Financial Services and Markets Act 2000

Tax treatment of levies and repayments

411 Tax treatment of levies and repayments

(1) In the [1988 c. 1.] Income and Corporation Taxes Act 1988 (“the 1988 Act”), in section 76 (expenses of management: insurance companies), for subsections (7) and (7A) substitute—

“(7) For the purposes of this section any sums paid by a company by way of a levy shall be treated as part of its expenses of management.

(7A) “Levy” means—

(a) a payment required under rules made under section 136(2) of the Financial Services and Markets Act 2000 (“the Act of 2000”);

(b) a levy imposed under the Financial Services Compensation Scheme;

(c) a payment required under rules made under section 234 of the Act of 2000;

(d) a payment required in accordance with the standard terms fixed under paragraph 18 of Schedule 17 to the Act of 2000.”

(2) After section 76 of the 1988 Act insert—

“76A Levies and repayments under the Financial Services and Markets Act 2000

(1) In computing the amount of the profits to be charged under Case I of Schedule D arising from a trade carried on by an authorised person (other than an investment company)—

(a) to the extent that it would not be deductible apart from this section, any sum expended by the authorised person in paying a levy may be deducted as an allowable expense;

(b) any payment which is made to the authorised person as a result of a repayment provision is to be treated as a trading receipt.

(2) “Levy” has the meaning given in section 76(7A).

(3) “Repayment provision” means any provision made by virtue of—

(a) section 136(7) of the Financial Services and Markets Act 2000 (“the Act of 2000”);

(b) section 214(1)(e) of the Act of 2000.

(4) “Authorised person” has the same meaning as in the Act of 2000.

76B Levies and repayments under the Financial Services and Markets Act 2000: investment companies

(1) For the purposes of section 75 any sums paid by an investment company—

(a) by way of a levy, or

(b) as a result of an award of costs under costs rules,

shall be treated as part of its expenses of management.

(2) If a payment is made to an investment company as a result of a repayment provision, the company shall be charged to tax under Case VI of Schedule D on the amount of that payment.

(3) “Levy” has the meaning given in section 76(7A).

(4) “Costs rules” means—

(a) rules made under section 230 of the Financial Services and Markets Act 2000;

(b) provision relating to costs contained in the standard terms fixed under paragraph 18 of Schedule 17 to that Act.

(5) “Repayment provision” has the meaning given in section 76A(3).”