PART IV continued
(1) In section 117 of the [1979 c. 2.] Customs and Excise Management Act 1979 (execution and distress against revenue traders), after subsection (4) there shall be inserted the following subsection—
“(4A) This section does not apply for the purposes of levying distress in accordance with regulations under section 51 of the Finance Act 1997 or for the purposes of any execution under section 52 of that Act by diligence.”
(2) In section 11(1)(a) of the [1994 c. 9.] Finance Act 1994 (walking possession agreements in connection with enforcement of excise duty)—
(a) for the words from “by virtue of” to “1981” there shall be substituted “in accordance with regulations under section 51 of the Finance Act 1997 (enforcement by distress)”; and
(b) after “default’)” there shall be inserted “who has refused or neglected to pay any amount of relevant duty or any amount recoverable as if it were an amount of relevant duty due from him”.
(3) In section 13(6) of the [1994 c. 9.] Finance Act 1994 (assessment for penalties), for the words “duty of excise”, in each place where they occur, there shall be substituted “relevant duty”.
(4) In section 18(8) of the [1994 c. 9.] Finance Act 1994 (saving relating to section 18(1), (2) and (4)), for “, (2) and (4)” there shall be substituted “and (2)”.
(5) In paragraph 19(1)(a) of Schedule 7 to the [1994 c. 9.] Finance Act 1994 (walking possession agreements in connection with enforcement of insurance premium tax), for “paragraph 7(7) above” there shall be substituted “section 51 of the Finance Act 1997 (enforcement by distress)”.
(6) In section 48 of the [1994 c. 23.] Value Added Tax Act 1994 (VAT representatives), after subsection (7) there shall be inserted the following subsection—
“(7A) A sum required by way of security under subsection (7) above shall be deemed for the purposes of—
(a) section 51 of the Finance Act 1997 (enforcement by distress) and any regulations under that section, and
(b) section 52 of that Act (enforcement by diligence),
to be recoverable as if it were VAT due from the person who is required to provide it.”
(7) In section 68(1)(a) of the Value Added Tax Act 1994 (walking possession agreements), for “paragraph 5(4) of Schedule 11” there shall be substituted “section 51 of the Finance Act 1997 (enforcement by distress)”.
(8) In paragraph 24(1)(a) of Schedule 5 to the [1996 c. 8.] Finance Act 1996 (walking possession agreements in connection with the enforcement of landfill tax), for “paragraph 13(1) above” there shall be substituted “section 51 of the Finance Act 1997 (enforcement by distress)”.
(9) This section shall come into force on such day as the Commissioners of Customs and Excise may by order made by statutory instrument appoint, and different days may be appointed under this subsection for different purposes.
(1) Income tax shall be charged for the year 1997-98, 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.
(2) For the year 1997-98 section 1(2) of the Taxes Act 1988 shall apply as if the amount specified in paragraph (aa) (the lower rate limit) were £4,100; and, accordingly, section 1(4) of that Act (indexation) shall apply for the year 1997-98 in relation only to the amount specified in section 1(2)(b) of that Act (the basic rate limit).
(3) In section 686(1A) of the Taxes Act 1988 (meaning of “the rate applicable to trusts”), for the words “for any year of assessment shall be the rate equal to the sum of the basic rate and the additional rate in force for that year” there shall be substituted “, in relation to any year of assessment for which income tax is charged, shall be 34 per cent. or such other rate as Parliament may determine”.
(4) Subsection (3) above has effect in relation to the year 1997-98 and subsequent years of assessment.
(5) Section 559(4) of the Taxes Act 1988 (deductions from payments to sub-contractors in the construction industry) shall have effect—
(a) in relation to payments made on or after 1st July 1997 and before the appointed day (within the meaning of section 139 of the [1995 c. 4.] Finance Act 1995), with “23 per cent.” substituted for “24 per cent.”; and
(b) in relation to payments made on or after that appointed day, as if the substitution for which section 139(1) of the Finance Act 1995 provided were a substitution of “the relevant percentage” for “23 per cent.”
(1) For the year 1997-98 the amounts specified in the provisions mentioned in subsection (2) below shall be taken to be as set out in that subsection; and, accordingly, section 257C(1) of the Taxes Act 1988 (indexation), so far as it relates to the amounts so specified, shall not apply for the year 1997-98.
(2) In section 257 of that Act (personal allowance)—
(a) the amount in subsection (1) (basic allowance) shall be £4,045;
(b) the amount in subsection (2) (allowance for persons aged 65 or more but not aged 75 or more) shall be £5,220; and
(c) the amount in subsection (3) (allowance for persons aged 75 or more) shall be £5,400.
(1) In subsection (1) of section 265 of the Taxes Act 1988 (blind person’s allowance), for “£1,250” there shall be substituted “£1,280”.
(2) After that subsection there shall be inserted the following subsection—
“(1A) Section 257C (indexation) shall have effect (using the rounding up rule in subsection (1)(b) of that section) for the application of this section for the year 1998-99 and any subsequent year of assessment as it has effect for the application of sections 257 and 257A.”
(3) Subsection (1) above shall apply for the year 1997-98 and, subject to subsection (2) above, for subsequent years of assessment.
For the year 1997-98 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.
Corporation tax shall be charged for the financial year 1997 at the rate of 33 per cent.
For the financial year 1997—
(a) the small companies' rate shall be 23 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) Section 120 of the Taxes Act 1988 (payments for wayleaves for electricity cables, telephone lines, etc.) shall be amended as follows.
(2) In subsection (1) (payments charged under Schedule D subject to deduction of tax)—
(a) at the beginning there shall be inserted “Subject to subsection (1A) below,”; and
(b) the words from “and, subject to” onwards (which provide for the deduction of tax) shall be omitted.
(3) After subsection (1) there shall be inserted the following subsection—
“(1A) If—
(a) the profits and gains arising to any person for any chargeable period include both rent in respect of any such easement as is mentioned in subsection (1) above and amounts which are charged to tax under Schedule A, and
(b) some or all of the land to which the easement relates is included in the land by reference to which the amounts charged under Schedule A arise,
then, for that period, that rent shall be charged to tax under Schedule A, instead of being charged under Schedule D.”
(4) Subsections (2) to (4) and, in subsection (5), paragraph (c) and the word “and” immediately preceding it shall cease to have effect.
(5) This section has effect in relation to payments made on or after 6th April 1997.
(1) Chapter III of Part V of the Taxes Act 1988 (profit-related pay) shall have effect as if, in section 171(4) (£4,000 limit on relief for profit period of twelve months), for “£4,000” there were substituted—
(a) in relation to profit-related pay paid by reference to profit periods beginning on or after 1st January 1998 and before 1st January 1999, “£2,000”; and
(b) in relation to profit-related pay paid by reference to profit periods beginning on or after 1st January 1999 and before 1st January 2000, “£1,000”.
(2) That Chapter shall not have effect in relation to any payment made by reference to a profit period beginning on or after 1st January 2000.
(3) Accordingly—
(a) a scheme shall not be registered under that Chapter if the only payments for which it provides are payments by reference to profit periods beginning on or after 1st January 2000; and
(b) registration under that Chapter shall end on 31st December 2000.
(1) For subsection (1) of section 198 of the Taxes Act 1988 (relief for necessary expenses) there shall be substituted the following subsections—
“(1) If the holder of an office or employment is obliged to incur and defray out of the emoluments of that office or employment—
(a) any amount necessarily expended on travelling in the performance of the duties of the office or employment,
(b) any other expenses of travelling which are not expenses of ordinary commuting but are attributable to the attendance of the holder of the office or employment at any place on an occasion when his attendance at that place is in the performance of the duties of the office or employment, or
(c) any amount not comprised in expenses falling within paragraph (a) or (b) above but expended wholly, exclusively and necessarily in the performance of the duties of the office or employment,
then (subject to subsection (1A) below) there may be deducted from the emoluments to be assessed the amount which is so incurred and defrayed.
(1A) Where—
(a) any person holding an office or employment undertakes any travelling the expenses of which fall within paragraph (a) or (b) of subsection (1) above, and
(b) in consequence of his doing so, he does not incur expenses of ordinary commuting which it is likely he would have incurred had he not undertaken that travelling,
the amount (if any) which is deductible under subsection (1) above in respect of that travelling, or in respect of expenses incurred as mentioned in paragraph (c) of that subsection in connection with that travelling, shall be reduced by the amount of the expenses of ordinary commuting that have been saved.
(1B) For the purposes of subsection (1A) above the amount of any saving on ordinary commuting shall be calculated by using the same method for the expenses of the travelling comprised in ordinary commuting as would be used in the employee’s case for calculating the deductible expenses of that travelling if it were not ordinary commuting.”
(2) After section 198 of that Act there shall be inserted the following section—
(1) For the purposes of section 198 and this section ordinary commuting, in relation to the holder of an office or employment, is—
(a) travelling, in either direction, between a permanent workplace of his and a place mentioned in subsection (4) below (including any travel via another place so mentioned); or
(b) travelling between two places in a case where, because of the proximity of one place to another, the journey in question is, for practical purposes, the same as a journey which would constitute ordinary commuting by virtue of paragraph (a) above.
(2) For the purposes of section 198 and this section a permanent workplace, in relation to the holder of an office or employment, is any place which—
(a) he regularly attends in the performance of the duties of the office or employment and otherwise than for the purpose of performing a task of limited duration or for some other temporary purpose; and
(b) is not a place falling within subsection (4)(a) below.
(3) The holder of an office or employment who does not have a permanent workplace apart from this subsection but is a person who—
(a) in the performance of the duties of the office or employment, attends different places within a particular area, and
(b) performs his duties at places in that area because his duties (except so far as requiring his attendance at places outside that area for the purpose of carrying out tasks of limited duration or for other temporary purposes) are defined by reference to that area,
shall be deemed for the purposes of section 198 and this section to have a permanent workplace comprising the whole area.
(4) The places referred to in subsection (1) above, in relation to the holder of an office or employment, are—
(a) his home or any other place which he uses, otherwise than in the performance of the duties of that office or employment, as a permanent or temporary place of residence,
(b) any place that he is visiting for social or personal reasons and otherwise than in the performance of the duties of that office or employment,
(c) any place that he attends, otherwise than in the performance of the duties of that office or employment, for the purposes of any trade, profession or vocation carried on by him, and
(d) any place that he attends in the performance of the duties of another office or employment held by him.
(5) For the purposes of this section attendance for limited purposes at—
(a) a place which forms the base from which a person works in the performance of the duties of his office or employment, or
(b) the place at which he is allocated the tasks that he is to carry out in the performance of those duties,
shall not be taken to involve attendance at that place to perform a task of limited duration or for a temporary purpose.
(6) For the purposes of this section, where on any occasion a person attends any place in the performance of the duties of any office or employment or performs those duties within a particular area—
(a) the tasks which he carries out on that occasion at that place, or within that area, shall not be taken to be tasks of limited duration, and
(b) the purposes for which, on that occasion, he attends that place or performs duties within that area shall not be taken to be temporary purposes,
if subsection (7) below applies to the place or area as respects that occasion.
(7) This subsection applies to a place or area as respects any occasion on which a task is carried out, or duties are performed, by a person holding an office or employment if—
(a) the task is carried out, or the duties are performed—
(i) in the course of a period of continuous work at that place or within that area; or
(ii) at a time which it would be reasonable, on that occasion, to assume will be included in such a period;
and
(b) the period of continuous work is one of which more than twenty-four months has expired before that occasion or is one which it would be reasonable, on that occasion, to assume will in due course be either—
(i) a period of more than twenty-four months; or
(ii) a period comprising all or almost all of the period for which the person holding the office or employment is likely to continue to hold it after that occasion.
(8) The reference in subsection (7) above to a period of continuous work at a place or within an area is (subject to subsection (9) below) a reference to any continuous period throughout which the duties of the office or employment in question fall to be performed wholly or mainly at that place or, as the case may be, within that area.
(9) For the purposes of subsection (8) above any actual or contemplated modification of the place at which, or of the area within which, the duties of any office or employment fall to be performed shall be disregarded unless it is such that it has had, or would have, a significant effect on the expenses of any travel by the person holding the office or employment to or from the place or area where those duties fall wholly or mainly to be performed.
(10) For the purposes of this section, where a person holds any office or employment with a company, the reference in subsection (4)(d) above to another office or employment does not, in relation to that office or employment, include a reference to an office or employment with another company in the same group of companies.
(11) For the purposes of subsection (10) above two companies shall be taken to be members of the same group if, and only if, one of them is a 51 per cent. subsidiary of the other or they are both 51 per cent. subsidiaries of a third company.”
(3) In section 158 of the Taxes Act 1988 (car fuel scales), in subsection (6) at the beginning there shall be inserted “Subject to subsection (7) below,”; and after that subsection there shall be inserted the following subsection—
“(7) Subsection (6) above does not apply in the relevant year unless the employee is required to make good, and does make good, to the person providing the fuel so much of the expenses incurred by him in or in connection with the provision of fuel for business travel as, for the purposes of section 198(1A), would be taken to represent expenses of ordinary commuting which (disregarding the requirement to make good) have been saved in consequence of the business travel having been undertaken.”
(4) In subsections (5) and (5A) of section 168 of the Taxes Act 1988 (meaning of business travel), for paragraph (c) there shall be substituted, in each case, the following paragraph—
“(c) “business travel”, in relation to any employee, means any travelling the expenses of which, if incurred out of the emoluments of his employment, would be deductible under section 198;”.
(5) This section has effect for the year 1998-99 and subsequent years of assessment.
(1) After section 200A of the Taxes Act 1988 there shall be inserted the following sections—
(1) This section applies for the purposes of Schedule E where any person (“the employer”) incurs expenditure on providing work-related training for a person (“the employee”) who holds an office or employment under him.
(2) Subject to section 200C, the emoluments of the employee from the office or employment shall not be taken to include—
(a) any amount in respect of that expenditure; or
(b) any amount in respect of the benefit of the work-related training provided by means of that expenditure.
(3) For the purposes of this section the employer shall be taken to incur expenditure on the provision of work-related training in so far only as he incurs expenditure in paying or reimbursing—
(a) the cost of providing any such training to the employee; or
(b) any related costs.
(4) In subsection (3) above “related costs”, in relation to any work-related training provided to the employee, means—
(a) any costs which are incidental to the employee’s undertaking the training and are incurred wholly and exclusively as a result of his doing so;
(b) any expenses incurred in connection with an assessment (whether by examination or otherwise) of what the employee has gained from the training; and
(c) the cost of obtaining for the employee any qualification, registration or award to which he has or may become entitled as a result of undertaking the training or of undergoing such an assessment.
(5) In this section “work-related training” means any training course or other activity which is designed to impart, instill, improve or reinforce any knowledge, skills or personal qualities which—
(a) is or, as the case may be, are likely to prove useful to the employee when performing the duties of any relevant employment; or
(b) will qualify him, or better qualify him—
(i) to undertake any relevant employment; or
(ii) to participate in any charitable or voluntary activities that are available to be undertaken in association with any relevant employment.
(6) In this section “relevant employment”, in relation to the employee, means—
(a) any office or employment which he holds under the employer or which he is to hold under the employer or a person connected with the employer;
(b) any office or employment under the employer or such a person to which he has a serious opportunity of being appointed; or
(c) any office or employment under the employer or such a person as respects which he can realistically expect to have such an opportunity in due course.
(7) Section 839 (meaning of “connected person”) applies for the purposes of this section.
(1) Section 200B shall not apply in the case of any expenditure to the extent that it is incurred in paying or reimbursing the cost of any facilities or other benefits provided or made available to the employee for one or more of the following purposes, that is to say—
(a) enabling the employee to enjoy the facilities or benefits for entertainment or recreational purposes unconnected with the imparting, instilling, improvement or reinforcement of knowledge, skills or personal qualities falling within section 200B(5)(a) or (b);
(b) rewarding the employee for the performance of the duties of his office or employment under the employer, or for the manner in which he has performed them;
(c) providing the employee with an employment inducement which is unconnected with the imparting, instilling, improvement or reinforcement of knowledge, skills or personal qualities falling within section 200B(5)(a) or (b).
(2) Section 200B shall not apply in the case of any expenditure incurred in paying or reimbursing any expenses of travelling or subsistence, except to the extent that those expenses would be deductible under section 198 if the employee—
(a) undertook the training in question in the performance of the duties of his office or employment under the employer; and
(b) incurred those expenses out of the emoluments of that office or employment.
(3) Section 200B shall not apply in the case of any expenditure incurred in paying or reimbursing the cost of providing the employee with, or with the use of, any asset except where—
(a) the asset is provided or made available for use only in the course of the training;
(b) the asset is provided or made available for use in the course of the training and in the performance of the duties of the employee’s office or employment but not for any other use;
(c) the asset consists in training materials provided in the course of the training; or
(d) the asset consists in something made by the employee in the course of the training or incorporated into something so made.
(4) Section 200B shall apply in the case of expenditure in connection with anything that is a qualifying course of training for the purposes of section 588 to the extent only that section 588(1) does not have effect.
(5) Section 200B shall not apply in the case of any expenditure incurred in enabling the employee to meet, or in reimbursing him for, any payment in respect of which there is an entitlement to relief under section 32 of the [1991 c. 31.] Finance Act 1991 (vocational training).
(6) In subsection (1) above the reference to enjoying facilities or benefits for entertainment or recreational purposes includes a reference to enjoying them in the course of any leisure activity.
(7) In this section—
“employment inducement”, in relation to the employee, means an inducement to remain in, or to accept, any office or employment with the employer or a person connected with the employer;
“subsistence” includes food and drink and temporary living accommodation; and
“training materials” means stationery, books or other written material, audio or video tapes, compact disks or floppy disks.
(8) Section 839 (meaning of “connected person”) applies for the purposes of this section.
(1) For the purposes of Schedule E, where—
(a) any person (“the employee”) who holds an office or employment under another (“the employer”) is provided by reason of that office or employment with any benefit,
(b) that benefit consists in any work-related training or is provided in connection with any such training, and
(c) the amount which (apart from this section and sections 200B and 200C) would be included in respect of that benefit in the emoluments of the employee (“the chargeable amount”) is or includes an amount that does not represent expenditure incurred by the employer,
the questions whether and to what extent those emoluments shall in fact be taken to include an amount in respect of that benefit shall be determined in accordance with those sections as if the benefit had been provided by means of a payment by the employer of an amount equal to the whole of the chargeable amount.
(2) In this section “work-related training” has the same meaning as in section 200B.”
(2) In section 200A(3)(b) of that Act (definition of a qualifying absence from home), the word “either” before sub-paragraph (i) shall be omitted and, at the end of sub-paragraph (ii), there shall be inserted “or
(iii) expenses the amount of which, having been paid or reimbursed by the person under whom he holds that office or employment, is excluded from his emoluments in pursuance of section 200B, or
(iv) expenses the amount of which would be so excluded if it were so paid or reimbursed.”
(3) This section applies for the year 1997-98 and subsequent years of assessment.
(1) In section 339 of the Taxes Act 1988 (company donations to charity), after subsection (7) there shall be inserted the following subsections—
“(7AA) Where—
(a) a covenanted donation to a charity is made by a company which is wholly owned by a charity,
(b) the requirements of subsection (7) above for that donation to be regarded as a charge on income are satisfied,
(c) the disposition or covenant under which the donation is made required it to be made in an accounting period of the company which ended before the time when it is in fact made, and
(d) the donation is made within nine months of the end of that period,
the donation shall be deemed for the purposes of section 338 to be a charge on income paid in the accounting period in which it was required to be made, and not in any later period.
(7AB) For the purposes of this section a company is wholly owned by a charity if it is either—
(a) a company with an ordinary share capital every part of which is owned by a charity (whether or not the same charity); or
(b) a company limited by guarantee in whose case every person who—
(i) is beneficially entitled to participate in the divisible profits of the company, or
(ii) will be beneficially entitled to share in any net assets of the company available for distribution on its winding up,
is or must be a charity or a company wholly owned by a charity.
(7AC) For the purposes of subsection (7AB) above ordinary share capital of a company shall be taken to be owned by a charity if there is a charity which—
(a) within the meaning of section 838 directly or indirectly owns that share capital; or
(b) would be taken so to own that share capital if references in that section to a body corporate included references to a charity which is not a body corporate.”
(2) This section has effect in relation to donations made in accounting periods beginning on or after 1st April 1997.
(1) Section 617 of the Taxes Act 1988 (social security benefits and contributions) shall be amended as follows.
(2) In subsection (3) (which provides that, subject to subsection (4) and (5), no relief or deduction shall be given in respect of National Insurance contributions) the words “and (5)” shall be omitted in consequence of the repeal of subsection (5) by section 147 of the [1996 c. 8.] Finance Act 1996.
(3) For subsection (4) (exception from subsection (3) for secondary Class 1 contributions which are allowable as a deduction in certain computations) there shall be substituted—
“(4) Subsection (3) above shall not apply to a contribution if it is a secondary Class 1 contribution or Class 1A contribution (within the meaning of Part I of either of those Acts) and is allowable—
(a) as a deduction in computing profits or gains;
(b) as expenses of management deductible under section 75 or under that section as applied by section 76;
(c) as expenses of management or supervision deductible under section 121;
(d) as a deduction under section 198 from the emoluments of an office or employment; or
(e) as a deduction under section 332(3)(a) from the profits, fees or emoluments of the profession or vocation of a clergyman or minister of any religious denomination.”
(4) Subsection (2) above has effect in relation to the year 1996-97 and subsequent years of assessment.
(5) Subsection (3) above has effect in relation to contributions paid on or after 26th November 1996.