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Finance (No. 2) Act 1997 (c. 58)

(The document as of February, 2008)

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Finance (No. 2) Act 1997

1997 CHAPTER 58

ARRANGEMENT OF SECTIONS

Content
  1. Part I

    The windfall tax

    1. 1. Charge to windfall tax.

    2. 2. The companies benefitting from windfalls.

    3. 3. Administration of the windfall tax etc.

    4. 4. The windfall tax and profit-related pay.

    5. 5. Interpretation of Part I.

  2. Part II

    Value added tax and excise duties

    1. Value added tax

      1. 6. Fuel and power for domestic or charity use.

    2. Alcoholic liquor duties

      1. 7. Rate of duty on spirits.

      2. 8. Rate of duty on beer.

      3. 9. Rates of duty on wine and made-wine.

      4. 10. Rates of duty on cider.

    3. Hydrocarbon oil duties

      1. 11. Rates of hydrocarbon oil duties etc.

    4. Tobacco products duty

      1. 12. Rates of tobacco products duty.

    5. Vehicle excise and registration

      1. 13. Rates of vehicle excise duty.

      2. 14. Payments where vehicle information transmitted electronically.

  3. Part III

    Income tax and corporation tax

    1. Reliefs for interest and private medical insurance

      1. 15. Mortgage interest payments.

      2. 16. Limit on relief for interest for 1998-99.

      3. 17. Withdrawal of relief on medical insurance premiums.

    2. Corporation tax

      1. 18. Rates for financial year 1997.

    3. Distributions, tax credits etc on and after 2nd July 1997

      1. 19. Pension funds no longer entitled to payment of tax credits.

      2. 20. Losses etc not to be set against surplus franked investment income.

      3. 21. Estates in administration: distributions to which s.233(1) applies.

      4. 22. Lloyd's underwriters.

      5. 23. Insurance companies and friendly societies.

    4. Distributions, tax credits etc: avoidance

      1. 24. Taxation of dealers in respect of distributions etc.

      2. 25. Repeal of s.95(5) of the Taxes Act 1988: consequential amendments.

      3. 26. Purchase and sale of securities.

      4. 27. Payments to companies under section 687 of the Taxes Act 1988.

      5. 28. Arrangements to pass on value of tax credit.

      6. 29. Unauthorised unit trusts.

    5. Distributions, tax credits etc in and after 1999-00

      1. 30. Tax credits.

      2. 31. Rates of tax applicable to Schedule F income etc.

      3. 32. Trusts.

      4. 33. Estates of deceased persons in administration.

      5. 34. Tax credits and taxation of distributions: miscellaneous provisions.

      6. 35. Transitional relief for charities etc.

      7. 36. Foreign income dividends.

    6. Gilt-edged securities

      1. 37. Interest to be paid gross.

      2. 38. Paying and collecting agents.

    7. Relief for losses etc

      1. 39. Carry-back of trading losses.

      2. 40. Carry-back of loan relationship deficits.

      3. 41. Restrictions on group relief.

    8. Capital allowances for small and medium-sized businesses

      1. 42. Temporary first-year allowances.

      2. 43. Expenditure of a small company or small business.

    9. Capital

  • Part IV

    Miscellaneous and supplemental

    1. Stamp duty

      1. 49. Stamp duty on conveyance or transfer on sale.

    2. Provisional collection of taxes

      1. 50. Statutory effect of resolutions etc.

    3. Supplemental

      1. 51. Interpretation.

      2. 52. Repeals.

      3. 53. Short title.

  • Schedules:

    1. Schedule 1

      Quantification of a privatisation windfall.

    2. Schedule 2

      Administration and collection of windfall tax.

    3. Schedule 3

      Insurance companies and friendly societies.

    4. Schedule 4

      Tax credits, taxation of distributions etc.

      1. Part I

        General.

      2. Part II

        Insurance companies and Lloyd's underwriters.

    5. Schedule 5

      Limitation of entitlement to relief under section 35.

      1. Part I

        Qualifying distributions other than bonus issues.

      2. Part II

        Bonus issues.

    6. Schedule 6

      Foreign income dividends.

    7. Schedule 7

      Restrictions on group relief.

    8. Schedule 8

      Repeals.

      1. Part I

        Vehicle licensing: payments where information to be transmitted electronically.

      2. Part II

        Income tax and corporation tax.

      3. Part III

        Statutory effect of resolutions etc.

  • An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance.

    [31st July 1997]

    Most Gracious Sovereign,

    WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:--



    Part I The windfall tax

    1 Charge to windfall tax

    (1) Every company which, on 2nd July 1997, was benefitting from a windfall from the flotation of an undertaking whose privatisation involved the imposition of economic regulation shall be charged with a tax (to be known as the "windfall tax") on the amount of that windfall.

    (2) Windfall tax shall be charged at the rate of 23 per cent.

    (3) Schedule 1 to this Act (which sets out how to quantify the windfall from which a company was benefitting on 2nd July 1997) shall have effect.

    2 The companies benefitting from windfalls

    (1) For the purposes of this Part a company in existence on 2nd July 1997 was benefitting on that date from a windfall from the flotation of an undertaking whose privatisation involved the imposition of economic regulation if--

    (a) that company, or a company of which it was on that date a demerged successor, had before that date been privatised by means of a flotation;

    (b) there had, before that flotation, been a statutory transfer of property, rights and liabilities from a public corporation to the floated company or to a company which, at the time of the flotation, was a subsidiary undertaking of the floated company; and

    (c) at the time of the flotation, the floated company was carrying on an undertaking whose privatisation involved the imposition of economic regulation.

    (2) For the purposes of this Part a company was privatised by means of a flotation if--

    (a) an offer of shares in that company was at any time made to the public in the United Kingdom;

    (b) the shares which were the subject-matter of the offer were publicly-owned at the time of the offer;

    (c) the offer was or included an offer of shares for disposal at a fixed price; and

    (d) shares in that company were first admitted to listing on the Official List of the Stock Exchange in pursuance of an application made in connection with the offer.

    (3) In this Part references, in relation to a company privatised by means of a flotation, to the time of the company's flotation are references to the time when shares in the floated company were first admitted to listing on the Official List of the Stock Exchange.

    (4) For the purposes of this Part a company in existence on 2nd July 1997 ("the relevant company") was on that date a demerged successor of a company privatised by means of a flotation if--

    (a) after the flotation of the floated company but before 2nd July 1997, there had been a statutory transfer of property, rights and liabilities from the floated company to a company ("the transferee company") which was a subsidiary undertaking of the floated company at the time of the transfer;

    (b) the transferee company was not a subsidiary undertaking of the floated company on 2nd July 1997 but was, on that date, a subsidiary undertaking of the relevant company; and

    (c) before 2nd July 1997 shares in the relevant company had been admitted to listing on the Official List of the Stock Exchange in pursuance of an application made in connection with the transaction, or series of transactions, by virtue of which the transferee company ceased to be a subsidiary undertaking of the floated company.

    (5) For the purposes of this section a company was, at the time of its flotation, carrying on an undertaking whose privatisation involved the imposition of economic regulation if that company, or a company which at that time was a subsidiary undertaking of that company, was at that time--

    (a) a public telecommunications operator, within the meaning of the [1984 c. 12.] Telecommunications Act 1984;

    (b) an airport operator in relation to an airport subject to economic regulation under Part IV of the [1986 c. 31.] Airports Act 1986;

    (c) the holder of an authorisation granted under section 7 of the [1986 c. 44.] Gas Act 1986, as originally enacted (public gas suppliers);

    (d) the holder of an appointment under section 11 of the [1989 c. 15.] Water Act 1989 as the water undertaker for any area of England and Wales;

    (e) the holder of a licence granted under section 6 of the [1989 c. 29.] Electricity Act 1989 or Article 10 of the [S.I. 1992/231 (N.I. 1).] Electricity (Northern Ireland) Order 1992 (licences authorising generation, transmission and supply of electricity); or

    (f) a company authorised by a licence under section 8 of the [1993 c. 43.] Railways Act 1993 to be the operator of a railway asset.

    (6) In subsection (5) above "airport operator" has the [1986 c. 31.] same meaning as in the Airports Act 1986.

    3 Administration of the windfall tax etc

    (1) The windfall tax shall be under the care and management of the Commissioners of Inland Revenue.

    (2) Schedule 2 to this Act (which makes provision with respect to the management and collection of the windfall tax) shall have effect.

    (3) Subject to paragraph 19(5) of Schedule 8 to the Taxes Act 1988 (which is the provision about profit-related pay schemes that is amended by section 4 below), nothing in this Act or the Tax Acts shall have the effect of allowing or requiring any amount of windfall tax to be deducted in computing income, profits or losses for any of the purposes of the Tax Acts.

    4 The windfall tax and profit-related pay

    (1) In paragraph 19 of Schedule 8 to the Taxes Act 1988 (ascertainment of profits for the purposes of profit-related pay schemes)--

    (a) in sub-paragraph (5)(b), after "1985" there shall be inserted "or section 3(3) of the Finance (No. 2) Act 1997"; and

    (b) after paragraph (ff) of sub-paragraph (6) there shall be inserted the following paragraph--

    " (fg) windfall tax charged under Part I of the Finance (No. 2) Act 1997; " .

    (2) Subsection (1) above has effect in relation to the preparation, for the purposes of any scheme, of a profit and loss account for any period ending on or after 2nd July 1997.

    (3) Subsection (1) above shall not have effect in relation to an existing scheme unless, before the end of the period of six months beginning with the day on which this Act is passed, the scheme is altered, with effect for all periods ending on or after 2nd July 1997, to take account of that subsection.

    (4) Provision made, in compliance with paragraph 20(1) of Schedule 8 to the Taxes Act 1988 (consistency in preparation of accounts), by any existing scheme that is altered to take account of subsection (1) above shall not prevent a profit and loss account from being prepared in accordance with the alteration.

    (5) An alteration of an existing scheme to take account of subsection (1) above shall be treated as being within section 177B of the Taxes Act 1988 (alterations which are registrable and which, when registered, cannot give rise to the Board's power of cancellation).

    (6) In this section "existing scheme" means a scheme which at any time in the period beginning with 2nd July 1997 and ending immediately before the day on which this Act is passed was a registered scheme under Chapter III of Part V of the Taxes Act 1988.

    (7) The preceding provisions of this section shall cease to have effect, in accordance with the notes to Part VI(3) of Schedule 18 to the [1997 c. 16.] Finance Act 1997, as if they were included in the repeal of Schedule 8 to the Taxes Act 1988.

    5 Interpretation of Part I

    (1) In this Part--

    • "company" means a company within the meaning of the [1985 c. 6.] Companies Act 1985 or the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986;

    • "fixed price", in relation to any offer of publicly-owned shares in a company, means--

      (a)

      a price set out in the offer; or

      (b)

      a price subsequently fixed by a Minister of the Crown in a case in which the amount of a first instalment of the price was fixed by the offer;

    • "the floated company", in relation to the privatisation of a company by means of a flotation, means the company so privatised;

    • "public corporation", in relation to a statutory transfer, means any body corporate in existence at the time of the transfer which--

      (a)

      had been established by or in accordance with the provisions of any enactment; and

      (b)

      had a membership consisting of, or including, persons appointed as members by a Minister of the Crown;

    • "publicly-owned", in relation to any shares, means held by--

      (a)

      a Minister of the Crown or the Treasury; or

      (b)

      a nominee for a Minister of the Crown or for the Treasury;

    • "share" includes any right to require the issue of a share;

    • "statutory transfer" means a transfer under a transferring enactment or by or in accordance with a statutory scheme;

    • "subsidiary undertaking"--

      (a)

      except in relation to a company formed and registered in Northern Ireland, means a subsidiary undertaking within the meaning of Part VII of the Companies Act 1985; and

      (b)

      in relation to a company so formed and registered, means a subsidiary undertaking within the meaning of Part VIII of the Companies (Northern Ireland) Order 1986.

    (2) In this section--

    • "enactment" means an enactment contained in a public general Act or any provision of Northern Ireland legislation;

    • "Minister of the Crown" includes a Northern Ireland department or the head of such a department;

    • "statutory scheme" means any scheme which--

      (a)

      has been made in exercise of any power or duty conferred or imposed by any enactment;

      (b)

      contains provision for the division of property, rights and liabilities between different persons, or for the transfer of property, rights and liabilities to a company; and

      (c)

      would not have taken effect or come into force but for having been approved by a Minister of the Crown;

    • "transferring enactment" means an enactment under which property, rights and liabilities of a person specified in the enactment became, by virtue of that enactment, the property, rights or liabilities of a company nominated under that enactment.

    (3) In subsection (2) above the reference, in relation to a scheme, to its having been approved by a Minister of the Crown includes a reference to its having been made by a Minister of the Crown.

    (4) The reference in subsection (1) above to Part VII of the [1985 c. 6.] Companies Act 1985 shall be construed, in relation to times in relation to which that Part had effect without the amendments made by the [1989 c. 40.] Companies Act 1989, as if those amendments did have effect in relation to those times.



    Part II Value Added Tax and Excise Duties

    Value Added Tax

    6 Fuel and power for domestic or charity use

    (1) In section 2(1A) of the [1994 c. 23.] Value Added Tax Act 1994 (rate of VAT on fuel and power for domestic use etc.), for "8 per cent." there shall be substituted "5 per cent.".

    (2) This section applies in relation to any supply made on or after 1st September 1997 and any acquisition or importation taking place on or after that date.



    Alcoholic liquor duties

    7 Rate of duty on spirits

    (1) In section 5 of the [1979 c. 4.] Alcoholic Liquor Duties Act 1979 (spirits), for "£18.99" there shall be substituted "£19.56".

    (2) This section shall come into force on 1st January 1998.

    8 Rate of duty on beer

    (1) In section 36(1) of the Alocoholic Liquor Duties Act 1979 (beer), for "£10.82" there shall be substituted "£11.14".

    (2) This section shall come into force on 1st January 1998.

    9 Rates of duty on wine and made-wine

    (1) For the Table of rates of duty in Schedule 1 to the Alocoholic Liquor Duties Act 1979 (wine and made-wine) there shall be substituted--



    " Table of Rates of Duty on Wine and Made-Wine



    Part I Wine or Made-Wine of a Strength not Exceeding 22 Per Cent.
    Description of wine or made-wineRates of duty per hectolitre
    £
    Wine or made-wine of a strength not exceeding 4 per cent.44.58
    Wine or made-wine of a strength exceeding 4 per cent. but not exceeding 5.5 per cent.61.30
    Wine or made-wine of a strength exceeding 5.5 per cent. but not exceeding 15 per cent. and not being sparkling144.65
    Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent. but not exceeding 8.5 per cent.201.50
    Sparkling wine or sparkling made-wine of a strength exceeding 8.5 per cent. or of a strength exceeding 8.5 per cent. but not exceeding 15 per cent.206.66
    Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 22 per cent.192.86


    Part II Wine or Made-Wine of a Strength Exceeding 22 Per Cent.

    Description of wine or made-wineRates of duty per litre of alcohol in the wine or made-wine
    £
    Wine or made-wine of a strength exceeding 22 per cent.19.56 "

    (2) This section shall come into force on 1st January 1998.

    10 Rates of duty on cider

    (1) In section 62 of the Alcoholic Liquor Duties Act 1979 (cider), for subsection (1A) there shall be substituted--

    " (1A) The rates at which the duty shall be charged are--

    (a) £37.54 per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent.;

    (b) £36.74 per hectolitre in the case of cider of a strength exceeding 7.5 per cent. which is not sparkling cider; and

    (c) £24.49 per hectolitre in any other the case. "

    (2) This section shall come into force on 1st January 1998.



    Hydrocarbon oil duties

    11 Rates of hydrocarbon oil duties etc

    (1) In relation to times before the coming into force of section 7(2) and (3) of the [1997 c. 16.] Finance Act 1997 (which makes amendments specifying separate rates of duty for light oil, for ultra low sulphur diesel and for heavy oil which is not ultra low sulphur diesel), section 6(1) of the [1979 c. 5.] Hydrocarbon Oil Duties Act 1979 ("the 1979 Act") shall have effect as follows--

    (a) for "£0.4168" (rate of duty on light oil) there shall be substituted "£0.4510"; and

    (b) for "£0.3686" (rate of duty on heavy oil) there shall be substituted "£0.4028".

    (2) In relation to times after the coming into force of section 7(2) and (3) of the Finance Act 1997, section 6(1A) of the 1979 Act (which is inserted by section 7(3) of the Finance Act 1997) shall have effect as follows--

    (a) in paragraph (a) (rate of duty on light oil), for "£0.4168" there shall be substituted "£0.4510";

    (b) in paragraph (b) (rate of duty on ultra low sulphur diesel), for "£0.3586" there shall be substituted "£0.3928"; and

    (c) in paragraph (c) (rate of duty on heavy oil that is not ultra low sulphur diesel), for "£0.3686" there shall be substituted "£0.4028".

    (3) In section 11(1) of the 1979 Act (rebate on heavy oil), for "£0.0194" (fuel oil) and "£0.0250" (gas oil) there shall be substituted "£0.0200" and "£0.0258", respectively.

    (4) In section 14(1) of the 1979 Act (rebate on light oil for use as furnace fuel), for "£0.0194" there shall be substituted "£0.0200".

    (5) This section shall be deemed to have come into force at 6 o'clock in the evening of 2nd July 1997.



    Tobacco products duty

    12 Rates of tobacco products duty

    (1) For the Table of rates of duty in Schedule 1 to the [1979 c. 7.] Tobacco Products Duty Act 1979 there shall be substituted--

    TABLE
    1. Cigarettes ...An amount equal to 21 per cent. of the retail price plus £72.06 per thousand cigarettes.
    2. Cigars ...£105.86 per kilogram.
    3. Hand-rolling tobacco ...£87.74 per kilogram.
    4. Other smoking tobacco and chewing tobacco ...£46.55 per kilogram.

    (2) This section shall come into force on 1st December 1997.



    Vehicle excise and registration

    13 Rates of vehicle excise duty

    (1) In Schedule 1 to the [1994 c. 22.] Vehicle Excise and Registration Act 1994 (annual rates of duty) in paragraph 1(2) (the general rate), for "£145" there shall be substituted "£150".

    (2) For the table in paragraph 9(1) of that Schedule (rates of duty for rigid goods vehicles) there shall be substituted the following table--

    Revenue weight of vehicle
    (1) Exceeding(2) Not Exceeding
    Rate
    (3) Two axle vehicle(4) Three axle vehicle(5) Four or more axle vehicle
    kgskgs£££
    3,5007,500160160160
    7,50012,000300300300
    12,00013,000470490350
    13,00014,000650490350
    14,00015,000840490350
    15,00017,0001,320490350
    17,00019,0001,320850350
    19,00021,0001,3201,020350
    21,00023,0001,3201,470510
    23,00025,0001,3202,230830
    25,00027,0001,3202,3401,470
    27,00029,0001,3202,3402,320
    29,00031,0001,3202,3403,360
    31,00044,0001,3202,3404,400

    (3) For the table in paragraph 11(1) of that Schedule (rates of duty for tractive units) there shall be substituted the following table--

    Revenue weight of tractive unit
    (1) Exceeding(2) Not exceeding
    Rate for tractive unit with two axles
    (3) Any no. of semi-trailer axles(4) 2 or more semi-trailer axles(5) 3 or more semi-trailer axles
    Rate for tractive unit with three or more axles
    (6) Any no. of semi-trailer axles(7) 2 or more semi-trailer axles(8) 3 or more semi-trailer axles
    kgskgs££££££
    3,5007,500160160160160160160
    7,50012,000300300300300300300
    12,00016,000460460460460460460
    16,00020,000520460460460460460
    20,00023,000810460460460460460
    23,00026,0001,190590460590460460
    26,00028,0001,1901,1304601,130460460
    28,00031,0001,7401,7401,0901,740660460
    31,00033,0002,5302,5301,7402,5301,000460
    33,00034,0005,1705,1701,7402,5301,470570
    34,00036,0005,1705,1702,8402,5302,100860
    36,00038,0005,1705,1703,2102,8202,8201,280
    38,00044,0005,1705,1703,2102,8202,8201,280

    (4) This section applies in relation to licences taken out after 15th November 1997.

    14 Payments where vehicle information transmitted electronically

    (1) In section 7 of the Vehicle Excise and Registration Act 1994 (issue of vehicle licences), in subsection (3B) (conditions that may be imposed in place of requirement to make a declaration), after "include" there shall be inserted "(a)" and at the end there shall be inserted " ; and

    (b) a condition requiring such payments as may be specified by the Secretary of State to be made to him in respect of--

    (i) steps taken by him for facilitating compliance by any person with any condition falling within paragraph (a); and

    (ii) in such circumstances as may be so specified, the processing of applications for vehicle licences where particulars are transmitted in accordance with that paragraph. "

    (2) Subsection (1) above applies to applications made on or after the day on which this Act is passed.

    (3) In section 22 of the [1994 c. 22.] Vehicle Excise and Registration Act 1994, after subsection (2) (regulations about registration and identification of exempt vehicles, etc.) there shall be inserted the following subsections--

    " (2A) Regulations under subsection (2) may, in particular--

    (a) require a person applying for a nil licence--

    (i) to make such a declaration, and

    (ii) to furnish such particulars,

    (whether or not with respect to the vehicle for which the licence is to be taken out) as may be prescribed by the regulations, and

    (b) provide for any requirement to make such a declaration not to apply in such circumstances as may be so prescribed.

    (2B) The circumstances which may be prescribed by the regulations by virtue of subsection (2A)(b) include where a person applying for a nil licence agrees to comply with such conditions as may be specified in relation to him by the Secretary of State.

    (2C) The conditions which may be specified by virtue of subsection (2B) include--

    (a) a condition that particulars for the time being prescribed by the regulations by virtue of subsection (2A)(a) are furnished by being transmitted to the Secretary of State by such electronic means as he may specify; and

    (b) a condition such as is mentioned in section 7(3B)(b) (treating the references to paragraph (a) of subsection (3B) as references to paragraph (a) of this subsection). "



    Part III Income tax and corporation tax

    Reliefs for interest and private medical insurance

    15 Mortgage interest payments

    (1) In section 353 of the Taxes Act 1988 (general provision for relief for interest payments), in subsection (1G) (amount of relief for interest on loans to buy land, etc.), for paragraph (a) there shall be substituted--

    " (a) in relation to so much of any interest as is eligible for relief under this section by virtue of section 354, means 10 per cent; and " .

    (2) In section 369 of that Act (deduction at source of mortgage interest relief), in subsection (1A) (percentage of interest deductible), for paragraph (a) there shall be substituted--

    " (a) in relation to so much of any payment of relevant loan interest as is not a payment in relation to which paragraph (b) below has effect, means 10 per cent; and " .

    (3) Subsection (1) above has effect in relation to any payment of interest (whenever falling due) made in the year 1998-99 or any subsequent year of assessment; and subsection (2) above has effect in relation to any payment of interest which becomes due in the year 1998-99 or any subsequent year of assessment.

    16 Limit on relief for interest for 1998-99

    For the year 1998-99 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.

    17 Withdrawal of relief on medical insurance premiums

    (1) Subject to subsections (2) and (3) below, relief under section 54 of the [1989 c. 26.] Finance Act 1989 (medical insurance) shall not be given in respect of any payment where either--

    (a) the premium in respect of which the payment is made is a premium under a contract entered into on or after 2nd July 1997; or

    (b) the payment is received by the insurer on or after 6th April 1999.

    (2) Subsection (1) above shall not affect the giving of relief in respect of a payment received by an insurer before 6th April 1999 where--

    (a) the premium in respect of which the payment is made is a premium under a contract entered into on or after 2nd July 1997 but before 1st August 1997;

    (b) the contract is one entered into in pursuance of a written proposal received by or on behalf of the insurer before 2nd July 1997;

    (c) the contract is not a contract entered into by way of the renewal of an earlier contract; and

    (d) if the payment is not itself a payment received before 1st August 1997, the insurer had before 1st August 1997 received an earlier payment in respect of a premium under the contract in question.

    (3) Subsection (1) above shall not affect the giving of relief in respect of a payment received by an insurer before 6th April 1999 where--

    (a) the premium in respect of which the payment is made is a premium under a contract entered into on or after 2nd July 1997 but before 1st August 1997;

    (b) that contract is one entered into by way of the renewal of an earlier contract;

    (c) the period of insurance under the earlier contract ended before 2nd July 1997; and

    (d) if the payment is not itself a payment received before 1st August 1997, the insurer had before 1st August 1997 received an earlier payment in respect of a premium under the renewal contract.

    (4) For the purposes of the preceding provisions of this section a contract shall be taken to have been entered into by way of the renewal of an earlier contract only if--

    (a) it was entered into by way of the renewal of a contract which was an eligible contract for the purposes of section 54 of the [1989 c. 26.] Finance Act 1989 when that earlier contract was entered into;

    (b) the insurer under the earlier contract and the insurer under the contract by which it has been renewed are the same; and

    (c) the period of insurance under the earlier contract ended immediately before the beginning of the period of insurance under the contract by which it has been renewed.

    (5) This section has effect for the year 1997-98 and subsequent years of assessment.



    Corporation tax

    18 Rates for financial year 1997

    (1) The rate at which corporation tax is charged for the financial year 1997 shall be, and shall be deemed always to have been, 31 per cent. (and not 33 per cent. as provided by section 58 of the [1997 c. 16.] Finance Act 1997).

    (2) The small companies' rate for that year shall be, and shall be deemed always to have been, 21 per cent. (and not 23 per cent. as provided by section 59(a) of that Act).

    (3) All such adjustments shall be made, whether by way of discharge or repayment of tax or otherwise, as may be required in consequence of the provisions of this section.



    Distributions, tax credits etc on and after 2nd July 1997

    <<<< >>>>

    19 Pension funds no longer entitled to payment of tax credits

    (1) In section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions)--

    (a) in subsection (2) (payment of tax credits to companies resident in the United Kingdom) for "Subject to section 241(5)" there shall be substituted "Subject to sections 231A and 241(5)"; and

    (b) at the beginning of subsection (3) (claims by other persons to set tax credits against income tax liability and to receive payment of any excess of tax credit over that liability) there shall be inserted "Subject to section 231A,".

    (2) After section 231 of the Taxes Act 1988 there shall be inserted--

    " 231A Restrictions on the use of tax credits by pension funds

    (1) No claim shall be made under section 231(2) for payment of the amount of a tax credit if or to the extent that the qualifying distribution to which the credit relates is income of a pension fund.

    (2) In the case of any pension fund, for any year of assessment the aggregate amount of the tax credits in respect of which claims are made under section 231(3) must not exceed the aggregate amount of the tax credits in respect of the qualifying distributions comprised in the income of the pension fund and brought into charge to tax.

    (3) Accordingly, no payment shall be made under section 231(3) in respect of so much of the excess there mentioned as is referable to a tax credit in respect of a qualifying distribution if or to the extent that the qualifying distribution is income of a pension fund.

    (4) In this section--

    • "income", in relation to a pension fund, means income derived from investments or deposits held for the purposes of the pension fund;

    • "pension fund" means any scheme, fund or other arrangements established and maintained (whether in the United Kingdom or elsewhere) for the purpose of providing pensions, retirement annuities, allowances, lump sums, gratuities or other superannuation benefits (with or without subsidiary benefits);

    • "scheme" includes any deed, agreement or series of agreements.

    (5) For convenience of identification only, the schemes, funds or other arrangements which are "pension funds" for the purposes of this section by virtue of the definition of that expression in subsection (4) above include, in particular, those whose income is, in whole or in part, exempt, or eligible for exemption, from tax under or by virtue of any of the following provisions--

    (a) section 512(2);

    (b) section 592(2);

    (c) section 608(2)(a);

    (d) section 613(4);

    (e) section 614(2), (3), (4) or (5);

    (f) section 620(6);

    (g) section 643(2).

    (6) The preceding provisions of this section do not have effect in relation to--

    (a) claims made in respect of tax credits to which entitlement arises by virtue of section 232(3); or

    (b) claims made by virtue of arrangements having effect under section 788. "

    (3) This section has effect in relation to qualifying distributions made on or after 2nd July 1997.

    Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9

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