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| Relief for losses on unlisted shares in trading companies. |
80. - (1) At the beginning of subsection (1) of section 576 of the Taxes Act 1988 (provisions supplementary to sections 573 to 575) there shall be inserted the words "Subject to subsections (1A) and (1B) below,".
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(2) After that subsection there shall be inserted the following subsections-
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"(1A) Subsection (1B) below applies where the holding mentioned in subsection (1) above comprises any of the following, namely-
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(a) shares issued before 1st January 1994 in respect of which relief has been given under Chapter III of Part VII and has not been withdrawn; |
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(b) shares issued on or after that date to which relief under that Chapter is attributable; and |
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(c) shares to which deferral relief (within the meaning of Schedule 5B to the 1992 Act) is attributable. |
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(1B) Any such question as is mentioned in subsection (1) above shall not be determined as provided by that subsection, but shall be determined instead-
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(a) in the case of shares issued before 1st January 1994, as provided by subsections (3) to (4C) of section 299 as it has effect in relation to such shares; and |
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(b) in the case of shares issued on or after that date, as provided by subsections (6) to (6D) of that section as it has effect in relation to such shares." |
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(3) For subsection (4) of that section there shall be substituted the following subsections-
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"(4) For the purposes of sections 573 to 575 and this section a qualifying trading company is a company which at all times in the relevant period has been an unquoted company (within the meaning given by section 312) and which-
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(i) is an eligible trading company on the date of the disposal; or
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(ii) has ceased to be an eligible trading company at a time which is not more than three years before that date and has not since that time been an excluded company, an investment company or a trading company that is not an eligible trading company; and
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(i) has been an eligible trading company for a continuous period of six years ending on that date or at that time; or
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(ii) has been an eligible trading company for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company, an investment company or a trading company that is not an eligible trading company; and
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(c) has carried on its business wholly or mainly in the United Kingdom throughout the relevant period. |
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(4A) A company is an eligible trading company for the purposes of subsection (4) above at any time when, or in any period throughout which, it would comply with the requirements of section 293 if-
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(a) the provisions mentioned in subsection (4B) below were omitted; |
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(b) the references in subsection (6) of section 293 to dissolution were omitted and the condition in paragraph (b) of that subsection were a condition that the company continue to be a trading company within the meaning of subsection (5) below; |
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(c) the reference in section 293(6A) to the eligible shares were a reference to the shares in respect of which relief is claimed under section 573 or 574; |
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(d) any reference in section 293, 297 or 308 to the relevant period were a reference to the time that is relevant for the purposes of subsection (4)(a) above or, as the case may require, the continuous period that is relevant for the purposes of subsection (4)(b) above; |
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(e) the reference in section 304A(1)(e)(i) to eligible shares were a reference to shares in respect of which relief is claimed under section 573 or 574; |
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(f) references in section 304A(3) to an individual were references to a person; |
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(g) the reference in section 304A(4) to section 304 were a reference to section 574(3)(b); and |
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(h) the reference in section 304A(6) to the expressions "eligible shares" and "subscriber shares" were a reference to the expression "subscriber shares". |
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(4B) The provisions are-
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(a) in section 293, the words "Subject to section 294," in subsection (1), the words "an unquoted company and be" in subsection (2), and subsections (8A) and (8B); |
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(c) in section 298(5), the words "and section 312(1A)(b) shall apply to determine the relevant period for the purposes of that section"; |
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(d) in section 304A, subsections (1)(e)(ii) and (2)(b), in subsection (3), the words "to which relief becomes so attributable" and paragraphs (c) and (d), in subsection (4), the words "to which relief becomes so attributable" and paragraphs (c) and (d), and subsection (5); and |
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(4) In subsection (5) of that section-
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(a) in the definition of "excluded company", for the words "dealing in shares, securities, land, trades or commodity futures" there shall be substituted the words "dealing in land, in commodities or futures or in shares, securities or other financial instruments,"; |
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(b) in the definition of "relevant period", for the words "subscribed for" there shall be substituted the word "issued"; |
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(c) for the definition of "shares" there shall be substituted the following definition- |
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(a) except in subsections (1A) and (1B) above, includes stock; but
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(b) except in the definition of "excluded company", does not include shares or stock not forming part of a company's ordinary share capital;"; and
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(d) in the definition of "trading group", the words "or not resident in the United Kingdom" shall cease to have effect. |
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(5) In this section-
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(a) subsections (1) and (2) have effect in relation to disposals made on or after 6th April 1998; and |
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(b) subsections (3) and (4) have effect in relation to shares issued on or after that date. |
| Group relief: special rules for consortium cases. |
81. - (1) Section 403C of the Taxes Act 1988 (which imposes limits, based on the former section 403(9), on the amounts which may be set off where the surrendering company or, as the case may be, the claimant company is a member of a consortium) shall be amended as follows.
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(2) In subsection (1)(a) (case where the surrendering company is a member of the consortium) for "surrendering company" there shall be substituted "claimant company".
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(3) In subsection (2)(a) (case where the claimant company is a member of the consortium) for "claimant company" there shall be substituted "surrendering company".
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(4) In consequence of the amendments made by subsections (2) and (3) above, in subsection (3) (which defines "the relevant fraction" by reference to the member company's share in the consortium)-
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(a) in paragraph (a) (meaning in a case falling within subsection (1)) for "surrendering company's" there shall be substituted "claimant company's"; and |
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(b) in paragraph (b) (meaning in a case falling within subsection (2)) for "claimant company's" there shall be substituted "surrendering company's". |
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(5) Section 403C of the Taxes Act 1988 and Schedule 7 to the Finance (No. 2) Act 1997 (which, among other things, inserted that section into the Taxes Act 1988) shall have effect, and be deemed always to have had effect, as if that section had been originally enacted in that Schedule with the amendments made by this section.
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| Carry forward of non-trading deficit on loan relationships. |
82. - (1) In section 83 of the Finance Act 1996 (non-trading deficit on loan relationships), for subsections (3) and (4) substitute-
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"(3) So much of the deficit for the deficit period as is not the subject of a claim under subsection (2) above shall be carried forward and treated as a deficit for the next accounting period.
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(4) An amount carried forward to an accounting period under subsection (3) above-
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(a) may be the subject of a claim under paragraph (d) of subsection (2) above, but not under any other paragraph of that subsection, and |
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(b) shall be disregarded for the purposes of any claim under that subsection relating to a deficit arising in that period.". |
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(2) The following amendments of Schedule 28A to the Taxes Act 1988 (change in ownership of investment company: deductions) are consequential on the amendment in subsection (1) above-
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(a) in paragraph 6(db), omit "(dc) or"; |
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(b) in paragraph 6(dc), for "debit given for that accounting period by" substitute "deficit carried forward to that accounting period under"; |
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(c) in paragraph 11(2), omit paragraph (a); |
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(d) in paragraph 13(1)(eb), omit "(ec) or"; |
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(e) in paragraph 13(1)(ec), for "debit given for that accounting period by" substitute "deficit carried forward to that accounting period under". |
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(3) The amendments made by this section shall be deemed always to have had effect.
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Capital allowances |
| First-year allowances for small businesses etc. |
83. - (1) In subsection (1) of section 22 of the Capital Allowances Act 1990 (which provides for first-year allowances at the rate, in the case of expenditure falling within subsection (3B), of 40 per cent.), after "(3B)" there shall be inserted "or (3D)".
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(2) After subsection (3C) of that section there shall be inserted the following subsection-
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"(3D) This section applies to the following expenditure except in so far as it is expenditure to which Chapter IVA applies, that is to say-
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(a) any expenditure which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by a small company or a small business in the period beginning with 2nd July 1998 and ending with 1st July 1999; and |
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(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above." |
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(3) In each of subsections (4), (6B) and (6C) of that section, after "(3C)" there shall be inserted "or (3D)".
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(4) In sections 23(6), 42(9), 44(5), 46(8), 48(7) and 50(3) and (4A) of that Act (which contain provisions relating to the temporary first-year allowances under section 22(3B) and (3C) of that Act), for the words "or (3C)", in each place where they occur, there shall be substituted ", (3C) or (3D)".
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(5) In section 39(2)(a) of that Act (definition of qualifying purpose), for "subsections (2) to (3C)" there shall be substituted "subsections (2) to (3D)".
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(6) In section 43(5) of that Act (provisions relating to joint lessees in cases involving new expenditure), after "(3C)" there shall be inserted "or (3D)".
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(7) The preceding provisions of this section have effect in relation to every chargeable period ending on or after 2nd July 1998.
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Insurance, insurance companies and friendly societies |
| Life policies etc. |
84. Schedule 14 to this Act (which makes provision in relation to the taxation of life policies etc under Chapter II of Part XIII of the Taxes Act 1988) shall have effect.
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