PART III continued CHAPTER I continued
(2) Where—
(a) a person has an interest in any shares which is only conditional,
(b) those shares cease to be shares in which that person’s interest is only conditional or are disposed of or that person dies, and
(c) that event gives rise to a charge under section 140A(4),
each of the relevant persons shall deliver to an officer of the Board particulars in writing of the shares and the event.
(3) Where—
(a) any person has provided any individual with any convertible shares in a company,
(b) those shares are subsequently converted into shares of a different class, and
(c) the circumstances are such that the conversion gives rise or may give rise to a charge under section 140D on that individual,
each of the relevant persons shall deliver to an officer of the Board particulars in writing of the shares and their conversion.
(4) For the purposes of this section the relevant persons are—
(a) the person who is providing, or who provided, the shares in question; and
(b) the person under or with whom the office or employment is or was held by reference to which the charge may arise or has arisen.
(5) Particulars required to be delivered under this section must be delivered no later than thirty days after the end of the year of assessment in which the interest is provided, the event occurs or the conversion takes place.
(6) Expressions used in this section and in section 140A or 140D above have the same meanings in this section as in section 140A or, as the case may be, section 140D.”
(2) In the second column of the Table in section 98 of the [1970 c. 9.] Taxes Management Act 1970 (penalties for failure to furnish information), after the entry relating to section 136(6) of the Taxes Act 1988 there shall be inserted the following entry— “section 140G;”.
After the section 140G of the Taxes Act 1988 inserted by section 52 above there shall be inserted the following section—
(1) For the purposes of sections 140A to 140G and this section, a person acquires any shares or securities as a director or employee of a company if—
(a) he acquires them in pursuance of a right conferred on him, or an opportunity offered to him, by reason of his office or employment as a director or employee of the company; or
(b) the shares or securities are, or a right or opportunity in pursuance of which he acquires them is, assigned to him after being acquired by, conferred on or, as the case may be, offered to some other person by reason of the assignee’s office or employment as a director or employee of the company.
(2) Subject to subsection (3) below, the references in subsection (1) above to a right or opportunity conferred or offered by reason of a person’s office or employment shall be taken to include—
(a) a reference to one so conferred or offered after he has ceased to hold it; and
(b) a reference to one that arises from the fact that any shares which a person acquires as a director or employee (or is treated as so acquiring by virtue of this paragraph) are convertible for the purposes of section 140D.
(3) For the purposes of this section—
(a) the references in subsections (1) and (2) above to a person’s office or employment are references only to an office or employment in respect of which he is chargeable to tax under Case I of Schedule E; but
(b) subsection (2)(a) above shall not apply where a right or opportunity conferred or offered in the last chargeable period in which the office or employment was held by the person in question would not have fallen to be taken into account for the purposes of subsection (1)(a) above.
(4) Without prejudice to subsection (2)(b) above where—
(a) a person has acquired an interest in any shares or securities which is only conditional or has acquired any convertible shares,
(b) he acquired that interest or those shares as a director or employee of a company, or is treated by virtue of this subsection as having done so, and
(c) as a result of any two or more transactions—
(i) he ceases to be entitled to that interest or those shares, and
(ii) he or a connected person becomes entitled to any interest in any shares or securities which is only conditional or to any convertible shares,
he shall be treated for the purposes of sections 140A to 140G as if the interest or shares to which he becomes entitled were also acquired by him as a director or employee of the company in question.
(5) Sections 140C and 140D(2) have effect for the purposes of subsection (4) above as they have effect for the purposes of sections 140A and 140B and section 140D respectively.
(6) References in sections 140A to 140G or this section to the terms on which a person is entitled to an interest in shares or securities include references to any terms imposed by any contract or arrangement or in any other way.
(7) References in this section to shares or to securities include references to an interest in shares or, as the case may be, securities.
(8) Subsection (5) of section 136 applies for the purposes of sections 140A to 140G and this section as it applies for the purposes of that section but as if—
(a) references to a body corporate were references to a company;
(b) at the end of paragraph (d) there were inserted “or any other interest of a member of a company”; and
(c) the words after paragraph (d) were omitted.
(9) Section 839 applies for the purposes of this section.”
(1) The [1992 c. 12.] Taxation of Chargeable Gains Act 1992 shall be amended as follows.
(2) After subsection (5) of section 120 (increase of expenditure by reference to tax charged in relation to shares) there shall be inserted the following subsections—
“(5A) Where an amount is chargeable to tax under section 140A of the Taxes Act in respect of—
(a) the acquisition or disposal of any interest in shares, or
(b) any interest in shares ceasing to be only conditional,
the relevant amount is a sum equal to the amount so chargeable.
(5B) Where an amount is chargeable to tax under section 140D of the Taxes Act in respect of the conversion of shares, the relevant amount is a sum equal to the amount so chargeable.”
(3) In subsection (7) of that section—
(a) after “(5),” there shall be inserted “, (5A), (5B)”; and
(b) after “138” there shall be inserted “, 140A, 140D”.
(4) After that subsection there shall be inserted the following subsection—
“(8) For the purposes of subsection (5A) above this section shall have effect as if references in this section to shares included anything referred to as shares in section 140A of the Taxes Act.”
(5) After section 149A there shall be inserted the following section—
(1) Where—
(a) an individual has acquired an interest in any shares or securities which is only conditional,
(b) that interest is one which for the purposes of section 140A of the Taxes Act is taken to have been acquired by him as a director or employee of a company, and
(c) by virtue of section 17(1)(b) the acquisition of that interest would, apart from this section, be an acquisition for a consideration equal to the market value of the interest,
section 17 shall not apply for calculating the consideration.
(2) Instead, the consideration for the acquisition shall be taken (subject to section 120) to be equal to the actual amount or value of the consideration given for that interest as computed in accordance with section 140B of the Taxes Act.
(3) This section shall apply in relation only to the individual making the acquisition and, accordingly, shall be disregarded in calculating the consideration received by the person from whom the interest is acquired.
(4) Expressions used in this section and in section 140A of the Taxes Act have the same meanings in this section as in that section.”
(6) This section has effect in relation to disposals on or after 17th March 1998 of interests and shares acquired on or after that date.
(1) In section 134 of the Taxes Act 1988, subsection (5)(c) (which excepts from charge by virtue of that section the remuneration of construction workers who are sub-contractors supplied by agencies) shall cease to have effect.
(2) In section 559 of the Taxes Act 1988 (deductions on account of tax etc. from payments to certain sub-contractors), in subsection (1), for “subsection (2) below” there shall be substituted “the following provisions of this section”; and after subsection (1) there shall be inserted the following subsection—
“(1A) Subsection (1) above shall not apply to any payment made under the contract in question that is chargeable to income tax under Schedule E by virtue of section 134(1).”
(3) Subsections (1) and (2) above have effect in relation to—
(a) any payments made on or after 6th April 1998 other than any made in respect of services rendered before that date; and
(b) any payments made before 6th April 1998 in respect of services to be rendered on or after that date.
(1) Subject to subsection (6) below, subsection (2) below applies if—
(a) a construction trade is being carried on by a person (“the sub-contractor”) at the end of the year 1997-98; and
(b) there are receipts of that trade which, but for section 134(5)(c) of the Taxes Act 1988, would have fallen to be treated for the year 1997-98 as the emoluments of an office or employment.
(2) Where this subsection applies, then, subject to subsections (4) and (5) below—
(a) the trade shall be deemed to have been permanently discontinued at the end of the year 1997-98; and
(b) to the extent (if any) that the trade includes activities in addition to the rendering of services falling by virtue of section 55 to be treated as the duties of an office or employment, a new trade shall be deemed to have been set up and commenced on 6th April 1998.
(3) Subsection (4) below applies if—
(a) a construction trade (“the old trade”) is deemed by virtue of subsection (2)(a) above to have been permanently discontinued; and
(b) a construction trade (“the new trade”)—
(i) is deemed by virtue of subsection (2)(b) above to have been set up and commenced; or
(ii) (where sub-paragraph (i) above does not apply) is actually set up and commenced in the year 1998-99.
(4) Where this subsection applies then, notwithstanding the deemed discontinuance, the old trade and the new trade shall be treated as the same for the purposes of section 385 of the Taxes Act 1988 (carry-forward of losses against subsequent profits).
(5) An officer of the Board shall not become entitled by virtue of anything in this section to give a direction under paragraph 3(2) of Schedule 20 to the [1994 c. 9.] Finance Act 1994 (power to revise assessment so that made on the actual basis) in the case of a person whose trade is deemed under subsection (2) above to cease on 5th April 1998.
(6) Subsection (2) above does not apply if the sub-contractor by notice to an officer of the Board otherwise elects.
(7) An election under subsection (6) above—
(a) if it relates to a trade carried on by an individual, must be included in a return under section 8 of the [1970 c. 9.] Taxes Management Act 1970 which is made and delivered in that individual’s case on or before the day on which it is required to be made and delivered under that section; and
(b) if it relates to a trade carried on by persons in partnership, must be included in a return under section 12AA of that Act which is made and delivered in the partners' case, or in the case of any one or more of them, on or before the day specified in relation to that return under subsection (2) or (3) of that section.
(8) In this section “construction trade” means a trade consisting in or including the rendering of services under contracts relating to construction operations (within the meaning of Chapter IV of Part XIII of the Taxes Act 1988).
(9) Where at any time on or after 17th March 1998 and before the day on which this Act is passed any election corresponding to an election under subsection (6) above has been made under a resolution of the House of Commons having effect in accordance with the provisions of the [1968 c. 2.] Provisional Collection of Taxes Act 1968, this section has effect, on and after the day on which this Act is passed, as if that election were an election under subsection (6) above.
Schedule 8 to this Act (which makes provision in relation to sub-contractors in the construction industry) shall have effect.
(1) For section 148 of the Taxes Act 1988 (payments on retirement or removal from office or employment) substitute—
(1) Payments and other benefits not otherwise chargeable to tax which are received in connection with—
(a) the termination of a person’s employment, or
(b) any change in the duties of or emoluments from a person’s employment,
are chargeable to tax under this section if and to the extent that their amount exceeds £30,000.
(2) For the purposes of this section a “benefit” includes anything which, if received for performance of the duties of the employment—
(a) would be an emolument of the employment, or
(b) would be chargeable to tax as an emolument of the employment,
or which would be such an emolument, or so chargeable, apart from any exemption.
(3) An amount chargeable to tax under this section is income chargeable under Schedule E for the year of assessment in which the payment or other benefit is received.
The right to receive the payments or other benefits is not itself regarded as a benefit for this purpose.
(4) For the purposes of this section—
(a) a cash benefit is treated as received—
(i) when payment is made of or on account of the benefit, or
(ii) when the recipient becomes entitled to require payment of or on account of the benefit; and
(b) a non-cash benefit is treated as received when it is used or enjoyed.
(5) This section applies—
(a) whether the payment or other benefit is provided by the employer or former employer or by another person, and
(b) whether or not the payment or other benefit is provided in pursuance of a legal obligation.
(6) This section has effect subject to Schedule 11, which contains provisions extending, restricting and otherwise supplementing the provisions of this section.
(7) In this section and that Schedule “employment” includes an office and related expressions have a corresponding meaning.”.
(2) In the Taxes Act 1988, for Schedule 11 (relief as respects tax on payments on retirement or removal from office or employment) substitute the Schedule set out in Part I of Schedule 9 to this Act.
(3) The enactments mentioned in Part II of Schedule 9 to this Act have effect with the amendments specified there which are consequential on this section.
(4) This section applies to payments or other benefits received (within the meaning of section 148 of the Taxes Act 1988 as substituted by subsection (1) above) on or after 6th April 1998, except where the payment or other benefit or the right to receive it has been brought into charge to tax before that date.
(1) In section 158 of the Taxes Act 1988 (car fuel) for the Tables in subsection (2) (tables of cash equivalents) there shall be substituted—
| Cylinder capacity of car in cubic centimetres | Cash equivalent |
|---|---|
| 1,400 or less | £1,010 |
| More than 1,400 but not more than 2,000 | £1,280 |
| More than 2,000 | £1,890 |
| Cylinder capacity of car in cubic centimetres | Cash equivalent |
|---|---|
| 2,000 or less | £1,280 |
| More than 2,000 | £1,890 |
| Description of car | Cash equivalent |
|---|---|
| Any car | £1,890 |
(2) This section shall have effect for the year 1998-99 and subsequent years of assessment.
(1) In subsection (1) of section 168A of the Taxes Act 1988 (price of a car as regards year), for the words “sections 168B to 168G” there shall be substituted the words “sections 168AB to 168G”.
(2) In subsection (11) of that section, after the words “section 168AA” there shall be inserted the words “or 168AB(1)”.
(3) After section 168AA of that Act there shall be inserted the following section—
(1) Equipment by means of which the car is capable of running on road fuel gas shall not be regarded as an accessory for the purposes of section 168A.
(2) Where the car is manufactured in such way as to be capable of running on road fuel gas, the price of the car as regards each relevant year shall be treated as the price given by section 168A, reduced by so much of that price as it is reasonable to attribute to the car’s being manufactured in that way rather than in such a way as to be capable of running only on petrol.
(3) In this section “road fuel gas” means any substance which is gaseous at a temperature of 15°C and under a pressure of 1013.25 millibars, and which is for use as fuel in road vehicles.”
(4) In subsection (2) of section 168B of that Act (accessories not included in list price), for the words “section 168A” there shall be substituted the words “sections 168A and 168AB”.
(5) In subsection (2) of section 168C of that Act (accessories available after car first made available), for the words “sections 168A and 168B” there shall be substituted the words “sections 168A to 168B”.
(6) This section has effect for the year 1998-99 and subsequent years of assessment.
(1) For subsections (1) to (1B) of section 198 of the Taxes Act 1988 (relief for necessary expenses) substitute—
“(1) If the holder of an office or employment is obliged to incur and defray out of the emoluments of the office or employment—
(a) qualifying travelling expenses, or
(b) any amount (other than qualifying travelling expenses) expended wholly, exclusively and necessarily in the performance of the duties of the office or employment,
there may be deducted from the emoluments to be assessed the amount so incurred and defrayed.
(1A) “Qualifying travelling expenses” means—
(a) amounts necessarily expended on travelling in the performance of the duties of the office or employment, or
(b) other expenses of travelling which—
(i) are attributable to the necessary attendance at any place of the holder of the office or employment in the performance of the duties of the office or employment, and
(ii) are not expenses of ordinary commuting or private travel.
What is ordinary commuting or private travel for this purpose is defined in Schedule 12A.
(1B) Expenses of travel by the holder of an office or employment between two places at which he performs duties of different offices or employments under or with companies in the same group are treated as necessarily expended in the performance of the duties which he is to perform at his destination.
For this purpose companies are taken to be members of the same group if, and only if, one is a 51 per cent. subsidiary of the other or both are 51 per cent. subsidiaries of a third company.”.
(2) In the Taxes Act 1988 insert as Schedule 12A the Schedule set out in Schedule 10 to this Act.
(3) This section has effect for the year 1998-99 and subsequent years of assessment.
Schedule 11 to this Act (which makes provision to prevent the manipulation of profit periods in relation to the phasing out of relief for profit-related pay) shall have effect.
(1) Section 193(1) of the Taxes Act 1988 (Schedule E foreign earnings deduction) shall cease to have effect.
(2) Before that section insert—
(1) Where in any year of assessment—
(a) the duties of an employment as a seafarer are performed wholly or partly outside the United Kingdom, and
(b) any of those duties are performed in the course of a qualifying period (within the meaning of Schedule 12) which falls wholly or partly in that year and consists of at least 365 days,
then, in charging tax under Case I of Schedule E on the amount of the emoluments from that employment attributable to that period, or to so much of it as falls in that year of assessment, there shall be allowed a deduction equal to the whole of that amount.
(2) In subsection (1) employment “as a seafarer” means an employment consisting of the performance of duties on a ship (or of such duties and others incidental to them).
(3) For the purposes of this section a “ship” does not include—
(a) any offshore installation within the meaning of the [1971 c. 61.] Mineral Workings (Offshore Installations) Act 1971, or
(b) what would be such an installation if the references in that Act to controlled waters were to any waters.
(4) Schedule 12 has effect for the purpose of supplementing this section.”.
(3) The references in the Taxes Act 1988 to section 193(1) are amended as follows—
(a) in section 19(1), in Case I of Schedule E, omit the words from “and to section 193(1)” to the end;
(b) in paragraph 10 of Schedule 11, after “193(1)” insert “or 192A”;
(c) in section 132(3) and paragraphs 1, 1A, 2(1), 3(1) and (3), 5 and 6 of Schedule 12, for “193(1)” substitute “192A”.
(4) In Schedule 12 to that Act—
(a) in paragraph 3(2) (qualifying periods)—
(i) in paragraph (a) for “62” substitute “183”, and
(ii) in paragraph (b) for “one-sixth” substitute “one-half”;
(b) in paragraph 5 (duties treated as performed outside the United Kingdom)—
(i) for “vessel or aircraft” substitute “ship (within the meaning of section 192A)”, and
(ii) in paragraphs (a) and (b) for “voyage or journey” substitute “voyage”.
(5) Subsections (1) to (4) above have effect in relation to—
(a) emoluments attributable to qualifying periods beginning on or after 17th March 1998, and
(b) emoluments attributable to qualifying periods beginning before 17th March 1998 which are received on or after that date.
(6) Nothing in those subsections affects the question what deduction (if any) falls to be made under section 193(1) of the Taxes Act 1988 in the case of emoluments attributable to a qualifying period beginning before 17th March 1998 and received before that date.
(7) For the purposes of subsections (5) and (6) above the question whether emoluments are attributable to a qualifying period beginning before 17th March 1998 shall be determined without reference to any arrangements entered into on or after that date.
(1) In relation to any asset provided on or after 2nd July 1997 and before 6th April 1998, section 203F of the Taxes Act 1988 (application of PAYE where payment is in the form of the provision of a tradeable asset) shall have effect with the following two modifications.
(2) The first modification is the insertion in subsection (2), before the word “and” at the end of paragraph (b), of the following paragraph—
“(ba) an asset not falling within paragraph (a) or (b) above which consists in the rights of an assignee, or any other rights, in respect of a trade debt that is or may become due to the employer;”.
(3) The second modification is the insertion in subsection (3), before the word “and” at the end of paragraph (a), of the following paragraph—
“(aa) in the case of an asset falling within subsection (2)(ba) above, the amount of the debt;”.
(4) The preceding provisions of this section shall be deemed, in accordance with subsections (5) and (6) below, to have come into force on 2nd July 1997.
(5) Subject to subsection (6) below, this section shall not be taken to have changed—
(a) the amounts which were deductible by any person under section 203 of the Taxes Act 1988 at any time on or before 17th March 1998; or
(b) the amounts which should have been accounted for to the Board under section 203J(3) of that Act at any time on or before 5th April 1998.
(6) Where, by virtue of this section, any employer would (but for subsection (5) above) be treated as having been under an obligation at any time on or before 17th March 1998 to make deductions from payments made by the employer of, or on account of, an employee’s assessable income—
(a) sections 203 and 203J of the Taxes Act 1988, and
(b) the provisions of any regulations under section 203 of that Act,
shall have effect, and be deemed to have had effect, as if the employer had been obliged (subject to section 203J(3) of that Act) to make those deductions from any payments that were so made on or after 24th March 1998 and before 6th April 1998.
(7) Expressions used in subsection (6) above and in section 203J of the Taxes Act 1988 have the same meanings in that subsection as in that section.
(1) Section 203F of the Taxes Act 1988 (tradeable assets) shall be amended as follows.
(2) In subsection (1) (provision of tradeable asset to be treated as payment), for “a tradeable asset” there shall be substituted “a readily convertible asset”.
(3) For subsections (2) and (3) (meaning of “tradeable asset” and amount of deemed payment) there shall be substituted the following subsections—
“(2) In this section “readily convertible asset” means—
(a) an asset capable of being sold or otherwise realised on a recognised investment exchange (within the meaning of the [1986 c. 60.] Financial Services Act 1986) or on the London Bullion Market;
(b) an asset capable of being sold or otherwise realised on a market for the time being specified in PAYE regulations;
(c) an asset consisting in the rights of an assignee, or any other rights, in respect of a money debt that is or may become due to the employer or any other person;
(d) an asset consisting in, or in any right in respect of, any property that is subject to a fiscal warehousing regime;
(e) an asset consisting in anything that is likely (without anything being done by the employee) to give rise to, or to become, a right enabling a person to obtain an amount or total amount of money which is likely to be similar to the expense incurred in the provision of the asset;
(f) an asset for which trading arrangementrposes of this section trading arrangements for any asset provided to any person exist whenever there exist any arrangements the effect of which in relation to that asset is to enable that person, or a member of his family or household, to obtain an amount or total amount of money that is, or is likely to be, similar to the expense incurred in the provision of that asset.