Finance (No. 2) Act 1997 (c. 58)

SCHEDULES

Section 34.

SCHEDULE 4 U.K. Tax credits, taxation of distributions etc

Modifications etc. (not altering text)

C1 Sch. 4 applied (with modifications) ( temp. from 6.4.1999 to 6.4.2004) by S.I. 1998/1871, reg. 4

Part I U.K. General

U.K. The Taxes Management Act 1970

Section 7 U.K.

1 (1) In section 7 of the M1 Taxes Management Act 1970 (notice of liability to income tax and capital gains tax) in subsection (6) (sources of income which fall within that subsection) after the words “other than the basic rate” there shall be inserted “ , the Schedule F ordinary rate ”. U.K.

(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Marginal Citations

M1 1970 c. 9.

Section 42 (pre-corporation tax self-assessment version) U.K.

Modifications etc. (not altering text)

C2 Sch. 4 para. 2 modified (31.7.1998) by 1998 c. 36, s. 90(2)(b)

2 (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims), as it has effect in relation to corporation tax for accounting periods ending before the day appointed under section 199 of the M2 Finance Act 1994, the following provisions shall cease to have effect— U.K.

(a) in subsection (5) (form of claim) the words “Subject to subsection (5A) below,”;

(b) subsection (5A) (claims by companies for payment of tax credits); and

(c) subsection (10A) (extended meaning of terms used in subsection (5A)).

(2) This paragraph has effect in relation to tax credits in respect of distributions made on or after 6th April 1999.

Marginal Citations

M2 1994 c. 9.

Section 42 (corporation tax self-assessment version)F1 F1 U.K.

Textual Amendments

F1 Sch. 4 para. 3 repealed (31.7.1998 with effect as mentioned in Sch. 27 Pt. III(28)) by 1998 c. 36, ss. 117, 165, Sch. 27 Pt. III(28) Note

Modifications etc. (not altering text)

C3 Sch. 4 para. 3 modified (31.7.1998) by 1998 c. 36, s. 90(2)(a)

3 (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims), as it has effect in relation to corporation tax for accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994, the following provisions shall cease to have effect— U.K.

(a) subsections (4) and (4A) (claims by companies for payment of tax credits); and

(b) in subsection (5), the words from “and the reference in subsection (4) above” onwards.

(2) This paragraph has effect in relation to tax credits in respect of distributions made on or after 6th April 1999.

U.K. The Taxes Act 1988

Section 231 U.K.

F2 4 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 Sch. 4 para. 4 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 232 U.K.

F3 5 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F3 Sch. 4 para. 5 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 233 U.K.

F4 6 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Sch. 4 para. 6 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Sections 235 to 237 U.K.

7 (1) Sections 235 to 237 of the Taxes Act 1988 (distributions of exempt funds and bonus issues) shall cease to have effect. U.K.

(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 238F5 F5 U.K.

Textual Amendments

F5 Sch. 4 para. 8 repealed (31.7.1998 with effect as mentioned in Sch. 27 Pt. III(2) Note of the amending Act) by 1998 c. 36, ss. 31, 165, Sch. 3 para. 45, Sch. 27 Pt. III(2) Note

8 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 241F6 F6 U.K.

Textual Amendments

F6 Sch. 4 para. 9 repealed (31.7.1998 with effect as mentioned in Sch. 27 Pt. III(2) Note of the amending Act) by 1998 c. 36, ss. 31, 165, Sch. 3 para. 46, Sch. 27 Pt. III(2) NOte

9 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 249 U.K.

F7 10 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7 Sch. 4 para. 10 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 421 U.K.

11 (1) In section 421 of the Taxes Act 1988 (taxation of borrower when loan under s.419 released etc) in subsection (1)— U.K.

(a) in paragraphs (a) and (b), for the words “lower rate”, in both places where they occur, there shall be substituted “ Schedule F ordinary rate ”; F8 ...

F8 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) This paragraph has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.

Textual Amendments

F8 Sch. 4 para. 11(1)(b) and preceding word repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 469 U.K.

12 (1) Section 469 of the Taxes Act 1988 (unit trusts other than authorised unit trusts) shall be amended as follows. U.K.

(2) In subsection (2) (income of the trustees to which section 1A applies to be chargeable at the basic rate instead of the lower rate) for “lower rate” there shall be substituted “ rate applicable in accordance with subsection (1A) of that section ”.

(3) After subsection (2) there shall be inserted—

“(2A) Section 231(1) shall not apply where the recipient of the distribution there mentioned is the trustees of the scheme.

(2B) Section 233(1) shall not apply where the person there mentioned is the trustees of the scheme.”

(4) In subsection (9) (sections 686 and 687 not to apply) after “686” there shall be inserted “ , 686A ”.

(5) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 549 U.K.

F9 13 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9 Sch. 4 para. 13 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 660C U.K.

F10 14 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10 Sch. 4 para. 14 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 687 U.K.

15 (1) In section 687 of the Taxes Act 1988 (payments under discretionary trusts) subsection (3) (amounts which may be set against the amount assessable on trustees) shall be amended as follows. U.K.

(2) For paragraphs (a) and (aa) there shall be substituted—

“(a) the amount of any tax on income arising to the trustees which (not being income the tax on which falls within paragraphs (a1) to (bc) below) is charged in pursuance of section 686 at the rate applicable to trusts or the Schedule F trust rate;

(a1) the amount of tax at a rate equal to the difference between the Schedule F ordinary rate and the Schedule F trust rate on any income of the trustees chargeable under Schedule F;

(a2) the amount of tax which, by virtue of section 233(1A), is charged, at a rate equal to the difference between the Schedule F ordinary rate and the Schedule F trust rate, on the amount or value of the whole or any part of any qualifying distribution included in the income arising to the trustees;

(aa) the amount of tax which, by virtue of section 233(1B), is charged, at a rate equal to the difference between the Schedule F ordinary rate and the Schedule F trust rate, on the amount or value of the whole or any part of any non-qualifying distribution included in the income arising to the trustees;”.

(3) For paragraph (b) there shall be substituted—

“(b) the amount of tax at a rate equal to the difference between the Schedule F ordinary rate and the Schedule F trust rate on any sum treated, under section 249(6), as income of the trustees;”.

(4) After paragraph (b) there shall be inserted—

“(bb) the amount of tax at a rate equal to the difference between the Schedule F ordinary rate and the Schedule F trust rate on any sum treated under section 421(1)(a) as income of the trustees;

(bc) the amount of tax at a rate equal to the difference between the Schedule F ordinary rate and the Schedule F trust rate on any sum treated under section 686A as income of the trustees;”.

(5) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Section 689B U.K.

16 (1) Section 689B of the Taxes Act 1988 (order in which expenses of trustees are to be set against income) shall be amended as follows. U.K.

(2) In subsection (1)—

(a) in paragraph (a) (set against income within subsection (2) or (3) before other income) after “subsection (2)” there shall be inserted “ , (2A) ”;

(b) in paragraph (b) (set against income within subsection (2) before subsection (3)) after “subsection (2)” there shall be inserted “ or (2A) ”; and

(c) at the end of paragraph (b) there shall be added “and

(c) as set against so much (if any) of any income as is income falling within subsection (2) below before being set against income falling within subsection (2A) below”.

F11 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) After subsection (2) there shall be inserted—

“(2A) Income falls within this subsection if it is income to which section 1A applies by virtue of its being equivalent foreign income falling within subsection (3)(b) of that section and chargeable under Case V of Schedule D.”

(5) In subsection (3) (income to which section 1A applies but which does not fall within subsection (2) of s.689B) after “subsection (2)” there shall be inserted “ or (2A) ”.

(6) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Textual Amendments

F11 Sch. 4 para. 16(3) repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 699 U.K.

F12 17 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F12 Sch. 4 para. 17 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 703F13 F13 U.K.

Textual Amendments

F13 Sch. 4 para. 18 repealed (31.7.1998 with effect as mentioned in Sch. 27 Pt. III(2) Note of the amending Act) by 1998 c. 36, ss. 31, 165, Sch. 3 para. 47, Sch. 27 Pt. III(2) Note

18 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 709 U.K.

19 (1) In section 709 of the Taxes Act 1988 (meaning of tax advantage etc) in subsection (2A) (references to a relief and to repayment of tax to include references to a tax credit and payment of any amount in respect of a tax credit) the words “and to a repayment of tax”, “respectively” and “and to a payment of any amount in respect of a tax credit” shall be omitted. U.K.

(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Section 743 U.K.

20 (1) Section 743 of the Taxes Act 1988 (provisions supplemental to section 739 etc) shall be amended as follows. U.K.

(2) In subsection (1) (subject to an exception for income which has borne tax by deduction at the basic rate or the lower rate, income chargeable under s.739 to be charged under Case VI of Schedule D)—

(a) for “or the lower rate” there shall be substituted “ , the lower rate or the Schedule F ordinary rate ”; and

F14 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) After subsection (1) there shall be inserted—

“(1A) Income falls within this subsection if it is—

(a) income chargeable under Schedule F;

(b) income to which section 1A applies by virtue of its being equivalent foreign income falling within subsection (3)(b) of that section and chargeable under Case V of Schedule D;

(c) a distribution in relation to which section 233(1) applies;

(d) a qualifying distribution whose amount or value is determined in accordance with section 233(1A);

(e) a non-qualifying distribution, within the meaning of section 233(1B);

(f) income treated as arising by virtue of section 249;

(g) income treated as received by virtue of section 421(1)(a).”

(4) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Textual Amendments

F14 Sch. 4 para. 20(2)(b) repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 819 U.K.

21 (1) In section 819 of the Taxes Act 1988 (old references to standard rate tax) in subsection (2)— U.K.

(a) after “(so far as applicable in accordance with section 1A) the lower rate” there shall be inserted “ or the Schedule F ordinary rate ”; and

(b) for “any higher rate” there shall be substituted “ the higher rate and the Schedule F upper rate ”.

(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Section 832 U.K.

22 (1) In section 832 of the Taxes Act 1988 (interpretation of the Tax Acts) the following definitions shall be inserted in subsection (1) at the appropriate places— U.K.

• ““the Schedule F ordinary rate” shall be construed in accordance with section 1B(2);”;

“(b) “the Schedule F trust rate” shall be construed in accordance with section 686(1A);”;

“(c) “the Schedule F upper rate” shall be construed in accordance with section 1B(2);”.

(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Schedule 13F15 F15 U.K.

Textual Amendments

F15 Sch. 4 para. 23 repealed (31.7.1998 with effect as mentioned in Sch. 27 Pt. III(2) Note of the amending Act) by 1998 c. 36, ss. 31, 165, Sch. 3 para. 48, Sch. 27 Pt. III(2) Note

23 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U.K. The Taxation of Chargeable Gains Act 1992

Section 4 U.K.

24 (1) Section 4 of the M3 Taxation of Chargeable Gains Act 1992 (rates of capital gains tax) shall be amended as follows. U.K.

(2) In subsection (2) (case where income tax is chargeable at the higher rate on part of income of an individual) after “the higher rate”, where first occurring, there shall be inserted “ or the Schedule F upper rate ”.

(3) In subsection (3) (case where income tax is not chargeable at the higher rate on income of an individual but his gains exceed the unused basic rate band) after “the higher rate”, where first occurring, there shall be inserted “ or the Schedule F upper rate ”.

F16 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Textual Amendments

F16 Sch. 4 para. 24(4)(5) repealed (27.7.1999 with effect for the years 1999-2000 and subsequent years of assessment) by 1999 c. 16, s. 139, Sch. 20 Pt. III(1) Note

Marginal Citations

M3 1992 c. 12.

Section 6 U.K.

25 (1) In section 6 of the M4 Taxation of Chargeable Gains Act 1992 (other special cases) in subsection (3) (cases where income includes gains on policies of life insurance etc) in paragraph (b) after “as if no income were chargeable at the higher rate” there shall be inserted “ or the Schedule F upper rate ”. U.K.

(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.

Marginal Citations

M4 1992 c. 12.

Part II U.K. Insurance companies and Lloyd’s underwriters

U.K. The Taxes Act 1988

Section 231B U.K.

26 (1) In section 231B of the Taxes Act 1988, in subsection (4)(b), the words “or 441A(7)” shall be omitted. U.K.

(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Section 434 U.K.

F17 27 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F17 Sch. 4 para. 27 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 3 (with Sch. 2)

Section 441A U.K.

28 (1) In section 441A, subsections (2) to (8) (regulations about tax credits to which insurance companies are entitled) shall cease to have effect. U.K.

(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.

Schedule 19AC U.K.

29 (1) Schedule 19AC to the Taxes Act 1988 (overseas life insurance companies) shall be amended as follows. U.K.

(2) In paragraph 9(1) (which notionally inserts subsections (1C) to (1E) into section 434 of the Taxes Act 1988) in the notionally inserted subsection (1D), the words from “but this subsection” onwards shall cease to have effect.

(3) Paragraph 11A(2) (which modifies section 441A(2) and (3) of the Taxes Act 1988) shall cease to have effect.

(4) This paragraph has effect in relation to distributions made on or after 6th April 1999.

U.K. The Finance Act 1993

Schedule 20 U.K.

Prospective

30 (1) In Schedule 20 to the M5 Finance Act 1993 (Lloyd’s underwriters: special reserve funds) the following provisions shall cease to have effect— U.K.

(a) paragraph 9(3) (claims for payment of tax credits); and

(b) in paragraph 11(3)(c) (value of fund as increased by tax repayment or tax credit received under paragraph 9(2) or (3)) the words “or tax credit received” and “or (3)”.

(2) Sub-paragraph (1) above has effect in relation to distributions made on or after 6th April 1999.

Marginal Citations

M5 1993 c. 34.