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SCHEDULE 4
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TAX CREDITS, TAXATION OF DISTRIBUTIONS ETC |
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PART I |
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GENERAL |
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The Taxes Management Act 1970 |
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Section 7 |
| | 1. - (1) In section 7 of the Taxes Management Act 1970 (notice of liability to income tax and capital gains tax) in subsection (6) (sources of income which fall within that subsection) after the words "other than the basic rate" there shall be inserted ", the Schedule F ordinary rate".
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(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.
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Section 42 (pre-corporation tax self-assessment version) |
| | 2. - (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims), as it has effect in relation to corporation tax for accounting periods ending before the day appointed under section 199 of the Finance Act 1994, the following provisions shall cease to have effect-
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(a) in subsection (5) (form of claim) the words "Subject to subsection (5A) below,"; |
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(b) subsection (5A) (claims by companies for payment of tax credits); and |
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(c) subsection (10A) (extended meaning of terms used in subsection (5A). |
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(2) This paragraph has effect in relation to tax credits in respect of distributions made on or after 6th April 1999.
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Section 42 (corporation tax self-assessment version) |
| | 3. - (1) In section 42 of the Taxes Management Act 1970 (procedure for making claims), as it has effect in relation to corporation tax for accounting periods ending on or after the day appointed under section 199 of the Finance Act 1994, the following provisions shall cease to have effect-
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(a) subsections (4) and (4A) (claims by companies for payment of tax credits); and |
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(b) in subsection (5), the words from "and the reference in subsection (4) above" onwards. |
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(2) This paragraph has effect in relation to tax credits in respect of distributions made on or after 6th April 1999.
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The Taxes Act 1988 |
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Section 231 |
| | 4. - (1) In section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions) in subsection (1) (whose provisions are expressed to be subject to sections 247 and 441A) for "441A" there shall be substituted "469(2A)".
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(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.
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Section 232 |
| | 5. - (1) In section 232 of the Taxes Act 1988 (tax credits for non-UK residents) the following provisions shall cease to have effect-
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(a) subsection (2) (funds to which section 615(2)(b) or (c) applies); and |
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(b) subsection (3) (sovereign powers, governments and international organisations). |
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(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.
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Section 233 |
| | 6. - (1) Section 233 of the Taxes Act 1988 (taxation of certain recipients of distributions and in respect of non-qualifying distributions) shall be amended as follows.
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(2) In subsections (1) to (1B), for the words "lower rate", wherever occurring, there shall be substituted "Schedule F ordinary rate".
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(3) In subsection (1B), for the words "rate applicable to trusts", in both places where they occur, there shall be substituted "Schedule F trust rate".
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(4) In subsection (2), in the definition of "excess liability", for "were charged at the lower rate to the exclusion of the higher rate or, as the case may, be the rate applicable to trusts" there shall be substituted"were charged-
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(a) in the case of income chargeable under Schedule F, at the Schedule F ordinary rate, and |
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(b) in the case of any other income, at the lower rate, |
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to the exclusion of the higher rate, the Schedule F upper rate or, as the case may be, the Schedule F trust rate".
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(5) This paragraph has effect in relation to distributions made on or after 6th April 1999.
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Sections 235 to 237 |
| | 7. - (1) Sections 235 to 237 of the Taxes Act 1988 (distributions of exempt funds and bonus issues) shall cease to have effect.
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(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.
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Section 238 |
| | 8. - (1) In section 238(1) of the Taxes Act 1988 (interpretation etc) in the definition of "franked payment" for "rate of advance corporation tax" there shall be substituted "tax credit fraction".
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(2) This paragraph has effect in relation to distributions made on or after 6th April 1999.
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Section 241 |
| | 9. - (1) In section 241 of the Taxes Act 1988, for subsection (2) (amount on which ACT is payable where there is in an accounting period an excess of franked payments over franked investment income) there shall be substituted-
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"(2) If in an accounting period there is such an excess, advance corporation tax shall be payable on the excess at nine-tenths of the rate of advance corporation tax."
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(2) Sub-paragraph (1) above has effect in relation to accounting periods beginning on or after 6th April 1999.
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(3) In the case of an accounting period beginning before, and ending on or after, 6th April 1999, the advance corporation tax payable shall be computed-
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(a) in accordance with section 241, as amended by sub-paragraph (1) above, in the case of that part of the excess, if any, which, had there been such a period, would have accrued in an accounting period beginning with 6th April 1999 and ending with the true accounting period; and |
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(b) in accordance with that section as it has effect apart from subsection (1) above in the case of that part of the excess, if any, which, had there been such a period, would have accrued in an accounting period beginning with the true accounting period and ending with 6th April 1999. |
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Section 249 |
| | 10. - (1) Section 249 of the Taxes Act 1988 (stock dividends treated as income) shall be amended as follows.
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(2) In subsection (4) (taxation of individuals)-
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(a) in the words preceding paragraph (a), for "lower rate" there shall be substituted "Schedule F ordinary rate"; |
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(b) in paragraph (a), for "lower rate" there shall be substituted "Schedule F ordinary rate"; and |
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(c) in paragraph (c) after "as if it were income to which section 1A applies" there shall be inserted "as it applies to income chargeable under Schedule F". |
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(3) In subsection (6) (taxation of trustees) in paragraph (b) for "lower rate" there shall be substituted "Schedule F ordinary rate".
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(4) This paragraph has effect in relation to share capital, within the meaning of section 249 of the Taxes Act 1988, issued on or after 6th April 1999.
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Section 421 |
| | 11. - (1) In section 421 of the Taxes Act 1988 (taxation of borrower when loan under s.419 released etc) in subsection (1)-
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(a) in paragraphs (a) and (b) for the words "lower rate", in both places where they occur, there shall be substituted "Schedule F ordinary rate"; and |
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(b) in paragraph (c), after the words "as if it were income to which section 1A applies" there shall be inserted "by virtue of subsection (2)(b) of that section". |
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(2) This paragraph has effect in relation to the release or writing off of the whole or part of a debt on or after 6th April 1999.
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Section 469 |
| | 12. - (1) Section 469 of the Taxes Act 1988 (unit trusts other than authorised unit trusts) shall be amended as follows.
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(2) In subsection (2) (income of the trustees to which section 1A applies to be chargeable at the basic rate instead of the lower rate) for "lower rate" there shall be substituted "rate applicable in accordance with subsection (1A) of that section".
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(3) After subsection (2) there shall be inserted-
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"(2A) Section 231(1) shall not apply where the recipient of the distribution there mentioned is the trustees of the scheme.
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(2B) Section 233(1) shall not apply where the person there mentioned is the trustees of the scheme."
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(4) In subsection (9) (sections 686 and 687 not to apply) after "686" there shall be inserted ", 686A".
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(5) This paragraph has effect in relation to distributions made on or after 6th April 1999.
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Section 549 |
| | 13. - (1) In section 549 of the Taxes Act 1988 (policies of life insurance etc: corresponding deficiency relief) in subsection (2) (which contains a definition of "excess liability")-
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(a) after "(so far as applicable in accordance with section 1A) the lower rate" there shall be inserted "or the Schedule F ordinary rate"; and |
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(b) for "any higher rate" there shall be substituted "the higher rate and the Schedule F upper rate". |
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(2) This paragraph has effect for the year 1999-00 and subsequent years of assessment.
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Section 660C |
| | 14. - (1) Section 660C of the Taxes Act 1988 (settlements where the settlor retains an interest: nature of the charge on settlor) shall be amended as follows.
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(2) In subsection (1) (tax to be charged under Case VI of Schedule D) for "under Case VI of Schedule D" there shall be substituted-
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"(a) in the case of income falling within subsection (1A) below, as if it were income to which section 1A applies by virtue of subsection (2)(b) of that section; and |
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(b) in the case of any other income, under Case VI of Schedule D". |
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(3) After subsection (1) there shall be inserted-
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"(1A) Income falls within this subsection if it is-
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(a) income chargeable under Schedule F; |
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(b) income to which section 1A applies by virtue of its being equivalent foreign income falling within subsection (3)(b) of that section and chargeable under Case V of Schedule D; |
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(c) a distribution in relation to which section 233(1) applies; |
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(d) a qualifying distribution whose amount or value is determined in accordance with section 233(1A); |
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(e) a non-qualifying distribution, within the meaning of section 233(1B); |
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(f) income treated as arising by virtue of section 249; |
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(g) income treated as received by virtue of section 421(1)(a)." |
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(4) This paragraph has effect for the year 1999-00 and subsequent years of assessment.
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