Finance Act 1965

PART I Application and Adaptation of Enactments.

The Income Tax Act 1952.

1 In section 125 of the Income Tax Act 1952 (woodlands) the references in subsection (2) to the year of assessment shall, in relation to corporation tax, be construed as references to the accounting period.

2 Section 202 of the Income Tax Act 1952 (which provides for the issue of funding bonds to be treated as payment of the interest) shall have effect for purposes of corporation tax.

3 In section 203(1) of the Income Tax Act 1952 (sale and repurchase of securities) paragraph (ii) shall in relation to corporation tax apply (subject to the provisions of this Act about distributions) to any interest within the meaning of that section, whether or not the securities are of such a character that the interest may be paid without deduction of tax ; and section 416(3) of that Act shall apply in like manner, and with the omission of the proviso.

4 (1) Section 440 of the Income Tax Act 1952 shall be amended—

(a) by adding at the end of subsection (1) (exemptions for friendly societies) the words " and any such unregistered or registered friendly society shall be entitled to exemption from tax in respect of chargeable gains "; and

(b) by inserting in subsection (2) (exemptions for trade unions) at the end of the first paragraph the words " and to exemption from tax in respect of chargeable gains which are applicable and applied for the purpose of provident benefits ".

(2) Section 449 of the [1952 c. 10.] Income Tax Act 1952 (exemptions for scientific research associations) shall be amended by inserting in subsection (1) immediately before the proviso the words " and exemption from tax in respect of chargeable gains ".

(3) Section 451 of the Income Tax Act 1952 (exemption of British Museum) shall be amended by adding at the end of subsection (1) the words " and exemption from tax in respect of chargeable gains ".

(4) Section 460 of the Income Tax Act 1952 (Central Banks of India and Pakistan) shall be amended by inserting after the word " 1947 " the words " including chargeable gains so arising or accruing ".

5 In section 468 of the Income Tax Act 1952 (removal of company or company's business overseas etc.) for the proviso to subsection (6) there shall be substituted, in relation to offences committed in or after the year 1966-67:—

“Provided that where the person in question is a body corporate which is or was resident in the United Kingdom, the maximum amount of the fine shall be three times the corporation tax, profits tax, capital gains tax and income tax paid or payable which is attributable to the income, profits or gains (including chargeable gains) arising in the thirty-six months immediately preceding the commission of the offence, or ten thousand pounds, whichever is the greater”;

and in subsection (7) the reference to an income tax purpose shall include a corporation tax purpose.

6 Sections 482 to 484 of the Income Tax Act 1952 (which relate to nationalised industries) shall have effect for corporation tax as for income tax; and references to years of assessment, to charging the profits or gains of a trade, and to any provision of the Income Tax Act 1952, shall have effect accordingly as if they were or included references to accounting periods, to taxing a trade, and to the relevant provision of Part IV of this Act; but in section 484 there shall be omitted (as being spent) the references to the owner of the assets before the date of vesting.

7 (1) As from the beginning of the year 1966-67, sections 491 and 492 of the Income Tax Act 1952 (which provide for adjusting under-deductions and over-deductions of income tax from certain payments made before the passing of an annual Act imposing the tax) shall be amended in accordance with the following sub-paragraphs.

(2) For section 491(3)(a) (by virtue of which section 491(2) has effect where too little tax is deducted under section 184 from preference dividends) there shall be substituted:—

“(a) any preference dividend within the meaning of Part IV of the Finance Act 1965 from which a deduction of tax may be made under the said Part IV ; and”.

(3) In section 492 (over-deductions by bodies corporate under section 169 from interest payments on securities or under section 184 from preference dividends)—

(a) after the words " section 169 " there shall be inserted the words " or section 170 "; and

(b) for the words " section 184 of this Act " there shall be substituted the words " Part IV of the Finance Act 1965 "; and

(c) at the end of the section there shall be added—

“In this section ' preference dividend ' has the same meaning as in Part IV of the Finance Act 1965, and ' share' includes stock.”

8 Sections 495 to 497 of the [1952 c. 10.] Income Tax Act 1952 (interest on overdue tax) shall have effect for corporation tax as for income tax, references to accounting periods being substituted for references to years of assessment.

9 In Schedule 20 to the Income Tax Act 1952 (assessment on the herd basis) the references in paragraph 2 to years of assessment shall, in relation to corporation tax, be construed as references to accounting periods.

The Finance Act 1953.

10 (1) Section 20 of the [1953 c. 34.] Finance Act 1953 (subvention payments) shall have effect subject to the following sub-paragraphs.

(2) In relation to a time after the year 1965-66 " accounting period " in relation to any company shall mean its accounting period for corporation tax, and the question whether a company has a deficit or surplus for tax purposes, or what is the amount of that deficit or surplus, shall be ascertained by applying the rules applicable under Part IV of this Act to the computation of total profits for corporation tax (deducting any loss incurred in a trade from profits of any description), except that—

(a) franked investment income shall be included other than income received by the company from its subsidiary or from a subsidiary of a third company of which it is also a subsidiary (" subsidiary" having for this purpose the meaning assigned to it for certain purposes of the profits tax by section 42 of the [1938 c. 46.] Finance Act 1938);

(b) no regard shall be had to any deduction falling to be made in respect of losses, allowances or expenses of management of any other period, except any deduction falling to be made against chargeable gains in respect of losses incurred before the accounting period ;

(c) there shall be deducted any charges on income.

(3) Where an accounting period of a company for corporation tax begins before but ends after the end of the year 1965-66, sub-paragraph (2) above shall apply, except that the deficit or surplus shall be ascertained separately for the part of the period falling in that year (according to the rules applying to that year) and for the part falling after it (in accordance with sub-paragraph (2) above), and shall be aggregated with, or as the case may be, set off against, the other to arrive at the deficit or surplus for the whole period.

(4) Where any period of account of a company beginning before the year 1966-67 is partly but not wholly comprised in an accounting period for corporation tax ending in that year, then the part not so comprised shall be treated for purposes of section 20 as a separate accounting period.

(5) In subsection (2) of section 20 for the words " second year of assessment " in the proviso (as amended by the [1958 c. 56.] Finance Act 1958) there shall, in relation to accounting periods ending after the year 1965-66, be substituted the words " second year ".

11 In section 23 of the [1953 c. 34.] Finance Act 1953 (elections for the herd basis after compulsory slaughter of farm animals) subsections (2) and (3) shall, in relation to corporation tax, have effect as if references to years of assessment were references to accounting periods, and with the omission of the proviso to each of those subsections.

The Atomic Energy Authority Act 1954.

12 In section 6(2) of the [1954 c. 32.] Atomic Energy Authority Act 1954 (which confers certain exemptions from income tax on the Authority and its pension fund) there shall be inserted as a new paragraph (e)—

“(e) tax in respect of chargeable gains”;

and at the end of the final paragraph (which relates to the pension fund) there shall be added the words " and similarly with chargeable gains (the exemptions from corporation tax conferred on the Authority having effect as exemptions from income tax or capital gains tax) ".

The Finance Act 1957.

13 In section 22 of the [1957 c. 49.] Finance Act 1957 there shall be inserted as a new subsection (1A):—

“(1A) A bank or issue department of a bank to which this section for the time being applies shall be exempt from tax in respect of chargeable gains accruing to it:

Provided that subsection (1) above may be applied to a bank or issue department without this subsection, or this subsection without that.”

The Finance Act 1960.

14 In section 25(6) of the [1960 c. 44.] Finance Act 1960 for the reference to section 346 of the [1952 c. 10.] Income Tax Act 1952 there shall be substituted a reference to the corresponding provision of this Act.

15 In the Finance Act 1960—

(a) in section 28(2) for the reference to section 256(2) and (3) of the Income Tax Act 1952 there shall be substituted a reference to paragraph 3 of Schedule 18 to this Act; and

(b) for section 28(11) proviso there shall be substituted:—

“Provided that there shall be disregarded any amount received by a company by way of dividend from an associated company in so far as the dividend is paid out of income arising to the company paying it since the two companies became associated companies, and Schedule 17 to the Finance Act 1965 shall with the necessary modifications apply for determining the extent to which the dividend was so paid”; and

(c) in section 29 (power to obtain information), and in the definition of "tax advantage" in section 43(4)(g), the references to income tax shall include corporation tax ;

and (without prejudice to any general provision of this Act for the continuity of income tax and corporation tax) in relation to tax advantages related to corporation tax the said section 28 shall apply to transactions taking place before the charge to corporation tax becomes effective.

16 In the [1960 c. 44.] Finance Act 1960, the references in section 33(4) to a company to which section 245 of the [1952 c. 10.] Income Tax Act 1952 applies, not being an investment company, and to Chapter III of Part IX of that Act shall include references to a close company and to section 78 of this Act and the other provisions of this Act having effect for purposes of that section.

The Finance Act 1962.

17 Section 22 of the [1962 c. 44.] Finance Act 1962 (taxation of Gas Council and Area Boards) shall apply in relation to corporation tax as it applied in relation to income tax.

The Finance Act 1963.

18 (1) Schedule 4 to the [1963 c. 25.] Finance Act 1963 shall have effect subject to the following sub-paragraphs.

(2) In relation to a company the references in paragraph 15(1) to a year of assessment shall not be read as references to an accounting period, but any deduction authorised by that paragraph shall be apportioned between the accounting periods (if more than one) comprising the year of assessment; and for the references in paragraph 15(1) to a company to which section 245 of the Income Tax Act 1952 applies and to a director or member of it within the meaning of Chapter III of Part IX of that Act there shall be substituted references to a close company and to a director of or participator in it within the meaning of Part IV of this Act.

(3) In relation to a company the references in paragraph 16 to a year of assessment shall not be read as references to an accounting period, but any deduction authorised by that paragraph shall be apportioned between the accounting periods (if more than one) comprising the year of assessment, other than any such period ended before the expenditure is incurred or transfer takes place by virtue of which the company is entitled to the deduction.

(4) In paragraph 17, sub-paragraph (3)(b) shall not have effect in relation to a company.

19 In Schedule 8 to the [1963 c. 25.] Finance Act 1963, paragraph 5(a) shall not have effect in relation to a company.