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Income tax shall be charged for the year 1998-99, and for that year—
(a) the lower rate shall be 20 per cent.;
(b) the basic rate shall be 23 per cent.; and
(c) the higher rate shall be 40 per cent.
(1) In subsection (1)(c) of section 259 of the Taxes Act 1988 (additional relief for children in the case of a man with an incapacitated wife), for “man” and “wife” there shall be substituted, respectively, “individual” and “spouse”.
(2) In subsection (4) of that section (woman not entitled to relief in a case where a child is resident with her only while she is married and living with her husband), after “relief under this section” there shall be inserted “by virtue of subsection (1)(a) above”.
(3) In section 261A(3) of that Act (rule in the year of a separation for man who is entitled to relief by virtue of section 259(1)(c)), for “a man” there shall be substituted “an individual”.
(4) This section has effect for the year 1998-99 and subsequent years of assessment and shall be deemed to have had effect for the year 1997-98.
(1) The Taxes Act 1988 shall have effect for the year 1999-00 and subsequent years of assessment with the following amendments—
(a) in section 256(2)(a) of that Act (rate of reliefs given by way of income tax reduction under Chapter I of Part VII), for “15 per cent.” there shall be substituted “10 per cent.”; and
(b) in section 347B(5A)(a) of that Act (rate of relief for qualifying maintenance payments), for “the appropriate percentage” there shall be substituted “10 per cent.”.
(2) For the purposes only of applying section 257C of the Taxes Act 1988 (indexation) for the year 1999-00, the amounts specified for the year 1998-99 in subsections (2) and (3) of section 257A of that Act (married couple’s allowance for persons of 65 or more) shall be taken to have been £4,965 and £5,025, respectively.
(1) Corporation tax shall be charged for the financial year 1998 at the rate of 31 per cent.
(2) For that year—
(a) the small companies' rate shall be 21 per cent.; and
(b) the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fortieth.
(1) Corporation tax shall be charged for the financial year 1999 at the rate of 30 per cent.
(2) For that year—
(a) the small companies' rate shall be 20 per cent.; and
(b) the fraction mentioned in section 13(2) of the Taxes Act 1988 (marginal relief for small companies) shall be one fortieth.
(1) After section 59DA of the [1970 c. 9.] Taxes Management Act 1970 there shall be inserted—
(1) The Treasury may by regulations make provision, in relation to companies of such descriptions as may be prescribed, for or in connection with treating amounts of corporation tax for an accounting period as becoming due and payable on dates which fall on or before the date on which corporation tax for that period would become due and payable apart from this section.
(2) Without prejudice to the generality of subsection (1) above, regulations under this section may make provision—
(a) for or in connection with the determination of amounts of corporation tax which are treated as becoming due and payable under the regulations;
(b) for or in connection with the determination of the dates on which amounts of corporation tax are treated as becoming due and payable under the regulations;
(c) for or in connection with the making of payments to the Board in respect of amounts of corporation tax which are treated as becoming due and payable under the regulations;
(d) for or in connection with the determination of the amount of any such payments as are mentioned in paragraph (c) above;
(e) for or in connection with the determination of the dates on which any such payments as are mentioned in paragraph (c) above become due and payable;
(f) for or in connection with any assumptions which are to be made for any purposes of the regulations;
(g) for or in connection with the payment to the Board of interest on amounts of corporation tax which are treated as becoming due and payable under the regulations;
(h) for or in connection with the repayment of amounts paid under the regulations;
(i) for or in connection with the payment of interest by the Board on amounts paid or repaid under the regulations;
(j) with respect to the furnishing of information to the Board;
(k) with respect to the keeping, production or inspection of any books, documents or other records;
(l) for or in connection with the imposition of such requirements as the Treasury think necessary or expedient for any purposes of the regulations;
(m) for or in connection with appeals in relation to questions arising under the regulations.
(3) Regulations under this section may make provision—
(a) for amounts of corporation tax for an accounting period to be treated as becoming due and payable on dates which fall within the accounting period;
(b) for payments in respect of any such amounts of corporation tax for an accounting period as are mentioned in paragraph (a) above to become due and payable on dates which fall within the accounting period.
(4) Where interest is charged by virtue of regulations under this section on any amounts of corporation tax for an accounting period which are treated as becoming due and payable under the regulations, the company shall, in such circumstances as may be prescribed, be liable to a penalty not exceeding twice the amount of that interest.
(5) Regulations under this section—
(a) may make such modifications of any provisions of the Taxes Acts, or
(b) may apply such provisions of the Taxes Acts,
as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.
(6) Regulations under this section which apply any provisions of the Taxes Acts may apply those provisions either without modifications or with such modifications as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.
(7) Regulations under this section—
(a) may make different provision for different purposes, cases or circumstances;
(b) may make different provision in relation to companies or accounting periods of different descriptions;
(c) may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.
(8) Subject to subsection (9) below, regulations under this section may make provision in relation to accounting periods beginning before (as well as accounting periods beginning on or after) the date on which the regulations are made.
(9) Regulations under this section may not make provision in relation to accounting periods ending before the day appointed under section 199 of the [1994 c. 9.] Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).
(10) In this section—
“modifications” includes amendments, additions and omissions;
“prescribed” means prescribed by regulations made under this section.
(11) Any reference in this section to corporation tax includes a reference—
(a) to any amount due from a company under section 419 of the principal Act (loans to participators etc) as if it were an amount of corporation tax chargeable on the company;
(b) to any sum chargeable on a company under section 747(4)(a) of the principal Act (controlled foreign companies) as if it were an amount of corporation tax.”
(2) The Treasury may by regulations make provision for or in connection with the payment to the Board of an amount or amounts determined by or under the regulations in any case where, on or after 25th November 1997 and before 30th June 2002, a company takes any action specified in the regulations which has the effect—
(a) of delaying the application, or
(b) of delaying or avoiding the full effect,
in relation to the company of any regulations made under section 59E of the [1970 c. 9.] Taxes Management Act 1970.
(3) Any amount determined by or under regulations under this section shall be computed as if it were interest on a sum determined by or under the regulations; and any amount so determined shall be treated for the purposes of the Tax Acts as if it were interest due to the Board.
(4) The action which may be specified in regulations under this section includes—
(a) a change by a company in the date or dates on which any of its accounting periods begin or end; or
(b) a transfer by a company of any property, rights or liabilities to a company which belongs to the same group as that company.
(5) In subsection (4) above “group” means a company which has one or more 51 per cent. subsidiaries together with that or those subsidiaries.
(6) Regulations under this section—
(a) may make different provision in relation to different cases or in relation to companies of different descriptions;
(b) may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.
(1) No company resident in the United Kingdom shall be liable to pay advance corporation tax in respect of any qualifying distribution made on or after 6th April 1999.
(2) For the purposes of the Tax Acts, no distribution made on or after 6th April 1999 shall be treated as giving rise to the making of a franked payment.
(3) No franked investment income which is attributable to a distribution made on or after 6th April 1999 shall be used to frank any distributions of a company.
(4) Section 238(3) of the Taxes Act 1988 shall apply for the purposes of subsection (3) above as it applies for the purposes of Chapter V of Part VI of that Act.
(5) Schedule 3 to this Act (which makes provision for and in connection with the abolition of advance corporation tax) shall have effect.
(1) The Treasury may by regulations make provision for or in connection with enabling unrelieved surplus advance corporation tax to be set against liability to corporation tax on profits charged to corporation tax for accounting periods ending on or after 6th April 1999 (and thus to discharge a corresponding amount of any such liability).
(2) Without prejudice to the generality of subsection (1) above, regulations under this section may make provision—
(a) for or in connection with imposing a limit or limits on the amount of unrelieved surplus advance corporation tax which may be set against liability to corporation tax on profits charged to corporation tax for an accounting period;
(b) for or in connection with the carrying forward of unrelieved surplus advance corporation tax from earlier accounting periods to later accounting periods;
(c) for or in connection with the recovery of corporation tax from companies in prescribed circumstances where any such liability as is mentioned in paragraph (a) above is or has been discharged by the set-off of unrelieved surplus advance corporation tax;
(d) for or in connection with the reduction or extinguishment of unrelieved surplus advance corporation tax;
(e) for or in connection with treating notional amounts of advance corporation tax (“shadow ACT”) as paid by companies in respect of distributions made on or after 6th April 1999;
(f) for or in connection with the determination of amounts of shadow ACT which are treated as paid by companies in respect of distributions made on or after 6th April 1999;
(g) in relation to the treatment of shadow ACT;
(h) in relation to the treatment of companies which have prescribed relationships or connections with each other;
(i) in relation to the treatment of prescribed events, arrangements or transactions involving companies with unrelieved surplus advance corporation tax.
(3) The provision which may be made by regulations under this section includes provision—
(a) for or in connection with treating shadow ACT as reducing any limit or limits on the amount of unrelieved surplus advance corporation tax which may be set against any such liability as is mentioned in subsection (2)(a) above;
(b) for or in connection with the carrying forward of shadow ACT from earlier accounting periods to later accounting periods;
(c) for or in connection with the carrying back of shadow ACT from later accounting periods to earlier accounting periods;
(d) for or in connection with the transfer of shadow ACT between companies;
(e) for or in connection with the reduction or extinguishment of shadow ACT.
(4) The provision which may be made by virtue of subsection (2)(c) above includes provision for or in connection with the recovery of corporation tax from a company which has a prescribed relationship or connection with a company whose liability to corporation tax is or has been discharged by the set-off of unrelieved surplus advance corporation tax.
(5) The provision which may be made by regulations under this section includes provision for or in connection with enabling unrelieved surplus advance corporation tax to be set against liability to a sum chargeable under section 747(4)(a) of the Taxes Act 1988 (controlled foreign companies) as if it were an amount of corporation tax for an accounting period.
(6) In this section “unrelieved surplus advance corporation tax” means the advance corporation tax (if any) which, apart from sub-paragraph (3) of paragraph 11 of Schedule 3 to this Act but otherwise in accordance with that paragraph, would be treated by virtue of section 239(4) of the Taxes Act 1988 as paid in respect of distributions made by a company in the first accounting period of the company to begin on or after 6th April 1999.
(7) The reference in subsection (6) above to an accounting period beginning on or after 6th April 1999 includes a reference to a separate accounting period mentioned in section 245(2) of the Taxes Act 1988 which begins on 6th April 1999.
(8) Regulations under this section—
(a) may make such modifications of any provisions of the Tax Acts, or
(b) may apply such provisions of the Tax Acts,
as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.
(9) Regulations under this section which apply any provisions of the Tax Acts may apply those provisions either without modifications or with such modifications as the Treasury think necessary or expedient for or in connection with giving effect to the provisions of this section.
(10) Regulations under this section—
(a) may make different provision for different purposes, cases or circumstances;
(b) may make different provision in relation to companies or accounting periods of different descriptions;
(c) may make such supplementary, incidental, consequential or transitional provision as appears to the Treasury to be necessary or expedient.
(11) Regulations under this section may make provision in relation to accounting periods beginning before (as well as accounting periods beginning on or after) the date on which the regulations are made.
(12) In this section—
“modifications” includes amendments, additions and omissions;
“prescribed” means prescribed by regulations made under this section.
(1) Section 90 of the [1970 c. 9.] Taxes Management Act 1970 (interest on overdue tax to be paid without deduction of income tax and not to be allowed as a deduction in computing income, profits or losses) shall be amended as follows.
(2) At the beginning there shall be inserted “(1)” and in the subsection (1) so formed—
(a) after “Interest payable under this Part of this Act” there shall be inserted “(a)”; and
(b) after “and” there shall be inserted “(b)”.
(3) At the beginning of the paragraph (b) formed by subsection (2)(b) above (disallowance of relief for interest) there shall be inserted “subject to subsection (2) below,”.
(4) At the end of the section there shall be added—
“(2) Paragraph (b) of subsection (1) above does not apply in relation to interest under section 87 or 87A of this Act payable by a company within the charge to corporation tax.”
(5) The amendments made by subsections (3) and (4) above have effect in relation to—
(a) interest on corporation tax for accounting periods ending on or after the day appointed under section 199 of the [1994 c. 9.] Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment); and
(b) interest on tax assessable in accordance with Schedule 13 or 16 to the Taxes Act 1988 for return periods in accounting periods ending on or after that day.
(1) Section 826 of the Taxes Act 1988 (interest on tax overpaid) shall be amended as follows.
(2) In subsection (5) (interest on overpaid tax to be paid without deduction of income tax and not to be brought into account in computing profits or income)—
(a) after “Interest paid under this section” there shall be inserted “(a)”; and
(b) after “and” there shall be inserted “(b)”.
(3) At the beginning of the paragraph (b) formed by subsection (2)(b) above (interest not to be brought into account in computing profits or income) there shall be inserted “subject to subsection (5A) below,”.
(4) After subsection (5) there shall be inserted—
“(5A) Paragraph (b) of subsection (5) above does not apply in relation to interest payable to a company within the charge to corporation tax.”
(5) The amendments made by subsections (3) and (4) above have effect in relation to interest payable by virtue of any paragraph of section 826(1) of the [1994 c. 9.] Taxes Act 1988 if the accounting period mentioned in that paragraph is one which ends on or after the day appointed under section 199 of the Finance Act 1994 for the purposes of Chapter III of Part IV of that Act (corporation tax self-assessment).
Schedule 4 to this Act (which makes further amendments relating to interest payable under the Tax Acts by or to companies) shall have effect.
(1) The Board may enter into arrangements with some or all of the members of a group of companies for one of those members to discharge any liability of each of those members to pay corporation tax for the accounting periods to which the arrangements relate.
(2) Any such arrangements—
(a) may make provision in relation to cases where companies become or cease to be members of a group of companies;
(b) may make provision in relation to the discharge of liability to pay interest or penalties;
(c) may make provision in relation to the discharge of liability to pay any amount treated as corporation tax;
(d) may make provision for or in connection with the termination of the arrangements;
(e) may make such supplementary, incidental, consequential or transitional provision as is necessary or expedient for the purposes of the arrangements.
(3) Any such arrangements—
(a) shall not affect the liability to corporation tax, or to pay corporation tax, of any company to which the arrangements relate; and
(b) shall not affect any other liability of any such company under the Tax Acts.
(4) For the purposes of this section a company and all its 51 per cent. subsidiaries form a group of companies and, if any of those subsidiaries have 51 per cent. subsidiaries, the group of companies includes them and their 51 per cent. subsidiaries, and so on.
(5) The reference in subsection (2)(c) above to any amount treated as corporation tax is a reference—
(a) to any amount due from a company under section 419 of the Taxes Act 1988 (loans to participators etc) as if it were an amount of corporation tax chargeable on the company;
(b) to any sum chargeable on a company under section 747(4)(a) of the Taxes Act 1988 (controlled foreign companies) as if it were an amount of corporation tax.
(1) Section 51B of the Taxes Act 1988 (which enables provision to be made requiring tax on interest on gilt-edged securities to be accounted for periodically) shall cease to have effect.
(2) In consequence of subsection (1) above, in paragraph 3 of Schedule 19AB to that Act (repayment of excessive provisional payments made on self-assessment), in sub-paragraph (1C) (as inserted by Schedule 34 to the [1996 c. 8.] Finance Act 1996)—
(a) the word “or” shall be inserted at the end of paragraph (a); and
(b) paragraph (c) and the word “or” immediately preceding it shall be omitted.
(3) The preceding provisions of this section have effect in relation only to payments of interest falling due on or after such day as the Treasury may by order appoint.
(1) The provisions of Schedule 5 to this Act have effect with respect to tax on rents and other receipts from land.
Part I contains amendments relating to the charge to tax under Schedule A or Case V of Schedule D on rents and other receipts from land.
Part II contains amendments about relief for losses incurred in a Schedule A business or overseas property business, and the relationship between such relief and other reliefs.
Part III contains minor and consequential amendments.
(2) So far as relating to income tax, the provisions of Parts I to III of that Schedule have effect for the year 1998-99 and subsequent years of assessment.
(3) So far as relating to corporation tax, the provisions of Parts I to III of that Schedule come into force on 1st April 1998, subject to the transitional provisions in Part IV of the Schedule.
Sections 26 and 27 of the Taxes Act 1988 (deductions from rent: land managed as one estate and maintenance funds for historic buildings) shall cease to have effect—
(a) for income tax purposes, on and after 6th April 2001;
(b) for corporation tax purposes, for accounting periods beginning on or after 1st April 2001.
(1) Section 34 of the Taxes Act 1988 (treatment of premiums, etc. as rent) is amended as follows.
(2) In subsection (1) for “becoming entitled when the lease is granted to” substitute “receiving when the lease is granted”.
(3) In subsection (4)—
(a) in paragraph (a), for the words from “in computing” to “in lieu of rent” substitute “in computing the profits of the Schedule A business of which the sum payable in lieu of rent is by virtue of this subsection to be treated as a receipt”; and
(b) in paragraph (b), for “deemed to become due” substitute “deemed to be received”.
(4) In subsection (5)—
(a) in paragraph (a), for “tax chargeable by virtue of this subsection” substitute “the profits of the Schedule A business of which that sum is by virtue of this subsection to be treated as a receipt”; and
(b) in paragraph (b), for “deemed to become due” substitute “deemed to be received”.
(5) The above amendments have effect in relation to amounts treated as received under section 34 of the Taxes Act 1988 on or after 17th March 1998.
(1) For section 98 of the Taxes Act 1988 (tied premises) substitute—
(1) This section applies where a person (“the trader”)—
(a) carries on a trade,
(b) in the course of the trade supplies, or is concerned in the supply of, goods sold or used on premises occupied by another person,
(c) has an estate or interest in those premises, and
(d) deals with that estate or interest as property employed for the purposes of the trade.
(2) Where this section applies the receipts and expenses in connection with the premises that would otherwise fall to be brought into account in computing the profits of a Schedule A business carried on by the trader shall instead be brought into account in computing the profits of the trade.
(3) Any necessary apportionment shall be made on a just and reasonable basis of receipts or expenses—
(a) which do not relate only to the premises concerned, or
(b) where the conditions in subsection (1) are met only in relation to part of the premises.
(4) This section applies to premises outside the United Kingdom as if the premises were in the United Kingdom.”.
(2) In section 156 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (replacement of business assets: buildings and land), for subsection (4) substitute—
“(4) Where section 98 of the Taxes Act applies (tied premises: receipts and expenses treated as those of trade), the trader shall be treated, to the extent that the conditions in subsection (1) of that section are met in relation to premises, as occupying as well as using the premises for the purposes of the trade.”.
(3) The above amendments have effect on and after 17th March 1998, subject to the following transitional provisions.
In those provisions—
“before commencement” and “after commencement” mean, respectively, before 17th March 1998 and on or after that date; and
“the new section 98” means the section as substituted by subsection (1) above.
(4) To the extent that receipts or expenses have been taken into account before commencement, they shall not be taken into account again under the new section 98 after commencement.
(5) To the extent that receipts or expenses would under the new section 98 have been brought into account before commencement, and were not so brought into account, they shall be brought into account immediately after commencement.
(6) If any estate, interest or rights in or over land is or are transferred from one person to another, the references in subsections (4) and (5) above to receipts or expenses being taken into account shall be construed as references to their being taken into account in relation to either of those persons.
(7) For the purposes of those subsections an amount is “taken into account” if—
(a) it is brought into account for tax purposes, or
(b) it would have been so brought into account if the person concerned were chargeable to tax.
(1) For the purposes of Case I or II of Schedule D the profits of a trade, profession or vocation must be computed on an accounting basis which gives a true and fair view, subject to any adjustment required or authorised by law in computing profits for those purposes.
(2) This does not—
(a) require a person to comply with the requirements of the [1985 c. 6.] Companies Act 1985 or the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986 except as to the basis of computation, or
(b) impose any requirements as to audit or disclosure.
(3) This section applies to periods of account beginning after 6th April 1999.
A period of account beginning on or before 6th April 1999 which is still current on 7th April 2000 shall be treated for the purposes of this section as having ended on 6th April 1999 and a new period as having begun on 7th April 1999.
(4) This section is subject to the exemption in section 43 below (barristers and advocates in early years of practice).
(5) This section does not affect provisions of the Tax Acts relating to the computation of the profits of Lloyd’s underwriters or companies carrying on life insurance, or otherwise laying down special rules for the computation of the profits of a particular description of business.
Finance Act 1998 (C. 36)