Finance Act 1988

Part I E+W+S+N.I. Amendments of the Taxes Act 1988

Introductory E+W+S+N.I.

1 The Taxes Act 1988 shall have effect subject to the following amendments. E+W+S+N.I.

Commencement of trade etc. E+W+S+N.I.

2 In section 62 (special basis for early years following commencement of trade etc.) the following subsection shall be inserted after subsection (2)— E+W+S+N.I.

“(2A) Where—

(a) the second year of assessment is the year 1989-90,

(b) the person charged, or liable to be charged, for that year is a married man, and

(c) the person charged, or liable to be charged, for the year 1990-91 is his wife,

subsection (2) above shall have effect as if it conferred the right to give notice on her and not on him.”

Discontinuance of trade etc. E+W+S+N.I.

3 In section 63 (special basis on discontinuance of trade etc.)— E+W+S+N.I.

(a) in subsection (1)(b), for the words “that person” and the word “he”, in both places where it occurs, there shall be substituted the words “ income tax ”, and

(b) in subsection (2), for the words “a person has been charged with income tax” there shall be substituted the words “ income tax has been charged ”.

Underpayments E+W+S+N.I.

4 In section 203 (PAYE) the following subsection shall be inserted after subsection (3)— E+W+S+N.I.

“(3A) Regulations under this section may include provision for income tax in respect of any of a person’s income for the year 1989-90 or any earlier year of assessment to be collected and recovered (whether by deduction from income assessable under Schedule E or otherwise) from the person’s spouse if—

(a) the income was income to which section 279 applied, and

(b) the tax has not been deducted or otherwise recovered before 6th April 1990.”

Additional relief in respect of children E+W+S+N.I.

F1 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E+W+S+N.I.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F1 Sch. 3 para. 5 repealed (27.7.1999 with effect for the year 2000-01 and subsequent years of assessment) by 1999 c. 16, s. 139, Sch. 20 Pt. III(4), note

F2 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E+W+S+N.I.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F2 Sch. 3 para. 6 repealed (27.7.1999 with effect for the year 2000-01 and subsequent years of assessment) by 1999 c. 16, s. 139, Sch. 20 Pt. III(4), note

Widow’s bereavement allowance E+W+S+N.I.

7 (1) The section set out in sub-paragraph (2) below shall have effect in substitution for section 262 (widow’s bereavement allowance) in relation to deaths occurring during the year 1989-90, and the section set out in sub-paragraph (3) below shall have effect in substitution for that section in relation to deaths occurring during the year 1990-91 or any subsequent year of assessment. E+W+S+N.I.

(2) The section first referred to in sub-paragraph (1) above is—

“262 Widow’s bereavement allowance.

Where a man dies in the year 1989-90 and for that year he is entitled to the higher (married person’s) relief under section 257(1), or would be so entitled but for an election under section 261 or 287, his widow shall be entitled—

(a) for that year of assessment, to a deduction from her total income of an amount equal to the amount referred to in section 259(2), and

(b) (unless she marries again before the beginning of it) for the year 1990-91, to a deduction from her total income of an amount equal to the amount specified in section 257A(1) for that year.”

F3 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F3 Sch. 3 para. 7(3) repealed (27.7.1999 with effect for the year 2001-02 and subsequent years of assessment) by 1999 c. 16, s. 139, Sch. 20 Pt. III(5), note 2

Blind person’s allowance E+W+S+N.I.

8 For the year 1990-91 and subsequent years of assessment the following section shall be substituted for section 265— E+W+S+N.I.

“265 Blind person’s allowance.

(1) If the claimant proves that he is a registered blind person for the whole or any part of the year of assessment, he shall be entitled to a deduction of £540 from his total income.

(2) Where—

(a) a person entitled to relief under subsection (1) above is a married man whose wife is living with him for the whole or any part of the year of assessment, but

(b) the amount which he is entitled to deduct from his total income by virtue of that subsection exceeds what is left of his total income after all other deductions have been made from it,

his wife shall be entitled to a deduction from her total income of an amount equal to the excess.

(3) In determining for the purposes of subsection (2)(b) above the amount that is left of a person’s total income for a year of assessment after other deductions have been made from it, there shall be disregarded any deduction made—

(a) on account of any payments of relevant loan interest which become due in that year and to which section 369 applies, or

(b) under section 257A or section 289.

(4) Subsections (2) and (3) above shall have effect where a wife is entitled to relief under subsection (1) above as they have effect where the husband is entitled to that relief, but with the appropriate modifications (and in particular the omission from subsection (3) of the reference to section 257A).

(5) Subsections (2) to (4) above shall not apply for a year of assessment unless the person entitled to relief under subsection (1) has given to the inspector written notice that they are to apply; and any such notice—

(a) shall be given not later than six years after the end of the year of assessment to which it relates,

(b) shall be in such form as the Board may determine, and

(c) shall be irrevocable.

(6) A notice given under subsection (5) above in relation to a year of assesment by a husband shall have effect also as a notice under section 257B(3).

(7) In this section “registered blind person” means a person registered as a blind person in a register compiled under section 29 of the National Assistance Act 1948 or, in the case of a person ordinarily resident in Scotland or Northern Ireland, a person who is a blind person within the meaning of section 64(1) of that Act.”

Life assurance premiums E+W+S+N.I.

9 For the year 1990-91 and subsequent years of assessment section 266 (life assurance premiums) shall have effect with the substitution— E+W+S+N.I.

(a) in subsection (9), of the word “spouse” for the words “wife (but not the husband)”, and

(b) in subsection (11)(a), of the words “spouse, widow, widower or children or other dependants of any such employee or person,” for the word “wife” onwards.

Payments securing annuities E+W+S+N.I.

10 For the year 1990-91 and subsequent years of assessment the following section shall be substituted for section 273 (payments securing annuities)— E+W+S+N.I.

“273 Payments securing annuities.

Subject to sections 274, 617(3) and 619(6), if the claimant is, under any Act of Parliament or under any terms and conditions of employment, liable to the payment of any sum, or to the deduction from any salary or stipend of any sum, for the purpose of securing a deferred annuity to a widow or widower of the claimant or provision for the claimant’s children after the claimant dies, the claimant shall be entitled to a deduction from the amount of income tax on which he or she is chargeable equal to income tax at the basic rate on the amount of the sum which he or she has paid or which has been deducted from his or her salary or stipend.”

Married couples living together E+W+S+N.I.

11 For the year 1990-91 and subsequent years of assessment the following section shall be substituted for section 282 (construction of references to married women living with their husbands)— E+W+S+N.I.

“282 Construction of references to husband and wife living together.

A husband and wife shall be treated for income tax purposes as living together unless—

(a) they are separated under an order of a court of competent jurisdiction, or by deed of separation, or

(b) they are in fact separated in such circumstances that the separation is likely to be permanent.”

Business expansion scheme E+W+S+N.I.

12 (1) For the year 1990-91 and subsequent years of assessment section 304 (business expansion scheme: husband and wife) shall have effect— E+W+S+N.I.

(a) with the omission of subsections (1) to (4), and

(b) with the substitution of the following subsections for subsections (5) and (6)—

“(5) Subsection (1) of section 299 shall not apply to a disposal made by a married man to his wife or a married woman to her husband at a time when they are living together; but where shares issued to one of them have been transferred to the other by a transaction inter vivos that subsection shall apply on the disposal of the shares by the transferee to a third person and any assessment for withdrawing relief in respect of the shares shall be made on the transferee.

(6) If any relief given for the year 1989-90 or any earlier year of assessment in respect of shares for which a married man or married woman has subscribed and which were issued while they were living together falls to be withdrawn in the year 1990-91 or any subsequent year of assessment by virtue of a disposal of those shares by the person who subscribed for them, any assessment for withdrawing that relief shall be made on the person making the disposal and shall be made by reference to the reduction of tax flowing from the amount of the relief regardless of any allocation of that relief under section 280 or of any allocation of the reduction under section 284 for the year of assessment for which the relief was given.”

(2) Sub-paragraph (3) below applies where—

(a) an amount is subscribed for shares in the year 1990-91 by one of a married couple who are living together,

(b) the couple were married and living together throughout the year 1989-90, and

(c) the subscriber claims that relief in respect of the amount be given partly by way of deduction from total income for the year 1989-90 in accordance with section 289(6).

(3) Where this sub-paragraph applies—

(a) the deduction shall be made from the husband’s total income (references in Chapter II of Part VII to the relief to which an individual is entitled in respect of any shares being construed accordingly), and

(b) the limits in sections 289(7) and 290 shall apply jointly to the husband and wife for the year 1989-90 as respects the amount subscribed.

Qualifying maintenance payments E+W+S+N.I.

13 For the year 1990-91 and subsequent years of assessment section 347B(3) (qualifying maintenance payments) shall have effect with the substitution of the words “specified in section 257A(1) for the year” for the words “of the difference between” onwards. E+W+S+N.I.

Home loans E+W+S+N.I.

F4 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E+W+S+N.I.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F4 Sch. 3 para. 14 repealed (27.7.1999 with effect as mentioned in Sch. 20 Pt. III(7) note 4 of the amending Act) by 1999 c. 16, s. 139, Sch. 20 Pt. III(7)

Loans for shares in employee-controlled company E+W+S+N.I.

15 (1) In section 361 (relief for interest on loans to acquire shares in employee-controlled company)— E+W+S+N.I.

(a) the words “or his spouse” in subsection (4)(d) and “, or whose spouses,” in subsection (5) shall cease to have effect, and

(b) the following subsection shall be substituted for subsections (6) and (7)—

“(6) Where an individual owns beneficially more than 10 per cent. of the issued ordinary share capital of, or voting power in, a company, the excess shall be treated for the purposes of subsection (5) above as being owned by an individual who is not a full-time employee of the company.”

(2) Sub-paragraph (1) above shall have effect in relation to payments of interest made on or after 6th April 1990 unless the proceeds of the loan were used before that date to defray money applied as mentioned in section 361(3).

(3) Interest paid on a loan made on or after 6th April 1990 to defray money applied in paying off another loan shall not be eligible for relief by virtue of paragraph (b) of subsection (3) of section 361 unless—

(a) the proceeds of the loan paid off were used on or after 6th April 1990 to defray money applied as mentioned in that subsection, or

(b) those proceeds were so used before that date but interest on the loan paid off would have been eligible for relief had they been so used on or after that date.

Close company loans E+W+S+N.I.

16 (1) In section 420(2)(a)(i) (exception from charge in case where close company loans to borrower and spouse do not exceed £15,000) the words “or the wife or husband of the borrower” shall cease to have effect. E+W+S+N.I.

(2) This paragraph shall apply where the loan first mentioned in section 420(2) is made on or after 6th April 1990.

Trade unions and employers’ associations E+W+S+N.I.

17 (1) In section 467(2) (tax exemption in respect of income of trade unions and employers’ associations applied for provident benefits) for the word “wife” there shall be substituted the word “ spouse ”. E+W+S+N.I.

(2) This paragraph shall apply for any chargeable period beginning on or after 6th April 1990.

Retirement benefit schemes E+W+S+N.I.

18 (1) In section 590 (conditions for approval of retirement benefit schemes)— E+W+S+N.I.

(a) after the word “widow,” in subsection (2)(a) there shall be inserted the word “ widower, ” and

(b) after the word “widow” in both places where it occurs in subsection (3)(b) there shall be inserted the words “ or widower ”.

(2) This paragraph shall have effect on and after 6th April 1990.

Partnership retirement annuities E+W+S+N.I.

19 For the year 1990-91 and subsequent years of assessment section 628(1) (partnership retirement annuities) shall have effect with the substitution of the words “a widow, widower or dependant of the former partner” for the words “ his widow or a dependant of his ”. E+W+S+N.I.

F5 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E+W+S+N.I.

Annotations:

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F5 Sch. 3 para. 20 repealed (1.5.1995 wih effect for the year 1995-96 and subsequent years of assessment) by 1995 c. 4, s. 162, Sch. 29 Pt. VIII(8), note

Earned income E+W+S+N.I.

21 For the year 1990-91 and subsequent years of assessment section 833(4)(a) (meaning of “earned income”) shall have effect with the substitution of the word “spouse” for the word “ husband ”, in both places where it occurs. E+W+S+N.I.

Total income E+W+S+N.I.

22 For the year 1990-91 and subsequent years of assessment section 835(5) (meaning of “total income”) shall have effect with the insertion of “ , 257A(5) ” after “257(5)”. E+W+S+N.I.