Office of Public Sector Information
PART II continued CHAPTER I continued
(2) The words “Regulations under section 57 of the Finance Act 1989” shall be added at the end of each column in the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to furnish information etc.).
(3) The following provisions of the Taxes Management Act 1970, namely—
(a) section 29(3)(c) (excessive relief),
(b) section 30 (tax repaid in error etc.),
(c) section 88 (interest), and
(d) section 95 (incorrect return or accounts),
shall apply in relation to the payment of an amount claimed under section 54(6)(b) above to which the claimant was not entitled as if it had been income tax repaid as a relief which was not due.
(4) In sections 257B(2), 257D(8) and 265(3) of the Taxes Act 1988 after paragraph (c) there shall be inserted “or
(d) on account of any payments to which section 54(5) of the Finance Act 1989 applies”.
(5) In subsection (1) above—
“eligible contract” has the meaning given by section 55 above, and
“prescribed” means prescribed by or, in relation to form, under the regulations.
(1) In section 202(7) of the Taxes Act 1988 (which limits to £240 the deductions attracting relief) for “£240” there shall be substituted “£480”.
(2) This section shall have effect for the year 1989-90 and subsequent years of assessment.
(1) In determining whether a payment made to a charity within subsection (2) below is —
(a) an annual payment for the purposes of the Tax Acts, or
(b) a payment to which section 125(1) of the Taxes Act 1988 applies, or
(c) a covenanted payment to charity within the meaning given by section 660(3) of that Act,
there shall be disregarded any consideration for the payment which is of a kind described in subsection (3) below.
(2) A charity is within this subsection if its sole or main purpose is—
(a) the preservation of property for the public benefit, or
(b) the conservation of wildlife for the public benefit.
(3) The consideration referred to in subsection (1) above is the right of admission—
(a) to view property the preservation of which is the sole or main purpose of the charity, or
(b) to observe wildlife the conservation of which is the sole or main purpose of the charity.
(4) In subsection (3) above “right of admission” refers to admission of the person making the payment (or of any member of his family who may be admitted because of the payment) either free of the charges normally payable for admission by members of the public, or on payment of a reduced charge.
(5) Subsection (1) above shall not apply unless the opportunity to make payments of the kind in question is available to members of the public.
(6) For the purposes of this section—
(a) “charity” means a body of persons or trust established for charitable purposes only, and
(b) the bodies mentioned in section 507 shall each be treated as having been so established.
(7) This section shall apply to payments due on or after 14th March 1989.
(1) In subsection (1) of section 507 of the Taxes Act 1988 (which gives tax exemption to the National Heritage Memorial Fund and the Historic Buildings and Monuments Commission) after paragraph (b) there shall be inserted—
“(c) the Trustees of the British Museum;
(d) the Trustees of the British Museum (Natural History);”
and subsection (2) of that section (which gives partial tax exemption to those Trustees) shall cease to have effect.
(2) In section 339(9) of that Act, for the words from “the Trustees” (where those words first occur) to “History) and” there shall be substituted the words “each of the bodies mentioned in section 507, and in subsections (1) to (5) above includes”.
(3) In section 660(4) of that Act, for the words from “the Trustees” to “England” there shall be substituted the words “the bodies mentioned in section 507”.
(4) Subsection (1) above shall apply in relation to accounting periods ending on or after 14th March 1989, and subsections (2) and (3) above shall apply to payments due on or after that day.
Schedule 4 to this Act (which amends the provisions of the Taxes Act 1988 relating to profit-related pay) shall have effect.
(1) Part III of Schedule 9 to the Taxes Act 1988 (requirements applicable to savings-related share option schemes) shall be amended as follows.
(2) In paragraph 24(2)(a) (scheme not to permit monthly amount of contributions linked to schemes to exceed £100), for “£100” there shall be substituted “£150”.
(3) In paragraph 25(b) (requirement that price at which share may be acquired under scheme be not less than 90 per cent. of market value), for the words “90 per cent.” there shall be substituted the words “80 per cent.”.
(4) Subsection (2) above shall come into force on such day as the Treasury may by order made by statutory instrument appoint.
(1) In section 187(2) of the Taxes Act 1988, in the definition of “relevant amount” (limit on the value of shares that may be appropriated to a participant in a year of assessment), for the words “not less than £l,250 and not more than £5,000” there shall be substituted the words “not less than £2,000 and not more than £6,000”.
(2) This section shall apply for the year 1989-90 and subsequent years of assessment.
In paragraph 10 of Schedule 9 to the Taxes Act 1988, paragraph (c)(ii) (which requires a consortium member to hold not less than three-twentieths of share capital of grantor company etc. if member’s shares are to qualify as scheme shares) shall cease to have effect.
In Schedule 9 to the Taxes Act 1988 the following paragraph shall be inserted after paragraph 39—
40 (1) Where an individual has an interest in shares or obligations of the company as a beneficiary of an employee benefit trust, the trustees shall not be regarded as associates of his by reason only of that interest unless sub-paragraph (3) below applies in relation to him.
(2) In this paragraph “employee benefit trust” has the same meaning as in paragraph 7 of Schedule 8.
(3) This sub-paragraph applies in relation to an individual if at any time on or after 14th March 1989—
(a) the individual, either on his own or with any one or more of his associates, or
(b) any associate of his, with or without other such associates,
has been the beneficial owner of, or able (directly or through the medium of other companies or by any other indirect means) to control, more than 25 per cent., or in the case of a share option scheme which is not a savings-related share option scheme more than 10 per cent., of the ordinary share capital of the company.
(4) Sub-paragraphs (9) to (12) of paragraph 7 of Schedule 8 shall apply for the purposes of this paragraph in relation to an individual as they apply for the purposes of that paragraph in relation to an employee.”
(1) In relation to offers made on or after 11th October 1988, section 68 of the [1988 c. 39.] Finance Act 1988 (which provides for the benefits derived from priority rights in share offers to be disregarded in certain circumstances) shall have effect with the following amendments.
(2) In subsection (1), the words from “at the fixed price” to “tendered” shall be omitted.
(3) After that subsection there shall be inserted—
“(1A) Where the price payable by the director or employee is less than the fixed price or the lowest price successfully tendered, subsection (1) above shall not apply to the benefit represented by the difference in price.”
(4) In subsection (2), for paragraph (a) (priority shares not to exceed 10 per cent. of shares subject to the offer) there shall be substituted—
“(a) that the aggregate number of shares subject to the offer that may be allocated as mentioned in subsection (1)(b) above does not exceed the limit specified in subsection (2A) below or, as the case may be, either of the limits specified in subsection (2B) below”.
(5) After subsection (2) there shall be inserted—
“(2A) Except where subsection (2B) below applies, the limit relevant for the purposes of subsection (2)(a) above is 10 per cent. of the shares subject to the offer (including the shares that may be allocated as mentioned in subsection (1)(b) above).
(2B) Where the offer is part of arrangements which include one or more other offers to the public of shares of the same class, the limits relevant for the purposes of subsection (2)(a) above are—
(a) 40 per cent. of the shares subject to the offer (including the shares that may be allocated as mentioned in subsection (1)(b) above), and
(b) 10 per cent. of all the shares of the class in question (including the shares that may be so allocated) that are subject to any of the offers forming part of the arrangements.”
(1) This section applies where—
(a) a company expends a sum in making a payment by way of contribution to the trustees of a trust which is a qualifying employee share ownership trust at the time the sum is expended,
(b) at that time, the company or a company which it then controls has employees who are eligible to benefit under the terms of the trust deed,
(c) at that time the company is resident in the United Kingdom,
(d) before the expiry of the expenditure period the sum is expended by the trustees for one or more of the qualifying purposes, and
(e) before the end of the claim period a claim for relief under this section is made.
(2) In such a case the sum—
(a) shall be deducted in computing for the purposes of Schedule D the profits or gains of a trade carried on by the company, or
(b) if the company is an investment company or a company in the case of which section 75 of the Taxes Act 1988 applies by virtue of section 76 of that Act, shall be treated as expenses of management.
(3) For the purposes of subsection (1)(b) above, the question whether one company is controlled by another shall be construed in accordance with section 840 of the Taxes Act 1988.
(4) For the purposes of subsection (1)(d) above each of the following is a qualifying purpose—
(a) the acquisition of shares in the company which established the trust;
(b) the repayment of sums borrowed;
(c) the payment of interest on sums borrowed;
(d) the payment of any sum to a person who is a beneficiary under the terms of the trust deed;
(e) the meeting of expenses.
(5) For the purposes of subsection (1)(d) above the expenditure period is the period of nine months beginning with the day following the end of the period of account in which the sum is charged as an expense of the company, or such longer period as the Board may allow by notice given to the company.
(6) For the purposes of subsection (1)(e) above the claim period is the period of two years beginning with the day following the end of the period of account in which the sum is charged as an expense of the company.
(7) For the purposes of this section the trustees of an employee share ownership trust shall be taken to expend sums paid to them in the order in which the sums are received by them (irrespective of the number of companies making payments).
(1) This section applies where a chargeable event (within the meaning of section 69 below) occurs in relation to the trustees of an employee share ownership trust.
(2) In such a case—
(a) the trustees shall be treated as receiving, when the event occurs, annual profits or gains whose amount is equal to the chargeable amount (within the meaning of section 70 below),
(b) the profits or gains shall be chargeable to tax under Case VI of Schedule D for the year of assessment in which the event occurs, and
(c) the rate at which the tax is chargeable shall be a rate equal to the sum of the basic rate and the additional rate for the year of assessment in which the event occurs.
(3) If the whole or any part of the tax assessed on the trustees is not paid before the expiry of the period of six months beginning with the day on which the assessment becomes final and conclusive, a notice of liability to tax under this subsection may be served on a qualifying company and the tax or the part unpaid (as the case may be) shall be payable by the company on service of the notice.
(4) Where a notice of liability is served under subsection (3) above—
(a) any interest which is due on the tax or the part (as the case may be) and has not been paid by the trustees, and
(b) any interest accruing due on the tax or the part (as the case may be) after the date of service,
shall be payable by the company.
(5) Where a notice of liability is served under subsection (3) above and any amount payable by the company (whether on account of tax or interest) is not paid by the company before the expiry of the period of three months beginning with the date of service, the amount unpaid may be recovered from the trustees (without prejudice to the right to recover it instead from the company).
(6) For the purposes of this section each of the following is a qualifying company—
(a) the company which established the employee share ownership trust;
(b) any company falling within subsection (7) below.
(7) A company falls within this subsection if, before it is sought to serve a notice of liability on it under subsection (3) above—
(a) it has paid a sum to the trustees, and
(b) the sum has been deducted as mentioned in section 67(2)(a) above or treated as mentioned in section 67(2)(b) above.
(1) For the purposes of section 68 above each of the following is a chargeable event in relation to the trustees of an employee share ownership trust—
(a) the transfer of securities by the trustees, if the transfer is not a qualifying transfer;
(b) the transfer of securities by the trustees to persons who are at the time of the transfer beneficiaries under the terms of the trust deed, if the terms on which the transfer is made are not qualifying terms;
(c) the retention of securities by the trustees at the expiry of the period of seven years beginning with the date on which they acquired them;
(d) the expenditure of a sum by the trustees for a purpose other than a qualifying purpose.
(2) For the purposes of subsection (1)(a) above a transfer is a qualifying transfer if it is made to a person who at the time of the transfer is a beneficiary under the terms of the trust deed.
(3) For the purposes of subsection (1)(a) above a transfer is also a qualifying transfer if—
(a) it is made to the trustees of a scheme which at the time of the transfer is a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988, and
(b) it is made for a consideration which is not less than the price the securities might reasonably be expected to fetch on a sale in the open market.
(4) For the purposes of subsection (1)(b) above a transfer of securities is made on qualifying terms if—
(a) all the securities transferred at the same time are transferred on similar terms,
(b) securities have been offered to all the persons who are beneficiaries under the terms of the trust deed when the transfer is made, and
(c) securities are transferred to all such beneficiaries who have accepted.
(5) For the purposes of subsection (1)(d) above each of the following is a qualifying purpose—
(a) the acquisition of shares in the company which established the trust;
(b) the repayment of sums borrowed;
(c) the payment of interest on sums borrowed;
(d) the payment of any sum to a person who is a beneficiary under the terms of the trust deed;
(e) the meeting of expenses.
(6) For the purposes of subsection (4) above, the fact that terms vary according to the levels of remuneration of beneficiaries, the length of their service, or similar factors, shall not be regarded as meaning that the terms are not similar.
(7) In ascertaining for the purposes of this section whether particular securities are retained, securities acquired earlier by the trustees shall be treated as transferred by them before securities acquired by them later.
(8) For the purposes of this section trustees—
(a) acquire securities when they become entitled to them (subject to the exceptions in subsection (9) below);
(b) transfer securities to another person when that other becomes entitled to them;
(c) retain securities if they remain entitled to them.
(9) The exceptions are these—
(a) if securities are issued to trustees in exchange in circumstances mentioned in section 85(1) of the [1979 c. 14.] Capital Gains Tax Act 1979, they shall be treated as having acquired them when they became entitled to the securities for which they are exchanged;
(b) if trustees become entitled to securities as a result of a reorganisation, they shall be treated as having acquired them when they became entitled to the original shares which those securities represent (construing “reorganisation” and “original shares” in accordance with section 77 of that Act).
(10) If trustees agree to take a transfer of securities, for the purposes of this section they shall be treated as becoming entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement.
(11) If trustees agree to transfer securities to another person, for the purposes of this section the other person shall be treated as becoming entitled to them when the agreement is made and not on a later transfer made pursuant to the agreement.
(12) For the purposes of this section the following are securities—
(a) shares;
(b) debentures.
(1) This section has effect to determine the chargeable amount for the purposes of section 68 above.
(2) If the chargeable event falls within section 69(1)(a), (b) or (c) above the following rules shall apply—
(a) if the event constitutes a disposal of the securities by the trustees for the purposes of the Capital Gains Tax Act 1979, the chargeable amount is an amount equal to the sums allowable under section 32(1)(a) and (b) of that Act;
(b) if the event does not constitute such a disposal, the chargeable amount is an amount equal to the sums which would be so allowable had the trustees made a disposal of the securities for the purposes of that Act at the time the chargeable event occurs.
(3) If the chargeable event falls within section 69(1)(d) above the chargeable amount is an amount equal to the sum concerned.
(1) This section applies where—
(a) a chargeable event (within the meaning of section 69 above) occurs in relation to the trustees of an employee share ownership trust,
(b) at the time the event occurs anything is outstanding in respect of the principal of an amount or amounts borrowed at any time by the trustees, and
(c) the chargeable event is one as regards which section 72(2)(b) below applies.
(2) In the following provisions of this section—
(a) “the initial chargeable event” means the event referred to in subsection (1)(a) above, and
(b) “the total outstanding amount” means the total amount outstanding, at the time the initial chargeable event occurs, in respect of the principal of an amount or amounts borrowed at any time by the trustees.
(3) If any of the total outstanding amount is repaid after the initial chargeable event occurs, a further chargeable event shall occur in relation to the trustees at the end of the year of assessment in which the repayment is made.
(4) In such a case—
(a) the trustees shall be treated as receiving, when the further event occurs, annual profits or gains whose amount is equal to the chargeable amount,
(b) the profits or gains shall be chargeable to tax under Case VI of Schedule D for the year of assessment at the end of which the further event occurs, and
(c) the rate at which the tax is chargeable shall be a rate equal to the sum of the basic rate and the additional rate for the year of assessment at the end of which the further event occurs.
(5) Subject to subsection (6) below, for the purposes of subsection (4) above the chargeable amount is an amount equal to the aggregate of the total outstanding amount repaid in the year of assessment.
(6) In a case where section 72(2)(b) below had effect in the case of the initial chargeable event, for the purposes of subsection (4) above the chargeable amount is an amount equal to the smaller of—
(a) the aggregate of the total outstanding amount repaid in the year of assessment, and
(b) an amount found by applying the formula A-B-C.
(7) For the purposes of subsection (6) above—
(a) A is the amount which would be the chargeable amount for the initial chargeable event apart from section 72(2) below,
(b) B is the chargeable amount for the initial chargeable event, and
(c) C is the amount (if any) found under subsection (8) below.
(8) If, before the further chargeable event occurs, one or more prior chargeable events have occurred in relation to the trustees by virtue of the prior repayment of any of the total outstanding amount found for the time the initial chargeable event occurs, the amount found under this subsection is an amount equal to the chargeable amount for the prior chargeable event or to the aggregate of the chargeable amounts for the prior chargeable events (as the case may be).
(9) In a case where—
(a) a chargeable event (within the meaning of section 69 above) occurs in relation to the trustees in circumstances mentioned in subsection (1) above,
(b) a sum falls to be included in the total outstanding amount found for the time the event occurs,
(c) another chargeable event (within the meaning of that section) occurs in relation to the trustees in circumstances mentioned in subsection (1) above, and
(d) the same sum or a part of it would (apart from this subsection) fall to be included in the total outstanding amount found for the time the event occurs,
the sum or part (as the case may be) shall not be included in the total outstanding amount found for the time the other chargeable event occurs.
(10) In ascertaining for the purposes of this section whether a repayment is in respect of a particular amount, amounts borrowed earlier shall be taken to be repaid before amounts borrowed later.
(11) Subsections (3) to (7) of section 68 above shall apply where tax is assessed by virtue of this section as they apply where tax is assessed by virtue of that section.
(1) For the purposes of this section each of the following is a chargeable event in relation to the trustees of an employee share ownership trust—
(a) an event which is a chargeable event by virtue of section 69 above;
(b) an event which is a chargeable event by virtue of section 71 above.
(2) If a chargeable event (the event in question) occurs in relation to the trustees of an employee share ownership trust, the following rules shall apply—
(a) the amount which would (apart from this subsection) be the chargeable amount for the event in question shall be aggregated, for the purposes of paragraph (b) below, with the chargeable amounts for other chargeable events (if any) occurring in relation to the trustees before the event in question,
(b) if the amount which would (apart from this subsection) be the chargeable amount for the event in question (or the aggregate found under paragraph (a) above, if there is one) exceeds the deductible amount, the chargeable amount for the event in question shall be the amount it would be apart from this subsection less an amount equal to the excess, and
(c) section 70(2) and (3) and section 71(5) above shall have effect subject to paragraph (b) above.
(3) For the purposes of subsection (2) above the deductible amount (as regards the event in question) is an amount equal to the total of the sums falling within subsection (4) below.
(4) A sum falls within this subsection if it has been received by the trustees before the occurrence of the event in question and—
(a) it has been deducted as mentioned in section 67(2)(a) above, or treated as mentioned in section 67(2)(b) above, before the occurrence of that event, or
(b) it would fall to be so deducted or treated if a claim for relief under section 67 above had been made immediately before the occurrence of that event.
(1) An inspector may by notice in writing require a return to be made by the trustees of an employee share ownership trust if they have at any time received a sum which has been deducted as mentioned in section 67(2)(a) above or treated as mentioned in section 67(2)(b) above.
(2) Where he requires such a return to be made the inspector shall specify the information to be contained in it.
(3) The information which may be specified is information the inspector needs for the purposes of sections 68 to 72 above, and may include information about—
(a) sums received (including sums borrowed) by the trustees;
(b) expenditure incurred by them;
(c) assets acquired by them;
(d) transfers of assets made by them.
(4) The information which may be required under subsection (3)(a) above may include the persons from whom the sums were received.
(5) The information which may be required under subsection (3)(b) above may include the purpose of the expenditure and the persons receiving any sums.
(6) The information which may be specified under subsection (3)(c) above may include the persons from whom the assets were acquired and the consideration furnished by the trustees.
(7) The information which may be included under subsection (3)(d) above may include the persons to whom assets were transferred and the consideration furnished by them.
(8) In a case where a sum has been deducted as mentioned in section 67(2)(a) above, or treated as mentioned in section 67(2)(b) above, the inspector shall send to the trustees to whom the payment was made a certificate stating—
(a) that a sum has been so deducted or so treated, and
(b) what sum has been so deducted or so treated.
(9) In the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to comply with notices etc.) at the end of the first column there shall be inserted—
“Section 73 of the Finance Act 1989”.
Schedule 5 to this Act shall have effect to determine whether, for the purposes of sections 67 to 73 above, a trust is at a particular time—
(a) an employee share ownership trust;
(b) a qualifying employee share ownership trust.
Schedule 6 to this Act (which relates to retirement benefits schemes) shall have effect.
(1) In computing the amount of the profits or gains to be charged under Case I or Case II of Schedule D, no sum shall be deducted in respect of any expenses falling within subsection (2) or (3) below; and no expenses falling within either of those subsections shall be treated for the purposes of section 75 of the Taxes Act 1988 (investment companies) as expenses of management.
(2) Expenses fall within this subsection if—
(a) they are expenses of providing benefits pursuant to a relevant retirement benefits scheme, and
(b) the benefits are not ones in respect of which a person is on receipt chargeable to income tax.
(3) Expenses fall within this subsection if—
(a) they are expenses of paying any sum pursuant to a relevant retirement benefits scheme with a view to the provision of any benefits, and
(b) the sum is not one which when paid is treated as the income of a person by virtue of section 595(1) of the Taxes Act 1988 (sum paid with a view to the provision of any relevant benefits for an employee).
Finance Act 1989