Section 25.
1The relief shall be computed in accordance with the following provisions of this Schedule, and in those provisions—
" chargeable sum " means an amount to which, under subsection (1), (2), (3) or (4) of section 22 of this Act, the claimant is treated as becoming entitled in the year of assessment, or in respect of which he is, by virtue of subsection (5) of that section or section 23 or 24 of this Act chargeable to tax for the year under Case VI of Schedule D ;
" relevant period ", in relation to any chargeable sum, means the period treated in computing the amount of the sum as being the duration of the lease in respect of which it arises or, where it arises (by virtue of the said section 24) in connection with the sale of an estate or interest in land, means the period mentioned in subsection (1) of that section;
" yearly equivalent ", in relation to any chargeable sum, means the amount which bears to that sum the same proportion as one bears to the number of years and fractions of years in the relevant period.
2There shall be computed—
(a)the amount of the tax which, in respect of the chargeable sum or the aggregate of the chargeable sums, as the case may be, would be chargeable if—
(i)the relief were not given, and
(ii)that sum or aggregate were treated as the highest part of the claimant's total income, and
(iii)amounts deductible in computing the tax were so far as possible deducted from other sums from which they are deductible in the year rather than from that sum or aggregate ; and
(b)the amount of the tax which, in respect of that sum or aggregate, would be chargeable if calculated by reference to the yearly equivalent of that sum or of each sum comprised in that aggregate, as the case may be, in accordance with the following paragraph,
and the relief shall consist of a reduction or repayment of tax equal to the difference between those amounts.
3(1)Where the relief is to be given in respect of one chargeable sum only, the tax shall be calculated for the purposes of paragraph 2(b) of this Schedule as follows, that is to say—
(a)from the yearly equivalent of that sum there shall be deducted such amounts as, following the principle set out in paragraph 2(a)(iii) of this Schedule, are deductible from that sum;
(b)if any balance of the yearly equivalent remains, the tax in respect of the chargeable sum shall be calculated at the rate which, apart from the relief, would apply if the amount of the sum were reduced to the amount of that balance and were then treated as the highest part of the claimant's total income or, if two or more rates would then apply, at those rates in corresponding proportions ;
(c)if no such balance remains, the tax shall be calculated at the rate applicable to the highest part of the remainder of the claimant's total income for the year of assessment,
and whether or not any such balance remains the tax shall be arrived at by applying the said rate or rates to so much of the chargeable sum as remains after deducting such amounts as, following the principle set out in the said paragraph 2(a)(iii) are deductible from that sum.
(2)Where the relief is to be given in respect of two or more chargeable sums, the tax for each shall be calculated for the said purposes as provided by the foregoing sub-paragraph, but so mat—
(a)the rate of tax on a sum arising in respect of any relevant period shall be calculated before the rate of tax on any sum arising in respect of a shorter relevant period ;
(b)in calculating the rate of tax on a sum arising in respect of any relevant period and the deductions from that sum, an amount deducted in respect of a sum tax for which has already been calculated shall not again be deducted, and in calculating a rate of tax—
(i)any chargeable sum tax for which has not already been calculated or in respect of which no balance of the yearly equivalent remains shall be disregarded ;
(ii)as respects any other chargeable sum, the total income of the claimant shall be taken to include the sum, but on the assumption that the amount of it was only that of the balance remaining of the yearly equivalent.
(3)Where two or more chargeable sums arise in respect of relevant periods of equal duration they shall be treated for the purposes of this paragraph as a single chargeable sum of an amount equal to the aggregate of those sums and arising in respect of a relevant period of like duration.
4A provision of paragraph 2 or 3 of this Schedule requiring tax to be calculated as if an amount were treated as the highest part of the claimant's total income shall apply notwithstanding any provision of the Income Tax Acts directing other income to be treated as the highest part of his total income, but for the purposes of those paragraphs his total income shall be deemed not to include any amount in respect of which he is chargeable to tax under section 37 of the Finance Act 1960 (payments on retirement or removal from office or employment).
5A provision of paragraph 2 or 3 of this Schedule shall apply in relation to any part of the claimant's total income (as computed for the purpose of that provision) as respects which he would be entitled under Part VIII of the Act of 1952 (personal and other reliefs) to a deduction equal to tax at the standard rate on that part as if that part were subject to a nil rate of tax, and shall apply in relation to any part thereof as respects which he would be entitled under section 220 of that Act (reduced rate relief) to a deduction equal to tax at any other rate on that part as if that part were subject to a rate of tax equal to the difference between the standard rate and that other rate.
6(1)Sections 224 and 227 of the Act of 1952 shall apply, subject to any necessary modifications, in relation to claims for relief under this Schedule as they apply in relation to claims for relief under Part VIII of that Act, and a claim for relief under this Schedule in respect of surtax may be made to the Special Commissioners by an individual at the time of making his return for the year of assessment for the purposes of surtax or at any subsequent time not later than six years after the end of the year of assessment.
(2)Except in relation to a claim in respect of surtax, section 19 of this Act shall not apply as respects relief under this Schedule, and in relation to a claim in respect of surtax shall apply as if references to the surveyor and the Commissioners concerned were references to the Special Commissioners, and as if proviso (c) were omitted.
7For the purposes of any provision of the Income Tax Acts (other than this Schedule) requiring income of any description to be treated as the highest part of a person's income, his income shall be calculated without regard to any chargeable sum; and where for any year of assessment a person claims relief both under this Schedule and under paragraph 7 of Schedule 4 to the Finance Act 1960 then, in calculating relief under the said paragraph 7, the claimant's income shall be deemed to include, in respect of any chargeable sum (including two or more sums treated for the purposes of paragraph 3 of this Schedule as one chargeable sum), no greater amount than the balance (if any) of the yearly equivalent thereof remaining after the making of any deduction required by the said paragraph 3.