SCHEDULES
SCHEDULE 24Manufactured dividends
2Amendments of paragraph 2A of Schedule 23A to the Taxes Act 1988
1
In Schedule 23A to the Taxes Act 1988 (manufactured dividends and interest) paragraph 2A (deductibility of manufactured payment in the case of the manufacturer) is amended as follows.
2
For sub-paragraph (1) (amount of manufactured dividend paid allowable as deduction against total income, subject to sub-paragraph (1A)) substitute—
1
Where, in the case of a manufactured dividend, the dividend manufacturer is resident in the United Kingdom but is not a company, an amount (“the relevant amount”) equal to the lesser of—
a
the amount of the manufactured dividend paid (so far as it is not otherwise deductible), and
b
the amount of the dividend of which the manufactured dividend is representative,
shall be allowable as a deduction for the purposes of income tax only under sub-paragraph (1ZA) or (1A) below.
3
After sub-paragraph (1) insert—
1ZA
The relevant amount shall be allowable under this sub-paragraph as a deduction for the purposes of income tax to the extent that the dividend manufacturer—
a
receives the dividend on the equities which is represented by the manufactured dividend or receives a payment which is representative of that dividend, and
b
is chargeable to income tax on the dividend or other payment so received;
and that deduction shall be made against the amount of the dividend or other payment so received on which the dividend manufacturer is chargeable to income tax.
1ZB
Sub-paragraph (1ZA) above shall apply only if the amount of the dividend or other payment so received is received by the dividend manufacturer in—
a
the year of assessment in which he pays the manufactured dividend, or
b
the year of assessment immediately before, or immediately after, that year.
4
In sub-paragraph (1A) (circumstances in which amount of manufactured dividend paid is allowable as deduction against total income)—
a
in the opening words, for the words from “An amount shall” to “only” substitute “The relevant amount shall be allowable under this sub-paragraph as a deduction for the purposes of income tax against the total income of the dividend manufacturer”,
b
omit paragraph (a),
c
omit paragraph (c) and the word “or” before it, and
d
omit the words following paragraph (c).
5
In sub-paragraph (1B) (no double deduction allowed)—
a
for “sub-paragraph (1)” (in both places) substitute “sub-paragraph (1ZA) or (1A)”,
b
in paragraph (a), for “paragraph (a) of sub-paragraph (1A)” substitute “sub-paragraph (1ZA)” and at the end insert “, or”,
c
in paragraph (b), for “paragraph (b) of that sub-paragraph” substitute “sub-paragraph (1A) above”,
d
omit paragraph (c) and the word “or” before it, and
e
for “, other payment or chargeable gain” (in both places) substitute “or other payment”.
6
In sub-paragraph (4) (meaning of “deductible”)—
a
in paragraph (a), omit “or corporation tax”, and
b
in paragraph (b), omit “or, as the case may be, total profits”.
7
Subject to sub-paragraph (10), the amendments made by sub-paragraphs (3), (4)(b) and (5)(b) (and the amendments made by sub-paragraphs (2) and (5)(a) so far as relating to those amendments) have effect in relation to a manufactured dividend paid, or treated as paid, by a dividend manufacturer on or after the commencement date where the dividend or other payment of which that manufactured dividend is representative is or was received by him on or after that date.
8
In sub-paragraph (7) “the commencement date” means—
a
if the dividend manufacturer is an individual, 6th November 2003;
b
if the dividend manufacturer is not an individual, 17th March 2004.
9
Subject to sub-paragraph (10), the amendments made by sub-paragraphs (4)(a) and (5)(c) (and the amendments made by sub-paragraphs (2) and (5)(a) so far as relating to those amendments) have effect in relation to a manufactured dividend paid, or treated as paid, by a dividend manufacturer on or after 17th March 2004.
10
In relation to a manufactured dividend paid, or treated as paid, by a dividend manufacturer before the day on which this Act is passed, the sub-paragraph (1) of paragraph 2A of Schedule 23A to the Taxes Act 1988 substituted by sub-paragraph (2) of this paragraph shall have effect with the omission of—
a
the words “the lesser of”, and
b
paragraph (b) and the word “and” before it.
11
The amendments made by sub-paragraphs (4)(c) and (d) and (5)(d) and (e) have effect in relation to cases where—
a
the manufactured dividend is or was paid, or treated as paid, by the dividend manufacturer on or after 17th March 2004, or
b
the chargeable gain accrues or accrued to the dividend manufacturer on or after that date.