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Finance Act 1963

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This is the original version (as it was originally enacted).

41Motor cars: amendments as to capital allowances and deductions for hiring

(1)In relation to initial and annual allowances and balancing allowances under Chapter II of Part )( of the Act of 1952 falling to be made for the year 1963-64 and subsequent years, the provisions of the six following subsections shall have effect in substitution for the provisions of subsections (2) to (6) of section 23 of the Finance Act 1961 (capital allowances for vehicles costing over two thousand pounds) in cases where that section would otherwise have applied.

(2)The amount to be allowed by way of initial allowance for any one vehicle shall not exceed six hundred pounds (whether the allowance falls to be made by reference to lump sum expenditure or by reference to the amounts of instalments), the references in paragraph 3(2) of Schedule 14 to the Act of 1952 to seven-tenths of the limit of recharge on the seller having effect accordingly as references to the limit of recharge reduced by six hundred pounds.

(3)The amount of an annual allowance shall not exceed five hundred pounds ; and—

(a)where the amount of an annual allowance, if calculated in accordance with section 281 (normal method of calculating annual allowances) of the Act of 1952, would be reduced by the foregoing provisions of this subsection the allowance shall be so calculated ;

(b)section 291 of that Act (annual allowances where previous use has not attracted full allowances) shall have effect as if at the end of subsection (1) thereof there were added

and in any case where the machinery or plant was not in fact used for the purposes of the trade in the first of those previous years (whether or not the trade was then being carried on) there shall be deemed to have been made to him for that year the maximum allowances permitted by subsections (2) and (3) of section 41 of the Finance Act 1963.

(4)Where apart from this subsection a balancing allowance would fall to be made in respect of any vehicle, and the event giving rise to the allowance takes place within the basis period for a year of assessment as respects which the foregoing subsection would operate to reduce the amount of any annual allowance falling to be made in respect of the vehicle, or would so operate but for any provision of the Income Tax Acts (other than this section) reducing annual allowances.—

(a)if the person to whom the balancing allowance would fall to be made proves that as respects the period during which the vehicle has been used for the purposes of his trade the amount (if any) falling to be made to him by way of annual allowances in respect of the vehicle is less than an amount at a rate of five hundred pounds a year, the amount of the balancing allowance shall not exceed the amount of the difference, increased, if any amount which could have been allowed by way of initial allowance was not claimed, by that amount;

(b)in any other case no balancing allowance shall be made unless any amount which could have been allowed by way of initial allowance was not claimed, and if so the balancing allowance shall not exceed that amount.

(5)It is hereby declared that the provisions of the Income Tax Acts (other than this section) which in special circumstances reduce initial or annual allowances, and balancing allowances, apply to allowances after modification by the foregoing provisions of this section ; and in particular—

(a)the reference in section 286 of the Act of 1952 to an annual allowance computed in accordance with the preceding provisions of Chapter II of Part )( of that Act includes a reference to an annual allowance computed in accordance with those provisions and the foregoing provisions of this section;

(b)where, in a case falling within section 293 or the proviso to section 294 of that Act (effect on balancing allowances of part-time use otherwise than for trade purposes, and of subsidies for wear and tear), it is just and reasonable that the foregoing subsection should apply with the substitution for the reference to five hundred pounds of a reference to a smaller amount, that subsection shall so apply, without prejudice to the determination in accordance with the said section 293 or the said proviso whether any balancing allowance falls to be made, or would fall to be made apart from the foregoing subsection.

(6)Where under section 332(1) of the Act of 1952 any part of the expenditure incurred in the provision of a vehicle is to be treated as not having been incurred by a person, or under section 332(3) of that Act a person's contribution to such expenditure is to be treated as expenditure on the provision of a similar vehicle, the foregoing provisions of this section shall have the like effect as if for the references to six hundred and to five hundred pounds there were substituted references to sums which bear the same proportion thereto as the amount of expenditure which is to be treated as having been incurred by the person providing the vehicle, or as the case may be the amount of the contribution, bears to the whole expenditure incurred in the provision of the vehicle.

(7)Section 296(1) of the Act of 1952 (optional treatment of balancing charge in certain cases of replacement) shall not have effect where the vehicle is the new plant referred to in that subsection, and this provision shall apply in relation to balancing charges as well as in relation to initial and annual allowances.

(8)Section 25 of the Finance Act 1961 (which limits the deduction to be made for the cost of hiring a vehicle of which the retail price exceeds two thousand pounds in the proportion which two thousand pounds bears to the retail price) shall have effect in relation to assessments for the year 1963-64 and subsequent years as if after the words " the proportion which two thousand pounds" there were inserted the words

together with one half of the excess.

(9)Where a person, having on or after the 4th April 1963 hired (otherwise than by way of hire purchase) a vehicle to which section 25 of the Finance Act 1961 applies subsequently becomes the owner thereof, and the retail price of the vehicle at the time it was made exceeded two thousand pounds, then for the purposes of the Income Tax Acts (and in particular this section)—

(a)so much of the aggregate of the payments for the hire of the vehicle and of any payment for the acquisition thereof as does not exceed the retail price of the vehicle at the time it was made shall be treated as capital expenditure incurred in the provision of the vehicle, and as having been incurred when the hiring began, and

(b)the payments to be treated as expenditure on the hiring of the vehicle shall be rateably reduced so as to amount in the aggregate to the balance.

(10)In section 26 of the Finance Act 1961 (provisions as to hire purchase, etc.) subsections (2) and (3) shall cease to have effect.

(11)Paragraph 4 of Schedule 3 to the Finance Act 1957 (additional assessments and adjustments of assessments) shall have effect as if references therein to that Schedule included references to subsection (9) of this section; and any claim for an allowance by virtue of that subsection may be made in connection with the making or adjusting of assessments in pursuance of the said paragraph 4, and whether so made or not may notwithstanding anything in section 323 of the Act of 1952 be made at any time not later than two years after the claimant became the owner of the vehicle.

(12)The said paragraph 4 shall have effect in relation to section 27(3) of the Finance Act 1961 as applied for the purposes of this section as that paragraph had effect in relation to that subsection as originally enacted.

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