You are here: Parliament home page > Parliamentary business > Bills and legislation > Bills before Parliament > Commons Bill
Finance (No.2) Bill - continued        House of Commons
PART III, INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX - continued
Computation of profits of trade, profession or vocation - continued
back to previous text
 
Meaning of "period of account".     45. In sections 42 to 44 above a "period of account" means any period for which accounts of the trade, profession or vocation are drawn up.
 
Minor and consequential provisions about computations.     46. - (1) In provisions of the Tax Acts relating to the computation of the profits of a trade, profession or vocation references to receipts and expenses are (except where otherwise expressly provided) to any items brought into account as credits or debits in computing such profits.
 
  There is no implication that an amount has been actually received or expended.
 
      (2) Except where otherwise expressly provided, the same rules apply in computing losses of a trade, profession or vocation for any purpose of the Tax Acts as apply in computing profits.
 
      (3) In the provisions of the Tax Acts which refer to the subject of the charge under Case I or II of Schedule D as "profits or gains" or "profits and gains" of a trade, profession or vocation-
 
 
    (a) for "profits or gains" or "profits and gains", wherever occurring, substitute "profits", and
 
    (b) for "arising or accruing", in reference to such profits or gains, substitute "arising".
  The provisions affected are listed in Schedule 7 to this Act.
 
 
Gifts to charities
Gifts in kind for relief in poor countries.     47. - (1) This section applies where-
 
 
    (a) any article falling within subsection (2) below is given to a charity at any time in the period beginning with the first designation date and ending with 31st December 2000;
 
    (b) the person making the gift ("the donor") is a person carrying on a trade, profession or vocation; and
 
    (c) that gift is made for the purpose of enabling the article to be used by an educational establishment in a designated country or territory.
      (2) An article falls within this subsection if-
 
 
    (a) it is an article manufactured, or of a class or description sold, by the donor in the course of his trade; or
 
    (b) it is an article used by the donor in the course of his trade, profession or vocation which for the purposes of Part II of the Capital Allowances Act 1990 constitutes machinery or plant used by him wholly or partly in the course of that trade, profession or vocation.
      (3) Subject to subsections (4) and (5) below, where this section applies in the case of the gift of any article-
 
 
    (a) no amount shall be required, in consequence of the donor's disposal of that article from trading stock, to be brought into account for the purposes of the Tax Acts as a trading receipt of the donor; and
 
    (b) subsection (6) of section 24 of the Capital Allowances Act 1990 shall not require the donor to bring into account any disposal value in respect of the article for the purposes of that section.
      (4) In any case where-
 
 
    (a) relief is given under subsection (3) above in respect of the gift of an article, and
 
    (b) any benefit received in any chargeable period by the donor or any person connected with him is in any way attributable to the making of that gift,
  the donor shall in respect of that chargeable period be charged to tax under Case I or Case II of Schedule D or, if he is not chargeable to tax under either of those Cases for that period, under Case VI of Schedule D on an amount equal to the value of that benefit.
 
      (5) Subsection (3) above shall not apply unless the donor makes a claim for relief under this section; and such a claim-
 
 
    (a) must be made within the required period; and
 
    (b) must specify the article given and the name of the charity to which it is given.
      (6) In subsection (5)(a) above "the required period" means-
 
 
    (a) in the case of a claim with respect to income tax, the period ending with the first anniversary of the 31st January next following the year of assessment in whose basis period the gift is made; and
 
    (b) in the case of a claim with respect to corporation tax, the period of two years beginning at the end of the accounting period in which the gift is made.
      (7) In paragraph (a) of subsection (6) above "basis period" means-
 
 
    (a) in relation to a year of assessment for which a basis period is given by sections 60 to 63 of the Taxes Act 1988, that basis period; and
 
    (b) in relation to a year of assessment for which no basis period is given by those sections, the year of assessment.
      (8) A country or territory is a designated country or territory for the purposes of this section if-
 
 
    (a) it is designated as such by an order made for those purposes by the Treasury; or
 
    (b) it is of a description specified in an order so made;
  and a description specified in such an order may be expressed by reference to the opinion of any person so specified or by reference to the contents from time to time of a document prepared by a person so specified.
 
      (9) In this section-
 
 
    "charity" has the same meaning as in section 506 of the Taxes Act 1988; and
 
    "the first designation date" means the date on which the Treasury first makes an order under subsection (8) above.
      (10) Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this section.
 
Gifts of money for relief in poor countries.     48. - (1) This section applies to any gift of a sum of money by an individual to a charity that has given the required notification to the Board if that gift is made-
 
 
    (a) in the period beginning with the first designation date and ending with 31st December 2000; and
 
    (b) in circumstances giving rise to a reasonable expectation that the sum given will be applied for, or in connection with, one or both of the purposes specified in subsection (2) below.
      (2) Those purposes are-
 
 
    (a) the relief of poverty in any one or more designated countries or territories, and
 
    (b) the advancement of education in any one or more designated countries or territories.
      (3) Subject to the following provisions of this section, subsection (2)(g) of section 25 of the Finance Act 1990 (minimum payment for which relief given on gift by an individual) shall have effect in relation to any gift to which this section applies as if for "£250" there were substituted "£100".
 
      (4) Where-
 
 
    (a) a relevant gift of less than £100 is made by an individual to a charity that has given the required notification to the Board,
 
    (b) the aggregate of that gift and any one or more subsequent relevant gifts made by that individual to that charity is £100 or more,
 
    (c) that individual gives an appropriate certificate in relation to that aggregate to that charity, and
 
    (d) the condition specified in paragraph (e) of subsection (2) of section 25 of the Finance Act 1990 (limit on benefit for the donor) would be satisfied if the aggregated gifts constituted a single gift by that individual to that charity made at the time of the making of the last of them to be made,
  the aggregated gifts shall be treated for the purposes of that section as if they together constituted a single qualifying donation made by that individual to that charity at that time.
 
      (5) The gifts aggregated for the purposes of subsection (4) above must not include either-
 
 
    (a) a relevant gift of £250 or more; or
 
    (b) more than one relevant gift of £100 or more.
      (6) The reference in paragraph (c) of subsection (4) above to an appropriate certificate is a reference to a certificate which states-
 
 
    (a) that each of the gifts being aggregated qualifies as a relevant gift for the purposes of this section;
 
    (b) that if those gifts are treated in accordance with this section as a single qualifying donation made at the time specified in subsection (4) above, the single donation will satisfy the taxation condition; and
 
    (c) that the condition in paragraph (d) of that subsection is satisfied in the case of those gifts taken together.
      (7) For the purposes of subsection (6) above the taxation condition in the case of any relevant gift is that, either directly or by deduction from profits or gains brought into charge to tax in the relevant year of assessment, the individual making the gift has paid or will pay to the Board income tax of an amount equal to income tax at the basic rate for the relevant year of assessment on the grossed up amount of that gift.
 
      (8) In this section-
 
 
    "the first designation date" means the date on which the Treasury first makes an order under subsection (9) below;
 
    "relevant gift" means a gift to which this section applies which is either-
 
      (a) a gift which satisfies the requirements of subsection (2) of section 25 of the Finance Act 1990; or
 
      (b) a gift of less than £100 which would satisfy those requirements if paragraph (g) of that subsection, or that paragraph together with paragraph (e), were disregarded;
 
    and
 
    "required notification", in relation to a charity, means a notification (including one given before the passing of this Act) which-
 
      (i) is in such form, and contains such information, as may have been required by the Board, and
 
      (ii) contains a statement to the effect that the charity proposes to accept gifts to which this section applies.
      (9) A country or territory is a designated country or territory for the purposes of this section if-
 
 
    (a) it is designated as such by an order made for those purposes by the Treasury; or
 
    (b) it is of a description specified in an order so made;
  and a description specified in such an order may be expressed by reference to the opinion of any person so specified or by reference to the contents from time to time of a document prepared by a person so specified.
 
      (10) Expressions used in this section and in section 25 of the Finance Act 1990 have the same meanings in this section as in that section.
 
 
Employee share incentives
Employee share options.     49. - (1) In section 135 of the Taxes Act 1988, in each of subsections (2) and (5) (in accordance with which there is a charge to tax when an employee obtains a share option that is exercisable more than seven years after being obtained), for "seven" there shall be substituted "ten".
 
      (2) Subsection (1) above has effect in relation to rights obtained on or after 6th April 1998.
 
 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries
© Parliamentary copyright 1998
Prepared 24 June 1998