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Income Tax (Earnings and Pensions) Act 2003

Section 439: Amount of charge

1876.This section concerns the calculation of the taxable charge under section 438. It derives from section 140D(5) and (6) of ICTA. A formula has been introduced to make the provisions more user-friendly. As with section 428 the approach now adopted is to specify precisely what deductions are allowable in respect of amounts chargeable in respect of the acquisition of the interest. The three charges that are relevant are detailed in paragraphs (c), (d) and (e) of subsection (2). See Note 45 in Annex 2.

1877.Subsection (3) provides that charges under the provisions derived from sections 78 and 79 of FA 1988 are deductible. It derives from section 140D(6)(d) of ICTA. In contrast to section 428, there is no need to refer to “a different event” here since the conversion itself does not give rise to a charge under the FA 1988 provisions.

1878.Subsection (5) gives the meaning of “market value”, the definition of which is not found in ICTA until section 140F(3).

1879.Subsection (6) derives from the definition of “taxable conversion” in section 140D(7) of ICTA.

1880.Subsection (7) is new. It meets the point that there should be no reason why a charge arising at the end of the seven-year period in section 79 of FA 1988 should not be a deductible amount. This is a minor change to the law. See Change 112 in Annex 1.

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