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| Covenanted payments to charities. |
41. - (1) In subsection (5)(b) of section 338 of the Taxes Act 1988 (allowances of charges on income and capital), for "a covenanted donation to charity" there shall be substituted "a qualifying donation".
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(2) In section 347A of that Act (annual payments and interest: general rule), subsections (2)(b), (7) and (8) shall cease to have effect.
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(3) In subsection (3) of section 348 of that Act (payments out of profits or gains brought into charge to income tax: deductions of tax), at the end there shall be inserted "or to any payment which is a qualifying donation for the purposes of section 25 of the Finance Act 1990".
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(4) In subsection (1) of section 349 of that Act (payments not out of profits or gains brought into charge to income tax, and annual interest), at the end there shall be inserted "or to any payment which is a qualifying donation (within the meaning of section 339) or a qualifying donation for the purposes of section 25 of the Finance Act 1990".
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(5) In subsection (6) of section 505 of that Act (charities: general), the words "and, for this purpose, all covenanted payments to charity (within the meaning of section 347A(7)) shall be treated as a single item" shall cease to have effect.
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(6) In subsection (9) of section 660A of that Act (income arising under a settlement where settlor retains an interest), for paragraph (b) there shall be substituted-
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"(b) qualifying donations for the purposes of section 25 of the Finance Act 1990." |
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(7) Section 59 of the Finance Act 1989 (covenanted subscriptions) shall cease to have effect.
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(8) Where a deed of covenant executed by an individual before 6th April 2000 provides for the payment of specified amounts, any amount payable under the deed on or after that date shall be determined as if the individual were entitled to deduct tax from that amount at the basic rate.
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(9) This section shall have effect in relation to covenanted payments-
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(a) falling to be made by individuals on or after 6th April 2000; or |
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(b) made by companies on or after 1st April 2000. |
| Millennium gift aid. |
42. - (1) In section 48 of the Finance Act 1998 (gifts of money for relief in poor countries), subsections (3), (6) and (7) shall cease to have effect.
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(2) In subsection (4) of that section-
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(a) in paragraph (a), after "made" there shall be inserted "before 6th April 2000"; |
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(b) after paragraph (b) there shall be inserted- |
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"(bb) the subsequent gift, or at least one of the subsequent gifts, is made on or after 6th April 2000;"; and |
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(c) in paragraph (c), for "appropriate certificate" there shall be substituted "appropriate declaration". |
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(3) In subsection (8) of that section, for the definition of "relevant gift" there shall be substituted-
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""relevant gift" means a gift to which this section applies- |
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(a) which satisfies the requirements of subsection (2) of section 25 of the Finance Act 1990 (as amended by section 39 of the Finance Act 2000); or
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(b) which would satisfy those requirements if paragraph (e) of that subsection were disregarded.".
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| Gifts of shares and securities to charities etc. |
43. - (1) After section 83A of the Taxes Act 1988 there shall be inserted-
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| "Gifts of shares and securities to charities etc. |
83B. - (1) Subsections (2) and (3) below apply where, otherwise than by way of a bargain made at arm's length, an individual, or a company which is not itself a charity, disposes of the whole of the beneficial interest in a qualifying investment to a charity.
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(2) On a claim made in that behalf to an officer of the Board-
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(a) the relevant amount shall be allowed- |
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(i) in the case of a disposal by an individual, as a deduction in calculating his total income for the purposes of income tax for the year of assessment in which the disposal is made;
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(ii) in the case of a disposal by a company, as a charge on income for the purposes of corporation tax for the accounting period in which the disposal is made; and
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(b) no relief in respect of the disposal shall be given under section 83A or any other provision of the Income Tax Acts; |
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but paragraph (a)(i) above shall not apply for the purposes of any computation under section 550(2)(a) or (b).
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(3) The consideration for which the charity's acquisition of the qualifying investment is treated by virtue of section 257(2) of the 1992 Act as having been made-
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(a) shall be reduced by the relevant amount; or |
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(b) where that consideration is less than that amount, shall be reduced to nil. |
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(4) Subject to subsections (5) to (7) below, the relevant amount is an amount equal to-
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(a) where the disposal is a gift, the market value of the qualifying investment at the time when the disposal is made; |
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(b) where the disposal is at an undervalue, the difference between that market value and the amount or value of the consideration for the disposal. |
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(5) Where there are one or more benefits received in consequence of making the disposal which are received by the person making the disposal or a person connected with him, the relevant amount shall be reduced by the value of that benefit or, as the case may be, the aggregate value of those benefits; and section 839 applies for the purposes of this subsection.
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(6) Where the disposal is a gift, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the person making it.
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(7) Where the disposal is at an undervalue-
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(a) to the extent that the consideration for the disposal is less than that for which the disposal is treated as made by virtue of section 257(2)(a) of the 1992 Act, the relevant amount shall be increased by the amount of the incidental costs of making the disposal to the person making it; and |
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(b) section 48 of that Act (consideration due after time of disposal) shall apply in relation to the computation of the relevant amount as it applies in relation to the computation of a gain. |
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(8) In the case of a disposal by a company which is carrying on life assurance business-
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(a) if the company is charged to tax under Case I of Schedule D in respect of such business, subsections (2) and (3) above shall not apply; |
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(b) if the company is not so charged to tax in respect of such business- |
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(i) subsection (2)(a)(ii) above shall have effect as if for "a charge on income" there were substituted "an expense of management"; and
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(ii) the relevant amount given by subsection (4) above shall be reduced by so much (if any) of that amount as is not referable to basic life assurance and general annuity business;
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and for the purpose of determining how much (if any) of that amount is not so referable, section 432A shall have effect as if that amount were a gain accruing on the disposal of the qualifying investment to the company. |
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(9) In this section-
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"authorised unit trust" and "open-ended investment company" have the meanings given by section 468; |
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"charity" has the same meaning as in section 506 and includes each of the bodies mentioned in section 507(1); |
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"the incidental costs of making the disposal to the person making it" shall be construed in accordance with section 38(2) of the 1992 Act; |
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"life assurance business" and related expressions have the same meaning as in Chapter I of Part XII; |
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"offshore fund" means a collective investment scheme (within the meaning of the Financial Services Act 1986) which is constituted by any company, unit trust scheme or other arrangement falling within paragraph (a), (b) or (c) of section 759(1); |
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"qualifying investment" means any of the following- |
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(a) shares or securities which are listed or dealt in on a recognised stock exchange;
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(b) units in an authorised unit trust;
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(c) shares in an open-ended investment company; and
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(d) an interest in an offshore fund.
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(10) Subject to subsection (11) below, the market value of any qualifying investment shall be determined for the purposes of this section as for the purposes of the 1992 Act.
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(11) In the case of an interest in an offshore fund for which there are separate published buying and selling prices, section 272(4) of the 1992 Act (meaning of "market value" in relation to rights of unit holders in a unit trust scheme) shall apply with any necessary modifications for determining the market value of the interest for the purposes of this section.".
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(2) In subsection (2) of section 338 of that Act (allowances of charges on income and capital), immediately before paragraph (a) there shall be inserted-
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"(za) amounts allowed as charges on income under section 83B(2)(b);". |
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(3) This section has effect in relation to-
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(a) disposals made by individuals on or after 6th April 2000; and |
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(b) disposals made by companies on or after 1st April 2000. |
| Gifts to charity from certain trusts. |
44. - (1) Chapter IA of Part XV of the Taxes Act 1988 (liability of settlors) shall not apply to any qualifying income which arises under a trust the trustees of which are resident in the United Kingdom (a "UK trust") if-
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(a) it is given by the trustees to a charity in the year of assessment in which it arises; or |
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(b) it is income to which a charity is entitled under the terms of the trust. |
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(2) Subject to subsection (3) below, where in any year of assessment qualifying income arising under a UK trust from different sources exceeds the amount of that income falling within subsection (1) above, that amount shall be rateably apportioned between those sources.
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(3) Nothing in subsection (2) above shall affect the operation of any requirement that the whole, or any specified part, of the income from a particular source be given to a charity.
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(4) Where in any year of assessment qualifying income arising under a UK trust exceeds the amount of that income falling within subsection (1) above, any management expenses for that year shall be rateably apportioned between-
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(a) so much of that income as is equal to that amount; and |
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(b) so much of that income as exceeds that amount. |
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(5) In this section-
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"charity" has the same meaning as in section 506 of the Taxes Act 1988 and includes each of the bodies mentioned in section 507 of that Act; |
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"qualifying income" means- |
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(i) income which is to be accumulated;
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(ii) income which is payable at the discretion of the trustees or any other person (whether or not the trustees have power to accumulate it); or
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(iii) income which (before being distributed) is income of any person other than the trustees;
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"resident", in relation to the trustees of a trust, shall be construed in accordance with section 110 of the Finance Act 1989; |
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and the reference to Chapter IA of Part XV of the Taxes Act 1988 includes a reference to that Chapter as it has effect by virtue of section 660E of that Act (application to settlements by two or more settlors).
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(6) This section has effect in relation to qualifying income arising to a UK trust on or after 6th April 2000.
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