Income and Corporation Taxes Act 1988

Income and Corporation Taxes Act 1988 (c. 1)

1988 c. 1

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Income and Corporation Taxes Act 1988 (c. 1)

1988 Chapter c. 1

ARRANGEMENT OF PARTS

PART I—
The Charge to Tax.

PART II—
Provisions Relating to the Schedule A Charge and the Associated Schedule D Charges.

PART III—
Provisions Relating to the Schedule C Charge and General Provisions about Government Securities.

PART IV—
Provisions Relating to the Schedule D Charge.
Chapter I—
Supplementary Charging Provisions.

Chapter II—
Income Tax: Basis of Assessment etc.

Chapter III—
Corporation Tax: Basis of Assessment etc.

Chapter IV—
Provisions Supplementary to Chapters II and III.

Chapter V—
Computational Provisions.

Chapter VI—
Discontinuance, and Change of Basis of Computation.

Chapter VII—
Partnerships and Successions.

Chapter VIII—
Miscellaneous and Supplemental.

PART V—
Provisions Relating to the Schedule E Charge.
Chapter I—
Supplementary Charging Provisions of General Application.

Chapter II—
Supplementary Charging Provisions Applicable to Directors and Higher-Paid Employees and Office Holders.

Chapter III—
Profit-Related Pay.

Chapter IV—
Other Exemptions and Reliefs.

Chapter V—
Assessment, Collection, Recovery and Appeals.

PART VI—
Company Distributions, Tax Credits etc.
Chapter I—
Taxation of Company Distributions.

Chapter II—
Matters which are Distributions for the Purposes of the Corporation Tax Acts.

Chapter III—
Matters which are not Distributions for the Purposes of the Corporation Tax Acts.

Chapter IV—
Tax Credits.

Chapter V—
Advance Corporation Tax and Franked Investment Income.

Chapter VI—
Miscellaneous and Supplemental.

PART VII—
General Provisions Relating to Taxation of Income of Individuals.
Chapter I—
Personal Reliefs.

Chapter II—
Taxation of Income of Spouses.

Chapter III—
Relief for Investment in Corporate Trades: The Business Expansion Scheme.

Chapter IV—
Special Provisions.

Chapter V—
Residence of Individuals.

PART VIII—
Taxation of Income and Chargeable Gains of Companies.

PART IX—
Annual Payments and Interest.

PART X—
Loss Relief and Group Relief.
Chapter I—
Loss Relief: Income Tax.

Chapter II—
Loss Relief: Corporation Tax.

Chapter III—
Loss Relief: Miscellaneous Provisions.

Chapter IV—
Group Relief.

PART XI—
Close Companies.
Chapter I—
Interpretative Provisions.

Chapter II—
Charges to Tax in Connection with Loans.

Chapter III—
Apportionment of Undistributed Income etc.

PART XII—
Special Classes of Companies and Businesses.
Chapter I—
Insurance Companies, Underwriters and Capital Redemption Business.

Chapter II—
Friendly Societies, Trade Unions and Employers' Associations.

Chapter III—
Unit Trust Schemes, Dealers in Securities etc.

Chapter IV—
Building Societies, Banks, Savings Banks, Industrial and Provident Societies and Others.

Chapter V—
Petroleum Extraction Activities.

Chapter VI—
Miscellaneous Businesses and Bodies.

PART XIII—
Miscellaneous Special Provisions.
Chapter I—
Intellectual Property.

Chapter II—
Life Policies, Life Annuities and Capital Redemption Policies.

Chapter III—
Entertainers and Sportsmen.

Chapter IV—
Sub-Contractors in the Construction Industry.

Chapter V—
Schemes for Rationalizing Industry.

Chapter VI—
Other Provisions.

PART XIV—
Pension Schemes, Social Security Benefits, Life Annuities etc.
Chapter I—
Retirement Benefit Schemes.

Chapter II—
Other Pension Funds and Social Security Benefits and Contributions.

Chapter III—
Retirement Annuities.

Chapter IV—
Personal Pension Schemes.

Chapter V—
Purchased Life Annuities.

Chapter VI—
Miscellaneous.

PART XV—
Settlements.
Chapter I—
Dispositions for Short Periods.

Chapter II—
Settlements on Children.

Chapter III—
Revocable Settlements etc.

Chapter IV—
Liability to Higher Rate and Additional Rate Tax.

Chapter V—
Maintenance Funds for Historic Buildings.

PART XVI—
Estates of Deceased Persons in Course of Administration.

PART XVII—
Tax Avoidance.
Chapter I—
Cancellation of Tax Advantages From Certain Transactions in Securities.

Chapter II—
Transfers of Securities.

Chapter III—
Transfer of Assets Abroad.

Chapter IV—
Controlled Foreign Companies.

Chapter V—
Offshore Funds.

Chapter VI—
Miscellaneous.

PART XVIII—
Double Taxation Relief.
Chapter I—
The Principal Reliefs.

Chapter II—
Rules Governing Relief by Way of Credit.

Chapter III—
Miscellaneous Provisions.

Part XIX—
Supplemental.


ARRANGEMENT OF SECTIONS

Part I
The Charge to Tax
Income tax
1	The charge to income tax.
2	Fractions of a pound, and yearly assessments.
3	Certain income charged at basic rate.
4	Construction of references in Income Tax Acts to deduction of tax.
5	Date for payment.

Corporation tax
6	The charge to corporation tax and exclusion of income tax and capital gains tax.
7	Treatment of certain payments and repayment of income tax.
8	General scheme of corporation tax.
9	Computation of income: application of income tax principles.
10	Time for payment of tax.
11	Companies not resident in United Kingdom.
12	Basis of, and periods for, assessment.

Small companies' rate
13	Small companies' relief.

Advance corporation tax
14	Advance corporation tax and qualifying distributions.

The six Schedules
15	Schedule A.
16	Schedule B.
17	Schedule C.
18	Schedule D.
19	Schedule E.
20	Schedule F.

Part II
Provisions Relating to the Schedule A Charge and the Associated Schedule D Charges
General
21	Persons chargeable.
22	Assessments.
23	Collection from lessees and agents.
24	Construction of Part II.

Deductions and other allowances
25	Deductions from rent: general rules.
26	Deductions from rent: land managed as one estate.
27	Deductions from rent: maintenance funds for historic buildings.
28	Deductions from receipts other than rent.
29	Sporting rights.
30	Expenditure on making sea walls.
31	Provisions supplementary to sections 25 to 30.
32	Capital allowances for machinery and plant used in estate management.
33	Agricultural land: allowance for excess expenditure on maintenance.

Premiums, leases at undervalue etc
34	Treatment of premiums etc. as rent or Schedule D profits.
35	Schedule D charge on assignment of lease granted at an undervalue.
36	Schedule D charge on sale of land with right to reconveyance.
37	Premiums paid etc: deductions from premiums and rent received.
38	Rules for ascertaining duration of leases.
39	Saving for pre-1963 leases, and special relief for individuals.

Supplemental: Schedules A and D
40	Tax treatment of receipts and outgoings on sale of land.
41	Relief for rent etc. not paid.
42	Appeals against determinations under sections 34 to 36.
43	Non-residents.

Part III
Provisions Relating to the Schedule C Charge and General Provisions about Government Securities
General
44	Income tax: mode of charge.
45	Interpretation of Part III.

Government securities: exemptions from tax
46	Savings certificates and tax reserve certificates.
47	United Kingdom government securities held by non-residents.
48	Securities of foreign states.
49	Stock and dividends in name of Treasury etc.

Government securities: interest payable without deduction of tax
50	United Kingdom securities: Treasury directions for payment without deduction of tax.
51	Treasury directions as respects Northern Ireland securities.
52	Taxation of interest on converted government securities and interest which becomes subject to deduction.

Part IV
Provisions Relating to the Schedule D Charge
Chapter I
Supplementary Charging Provisions
53	Farming and other commercial occupation of land (except woodlands).
54	Woodlands managed on a commercial basis.
55	Mines, quarries and other concerns.
56	Transactions in deposits with and without certificates or in debts.
57	Deep discount securities.
58	Foreign pensions.
59	Persons chargeable.

Chapter II
Income Tax: Basis of Assessment etc.
Cases I and II
60	Assessment on preceding year basis.
61	Special basis at commencement of trade, profession or vocation.
62	Special basis for early years following commencement.
63	Special basis on discontinuance.

Cases III, IV and V
64	Case III assessments: general.
65	Cases IV and V assessments: general.
66	Special rules for fresh income.
67	Special rules where source of income disposed of or yield ceases.
68	Special rules where property etc. situated in Republic of Ireland.

Case VI
69	Assessment on current year basis unless otherwise directed.

Chapter III
Corporation Tax: Basis of Assessment etc.
70	Basis of assessment etc.

Chapter IV
Provisions Supplementary to Chapters II and III
71	Computation of income tax where no profits in year of assessment.
72	Apportionments etc. for purposes of Cases I, II and VI.
73	Single assessments for purposes of Cases III, IV and V.

Chapter V
Computational Provisions
Deductions
74	General rules as to deductions not allowable.
75	Expenses of management: investment companies.
76	Expenses of management: insurance companies.
77	Incidental costs of obtaining loan finance.
78	Discounted bills of exchange.
79	Contributions to local enterprise agencies.
80	Expenses connected with foreign trades etc.
81	Travel between trades etc.
82	Interest paid to non-residents.
83	Patent fees etc. and expenses.
84	Payments for technical education.
85	Payments to trustees of approved profit sharing schemes.
86	Employees seconded to charities and educational establishments.
87	Taxable premiums etc.
88	Payments to Export Credit Guarantee Department.
89	Debts proving irrecoverable after event treated as discontinuance.
90	Additional payments to redundant employees.
91	Cemeteries.

Treatment of regional development and other grants and debts released etc.
92	Regional development grants.
93	Other grants under Industrial Development Act 1982 etc.
94	Debts deducted and subsequently released.
95	Taxation of dealer's receipts on purchase by company of own shares.

Special provisions
96	Farming and market gardening: relief for fluctuating profits.
97	Treatment of farm animals etc.
98	Tied premises.
99	Dealers in land.

Chapter VI
Discontinuance, and Change of Basis of Computation
Valuation of trading stock etc.
100	Valuation of trading stock at discontinuance of trade.
101	Valuation of work in progress at discontinuance of profession or vocation.
102	Provisions supplementary to sections 100 and 101.

Case VI charges on receipts
103	Receipts after discontinuance: earnings basis charge and related charge affecting conventional basis.
104	Conventional basis: general charge on receipts after discontinuance or change of basis.
105	Allowable deductions.
106	Application of charges where rights to payments transferred.

Reliefs
107	Treatment of receipts as earned income.
108	Election for carry-back.
109	Charge under section 104: relief for individuals born before 6th April 1917.

Supplemental
110	Interpretation etc.

Chapter VII
Partnerships and Successions
General
111	Partnership assessments to income tax.
112	Partnerships controlled abroad.
113	Effect, for income tax, of change in ownership of trade, profession or vocation.

Partnerships involving companies
114.	Special rules for computing profits and losses.
115	Provisions supplementary to section 114.
116	Arrangements for transferring relief.

Limited partners
117.	Restriction on relief: individuals.
118	Restriction on relief: companies.

Chapter VIII
Miscellaneous and Supplemental
119	Rent etc. payable in connection with mines, quarries and similar concerns.
120	Rent etc. payable in respect of electric line wayleaves.
121	Management expenses of owner of mineral rights.
122	Relief in respect of mineral royalties.
123	Foreign dividends.
124	Interest on quoted Eurobonds.
125	Annual payments for non-taxable consideration.
126	Treasury securities issued at a discount.
127	Enterprise allowance.
128	Commodity and financial futures etc.: losses and gains.
129	Stock lending.
130	Meaning of "investment company" for the purposes of Part IV.

Part V
Provisions Relating to The Schedule E Charge
Chapter I
Supplementary Charging Provisions of General Application
Miscellaneous provisions
131	Chargeable emoluments.
132	Place of performance, and meaning of emoluments received in the U.K.
133	Voluntary pensions.
134	Workers supplied by agencies.

Shareholdings, loans etc.
135	Gains by directors and employees from share options.
136	Provisions supplementary to section 135.
137	Payment of tax under section 135 by instalments.
138	Share acquisitions by directors and employees.
139	Provisions supplementary to section 138.
140	Further interpretation of sections 135 to 139.

Vouchers etc.
141	Non-cash vouchers.
142	Credit-tokens.
143	Cash vouchers taxable under P.A.Y.E.
144	Supplementary provisions.

Living accommodation
145	Living accommodation provided for employee.
146	Additional charge in respect of certain living accommodation.
147	Occupation of Chevening House.

Payments on retirement, sick pay etc.
148	Payments on retirement or removal from office or employment.
149	Sick pay.
150	Job release scheme allowances, maternity pay and statutory sick pay.
151	Income support etc.
152	Notification of amount taxable under section 151.

Chapter II
Supplementary Charging Provisions Applicable to Directors and Higher-Paid Employees and Office Holders
Expenses
153	Payments in respect of expenses.

Benefits in kind
154.	General charging provision.
155	Exceptions from the general charge.
156	Cash equivalents of benefits charged under section 154.
157	Cars available for private use.
158	Car fuel.
159	Pooled cars.
160	Beneficial loan arrangements.
161	Exceptions from section 160.
162	Employee shareholdings.
163	Expenses connected with living accommodation.
164	Director's tax paid by employer.
165	Scholarships.

General supplementary provisions
166.	Notice of nil liability under this Chapter.
167	Meaning of "director's or higher-paid employment".
168	Other interpretative provisions.

Chapter III
Profit-Related Pay
Preliminary
169.	Interpretation.
170	Taxation of profit-related pay.

The relief
171.	Relief from tax.
172	Exceptions from tax.

Registration
173.	Persons who may apply for registration.
174	Excluded employments.
175	Applications for registration.
176	Registration.
177	Change of scheme employer.
178	Cancellation of registration.

Administration
179.	Recovery of tax from scheme employer.
180	Annual returns etc.
181	Other information.
182	Appeals.

Supplementary
183.	Partnerships.
184	Independent accountants.

Chapter IV
Other Exemptions and Reliefs
Share option and profit sharing schemes
185.	Approved share option schemes.
186	Approved profit sharing schemes.
187	Interpretation of sections 185 and 186 and Schedules 9 and 10.

Retirement benefits etc.
188.	Exemptions from section 148.
189	Lump sum benefits on retirement.
190	Payments to Members of Parliament, Representatives to the European Parliament and others.
191	Job release scheme allowances not to be treated as income.

Foreign emoluments and earnings, pensions and certain travel facilities
192	Relief from tax for foreign emoluments.
193	Foreign earnings and travel expenses.
194	Other foreign travel expenses.
195	Travel expenses of employees not domiciled in the United Kingdom.
196	Foreign pensions.
197	Leave travel facilities for the armed forces.

Other expenses, subscriptions etc.
198	Relief for necessary expenses.
199	Expenses necessarily incurred and defrayed from official emoluments.
200	Expenses of Members of Parliament.
201	Fees and subscriptions to professional bodies, learned societies etc.
202	Donations to charity: payroll deduction scheme.

Chapter V
Assessment, Collection, Recovery and Appeals
203	Pay as you earn.
204	P.A.Y.E repayments.
205	Assessments unnecessary in certain circumstances.
206	Additional provision for certain assessments.
207	Disputes as to domicile or ordinary residence.

Part VI
Company Distributions, Tax Credits etc
Chapter I
Taxation of Company Distributions
208	U.K. company distributions not generally chargeable to corporation tax.

Chapter II
Matters which are Distributions for the Purposes of the Corporation Tax Acts
209	Meaning of "distribution".
210	Bonus issue following repayment of share capital.
211	Matters to be treated or not to be treated as repayments of share capital.
199	Expenses necessarily incurred and defrayed from official emoluments.
200	Expenses of Members of Parliament.
201	Fees and subscriptions to professional bodies, learned societies etc.
202	Donations to charity: payroll deduction scheme.

Chapter V
Assessment, Collection, Recovery and Appeals
203	Pay as you earn.
204	P.A.Y.E. repayments.
205	Assessments unnecessary in certain circumstances.
206	Additional provision for certain assessments.
207	Disputes as to domicile or ordinary residence.

Part VI
Company Distributions, Tax Credits etc.
Chapter I
Taxation of Company Distributions
208	U.K. company distributions not generally chargeable to corporation tax.

Chapter II
Matters which are Distributions for the Purposes of the Corporation Tax Acts
209	Meaning of "distribution".
210	Bonus issue following repayment of share capital.
211	Matters to be treated or not to be treated as repayments of share capital.

Chapter III
Matters which are not Distributions for the Purposes of the Corporation Tax Acts
Payments of interest
212	Interest etc. paid in respect of certain securities.

Demergers
213	Exempt distributions.
214	Chargeable payments connected with exempt distributions.
215	Advance clearance by Board of distributions and payments.
216	Returns.
217	Information.
218	Interpretation of sections 213 to 217.

Purchase of own shares
219	Purchase by unquoted trading company of own shares.
220	Conditions as to residence and period of ownership.
221	Reduction of vendor's interest as shareholder.
222	Conditions applicable where purchasing company is member of group.
223	Other conditions.
224	Relaxation of conditions in certain cases.
225	Advance clearance of payments by Board.
226	Returns and information.
227	Associated persons.
228	Connected persons.
229	Other interpretative provisions.

Stock dividends
230	Stock dividends: distributions.

Chapter IV
Tax Credits
231	Tax credits for certain recipients of qualifying distributions.
232	Tax credits for non-U.K. residents.
233	Taxation of certain recipients of distributions and in respect of non-qualifying distributions.
234	Information relating to distributions.
235	Distributions of exempt funds etc.
236	Provisions supplementary to section 235.
237	Disallowance of reliefs in respect of bonus issues.

Chapter V
Advance Corporation Tax and Franked Investment Income
238	Interpretation of terms and collection of ACT.
239	Set-off of ACT against liability to corporation tax.
240	Set-off of company's surplus ACT against subsidiary's liability to corporation tax.
241	Calculation of ACT where company receives franked investment income.
242	Set-off of losses etc. against surplus of franked investment income.
243	Set-off of loss brought forward, or terminal loss.
244	Further provisions relating to claims under section 242 or 243.
245	Calculation etc. of ACT on change of ownership of company.
246	Charge of ACT at previous rate until new rate fixed, and changes of rate.

Chapter VI
Miscellaneous and Supplemental
Group income
247	Dividends etc. paid by one member of a group to another.
248	Provisions supplementary to section 247.

Stock dividends
249	Stock dividends treated as income.
250	Returns.
251	Interpretation of sections 249 and 250.

Supplemental
252	Rectification of excessive set-off etc. of ACT or tax credit.
253	Power to modify or replace section 234(5) to (9) and Schedule 13.
254	Interpretation of Part VI.
255	"Gross rate" and "gross amount" of distributions to include ACT.

Part VII
General Provisions Relating to Taxation of Income of Individuals
Chapter I
Personal Reliefs
The reliefs
256	General.
257	Personal relief.
258	Widower's or widow's housekeeper.
259	Additional relief in respect of children.
260	Apportionment of relief under section 259.
261	Claims under sections 258 and 259 for year of marriage.
262	Widows' bereavement allowance.
263	Dependent relatives.
264	Claimant depending on services of a son or daughter.
265	Relief for blind persons.
266	Life assurance premiums.
267	Qualifying policies.
268	Early conversion or surrender of life policies.
269	Surrender etc. of policies after four years.
270	Provisions supplementary to sections 268 and 269.
271	Deemed surrender in cases of certain loans.
272	Collection of sums payable under sections 268 and 269.
273	Payments securing widows' and children's annuities.
274	Limits on relief under sections 266 and 273.

Supplemental
275	Meaning of "relative".
276	Effect on relief of charges on income.
277	Partners.
278	Non-residents.

Chapter II
Taxation of Income of Spouses
General rules
279	Aggregation of wife's income with husband's.
280	Transfer of reliefs.
281	Tax repayments to wives.
282	Construction of references to married women living with their husbands.

Separate assessments
283	Option for separate assessment.
284	Effect of separate assessment on personal reliefs.
285	Collection from wife of tax assessed on husband but attributable to her income.
286	Right of husband to disclaim liability for tax on deceased wife's income.

Separate taxation
287	Separate taxation of wife's earnings.
288	Elections under section 287.

Chapter III
Relief for Investment in Corporate Trades: The Business Expansion Scheme
289	The relief.
290	Minimum and maximum subscriptions.
291	Individuals qualifying for relief.
292	Parallel trades.
293	Qualifying companies.
294	Companies with interests in land.
295	Valuation of interests in land for purposes of section 294(1)(b).
296	Section 294 disapplied where amounts raised total £50,000 or less.
297	Qualifying trades.
298	Provisions supplementary to sections 293 and 297.
299	Disposal of shares.
300	Value received from company.
301	Provisions supplementary to section 300.
302	Replacement capital.
303	Value received by persons other than claimants.
304	Husband and wife.
305	Reorganisation of share capital.
306	Claims.
307	Withdrawal of relief.
308	Application to subsidiaries.
309	Further provisions as to subsidiaries.
310	Information.
311	Nominees, bare trustees and approved investment funds.
312	Interpretation of Chapter III.

Chapter IV
Special Provisions
313	Taxation of consideration for certain restrictive undertakings.
314	Divers and diving supervisors.
315	Wounds and disability pensions.
316	Allowances, bounties and gratuities.
317	Victoria Cross and other awards.
318	Other pensions in respect of death due to war service etc.
319	Crown servants: foreign service allowance.
320	Commonwealth Agents-General and official agents etc.
321	Consuls and other official agents.
322	Consular officers and employees.
323	Visiting forces.
324	Designated international organisations.
325	Interest on deposits with National Savings Bank.
326	Interest etc. under contractual savings schemes.
327	Disabled persons' vehicle maintenance grant.
328	Funds in court.
329	Interest on damages for personal injuries.
330	Compensation for National-Socialist persecution.
331	Scholarship income.
332	Expenditure and houses of ministers of religion.
333	Personal equity plans.

Chapter V
Residence of Individuals
334	Commonwealth citizens and others temporarily abroad.
335	Residence of persons working abroad.
336	Temporary residents in the United Kingdom.

Part VIII
Taxation of Income and Chargeable Gains of Companies
Taxation of income
337	Companies beginning or ceasing to carry on a trade.
338	Allowance of charges on income and capital.
339	Charges on income: donations to charity.
340	Charges on income: interest payable to non-residents.
341	Payments of interest etc. between related companies.
342	Tax on company in liquidation.
343	Company reconstructions without a change of ownership.
344	Company reconstructions: supplemental.

Chargeable gains
345	Computation of chargeable gains.
346	Capital distribution of chargeable gains: recovery of tax from shareholder.
347	Tax on one member of group recoverable from another member.

Part IX
Annual Payments and Interest
Annual payments
348	Payments out of profits or gains brought into charge to income tax: deduction of tax.
349	Payments not out of profits or gains brought into charge to income tax, and annual interest.
350	Charge to tax where payments made under section 349.
351	Small maintenance payments.
352	Certificates of deduction of tax.

Relief for payments of interest (excluding MIRAS)
353	General provision.
354	Loans to buy land etc.
355	Matters excluded from section 354.
356	Job-related accommodation.
357	Limit on amount of loan eligible for relief by virtue of section 354.
358	Relief where borrower deceased.
359	Loan to buy machinery or plant.
360	Loan to buy interest in close company.
361	Loan to buy interest in co-operative or employee-controlled company.
362	Loan to buy into partnership.
363	Provisions supplementary to sections 360 to 362.
364	Loan to pay inheritance tax.
365	Loan to buy life annuity.
366	Information.
367	Provisions supplementary to sections 354 to 366.
368	Exclusion of double relief etc.

Mortgage interest relief at source
369 <