"Table — 43. Chargeable Gains (Companies) — 27 Mar 2000

Resolved,

That--

(1) Section 1A of the Income and Corporation Taxes Act 1988 shall be amended as follows.

(2) In subsection (1)(b), after the words "is not" there shall be inserted "--

(i) savings income falling within section 1(2)(aa), or

(ii)".

(3) After subsection (1) there shall be inserted--

Resolved,

That, for the financial year 2001, corporation tax shall be charged at the rate of 30 per cent.

24. Corporation Tax (Small Companies' Rate for 2000)

Resolved,

That, for the financial year 2000--

(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--

(1) Section 25 of the Finance Act 1990 shall be amended in accordance with paragraphs (2) to (7) below.

(2) In subsection (1)(c), for "an appropriate certificate" there shall be substituted "an appropriate declaration".

(3) In subsection (2)--

(a) paragraphs (c) and (g) shall cease to have effect;

(b) in paragraph (e), for "two and a half per cent of the amount of the gift" there shall be substituted "the limit imposed by subsection (5A) below"; and

(c) for paragraph (i) there shall be substituted--

"(i) either--

(i) at the time the gift is made, the donor is resident in the United Kingdom or performs duties which by virtue of section 132(4)(a) of the Taxes Act 1988 (Crown employees serving overseas) are treated as being performed in the United Kingdom; or

(ii) the grossed up amount of the gift would, if in fact made, be payable out of profits or gains brought into charge to income tax or capital gains tax."

(4) For subsection (3) there shall be substituted--

"(3) The reference in subsection (1)(c) above to an appropriate declaration is a reference to a declaration which--

(a) is given in such manner as may be prescribed by regulations made by the Board; and

(b) contains such information and such statements as may be so prescribed.

(3A) Regulations made for the purposes of subsection (3) above may--

(a) provide for declarations to have effect, to cease to have effect or to be deemed never to have had effect in such circumstances and for such purposes as may be prescribed by the regulations;

(b) require charities to keep records with respect to declarations given to them by donors; and

(c) make different provision for declarations made in a different manner."

(5) After subsection (5) there shall be inserted--

"(5A) The limit imposed by this subsection is--

(a) where the amount of the gift does not exceed £100, 25 per cent of the amount of the gift;

(b) where the amount of the gift exceeds £100 but does not exceed £1,000, £25;

(c) where the amount of the gift exceeds £1,000, 2.5 per cent of the amount of the gift.

(5B) Where a benefit received in consequence of making a gift--

(a) consists of the right to receive benefits at intervals over a period of less than twelve months;

(b) relates to a period of less than twelve months; or

(c) is one of a series of benefits received at intervals in consequence of making a series of gifts at intervals of less than twelve months,

the value of the benefit shall be adjusted for the purposes of subsection (4) above and the amount of the gift shall be adjusted for the purposes of subsection (5A) above.

(5C) Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a gift which is one of a series of gifts made at intervals of less than twelve months, the amount of the gift shall be adjusted for the purposes of subsection (5A) above.

(5D) Where the value of a benefit, or the amount of a gift, falls to be adjusted under subsection (5B) or (5C) above, the value or amount shall be multiplied by 365 and the result shall be divided by--

(a) in a case falling within subsection (5B)(a) or (b) above, the number of days in the period of less than twelve months;

(b) in a case falling within subsection (5B)(c) or (5C) above, the average number of days in the intervals of less than twelve months;

and the reference in subsection (5B) above to subsection (4) above is a reference to that subsection as it applies for the purposes of subsection (2)(e) above.

(5E) In determining whether a gift to a charity falling within subsection (5F) below is a qualifying donation, there shall be disregarded the benefit of any right of admission received in consequence of the making of the gift--

(a) to view property the preservation of which is the sole or main purpose of the charity; or

(b) to observe wildlife the conservation of which is the sole or main purpose of the charity;

but this subsection shall not apply unless the opportunity to make gifts which attract such a right is available to members of the public.

(5F) A charity falls within this subsection if its sole or main purpose is the preservation of property, or the conservation of wildlife, for the public benefit.

(5G) In subsection (5E) above "right of admission" refers to admission of the person making the gift (or any member of his family who may be admitted because of the gift) either free of the charges normally payable for admission by members of the public, or on payment of a reduced charge."

(6) For subsections (6) to (9) there shall be substituted--

"(6) Where any gift made by the donor in a year of assessment is a qualifying donation, then, for that year--

(a) the Income Tax Acts and the Taxation of Chargeable Gains Act 1992 shall have effect, in their application to him, as if--

(i) the gift had been made after deduction of income tax at the basic rate; and

(ii) the basic rate limit were increased by an amount equal to the grossed up amount of the gift;

(b) the provisions mentioned in subsection (7) below shall have effect, in their application to him, as if any reference to income tax which he is entitled to charge against any person included a reference to the tax treated as deducted from the gift; and

(c) to the extent, if any, necessary to ensure that he is charged to an amount of income tax and capital gains tax equal to the tax treated as deducted from the gift, he shall not be entitled to relief under Chapter I of Part VII of the Taxes Act 1988,

but paragraph (a)(ii) above shall not apply for the purposes of any computation under section 550(2)(a) or (b) of that Act (relief where gain charged at a higher rate).

(7) The provisions referred to in subsection (6)(b) above are--

(a) section 289A(5)(e) of the Taxes Act 1988 (relief under enterprise investment scheme);

(b) section 796(3) of that Act (credit for foreign tax); and

(c) paragraph 1(6)(f) of Schedule 15B to that Act (venture capital trusts).

(8) Where the tax treated as deducted from a gift by virtue of subsection (6) above exceeds the amount of income tax and capital gains tax with which the donor is charged for the year of assessment, the donor shall be assessable and chargeable with income tax at the basic rate on so much of the gift as is necessary to recover an amount of tax equal to the excess.

(9) In determining for the purposes of subsection (8) above the total amount of income tax and capital gains tax with which the donor is charged for the year of assessment, there shall be disregarded--

(a) any tax charged at the basic rate by virtue of--

(i) section 348 of the Taxes Act 1988 (read with section 3 of that Act); or

(ii) section 349 of that Act (read with section 350 of that Act);

(b) any tax treated as having been paid under--

(i) section 233(1)(a) of that Act (taxation of certain recipients of distributions);

(ii) section 249(4)(a) of that Act (stock dividends treated as income); or

(iii) section 547(5)(a) of that Act (method of charging life policy gain to tax);

(c) any relief to which section 256(2) of that Act applies (relief by way of income tax reduction);

(d) any relief under--

(i) section 347B of that Act (relief for maintenance payments);

(ii) section 788 of that Act (relief by agreement with other countries); or

(iii) section 790(1) of that Act (unilateral relief);

(e) any set off of tax deducted, or treated as deducted, from income other than--

(i) tax treated as deducted from income by virtue of section 421(1)(a) of that Act (taxation of borrower when loan released etc); or

(ii) tax treated as deducted from a relevant amount within the meaning of section 699A of that Act (untaxed sums comprised in the income of an estate) except to the extent that the relevant amount is or would be paid in respect of a distribution chargeable under Schedule F; and

(f) any set off of tax credits.

(9A) For the purposes of sections 257(5) and 257A(5) of the Taxes Act 1988 (age related allowances), the donor's total income shall be treated as reduced by the aggregate amount of gifts from which tax is treated as deducted by virtue of subsection (6) above."

(7) In subsection (12), paragraphs (b) and (e) and the word "and" immediately preceding paragraph (e) shall cease to have effect.

(8) In subsections (1)(b) and (3)(b) of section 257BB of the Income and Corporation Taxes Act 1988, after "section 256(2)(b)" there shall be inserted "(read with section 25(6)(c) of the Finance Act 1990 where applicable)".

(9) In paragraph 4(1)(b) of Schedule 13B to that Act, after "section 256(2)(b)" there shall be inserted "(read with section 25(6)(c) of the Finance Act 1990 where applicable)".

(10) This Resolution has effect in relation to--

(a) gifts made on or after 6th April 2000 which are not covenanted payments; and

(b) covenanted payments falling to be made on or after that date.

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) Section 339 of the Income and Corporation Taxes Act 1988 shall be amended in accordance with paragraphs (2) to (8) below.

(2) In subsection (1), for paragraph (a) there shall be substituted--

"(a) a payment which, by reason of any provision of the Taxes Acts except section 209(4), is to be regarded as a distribution; and".

(3) Subsections (2), (3), (3A), (3F), (6), (7) and (8) shall cease to have effect.

(4) In subsection (3B)(b), for "two and a half per cent. of the amount given after deducting tax under section 339(3)" there shall be substituted "the limit imposed by subsection (3DB) below".

(5) After subsection (3D) there shall be inserted--

"(3DA) The limit imposed by this subsection is--

(a) where the amount of the payment does not exceed £100, 25 per cent of the amount of the payment;

(b) where the amount of the payment exceeds £100 but does not exceed £1,000, £25;

(c) where the amount of the payment exceeds £1,000, 2.5 per cent of the amount of the payment.

(3DB) Where a benefit received in consequence of making a payment--

(a) consists of the right to receive benefits at intervals over a period of less than twelve months;

(b) relates to a period of less than twelve months; or

(c) is one of a series of benefits received at intervals in consequence of making a series of payments at intervals of less than twelve months,

the value of the benefit shall be adjusted for the purposes of subsection (3C) above and the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.

(3DC) Where a benefit, other than a benefit which is one of a series of benefits received at intervals, is received in consequence of making a payment which is one of a series of payments made at intervals of less than twelve months, the amount of the payment shall be adjusted for the purposes of subsection (3DA) above.

(3DD) Where the value of a benefit, or the amount of a payment, falls to be adjusted under subsection (3DB) or (3DC) above, the value or amount shall be multiplied by 365 and the result shall be divided by--

(a) in a case falling within subsection (3DB)(a) or (b) above, the number of days in the period of less than twelve months;

(b) in a case falling within subsection (3DB)(c) or (3DC) above, the average number of days in the intervals of less than twelve months;

and the reference in subsection (3DB) to subsection (3C) above is a reference to that subsection as it applies for the purposes of subsection (3B) above."

(6) For subsection (4) there shall be substituted--

"(4) Where a company gives a sum of money to a charity, the gift shall in the hands of the charity be treated for the purposes of this Act as if it were an annual payment."

(7) For subsection (7AA) there shall be substituted--

"(7AA) Where--

(a) a qualifying donation to a charity is made by a company which is wholly owned by a charity, and

(b) the company makes a claim for the donation, or any part of it, to be deemed for the purposes of section 338 to be a charge on income paid in an accounting period falling wholly or partly within the period of nine months ending with the date of the making of the donation,

the donation or part shall be deemed for those purposes to be a charge on income paid in that accounting period, and not in any later period.

A claim under this subsection must be made within the period of two years immediately following the accounting period in which the donation is made, or such longer period as the Board may allow."

(8) In subsection (9), the words "in subsections (1) to (4) above includes" shall cease to have effect.

(9) In subsection (1) of section 209 of the Income and Corporation Taxes Act 1988, for "section 339(6) and any other express exceptions" there shall be substituted "any express exceptions".

(10) In subsection (2)(a) of section 338 of that Act, after "company" there shall be inserted "or payments falling within paragraph (b) below".

(11) This Resolution has effect in relation to payments made on or after 1st April 2000; and--

(a) so much of an accounting period as falls before that date; and

(b) so much of it as falls after 31st March 2000,

shall be treated as separate accounting periods for the purposes of the amendment made by paragraph (5) above.

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 subsection (5)(b) of section 338 of the Income and Corporation Taxes Act 1988, for "a covenanted donation to charity" there shall be substituted "a qualifying donation".

(2) In section 347A of that Act, subsections (2)(b), (7) and (8) shall cease to have effect.

(3) In subsection (3) of section 348 of that Act, 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".

(4) In subsection (1) of section 349 of that Act, 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".

(5) In subsection (6) of section 505 of that Act, 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.

(6) In subsection (9) of section 660A of that Act, for paragraph (b) there shall be substituted--

"(b) qualifying donations for the purposes of section 25 of the Finance Act 1990."

(7) Section 59 of the Finance Act 1989 shall cease to have effect.

(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.

(9) This Resolution has effect in relation to covenanted payments--

(a) falling to be made by individuals on or after 6th April 2000; or

(b) made by companies on or after 1st April 2000.

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 about the disposal of shares, securities or other investments to charities or other bodies.

29. Employee Share Ownership Plans

Resolved,

That provision may be made for the purposes of income tax about employee share ownership plans.

30. Profit Sharing Schemes (Corporation Tax Relief)

Resolved,

That provision may be made about corporation tax relief for payments to trustees of profit sharing schemes approved under Schedule 9 to the Income and Corporation Taxes Act 1988.

31. Profit Sharing Schemes (Arrangements for Loans)

Resolved,

That--

(1) In paragraph 2 of Schedule 9 to the Income and Corporation Taxes Act 1988, after sub-paragraph (2) there shall be inserted--

"(2A) The Board shall not approve a profit sharing scheme unless they are satisfied--

(a) that the arrangements for the scheme do not make any provision, and are not in any way associated with any provision made, for loans to some or all of the employees of--

(i) the company that established the scheme, or

(ii) in the case of a group scheme, any participating company, and

(b) that the operation of the scheme is not in any way associated with such loans.

(2B) For the purposes of sub-paragraph (2A) above 'arrangements' includes any scheme, agreement or understanding, whether or not legally enforceable."

(2) In paragraph 3(2) of that Schedule, before paragraph (d) there shall be inserted--

"(ca) the Board--

(i) cease to be satisfied of the matters mentioned in paragraph 2(2A) above, or

(ii) in the case of a scheme approved before 21st March 2000, are not satisfied of those matters; or".

(3) This Resolution shall be deemed to have come into force on 21st March 2000.

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 paragraph 9(1) of Schedule 9 to the Income and Corporation Taxes Act 1988, after "below" there shall be inserted "(disregarding paragraph 11A)".

(2) After paragraph 11 of that Schedule there shall be inserted--

"11A.--(1) In the case of a profit sharing scheme, scheme shares must not be shares--

(a) in an employer company, or

(b) in a company that--

(i) has control of an employer company, and

(ii) is under the control of a person or persons within sub-paragraph (2)(b)(i) below in relation to an employer company.

(2) For the purposes of this paragraph a company is "an employer company" if--

(a) the business carried on by it consists substantially in the provision of the services of the persons employed by it, and

(b) the majority of those services are provided to--

(i) a person who has, or two or more persons who together have, control of the company, or

(ii) a company associated with the company.

(3) For the purposes of sub-paragraph (2)(b)(ii) above a company shall be treated as associated with another company if both companies are under the control of the same person or persons.

(4) For the purposes of sub-paragraphs (1) to (3) above--

(a) references to a person include a partnership, and

(b) where a partner, alone or together with others, has control of a company, the partnership shall be treated as having like control of that company.

(5) For the purposes of this paragraph the question whether a person controls a company shall be determined in accordance with section 416(2) to (6)."

(3) In paragraph 12 of that Schedule--

(a) in sub-paragraph (1), in paragraph (c) for "other than" to the end of that paragraph there shall be substituted "other than those permitted by sub-paragraph (1A) below.", and

(b) after sub-paragraph (1) there shall be inserted--

"(1A) Subject to sub-paragraph (1B) below, scheme shares may be subject to--

(a) restrictions which attach to all shares of the same class, or

(b) a restriction authorised by sub-paragraph (2) below.

(1B) In the case of a profit sharing scheme, scheme shares must not be subject to any restrictions affecting the rights attaching to those shares which relate to--

(a) dividends, or

(b) assets on a winding-up of the company,

other than restrictions which attach to all other ordinary shares in the same company."

(4) Paragraphs (1) to (3) of this Resolution shall be deemed to have come into force on 21st March 2000.

(5) Paragraphs (2) and (3) of this Resolution do not have effect in relation to shares acquired before 21st March 2000 by the trustees of a profit sharing scheme approved under Schedule 9 to the Income and Corporation Taxes Act 1988.

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 relating to the provision of services through an intermediary.

34. Rent-factoring

Resolved,

That provision may be made for sums received by way of consideration for the transfer of rent, or by way of premium, under rent-factoring agreements to be chargeable to corporation tax or income tax.

35. Groups of Companies etc.

Resolved,

That provision may be made about groups of companies and consortia for the purposes of corporation tax.

36. Enterprise Investment Scheme

Resolved,

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

37. Venture Capital Trusts

Resolved,

That provision may be made amending Schedule 28B to the Income and Corporation Taxes Act 1988.

38. Research and Development

Resolved,

That provision may be made amending provisions referring to "scientific research".

39. Capital Allowances

Resolved,

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

40. Relief for Interest on Loans to Buy Annuities

Resolved,

That provision may be made amending sections 353, 365 and 369 of the Income and Corporation Taxes Act 1988.

41. Tax Treatment of Acquisition, Disposal or Revaluation of Certain Rights

Resolved,

That provision may be made as to the treatment for tax purposes of amounts relating to the acquisition, disposal or revaluation of--

(a) certain licences granted under section 1 of the Wireless Telegraphy Act 1949,

(b) indefeasible rights to use a telecommunications cable system, or

(c) rights derived, directly or indirectly, from any such right as is mentioned in paragraph (a) or (b).

Resolved,

That provision (including retrospective provision) may be made amending the Taxation of Chargeable Gains Act 1992 with respect to--

(a) relief under section 165 or 260 of that Act,

(b) gains accruing to trustees,

(c) disposals of interests in settled property, and

(d) transfers of value by trustees.

Resolved,

That provision may be made about the treatment of the chargeable gains of companies for the purposes of corporation tax (including provision for the recovery of unpaid tax).

44. Double Taxation Relief

Motion made, and Question put,

That provision may be made amending--

(a) Part XVIII of the Income and Corporation Taxes Act 1988; and

(b) section 278 of the Taxation of Chargeable Gains Act 1992.

The House divided: Ayes 307, Noes 181.

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