Office of Public Sector Information
PART III continued CHAPTER I continued
(1) In relation to payments of interest made on or after 6th April 1988 section 355 of the Taxes Act 1988 (limitations on relief for loans for purchase or improvement of land etc.) shall have effect with the insertion of the following subsections after subsection (2)—
“(2A) Section 354 shall not apply by virtue of subsection (1)(a) above where the interest is paid on a home improvement loan unless the loan was made before 6th April 1988.
(2B) In subsection (2A) above “home improvement loan” means—
(a) a loan to defray money applied in improving or developing land or buildings on land, otherwise than by the erection of a new building (which is not part of an existing residence) on land which immediately before the improvement or development began had no building on it, or
(b) a loan replacing (whether directly or indirectly) a loan within paragraph (a) above.
(2C) Where it is proved by written evidence that a loan made on or after 6th April 1988 was made in pursuance of an offer made by the lender before that date and that the offer either was in writing or was evidenced by a note or memorandum made by the lender before that date, the loan shall be deemed for the purposes of subsection (2A) above to have been made before that date.”
(2) In relation to payments of interest made on or after 6th April 1988 section 356 of the Taxes Act 1988 (job-related accommodation) shall have effect with the insertion of the following subsection after subsection (1)—
“(1A) Subsection (1) above shall not apply where the interest is paid on a home improvement loan (as defined in section 355(2B)) unless the loan was made before 6th April 1988; and section 355(2C) shall have effect for the purposes of this subsection as for those of section 355(2A).”
(3) Interest paid by a housing association on a home improvement loan made on or after 6th April 1988 shall not be relevant loan interest for the purposes of Part IX of the Taxes Act 1988; and for the purposes of this subsection—
(a) “housing association” means a housing association for the time being approved for the purposes of section 488 of that Act or a self-build society for the time being approved for the purposes of section 489,
(b) “home improvement loan” has the same meaning as in subsection (2B) of section 355 of that Act, and
(c) subsection (2C) of that section shall have effect as it does for the purposes of subsection (2A) of that section.
(1) In sections 355(1)(a) and 357(2)(a) of the Taxes Act 1988 the words “or of a dependent relative or former or separated spouse of his,” shall not have effect in relation to payments of interest made on or after 6th April 1988.
(2) Subsection (1) above shall not apply where the interest is paid on a loan made before 6th April 1988 if interest paid on it at a relevant time was eligible for relief under section 353 of the Taxes Act 1988 only because the land, caravan or house-boat concerned was used as the only or main residence of the same dependent relative or former or separated spouse.
(3) In subsection (2) above “relevant time” means—
(a) the last time when interest was paid on the loan before 6th April 1988, or
(b) if no interest was paid on it before that date, any time within the period of 12 months (or any longer period substituted in relation to the case under section 355(2) of the Taxes Act 1988) after the date on which the loan was made;
but paragraph (b) above shall not apply if at any time after the date on which the loan was made and before the date on which the land, caravan or house-boat was first used as mentioned in subsection (2) above, the land, caravan or house-boat was used for any other purpose.
(4) In section 358(4)(a) of the Taxes Act 1988 (relief where borrower deceased) the words “or of any dependent relative of the deceased” shall not have effect in relation to payments of interest made on or after 6th April 1988 unless—
(a) the deceased died before that date, and
(b) the land, caravan or house-boat was used as the only or main residence of the dependent relative before that date.
(5) Where it is proved by written evidence that a loan made on or after 6th April 1988 was made in pursuance of an offer made by the lender before that date and that the offer either was in writing or was evidenced by a note or memorandum made by the lender before that date, the loan shall be deemed for the purposes of this section to have been made before that date.
(6) Interest paid by a housing association shall not be relevant loan interest for the purposes of Part IX of the Taxes Act 1988 where by virtue of this section it would not be relevant loan interest if paid by a member of the association; and in this subsection “housing association” means a housing association for the time being approved for the purposes of section 488 of that Act or a self-build society for the time being approved for the purposes of section 489.
(1) In Schedule 6 to the Taxes Act 1988 (taxation of directors and others in respect of cars) for Part I (tables of flat rate cash equivalents) there shall be substituted—
| Cylinder capacity of car in cubic centimetres | Age of car at end of relevant year of assessment | |
|---|---|---|
| Under 4 years | 4 years or more | |
| 1400 or less | £1,050 | £700 |
| More than 1400 but not more than 2000 | £1,400 | £940 |
| More than 2000 | £2,200 | £1,450 |
| Original market value of car | Age of car at end of relevant year of assessment | |
|---|---|---|
| Under 4 years | 4 years or more | |
| Less than £6,000 | £1,050 | £700 |
| £6,000 or more but less than £8,500 | £1,400 | £940 |
| £8,500 or more but not more than £19,250 | £2,200 | £1,450 |
| Original market value of car | Age of car at end of relevant year of assessment | |
|---|---|---|
| Under 4 years | 4 years or more | |
| More than £19,250 but not more than £29,000 | £2,900 | £1,940 |
| More than £29,000 | £4,600 | £3,060” |
(2) This section shall have effect for the year 1988-89 and subsequent years of assessment.
(1) In section 141 of the Taxes Act 1988 (non-cash vouchers), in subsection (6), for the words “Subsections (1) and (2)” there shall be substituted the words “Subsection (1)” and after that subsection there shall be inserted—
“(6A) Subsection (1) above shall not apply in relation to a non-cash voucher to the extent that it is used by the employee to obtain the use of a car parking space at or near his place of work.”
(2) In section 142 of that Act (credit-tokens), after subsection (3) there shall be inserted—
“(3A) Subsection (1) above shall not apply in relation to a credit-token to the extent that it is used by the employee to obtain the use of a car parking space at or near his place of work.”
(3) In section 155 of that Act (benefits in kind for persons in director’s or higher-paid employment: exceptions from the general charge), after subsection (1) there shall be inserted—
“(1A) Section 154 does not apply to a benefit consisting in the provision for the employee of a car parking space at or near his place of work.”
(4) After section 197 of that Act there shall be inserted—
Any expenditure incurred in paying or reimbursing expenses in connection with the provision for, or use by, a person holding an office or employment of a car parking space at or near his place of work shall not be regarded as an emolument of the office or employment for any purpose of Schedule E.”
(5) This section shall have effect for the year 1988-89 and subsequent years of assessment.
(1) In section 141 of the Taxes Act 1988 (non-cash vouchers), after subsection (6A) there shall be inserted—
“(6B) Subsection (1) above shall not apply in relation to any non-cash voucher to the extent that it is used to obtain entertainment (including hospitality of any kind) for the employee or a relation of his, if—
(a) the person providing the non-cash voucher is neither his employer nor a person connected with his employer;
(b) neither his employer nor a person connected with his employer has directly or indirectly procured the provision of the entertainment; and
(c) the entertainment is not provided either in recognition of particular services which have been performed by him in the course of his employment or in anticipation of particular services which are to be so performed by him;
and section 839 shall apply for determining whether persons are connected for the purposes of this subsection.”
(2) In subsection (1) of section 36 of the [1975 c. 45.] Finance (No. 2) Act 1975 (vouchers other than cash vouchers), for the words “Subject to subsection (2) below” there shall be substituted the words “Subject to the provisions of this section”.
(3) The provision set out in subsection (1) above shall be inserted after subsection (3A) of that section as subsection (3B) with the substitution—
(a) for the reference to section 839 of the Taxes Act 1988 of a reference to section 533 of the Taxes Act 1970; and
(b) for any reference to a non-cash voucher of a reference to a voucher.
(4) The amendment made by subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and the amendments made by subsections (2) and (3) above shall have effect for the year 1987-88.
(1) In section 142 of the Taxes Act 1988 (credit-tokens), after subsection (3A) there shall be inserted—
“(3B) Subsection (1) above shall not apply in relation to any credit-token to the extent that it is used to obtain entertainment (including hospitality of any kind) for the employee or a relation of his, if—
(a) the person providing the credit-token is neither his employer nor a person connected with his employer;
(b) neither his employer nor a person connected with his employer has directly or indirectly procured the provision of the entertainment; and
(c) the entertainment is not provided either in recognition of particular services which have been performed by him in the course of his employment or in anticipation of particular services which are to be so performed by him;
and section 839 shall apply for determining whether persons are connected for the purposes of this subsection.”
(2) The provision set out in subsection (1) above shall be inserted after subsection (3) of section 36A of the [1975 c. 45.] Finance (No. 2) Act 1975 (credit-tokens) as subsection (3A) with the substitution for the reference to section 839 of the Taxes Act 1988 of a reference to section 533 of the Taxes Act 1970.
(3) The amendment made by subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and the amendment made by subsection (2) above shall have effect for the year 1987-88.
(1) At the end of section 155 of the Taxes Act 1988 (benefits in kind for persons in director’s or higher-paid employment: exceptions from the general charge) there shall be added—
“(7) Section 154 does not apply to a benefit consisting in the provision of entertainment (including hospitality of any kind) for the employee, or for members of his family or household, if—
(a) the person providing the benefit is neither his employer nor a person connected with his employer;
(b) neither his employer nor a person connected with his employer has directly or indirectly procured its provision; and
(c) it is not provided either in recognition of particular services which have been performed by the employee in the course of his employment or in anticipation of particular services which are to be so performed by him;
and section 839 shall apply for determining whether persons are connected for the purposes of this subsection.”
(2) The provision set out in subsection (1) above shall be added at the end of section 62 of the [1976 c. 40.] Finance Act 1976 as subsection (9) with the substitution—
(a) for the reference to section 154 of the Taxes Act 1988 of a reference to section 61 of the 1976 Act; and
(b) for the reference to section 839 of the Taxes Act 1988 of a reference to section 533 of the Taxes Act 1970.
(3) The amendment made by subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and the amendment made by subsection (2) above shall have effect for the year 1987-88.
(1) Where eligible shares in a company are issued for the purpose of raising money for qualifying activities—
(a) which are being carried on by the company or any of its subsidiaries; or
(b) which the company or any of its subsidiaries intends to carry on,
Chapter III of Part VII of the Taxes Act 1988 (relief for investment in new corporate trades: the business expansion scheme) shall apply in relation to the company with the modifications set out in Part I of Schedule 4 to this Act.
(2) In this section and Chapter III (as so modified) “qualifying activities”, in relation to a company by which eligible shares are issued or any subsidiary of such a company, means activities which—
(a) consist of or are connected with the provision and maintenance of dwelling-houses to which this section applies which the company or subsidiary lets, or intends to let, on qualifying tenancies; and
(b) are, during the period beginning with the date on which the shares are issued and ending four years after that date, conducted on a commercial basis and with a view to the realisation of profits.
(3) This section applies to any dwelling-house which is not precluded from being a dwelling-house to which this section applies by Part II of Schedule 4 to this Act; and in this section and that Part of that Schedule—
(a) references to a company or subsidiary do not include references to a company or subsidiary which is a registered housing association within the meaning of the [1985 c. 69.] Housing Associations Act 1985 or Part VII of the [S.I. 1981/156 (N.I.3).] Housing (Northern Ireland) Order 1981;
(b) “qualifying tenancy” means any tenancy which is—
(i) for the purposes of the Housing Act 1988, an assured tenancy other than an assured shorthold tenancy;
(ii) for the purposes of the Housing (Scotland) Act 1988, an assured tenancy other than a short assured tenancy; or
(iii) in Northern Ireland, a tenancy which complies with such requirements or conditions as may be prescribed by regulations made by the Department of the Environment for Northern Ireland,
and is not a tenancy which falls within subsection (4) below; and
(c) expressions which are also used in Chapter III have the same meanings as in that Chapter.
(4) A tenancy falls within this subsection if—
(a) it is a tenancy granted in consideration of a premium within the meaning of Schedule 3 to the [1979 c. 14.] Capital Gains Tax Act 1979; or
(b) any option to purchase in relation to the dwelling-house has been granted to the tenant or an associate of his;
and in this subsection any reference to the tenant includes, in the case of a joint tenancy, a reference to either or any of the joint tenants.
(5) Regulations under subsection (3) above shall be made by statutory rule for the purposes of the [S.I. 1979/1573 (N.I.12).] Statutory Rules (Northern Ireland) Order 1979 and shall be subject to negative resolution within the meaning of section 41(6) of the [1954 c. 33 (N.I.).] Interpretation Act (Northern Ireland) 1954.
(6) This section and Schedule 4 to this Act shall have effect in relation to shares issued after the passing of this Act and before the end of 1993.
(1) The Taxes Act 1988 shall have effect, and be deemed always to have had effect, with the following amendments, namely—
(a) in section 289(12)(b), the substitution of the words “sections 290A, 293” for the words “sections 293”; and
(b) the insertion after section 290 of the following section—
(1) Where—
(a) a company raises any amount through the issue of eligible shares after 15th March 1988; and
(b) the aggregate of that amount and of all other amounts (if any) so raised within the period mentioned in subsection (2) below exceeds £500,000,
the relief shall not be given in respect of the excess.
(2) The period referred to in subsection (1) above is—
(a) the period of 6 months ending with the date of the issue of the shares; or
(b) the period beginning with the preceding 6th April and ending with the date of that issue,
whichever is the longer.
(3) In determining the aggregate mentioned in subsection (1) above, no account shall be taken of any amount—
(a) which is subscribed by a person other than an individual who qualifies for relief; or
(b) as respects which relief is precluded by section 290 or this section.
(4) Where—
(a) at any time within the relevant period, the company in question or any of its subsidiaries carries on any trade or part of a trade in partnership, or as a party to a joint venture, with one or more other persons; and
(b) that other person, or at least one of those other persons, is a company,
the reference to £500,000 in subsection (1) above shall have effect as if it were a reference to—
where A is the total number of companies (apart from the company in question or any of its subsidiaries) which, during the relevant period, are members of any such partnership or parties to any such joint venture.
(5) Where this section precludes the giving of relief on claims in respect of shares issued to two or more individuals, the available relief shall be divided between them in proportion to the amounts which have been respectively subscribed by them for the shares to which their claims relate and which would, apart from this section, be eligible for relief.
(6) Where—
(a) in the case of a company falling within subsection (2)(a) of section 293, the qualifying trade or each of the qualifying trades is a trade to which subsection (7) below applies;
(b) in the case of a company falling within subsection (2)(b)(i) of that section, the subsidiary or each of the subsidiaries is a dormant subsidiary or exists wholly, or substantially wholly, for the purpose of carrying on one or more qualifying trades which or each of which is a trade to which subsection (7) below applies; or
(c) in the case of a company falling within subsection (2)(b)(ii) of that section, the requirements mentioned in each of paragraphs (a) and (b) above are satisfied,
subsections (1) and (4) above shall have effect as if for the amount there specified there were substituted £5 million.
(7) This subsection applies to a trade if it consists, wholly or substantially wholly, of operating or letting ships, other than oil rigs or pleasure craft, and—
(a) every ship operated or let by the company carrying on the trade is beneficially owned by the company;
(b) every ship beneficially owned by the company is registered in the United Kingdom;
(c) throughout the relevant period the company is solely responsible for arranging the marketing of the services of its ships; and
(d) the conditions mentioned in section 297(7) are satisfied in relation to every letting by the company.
(8) Where—
(a) any of the requirements mentioned in paragraphs (a) to (c) of subsection (7) above are not satisfied in relation to any ships; or
(b) any of the conditions referred to in paragraph (d) of that subsection are not satisfied in relation to any lettings,
the trade shall not thereby be precluded from being a trade to which that subsection applies if the operation or letting of those ships, or, as the case may be, those lettings do not amount to a substantial part of the trade.
(9) The Treasury may by order amend any of the foregoing provisions of this section by substituting a different amount for the amount for the time being specified there.
(10) Where—
(a) the issue of the eligible shares is made in pursuance of a prospectus published, or an offer in writing made, before 15th March 1988;
(b) the shares are issued after that date and before 6th April 1988; and
(c) subsection (6) above does not apply,
subsections (1) and (4) above shall have effect as if for the amount there specified there were substituted £1 million.
(11) In this section—
“let” means let on charter and “letting” shall be construed accordingly;
“oil rig” and “pleasure craft” have the same meanings as in section 297;
“prospectus” has the meaning given by section 744 of the [1985 c. 6.] Companies Act 1985 or Article 2(3) of the [S.I. 1986/1032 (N.I.6).] Companies (Northern Ireland) Order 1986.”
(2) Schedule 5 to the [1983 c. 28.] Finance Act 1983 shall be deemed always to have had effect as if—
(a) in paragraph 2(7), for the words “paragraphs 5” there had been substituted the words “paragraphs 3A, 5”; and
(b) the provisions set out in subsection (1)(b) above had been inserted, with any necessary modifications, after paragraph 3 as paragraph 3A.
(1) In section 294 of the Taxes Act 1988 (companies with interests in land), after subsection (5) there shall be inserted—
“(5A) For the purposes of this section, the value of an interest in any building or other land shall be adjusted by deducting the market value of any machinery or plant which is so installed or otherwise fixed in or to the building or other land as to become, in law, part of it.”
(2) This section shall have effect in relation to valuations which fall to be made after the passing of this Act.
(1) For subsection (3) of section 311 of the Taxes Act 1988 there shall be substituted—
“(2A) Subsection (2B) below applies where an individual claims relief in respect of eligible shares in a company and—
(a) the shares have been issued to the managers of an approved fund as nominee for the individual;
(b) the fund has closed, that is to say, no further investments in the fund are to be accepted; and
(c) the amounts which the managers have, as nominee for the individual, subscribed for eligible shares issued within six months after the closing of the fund represent not less than 90 per cent. of his investment in the fund;
and in this section “the managers of an approved fund” means the person or persons having the management of an investment fund approved for the purposes of this section by the Board.
(2B) In any case where this subsection applies, subsections (5) to (7) of section 289 and subsections (1) to (3) and (6) of section 304 shall have effect as if—
(a) any reference to the year of assessment or other period in which the shares are issued were a reference to the year of assessment or other period in which the fund closes; and
(b) any reference to the time of the issue of the shares, or the time of the subscription for the shares, were a reference to the time of the closing of the fund.
(3) Section 290(1) shall not apply where the amount is subscribed as nominee for an individual by the managers of an approved fund.”
(2) This section shall have effect in relation to approved funds closing after 15th March 1988.
(1) In section 56(1) of the [1987 c. 51.] Finance (No. 2) Act 1987 and section 655(4) of the Taxes Act 1988 (personal pension schemes not to be approved with effect from date earlier than 4th January 1988) for “4th January” there shall be substituted “1st July”.
(2) In consequence of the amendment made by subsection (1) above—
(a) the same amendment shall be made in—
(i) section 54(1) of the Act of 1987 and section 618(1) of the Act of 1988 (no retirement annuity relief for contracts made or trust schemes established on or after 4th January 1988);
(ii) section 54(3) of the Act of 1987 and section 618(2) of the Act of 1988 (limit on lump sums under contracts made or schemes established before 4th January 1988); and
(iii) section 20(3) of the Act of 1987 and section 632(3) of the Act of 1988 (removal of restriction from certain schemes established before 4th January 1988);
(b) in section 55 of the Act of 1987 and section 655 of the Act of 1988 (transitional provisions: carry back and carry forward)—
(i) in subsection (2), for “1984-85, 1985-86 or 1986-87” there shall be substituted “1985-86, 1986-87 or 1987-88”; and
(ii) in subsection (3), for “1987-88” there shall be substituted “1988-89”; and
(c) in section 56(2) of the Act of 1987 and section 655(5) of the Act of 1988 (provisional approval where application made before 1st August 1989) for “August 1989” there shall be substituted “February 1990”.
(3) The amendments made by this section shall be deemed always to have had effect.
(1) At the end of section 630 of the Taxes Act 1988 (interpretation of Chapter IV of Part XIV) there shall be inserted—
“and references to an employee or to an employer include references to the holder of an office or to the person under whom an office is held.”
(2) In section 638 of that Act, for subsection (7) (personal pension schemes which permit acceptance of certain contributions not to be approved) there shall be substituted—
“(7) The Board shall not approve a personal pension scheme which permits the acceptance of minimum contributions paid as mentioned in subsection (6)(c) above in respect of an individual’s service as director of a company, if his emoluments as such are within section 644(5).
(8) A personal pension scheme which permits the acceptance of minimum contributions paid as mentioned in subsection (6)(c) above in respect of an individual’s service in an office or employment to which section 645 applies may be approved by the Board only if—
(a) the scheme does not permit the acceptance of contributions from the individual or from the person who is his employer in relation to that office or employment; or
(b) at the time when the minimum contributions are paid the individual is not serving in an office or employment to which section 645 applies.”
(3) In section 686(2) of that Act (income arising to trustees which is chargeable to income tax at the additional rate), for paragraph (c) there shall be substituted—
“(c) is not income arising under a trust established for charitable purposes only or income from investments, deposits or other property held—
(i) for the purposes of a fund or scheme established for the sole purpose of providing relevant benefits within the meaning of section 612; or
(ii) for the purposes of a personal pension scheme (within the meaning of section 630) which makes provision only for benefits such as are mentioned in section 633; and”.
(4) The amendments made by this section shall be deemed to have come into force on 1st July 1988.
Finance Act 1988