Budget Resolutions and Economic Situation — 36 Landfill tax (rate) — 13 Mar 2001

Resolved,

That-- (1) For the year 2001-02 the amount specified in section 1(2)(aa) of the Income and Corporation Taxes Act 1988 shall be £1,880. (2) Accordingly, section 1(4) of that Act, so far as it relates to the amount so specified, shall not apply for that year. (3) Nothing in this Resolution shall require any change to be made in the amounts deductible or repayable under section 203 of that Act before 18th May 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Resolved,

That-- (1) In section 257AA(2) of the Income and Corporation Taxes Act 1988 for "£4,420" there shall be substituted "£5,200". (2) This Resolution has effect for the year 2001-02. (3) Nothing in this Resolution shall require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 before 18th May 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Resolved,

That, for the financial year 2002, corporation tax shall be charged at the rate of 30 per cent.

Resolved,

That, for the financial year 2001-- (a) the small companies' rate shall be 20 per cent., and (b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988 shall be one fortieth.

Resolved,

That, for the financial year 2001-- (a) the corporation tax starting rate shall be 10 per cent., and (b) the fraction mentioned in section 13AA(3) of the Income and Corporation Taxes Act 1988 shall be one fortieth.

Resolved,

That provision (including retrospective provision) may be made about employee share ownership plans.

Resolved,

That provision may be made amending Chapter III of Part VII of the Income and Corporation Taxes Act 1988.

Resolved,

That provision may be made about the circumstances in which companies that are wound up are to be treated as qualifying trading companies for the purposes of sections 573 to 576 of the Income and Corporation Taxes Act 1988.

Resolved,

That provision may be made amending Schedule 15 to the Finance Act 2000.

Resolved,

That provision (including retrospective provision) may be made about capital allowances.

Resolved,

That provision may be made for the repeal of sections 534, 535, 537A and 538 of the Income and Corporation Taxes Act 1988.

Resolved,

That provision may be made as to the amount recoverable under section 601(2) of the Income and Corporation Taxes Act 1988.

Resolved,

That-- (1) Section 736B of the Income and Corporation Taxes Act 1988 shall be amended as follows. (2) In subsection (2), after "shall apply" there shall be inserted ", subject to subsection (2A) below,". (3) After that subsection there shall be inserted--

"(2A) The borrower is not entitled, by virtue of anything in Schedule 23A or any provision of regulations under that Schedule, or otherwise-- (a) to any deduction in computing profits or gains for the purposes of income tax or corporation tax, or (b) to any deduction against total income or, as the case may be, total profits,

in respect of any such deemed requirement or payment as is provided for by subsection (2) above.

Where the borrower is a company, an amount may not be surrendered by way of group relief if a deduction in respect of it is prohibited by this subsection.". (4) This Resolution shall apply to payments treated under section 736B as made on or after 3rd October 2000.

Resolved,

That provision may be made amending Part XVIII of the Income and Corporation Taxes Act 1988.

Resolved,

That provision may be made amending Part I of Schedule 25 to the Income and Corporation Taxes Act 1988.

Resolved,

That provision may be made about gains arising in connection with policies of life assurance, contracts for life annuities and capital redemption policies.

Resolved,

That-- (1) After section 349 of the Income and Corporation Taxes Act 1988 there shall be inserted--

349A.--(1) The provisions specified in subsection (3) below (which require tax to be deducted on making certain payments) do not apply to a payment made by a company if, at the time the payment is made, the company reasonably believes that one of the conditions specified in section 349B is satisfied.

(2) Subsection (1) above has effect subject to any directions under section 349C.

(3) The provisions are--

section 349(1) (certain annuities and other annual payments, and royalties and other sums paid for use of UK patents),

section 349(2)(a) and (b) (UK interest),

section 349(3A) (dividend or interest on securities issued by building societies), and

section 524(3)(b) (which provides for section 349(1) to apply to proceeds of sale of UK patent rights). (4) References in subsection (3) above to any provision of section 349 do not include that provision as applied--

(a) under section 777(9) (directions applying section 349(1) to certain payments to non-residents), or

(b) by paragraph 4(2) of Schedule 23A (manufactured overseas dividends to be treated as annual payments within section 349). (5) References in this section to the company by which a payment is made do not include a company acting as trustee or agent for another person. (6) For the purposes of this section, a payment by a partnership is treated as made by a company if any member of the partnership is a company.

349B.--(1) The first of the conditions mentioned in section 349A(1) is that the person beneficially entitled to the income in respect of which the payment is made is--

(a) a company resident in the United Kingdom, or

(b) a partnership each member of which is a company resident in the United Kingdom. (2) The second of those conditions is that--

(a) the person beneficially entitled to the income in respect of which the payment is made is a company not resident in the United Kingdom ("the non-resident company"),

(b) the non-resident company carries on a trade in the United Kingdom through a branch or agency, and

(c) the payment falls to be brought into account in computing the chargeable profits (within the meaning given by section 11(2)) of the non-resident company.

349C.--(1) The Board may give a direction to a company directing that section 349A(1) is not to apply in relation to any payment that--

(a) is made by the company after the giving of the direction, and

(b) is specified in the direction or is of a description so specified. (2) A direction under this section may be varied or revoked by a subsequent such direction. (3) In this section "company" includes a partnership of which any member is a company.

349D.--(1) Where--

(a) a payment is made by a company without an amount representing the income tax on the payment being deducted from the payment,

(b) at the time the payment is made, the company reasonably believes that one of the conditions specified in section 349B is satisfied,

(c) if the company did not so believe, tax would be deductible from the payment under section 349, and

(d) neither of the conditions specified in section 349B is satisfied at the time the payment is made,

section 350 applies as if the payment were within section 349 (and Schedule 16 applies as if tax were deductible from the payment under section 349). (2) In this section "company" includes a partnership of which any member is a company.". (2) In section 98 of the Taxes Management Act 1970, after subsection (4) there shall be inserted--

"(4A) If-- (a) a failure to comply with section 350(1) of, or Schedule 16 to, the principal Act arises from a person's failure to deliver an account, or show the amount, of a payment, and (b) the payment is within subsection (4B) below,

subsection (1) above shall have effect as if for "£300" there were substituted "£3,000" and as if for "£60" there were substituted "£600". (4B) A payment is within this subsection if-- (a) the payment is made by a company without an amount representing the income tax on the payment being deducted from the payment, (b) at the time the payment is made, the company--

(i) does not believe that either of the conditions specified in section 349B of the principal Act is satisfied, or

(ii) where it believes that either of those conditions is satisfied, could not reasonably so believe, (c) the payment is one from which tax is deductible under section 349 of the principal Act unless the company reasonably believes that one of those conditions is satisfied, and (d) neither of those conditions is satisfied at the time the payment is made. (4C) In subsection (4B) above "company" includes a partnership of which any member is a company.". (3) In section 338(4) of the Income and Corporation Taxes Act 1988, after paragraph (a) there shall be inserted--

"(aa) the person beneficially entitled to the income in respect of which the payment is made is a company not resident in the United Kingdom ("the non-resident company"), the non-resident company carries on a trade in the United Kingdom through a branch or agency and the payment falls to be brought into account in computing the chargeable profits (within the meaning given by section 11(2)) of the non-resident company, or". (4) This Resolution applies to payments made on or after 1st April 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Resolved,

That provision may be made for repealing sections 247 and 248 of the Income and Corporation Taxes Act 1988.

Resolved,

That provision may be made for section 438A of, and Schedule 19AB to, the Income and Corporation Taxes Act 1988 to cease to apply in relation to income tax borne by deduction.

Resolved,

That provision may be made about payments due as a result of the amendment of a return.

Resolved,

That-- (1) Schedule 19 to the Finance Act 1999 shall be amended as follows. (2) In paragraph 2(4), after "6" there shall be inserted ", 6A". (3) In paragraph 4, at the end there shall be inserted--

"(6) If a certificate is given in accordance with paragraph 6A(1)(c) in respect of a period which includes the relevant two-week period in the case of the unit in question in sub-paragraph (1), there shall be left out of account in applying this paragraph in relation to that unit-- (a) any issue of a unit which is to be held within an individual pension account, and (b) any surrender of a unit which, immediately before the surrender, was held within an individual pension account. (7) "Individual pension account" has the same meaning in sub-paragraph (6) as it has in paragraph 6A.". (4) After paragraph 6 there shall be inserted--

6A.--(1) There is no charge to tax under this Part of this Schedule on the surrender of the unit if--

(5) The amendment made by paragraph (3) of this Resolution shall have effect where the relevant two-week period mentioned in paragraph 4(1) of Schedule 19 to the Finance Act 1999 ends after 6th April 2001. (6) The other amendments made by this Resolution shall have effect in relation to surrenders made or effected on or after 6th April 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Resolved,

That-- (1) Where there are two or more classes of shares in an open-ended investment company and the company's instrument of incorporation-- (a) provides that shares of one or more of those classes ("the IPA classes") may only be held within an individual pension account, and (b) does not make such provision in relation to shares of at least one other class,

there is no charge to stamp duty reserve tax under Part II of Schedule 19 to the Finance Act 1999 on the surrender of a share of any of the IPA classes. (2) References in this Resolution to provisions of Schedule 19 to the Finance Act 1999 are references to those provisions as they have effect in relation to open-ended investment companies by virtue of regulations from time to time in force under section 152 of the Finance Act 1995. (3) In this Resolution--

"individual pension account" has the same meaning as it has in regulations from time to time in force under section 638A of the Income and Corporation Taxes Act 1988;

"open-ended investment company" has the meaning given by paragraph 14(2) of Schedule 19 to the Finance Act 1999;

"surrender", in relation to a share in an open-ended investment company, has the same meaning as it has in Part II of Schedule 19 to the Finance Act 1999. (4) This Resolution shall have effect in relation to surrenders made or effected on or after 6th April 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

Resolved,

That provision may be made for the purposes of petroleum revenue tax about-- (a) the expenditure allowable under section 3 of the Oil Taxation Act 1975; and (b) the amounts allowable as unrelievable field losses.

Motion made, and Question put,

That-- (1) In section 42(1)(a) and (2) of the Finance Act 1996, for "£11" there shall be substituted "£12". (2) This Resolution has effect in relation to taxable disposals made, or treated as made, on or after 1st April 2001.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

The House divided: Ayes 359, Noes 146.

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