Finance Bill - continued        House of Lords
PART III, INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX - continued
Income tax reductions - continued

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Order of income tax reductions etc.     35. - (1) In section 256(3) of the Taxes Act 1988 (order of income tax reductions etc.)-
 
 
    (a) in paragraph (a), for "section 259 or 261A" there shall be substituted "section 257AA";
 
    (b) paragraph (b) shall cease to have effect;
 
    (c) the words after paragraph (c) shall be omitted.
      (2) Subsection (1)(a) and (b) above has effect for the year 2001-02 and subsequent years of assessment.
 
      (3) Subsection (1)(c) above has effect for the year 2000-01 and subsequent years of assessment.
 
      (4) For the year 2000-01, section 256(3) of the Taxes Act 1988 shall have effect with the omission of paragraph (a) and, in paragraph (b), of the words "except section 259 or 261A".
 
Maintenance payments.     36. - (1) In subsection (1) of section 347B of the Taxes Act 1988 (income tax reduction in respect of qualifying maintenance payments), at the beginning there shall be inserted "Subject to subsection (1A) below".
 
      (2) After that subsection there shall be inserted the following subsection-
 
 
    "(1A) A periodical payment is not a qualifying maintenance payment unless either of the parties to the marriage mentioned in subsection (1)(b) above was born before 6th April 1935."
 
      (3) In subsection (2) of that section, for "subsections (3) and (4)" there shall be substituted "subsection (3)".
 
      (4) In subsection (3) of that section, for "section 257A(1)" there shall be substituted "section 257A(5A)".
 
      (5) In subsection (5A) of that section, for "subsections (2) to (5)" there shall be substituted "subsections (2) and (3)".
 
      (6) In subsection (8) of that section, for "subsections (1)(a) and (5)(a)" there shall be substituted "subsection (1)(a)".
 
      (7) Sections 347A and 347B of the Taxes Act 1988 shall have effect, notwithstanding anything in subsection (3) of section 36 of the Finance Act 1988 (which provides for the application of those sections), in relation to a payment made in pursuance of an existing obligation (within the meaning of that subsection) as they have effect in relation to a payment made otherwise than in pursuance of such an obligation.
 
      (8) This section has effect in relation to any payment falling due on or after 6th April 2000.
 
 
Relief for interest payments
Limit on relief for interest.     37. For the year 1999-00 the qualifying maximum defined in section 367(5) of the Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.
 
Withdrawal of relief for interest on loans to buy land etc.     38. - (1) A payment of interest falling within subsection (3) or (4) below shall not be eligible for relief under section 353 of the Taxes Act 1988 by virtue of section 354 of that Act (interest on loans to buy land etc.).
 
      (2) Section 369(1) of that Act (mortgage interest payable under deduction of tax) shall not apply to any payment of interest falling within subsection (3) or (4) below which (apart from section 353(2) of that Act and subsection (1) above) would be eligible for relief under section 353 of that Act by virtue of section 354 of that Act.
 
      (3) A payment of interest falls within this subsection if it is-
 
 
    (a) a payment made on or after 6th April 2000 (whenever falling due); or
 
    (b) a payment made before that date, but not before 9th March 1999, of any interest that was not due until on or after 6th April 2000.
      (4) A payment of interest falls within this subsection if it is-
 
 
    (a) made before 6th April 2000 but not before 9th March 1999; and
 
    (b) made under or in accordance with any scheme made for a tax-avoidance purpose on or after 9th March 1999 (whether or not before the making of the payment).
      (5) For the purposes of subsection (4) above, a scheme is made for a tax-avoidance purpose if its main purpose, or one of its main purposes, is to secure that a payment of one or more of the following descriptions is a relievable payment, that is to say-
 
 
    (a) a payment discharging an obligation to make a payment which (but for the scheme) might have been expected to be a non-relievable payment;
 
    (b) a payment made in pursuance of any obligation which has effect, directly or indirectly, in place of an obligation under which a payment which might have been expected to be a non-relievable payment would have become due;
 
    (c) a payment made in pursuance of an obligation which (apart from the purpose of securing that it is a relievable payment) might have been expected to take the form of an obligation-
 
      (i) to make a non-relievable payment, or
 
      (ii) to make two or more payments at least one of which would have been a non-relievable payment.
      (6) In subsection (5) above-
 
 
    "non-relievable payment" means a payment falling within subsection (3) above; and
 
    "relievable payment" means a payment which-
 
      (a) is eligible for relief under section 353 of the Taxes Act 1988, or
 
      (b) is a payment to which section 369(1) of that Act applies.
      (7) The references in this section to a scheme are references to any scheme, arrangements or understanding of any kind whatever, whether or not legally enforceable.
 
      (8) Schedule 4 to this Act (which contains amendments consequential on the preceding provisions of this section) shall have effect.
 
Withdrawal of relief for interest on new annuity loans.     39. - (1) In section 365 of the Taxes Act 1988 (relief for interest on loans to buy life annuities), in subsection (1), before paragraph (a) insert-
 
 
    "(aa) that the loan was made before 9th March 1999;".
      (2) After subsection (1) of that section insert-
 
 
    "(1AA) Where-
 
 
    (a) a loan made on or after 9th March 1999 was made in pursuance of an offer made by the lender before that date, and
 
    (b) the offer was either in writing or evidenced by a note or memorandum made by the lender before that date,
  the loan shall be deemed for the purposes of subsection (1)(aa) above to have been made before that date."
 
      (3) This section has effect for the year 1998-99 and subsequent years of assessment.
 
 
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