect with respect to capital expenditure incurred on or after 1st April 1985 unless that expenditure—

(a) is incurred before 1st April 1987, and

(b) consists of the payment of sums made under a contract entered into on or before 19th March 1985 by the person incurring the expenditure.

4

The repeals in sections 378, 379, 386 and 387 of the Income and Corporation Taxes Act 1970 have effect with respect to expenditure incurred on or after 1st April 1986.

5

The repeals in sections 41 and 44 of, and in paragraphs 6 and 10 of Schedule 8 to, the Finance Act 1971, in section 17 of the Finance Act 1974, in section 14 of the Finance Act 1975, in section 49 of the Finance (No 2) Act 1975, and in sections 65 and 71 of the Finance Act 1980 have effect with respect to any chargeable period or its basis period ending on or after 1st April 1985.

6

The repeals in paragraphs 5 and 8 of Schedule 8 to the Finance Act 1971 and in the Finance Act 1972 have effect with respect to capital expenditure incurred on or after 1st April 1985.

1

The repeals in section 270 of the Income and Corporation Taxes Act 1970, section 58 of the Finance (No. 2) Act 1975, sections 65 to 70 and 84 of and Schedule 7 to the Capital Gains Tax Act 1979, section 41 of the Finance Act 1981, section 58 of the Finance Act 1982 and Schedule 13 to the Finance Act 1984 have effect with respect to disposals on or after 2nd July 1986.

2

The repeal of sections 124 and 125 of the Capital Gains Tax Act 1979 has effect in accordance with section 69(1) of this Act.

3

The repeal of section 151 of the Capital Gains Tax Act 1979 has effect with respect to gifts or other transactions occurring after 19th March 1985.

4

The repeals in the Finance Act 1982, the Finance Act 1983, the Finance (No. 2) Act 1983 and Schedule 9 to the Finance Act 1984 have effect—

(a) in the case of securities within the meaning of Chapter IV of Part II of this Act (other than those mentioned in paragraph (b) below), with respect to disposals on or after 28th February 1986, and

(b) in the case of gilt-edged securities as defined in Schedule 2 to the Capital Gains Tax Act 1979 and qualifying corporate bonds as defined in section 64 of the Finance Act 1984, with respect to disposals on or after 2nd July 1986, and

(c) in any other case, with repsect to disposals made on or after 6th April 1985 or, in the case of disposals by companies, 1st April 1985.

(1) Gifts Inter Vivos

(2) Fixed Duties

(3) Contract Notes

(4) Exchange Rates

(5) Finance Act 1931

1

The repeals in the Finance Act 1974, the Finance Act 1976, the Capital Gains Tax Act 1979 and section 99(3) of the Finance Act 1984—

2

The other repeals in this Part and the repeal of section 114 of and paragraph 6 of Schedule 7 to the Capital Gains Tax Act 1979 do not have effect in relation to a disposal, as defined n section 93(1) of this Act, which takes place before 19th March 1985.

Editorial notes

[^c10029271]: ss. 1-3, 5-7, 10, 98(1)(6), Schs. 1, 3, 4, 27 Pt. I from Gp 40:1(Customs and Excise), ss. 11-33, 98(1)(6), Schs. 6-8, 27 Pt. IV from Gp 40:2(Customs and Excise), ss. 4, 9, 98(1)(6), Schs. 2, 27 Pt. II from Gp 107:2(Road Traffic), ss. 8, 10(5)-(7), 98(1)(6), Schs. 5, 27 Pt. III from Gp 12:2(Betting, Gaming and Lotteries), ss.34-66, 73-77, 90-92, 93, 96, 98(1)-(3)(5)(6), Schs. 9-18, 22, 23, 25, 27 Pts. V, VI, VIII, X from Gp 63:1(Income, Corporation and Capital Gains Taxes), ss. 67-72, 95, 98(1)-(3)(6), Schs 19-21, 27 Pt. VII from Gp 63:2(Income, Corporation and Capital Gains Taxes), ss. 78-89, 98(1)(4)(6), Schs. 24, 27 Pt. IX from Gp 114(Stamp duty), ss. 94, 95, 98(1)(6), Schs. 26, 27 Pt. XI from Gp 65(Inheritance Tax), ss. 97, 98(1) from Gp 99:7(Public Finance and Economic Controls)

[^c10029281]: Act partly in force at Royal Assent, partly prospective, partly retrospective, see individual sections. All provisions so far as unrepealed wholly in force at 1.2.1991. Some provisions came into force at specific times of the day.

[^c10029291]: General amendments to Tax Acts, Income Tax Acts, and/or Corporation Tax Acts made by legislation after 1.2.1991 are noted against Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) but not against each Act

[^c10029301]: 1979 c. 4.

[^c10029311]: S. 2 repealed by Finance Act 1986 (c. 41, SIF 40:1), s. 114, Sch. 23 Pt. I

[^c10029321]: 1979 c. 5.

[^c10029381]: S. 4(1)-(3)(5)-(8) repealed (1.9.1994) by 1994 c. 22, ss. 65, 66(1), Sch. 5 Pt. I (with s. 57(4))

[^c10029411]: S. 4(4) repealed (3.5.1994 with effect in relation to licences taken out after 30.11.1993) by 1994 c. 9, s. 258, Sch. 26 Pt. I

[^c10029461]: 1979 c. 4.

[^c10029471]: 1979 c. 4.

[^c10029481]: Power of appointment conferred by s. 6(2) fully exercised: 29.10.1985 appointed by S.I. 1985/1622, art. 2

[^c10029491]: Power of appointment conferred by s. 7(2) fully exercised: 15.10.1985 appointed by S.I. 1985/1451, art. 2

[^c10029501]: 1981 c. 63

[^c10029511]: 1972 c. 11 (N.I.).

[^c10029531]: S. 9 repealed (1.9.1994) by 1994 c. 22, ss. 65, 66(1), Sch. 5 Pt. I (with s. 57(4))

[^c10029901]: S. 11 repealed (1.9.1994 with effect as mentioned in s. 101(1) of the amending Act) by 1994 c. 23, ss. 100(2), Sch. 15

[^c10029921]: S. 12 repealed (1.9.1994 with effect as mentioned in s. 101(1) of the amending Act) by 1994 c. 23, ss. 100(2), Sch. 15

[^c10030141]: S. 13 repealed (1.9.1994 with effect as mentioned in s. 101(1) of the amending Act) by 1994 c. 23, ss. 100(2), Sch. 15

[^c10030161]: S. 13A repealed (1.9.1994 with effect as mentioned in s. 101(1) of the amending Act) by 1994 c. 23, ss. 100(2), Sch. 15

[^c10030811]: S. 14 repealed (1.9.1994 with effect as mentioned in s. 101(1) of the amending Act) by 1994 c. 23, ss. 100(2), Sch. 15

[^c10030881]: S. 14A repealed (1.9.1994 with effect as mentioned in s. 101(1) of the amending Act) by 1994 c. 23, ss. 100(2), Sch. 15

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Finance Act 1985

SCHEDULE 23

PART I — General Interpretation

Securities

1

Transfers, holding etc.

2

Interest and related expressions

3

Settlement day

4

Nominal value

5

PART II — Special Cases

Nominees and trustees

6

7

8

9

Foreign currency

10

Foreign securities: delayed remittances

11

Death

12

Trading stock: appropriations

13

Conversions

14

Transfer of unrealised interest

15

Insurance companies

16

17

18

19

20

Underwriters

21

22

23

24

25

26

27

28

29

Charities

30

31

Retirement schemes

32

PART III — Miscellaneous

Capital gains

33

34

35

36

Double taxation relief

37

38

Transfer of assets abroad

39

Taxes Act: miscellaneous

40

41

42

43

Information

44

SCHEDULE 24

a

b

c

d

e

f

g

h

i