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Finance Act 1988 (c. 39)(The document as of February, 2008) Page 5 Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 (11) In this section--
(2) Schedule 5 to the [1983 c. 28.] Finance Act 1983 shall be deemed always to have had effect as if-- (a) in paragraph 2(7), for the words "paragraphs 5" there had been substituted the words "paragraphs 3A, 5"; and (b) the provisions set out in subsection (1)(b) above had been inserted, with any necessary modifications, after paragraph 3 as paragraph 3A. 52 Valuation of interests in land(1) In section 294 of the Taxes Act 1988 (companies with interests in land), after subsection (5) there shall be inserted-- " (5A) For the purposes of this section, the value of an interest in any building or other land shall be adjusted by deducting the market value of any machinery or plant which is so installed or otherwise fixed in or to the building or other land as to become, in law, part of it. " (2) This section shall have effect in relation to valuations which fall to be made after the passing of this Act. 53 Approved investment funds(1) For subsection (3) of section 311 of the Taxes Act 1988 there shall be substituted-- " (2A) Subsection (2B) below applies where an individual claims relief in respect of eligible shares in a company and-- (a) the shares have been issued to the managers of an approved fund as nominee for the individual; (b) the fund has closed, that is to say, no further investments in the fund are to be accepted; and (c) the amounts which the managers have, as nominee for the individual, subscribed for eligible shares issued within six months after the closing of the fund represent not less than 90 per cent. of his investment in the fund; and in this section "the managers of an approved fund" means the person or persons having the management of an investment fund approved for the purposes of this section by the Board. (2B) In any case where this subsection applies, subsections (5) to (7) of section 289 and subsections (1) to (3) and (6) of section 304 shall have effect as if-- (a) any reference to the year of assessment or other period in which the shares are issued were a reference to the year of assessment or other period in which the fund closes; and (b) any reference to the time of the issue of the shares, or the time of the subscription for the shares, were a reference to the time of the closing of the fund. (3) Section 290(1) shall not apply where the amount is subscribed as nominee for an individual by the managers of an approved fund. " (2) This section shall have effect in relation to approved funds closing after 15th March 1988. Pensions etc.54 Personal pension schemes: commencement(1) In section 56(1) of the [1987 c. 51.] Finance (No. 2) Act 1987 and section 655(4) of the Taxes Act 1988 (personal pension schemes not to be approved with effect from date earlier than 4th January 1988) for "4th January" there shall be substituted "1st July". (2) In consequence of the amendment made by subsection (1) above-- (a) the same amendment shall be made in-- (i) section 54(1) of the Act of 1987 and section 618(1) of the Act of 1988 (no retirement annuity relief for contracts made or trust schemes established on or after 4th January 1988); (ii) section 54(3) of the Act of 1987 and section 618(2) of the Act of 1988 (limit on lump sums under contracts made or schemes established before 4th January 1988); and (iii) section 20(3) of the Act of 1987 and section 632(3) of the Act of 1988 (removal of restriction from certain schemes established before 4th January 1988); (b) in section 55 of the Act of 1987 and section 655 of the Act of 1988 (transitional provisions: carry back and carry forward)-- (i) in subsection (2), for "1984-85, 1985-86 or 1986-87" there shall be substituted "1985-86, 1986-87 or 1987-88"; and (ii) in subsection (3), for "1987-88" there shall be substituted "1988-89"; and (c) in section 56(2) of the Act of 1987 and section 655(5) of the Act of 1988 (provisional approval where application made before 1st August 1989) for "August 1989" there shall be substituted "February 1990". (3) The amendments made by this section shall be deemed always to have had effect. 55 Personal pension schemes: other amendments(1) At the end of section 630 of the Taxes Act 1988 (interpretation of Chapter IV of Part XIV) there shall be inserted-- " and references to an employee or to an employer include references to the holder of an office or to the person under whom an office is held. " (2) In section 638 of that Act, for subsection (7) (personal pension schemes which permit acceptance of certain contributions not to be approved) there shall be substituted-- " (7) The Board shall not approve a personal pension scheme which permits the acceptance of minimum contributions paid as mentioned in subsection (6)(c) above in respect of an individual's service as director of a company, if his emoluments as such are within section 644(5). (8) A personal pension scheme which permits the acceptance of minimum contributions paid as mentioned in subsection (6)(c) above in respect of an individual's service in an office or employment to which section 645 applies may be approved by the Board only if-- (a) the scheme does not permit the acceptance of contributions from the individual or from the person who is his employer in relation to that office or employment; or (b) at the time when the minimum contributions are paid the individual is not serving in an office or employment to which section 645 applies. " (3) In section 686(2) of that Act (income arising to trustees which is chargeable to income tax at the additional rate), for paragraph (c) there shall be substituted-- " (c) is not income arising under a trust established for charitable purposes only or income from investments, deposits or other property held-- (i) for the purposes of a fund or scheme established for the sole purpose of providing relevant benefits within the meaning of section 612; or (ii) for the purposes of a personal pension scheme (within the meaning of section 630) which makes provision only for benefits such as are mentioned in section 633; and " . (4) The amendments made by this section shall be deemed to have come into force on 1st July 1988. 56 Occupational pension schemesIn Schedule 23 to the Taxes Act 1988 (which alters the rules of schemes approved before 23rd July 1987) the following sub-paragraphs shall be substituted for sub-paragraph (2) of paragraph 1-- " (2) The Board may by regulations provide that, in circumstances prescribed in the regulations, this Schedule or any provision of it shall not apply or shall apply with such modifications as may be so prescribed. (2A) Regulations under sub-paragraph (2) above-- (a) may include provision authorising the Board to direct that this Schedule or any provision of it shall not apply in any particular case where in the opinion of the Board the facts are such that its application would not be appropriate; (b) may take effect (and may authorise any direction given under them to take effect) as from 17th March 1987 or any later date; (c) may make such supplementary provision as appears to the Board to be necessary or expedient. " 57 Lump sum benefits paid otherwise than on retirement(1) In section 14 of the [1973 c. 51.] Finance Act 1973 and section 189 of the Taxes Act 1988 (lump sum benefits paid on retirement not chargeable to income tax under Schedule E), for the words "on his retirement from an office or employment" there shall be substituted the words "(whether on his retirement from an office or employment or otherwise)". (2) The amendments made by this section shall be deemed always to have had effect. Underwriters58 Assessment and collection(1) For subsection (2) of section 450 of the Taxes Act 1988 (underwriters) there shall be substituted-- " (2) The aggregate for any year of assessment of-- (a) the profits or gains arising to a member from his underwriting business; and (b) the profits or gains arising to him from assets forming part of a premiums trust fund, shall be chargeable to tax under Case I of Schedule D; but nothing in this subsection shall affect the manner in which the amount of those profits or gains is to be computed. (2A) Schedule 19A shall have effect with respect to the assessment and collection of tax charged under Case I of Schedule D in accordance with this section. " (2) Section 39 of the [1973 c. 51.] Finance Act 1973 shall be renumbered as subsection (1) of that section and after that provision as so renumbered there shall be inserted-- " (2) Schedule 16A to this Act shall have effect with respect to the assessment and collection of tax charged under Case I of Schedule D in accordance with Schedule 16 to this Act. " (3) In Schedule 16 to that Act (underwriters)-- (a) the subsection (2) set out in subsection (1) above shall be inserted after paragraph 2 as paragraph 2A; and (b) paragraph 16 (assessment on agent) shall cease to have effect. (4) The provisions set out in Schedule 5 to this Act shall be inserted-- (a) after Schedule 19 to the Taxes Act 1988 as Schedule 19A; and (b) after Schedule 16 to the Finance Act 1973 as Schedule 16A. (5) Subsections (1) and (4)(a) above shall have effect for the year 1988-89 and subsequent years of assessment; and subsections (2), (3) and (4)(b) above shall have effect for the years 1986-87 and 1987-88. 59 Reinsurance: general(1) In subsection (4) of section 450 of the Taxes Act 1988 (underwriters), for paragraph (b) there shall be substituted-- " (b) any insurance money payable to him under that insurance in respect of a loss shall be taken into account as a trading receipt in computing those profits or gains for the year of assessment which corresponds to the underwriting year in which the loss arose; " . (2) The amendment set out in subsection (1) above shall also be made in paragraph 4 of Schedule 16 to the Finance Act 1973 (underwriters). (3) Subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and subsection (2) above shall have effect for the years 1985-86, 1986-87 and 1987-88. 60 Reinsurance to close(1) For subsection (5) of section 450 of the Taxes Act 1988 (underwriters) there shall be substituted-- " (5) Subsection (5A) below applies where-- (a) in accordance with the rules or practice of Lloyd's and in consideration of the payment of a premium, one member agrees with another to meet liabilities arising from the latter's business for an underwriting year so that the accounts of the business for that year may be closed; and (b) the member by whom the premium is payable is a continuing member, that is, a member not only of the syndicate as a member of which he is liable to pay the premium ("the reinsured syndicate") but also of the syndicate as a member of which the other member is entitled to receive it ("the reinsurer syndicate"). (5A) In any case where this subsection applies-- (a) in computing for the purposes of income tax the profits or gains of the continuing member's business as a member of the reinsured syndicate, the amount of the premium shall be deductible as an expense of his only to the extent that it is shown not to exceed a fair and reasonable assessment of the value of the liabilities in respect of which it is payable; and (b) in computing for those purposes the profits or gains of his business as a member of the reinsurer syndicate, those profits or gains shall be reduced by an amount equal to any part of a premium which, by virtue of paragraph (a) above, is not deductible as an expense of his as a member of the reinsured syndicate; and the assessment referred to above shall be taken to be fair and reasonable only if it is arrived at with a view to producing the result that a profit does not accrue to the member to whom the premium is payable but that he does not suffer a loss. " (2) The provisions set out in subsection (1) above, but renumbered as subsections (1) and (2) and with the substitution, in the provision renumbered as subsection (1), of the words "subsection (2)" for the words "subsection (5A)", shall also be substituted for subsections (1) to (4) of section 70 of the [1987 c. 51.] Finance (No. 2) Act 1987 (underwriters); and in subsection (5) of that section, for the word "underwriter" there shall be substituted the word "member". (3) In this section-- (a) subsection (1) shall have effect in relation to premiums payable in connection with the closing of accounts of a member's business for an underwriting year ending in the year 1988-89 or any subsequent year of assessment; and (b) subsection (2) shall have effect in relation to premiums payable in connection with the closing of accounts of a member's business for an underwriting year ending in the year 1985-86, 1986-87 or 1987-88. 61 Minor and consequential amendments(1) In the Taxes Act 1988-- (a) in section 20, at the beginning of subsection (2) there shall be inserted the words "Except as provided by section 450 (underwriters)"; (b) in section 451, in subsection (1), for paragraph (a) there shall be substituted-- " (a) for the assessment and collection of tax charged in accordance with section 450 (so far as not provided for by Schedule 19A); (aa) for making, in the event of any changes in the rules or practice of Lloyd's, such amendments of that Schedule as appear to the Board to be expedient having regard to those changes; " ; (c) after that subsection there shall be inserted-- " (1A) Regulations under subsection (1) above may make provision with respect to the year of assessment next but one preceding the year of assessment in which they are made. " ; and (d) in section 452(8), for the words "Case I of Schedule D" there shall be substituted the words "in accordance with section 450" and the words "the investments forming part of the premiums trust fund of the underwriter" shall cease to have effect. (2) In Schedule 10 to the Taxes Act 1970, in paragraph 7(3), for the words "Case I of Schedule D" there shall be substituted the words "in accordance with Schedule 16 to [1973 c. 51.] Finance Act 1973" and the words "the investments forming part of the premiums trust fund of the underwriter" shall cease to have effect. (3) In section 87 of the [1972 c. 41.] Finance Act 1972, at the beginning of subsection (3) there shall be inserted the words "Except as provided by Schedule 16 to Finance Act 1973 (underwriters)". (4) In Schedule 16 to the Finance Act 1973-- (a) in sub-paragraph (1) of paragraph 17, for paragraph (a) there shall be substituted-- " (a) for the assessment and collection of tax charged in accordance with the preceding provisions of this Schedule (so far as not provided for by Schedule 16A to this Act); (aa) for making, in the event of any changes in the rules or practice of Lloyd's, such amendments of that Schedule as appear to the Board to be expedient having regard to those changes; " ; (b) after that sub-paragraph, there shall be inserted-- " (1A) Regulations under this paragraph may make provision with respect to the year of assessment next but one preceding the year of assessment in which they are made. " (5) Subsection (1) above shall have effect for the year 1988-89 and subsequent years of assessment; and subsections (2) to (4) above shall have effect for the years 1986-87 and 1987-88. Oil licences62 Disposals of oil licences relating to undeveloped areas(1) If, at the time of the material disposal of a licence, the licence relates to an undeveloped area, then, to the extent that the consideration for the disposal consists of-- (a) another licence which at that time relates to an undeveloped area or an interest in another such licence, or (b) an obligation to undertake exploration work or appraisal work in an area which is or forms part of the licensed area in relation to the licence disposed of, the value of that consideration shall be treated as nil for the purposes of the [1979 c. 14.] Capital Gains Tax Act 1979 (in this section referred to as "the 1979 Act") and the appropriate legislation relating to capital allowances. (2) For the purposes of this section a "material disposal" is a disposal (which includes a part disposal) which occurred or occurs before or after the passing of this Act, other than,-- (a) so far as concerns the 1979 Act, a disposal which is made otherwise than by way of a bargain at arm's length; and (b) so far as concerns the appropriate legislation relating to capital allowances, a disposal in relation to which Schedule 7 to the [1968 c. 3.] Capital Allowances Act 1968 (sales between connected persons etc.) has effect. (3) If a material disposal of a licence which, at the time of the disposal, relates to an undeveloped area is part of a larger transaction under which one party makes to another material disposals of two or more licences, each of which at the time of the disposal relates to an undeveloped area, the reference in subsection (1)(b) above to the licensed area in relation to the licence disposed of shall be construed as a reference to the totality of the licensed areas in relation to those two or more licences. (4) Where a claim is made under section 68(5)(b) of the [1985 c. 54.] Finance Act 1985 (claims to substitute, for indexation purposes, a 1982 market value for cost on certain disposals between 1st April 1985 and 5th April 1988) for the purpose of computing the indexation allowance on a material disposal of a licence which, at the time of the disposal, relates to an undeveloped area and, accordingly, it is assumed for that purpose that, on 31st March 1982, the licence concerned was sold and immediately reacquired, then, for that purpose, section 34 of the 1979 Act (effect of capital allowances on allowable expenditure) shall apply in relation to any capital allowance-- (a) made in respect of the expenditure actually incurred in providing the licence, and (b) so made for an accounting period ending on or after 1st April 1982, as if the allowance (or, if the accounting period begins before that date, a time-apportioned part of the allowance) were made in respect of expenditure which, on that assumption, was incurred in reacquiring the asset on 31st March 1982. (5) In relation to a material disposal of a licence which at the time of the disposal relates to an undeveloped area, being a disposal-- (a) which is a part disposal of the licence in question, and (b) part but not the whole of the consideration for which falls within paragraph (a) or paragraph (b) of subsection (1) above, section 35 of the 1979 Act (apportionment of expenditure etc. on part disposals) shall not apply unless the amount or value of the part of the consideration which does not fall within one of those paragraphs is less than the aggregate of the amounts which, if the material disposal were a disposal of the whole of the licence rather than a part disposal, would be-- (i) the relevant allowable expenditure, as defined in section 86 of the [1982 c. 39.] Finance Act 1982 (indexation allowance on certain disposals); and (ii) the indexation allowance on the disposal. (6) Where section 35 of the 1979 Act has effect in relation to such a disposal as is referred to in subsection (5) above, it shall have effect as if, for subsection (2) thereof, there were substituted the following subsection-- " (2) The apportionment shall be made by reference to-- (a) the amount or value of the consideration for the disposal on the one hand (call that amount or value A), and (b) the aggregate referred to in subsection (5) of section 62 of the Finance Act 1988 on the other hand (call that aggregate C), and the fraction of the said sums allowable as a deduction in computing the amount of the gain (if any) accruing on the disposal shall be-- ---and the remainder shall be attributed to the part of the property which remains undisposed of. " (7) In the case of a material disposal-- (a) which falls within subsection (5) above, and (b) in respect of which a claim is made under section 68(5)(b) of the [1985 c. 54.] Finance Act 1985, the claim shall be treated also as having effect for the purpose of determining the indexation allowance referred to in sub-paragraph (ii) of subsection (5) above on the notional material disposal of the whole of the licence referred to in that subsection. 63 Allowance of certain drilling expenditure etc. in determining chargeable gains(1) On the disposal of a licence, whether occurring before or after the passing of this Act, relevant qualifying expenditure incurred by the person making the disposal-- (a) in searching for oil anywhere in the licensed area, or (b) in ascertaining the extent or characteristics of any oil-bearing area the whole or part of which lies in the licensed area or what the reserves of oil of any such oil-bearing area are, shall be treated as expenditure falling within section 32(1)(b) of the [1979 c. 14.] Capital Gains Tax Act 1979 (enhancement expenditure reflected in the state or nature of the asset at the time of disposal). (2) Expenditure incurred as mentioned in subsection (1) above is relevant expenditure if, and only if,-- (a) it is expenditure of a capital nature on scientific research; and (b) either it was allowed or allowable under section 91 of the [1968 c. 3.] Capital Allowances Act 1968 (capital expenditure on scientific research) for a chargeable period which, or the basis year for which, began before the date of the disposal or it would have been so allowable if the trading condition had been fulfilled; and (c) the disposal is an occasion by virtue of which section 92 of that Act (termination of user of assets representing scientific research expenditure of a capital nature) applies in relation to the expenditure or would apply if the trading condition had been fulfilled and the expenditure had been allowed accordingly. (3) In subsection (2) above and subsection (4) below, the expression "if the trading condition had been fulfilled" means, in relation to expenditure of a capital nature on scientific research, if, after the expenditure was incurred but before the disposal concerned was made, the person incurring the expenditure had set up and commenced a trade connected with that research; and in subsection (2)(b) above-- (a) "chargeable period" has the same meaning as in section 91 of the [1968 c. 3.] Capital Allowances Act 1968; and (b) "basis year" has the same meaning as in subsection (3)(c) of that section. (4) Relevant expenditure is qualifying expenditure only to the extent that it does not exceed the trading receipt which, by reason of the disposal,-- (a) is treated as accruing under section 92(2) of the Capital Allowances Act 1968; or (b) would be treated as so accruing if the trading condition had been fulfilled and the expenditure had been allowed accordingly. (5) On the disposal of a licence, sections 31 and 34 of the [1979 c. 14.] Capital Gains Tax Act 1979 (which include provisions under which set off is given for balancing charges) shall apply in relation to any such trading receipt as is mentioned in subsection (4)(a) above as if it were a balancing charge falling to be made by reference to the disposal. (6) Where, on the disposal of a licence, subsection (1) above has effect in relation to any relevant qualifying expenditure which had not in fact been allowed or become allowable as mentioned in subsection (2)(b) above,-- (a) no allowance shall be made in respect of that expenditure under section 91 of the Capital Allowances Act 1968; and (b) no deduction shall be allowed in respect of it under section 92(3) of that Act. (7) Where, on the disposal of a licence which is a part disposal, subsection (1) above has effect in relation to any relevant qualifying expenditure, then, for the purposes of section 35 of the Capital Gains Tax Act 1979 (part disposals), that expenditure shall be treated as wholly attributable to what is disposed of (and, accordingly, shall not be apportioned as mentioned in that section). 64 Interpretation of sections 62 and 63(1) For the purposes of section 62 above, a licence relates to an undeveloped area at any time if-- (a) for no part of the licensed area has consent for development been granted to the licensee by the Secretary of State on or before that time; and (b) for no part of the licensed area has a programme of development been served on the licensee or approved by the Secretary of State on or before that time. (2) Subsections (4) and (5) of section 36 of the [1983 c. 28.] Finance Act 1983 (meaning of "development") shall have effect in relation to subsection (1) above as they have effect in relation to subsection (2) of that section. (3) In relation to a licence under the [1964 c. 28 (N.I.).] Petroleum (Production) Act (Northern Ireland) 1964 any reference in subsection (1) above to the Secretary of State shall be construed as a reference to the Department of Economic Development. (4) In relation to a material disposal, within the meaning of section 62 above, of a licence under which the buyer acquires an interest in the licence only so far as it relates to part of the licensed area, any reference in subsection (1) or subsection (3) of that section or subsection (1) above to the licensed area shall be construed as a reference only to that part of the licensed area to which the buyer's acquisition relates. (5) In sections 62 and 63 above and the preceding provisions of this section "oil", "licence", "licensee" and, subject to subsection (4) above, "licensed area" have the meaning assigned by section 12(1) of the [1975 c. 22.] Oil Taxation Act 1975. (6) In section 62 above-- (a) "exploration work", in relation to any area, means work carried out for the purpose of searching for oil anywhere in that area; (b) "appraisal work", in relation to any area, means work carried out for the purpose of ascertaining the extent or characteristics of any oil-bearing area the whole or part of which lies in the area concerned or what the reserves of oil of any such oil-bearing area are; (c) "the appropriate legislation relating to capital allowances" means-- (i) Chapter III of Part I and Part II of the [1968 c. 3.] Capital Allowances Act 1968; and (ii) section 55 of and Schedules 13 and 14 to the [1986 c. 41.] Finance Act 1986 (new code of allowances for capital expenditure on mineral extraction); and (d) any reference to section 68(5)(b) of the [1985 c. 54.] Finance Act 1985 is a reference to that section as it had effect before the amendment made by Schedule 8 to this Act. Miscellaneous65 Commercial woodlandsSchedule 6 to this Act (which abolishes the charge to tax under Schedule B and makes other provision with respect to the occupation of commercial woodlands) shall have effect. 66 Company residence(1) Subject to the provisions of Schedule 7 to this Act, a company which is incorporated in the United Kingdom shall be regarded for the purposes of the Taxes Acts as resident there; and accordingly, if a different place of residence is given by any rule of law, that place shall no longer be taken into account for those purposes. (2) For the purposes of the Taxes Acts, a company which-- (a) is no longer carrying on any business; or (b) is being wound up outside the United Kingdom, shall be regarded as continuing to be resident in the United Kingdom if it was so regarded for those purposes immediately before it ceased to carry on business or, as the case may be, before any of its activities came under the control of a person exercising functions which, in the United Kingdom, would be exercisable by a liquidator. (3) In this section "the Taxes Acts" has the same meaning as in the [1970 c. 9.] Taxes Management Act 1970. (4) This section and Schedule 7 to this Act shall be deemed to have come into force on 15th March 1988. 67 Seafarers: foreign earnings(1) In paragraph 3 of Schedule 12 to the Taxes Act 1988 (qualifying period for relief for foreign earnings) after sub-paragraph (2) there shall be inserted-- " (2A) In relation to emoluments from employment as a seafarer, sub-paragraph (2) above shall have effect-- (a) as if the number of days specified in paragraph (a) were 90 instead of 62, and (b) as if the fraction specified in paragraph (b) were one quarter instead of one sixth; and for the purposes of this sub-paragraph "employment as a seafarer" means employment consisting of the performance of duties on a ship (or of such duties and of others incidental to them). " (2) This section shall have effect for the year 1988-89 and subsequent years of assessment; but the relevant period and the earlier qualifying period referred to in paragraph 3(2) of Schedule 12 to the Taxes Act 1988 shall not be treated as a single period by virtue of this section if none of the intervening days falls after 5th April 1988. 68 Priority share allocations for employees etc(1) Where-- (a) there is an offer to the public of shares in a company at a fixed price or by tender, and (b) a director or employee (whether of that company or of any other company or person) is entitled by reason of his office or employment to an allocation of the shares, in priority to members of the public, at the fixed price or at the lowest price successfully tendered, and (c) the conditions set out in subsection (2) below are satisfied, any benefit derived by the director or employee from his entitlement shall not be treated as an emolument of his office or employment. (2) The conditions referred to in subsection (1) above are-- (a) that the aggregate number of shares that may be allocated as mentioned in subsection (1)(b) above does not exceed 10 per cent. of the shares subject to the offer (including the shares that may be so allocated); (b) that all the persons entitled to such an allocation are entitled to it on similar terms; (c) that those persons are not restricted wholly or mainly to persons who are directors or whose remuneration exceeds a particular level. (3) For the purposes of subsection (2)(b) above the fact that different provision is made for persons according to the levels of their remuneration, the length of their service or similar factors shall not be regarded as meaning that they are not entitled to an allocation on similar terms. (4) Section 29A(1) of the [1979 c. 14.] Capital Gains Tax Act 1979 (assets deemed to be acquired at market value) shall not apply to any acquisition in relation to which subsection (1) above applies. (5) In this section "director" includes a person who is to be, or has ceased to be, a director and "employee" includes a person who is to be, or has ceased to be, an employee. (6) This section shall apply to offers made on or after 23rd September 1987. 69 Share options: loans(1) Paragraph 13 of Schedule 9 to the Taxes Act 1988 (approved share option schemes: cases where scheme shares are subject to restrictions) shall have effect, and shall be deemed always to have had effect, with the addition of the following sub-paragraph after sub-paragraph (2)-- " (3) In the case of schemes other than savings-related share option schemes, sub-paragraph (1) above does not apply in relation to any terms of a loan making provision about how it is to be repaid or the security to be given for it. " (2) Paragraph 10 of Schedule 10 to the [1984 c. 43.] Finance Act 1984 (approved share option schemes: cases where scheme shares are subject to restrictions) shall be deemed always to have had effect with the addition of the following sub-paragraph after sub-paragraph (2)-- " (3) Sub-paragraph (1) above does not apply in relation to any terms of a loan making provision about how it is to be repaid or the security to be given for it. " 70 Charities: payroll deduction scheme(1) In section 202(7) of the Taxes Act 1988 (which limits to £120 the deductions attracting relief) for "ВЈ120" there shall be substituted "ВЈ240". (2) This section shall have effect for the year 1988-89 and subsequent years of assessment. 71 Unit trusts: relief on certain paymentsSection 469 of the Taxes Act 1988 (taxation of unauthorised and certain other unit trusts) shall have effect, and shall be deemed always to have had effect, with the insertion of the following subsections after subsection (5)-- " (5A) Subsection (5B) below applies where for any year of assessment-- (a) the trustees are (or, apart from this subsection, would be) chargeable under section 350 with tax on payments treated as made by them under subsection (3) above, and (b) there is an uncredited surplus in the case of the scheme. (5B) Where this subsection applies, the amount on which the trustees would otherwise be so chargeable shall be reduced-- (a) if the surplus is greater than that amount, to nil, or (b) if it is not, by an amount equal to the surplus. (5C) For the purposes of subsections (5A) and (5B) above whether there is an uncredited surplus for a year of assessment in the case of a scheme (and, if so, its amount) shall be ascertained by-- (a) determining, for each earlier year of assessment in which the income on which the trustees were chargeable to tax by virtue of subsection (2) above exceeded the amount treated by subsection (3) above as annual payments received by the unit holders, the amount of the excess, (b) aggregating the amounts determined in the case of the scheme under paragraph (a) above, and (c) deducting from that aggregate the total of any reductions made in the case of the scheme under subsection (5B) above for earlier years of assessment. (5D) The references in subsection (5C)(a) above to subsections (2) and (3) above include references to subsections (2) and (3) of section 354A of the 1970 Act. " 72 Entertainment of overseas customers(1) Subsection (2) of section 577 of the Taxes Act 1988 (which excepts the entertainment of overseas customers from the general rule that entertainment expenses are not deductible for tax purposes) shall not have effect in relation to entertainment provided on or after 15th March 1988. (2) Subsection (1) above shall not apply where the expenses incurred or the assets used in providing the entertainment were incurred or used under a contract entered into before 15th March 1988. 73 Consideration for certain restrictive undertakings(1) For subsections (1) to (5) of section 313 of the Taxes Act 1988 (taxation of consideration for certain restrictive undertakings) there shall be substituted-- " (1) Where an individual who holds, has held, or is about to hold, an office or employment gives in connection with his holding that office or employment an undertaking (whether absolute or qualified, and whether legally valid or not) the tenor or effect of which is to restrict him as to his conduct or activities, any sum to which this section applies shall be treated as an emolument of the office or employment, and accordingly shall be chargeable to tax under Schedule E, for the year of assessment in which it is paid. (2) This section applies to any sum which-- (a) is paid, in respect of the giving of the undertaking or its total or partial fulfilment, either to the individual or to any other person; and (b) would not, apart from this section, fall to be treated as an emolument of the office or employment. (3) Where the individual has died before the payment of any sum to which this section applies, subsections (1) and (2) above shall have effect as if that sum had been paid immediately before his death. (4) Where valuable consideration otherwise than in the form of money is given in respect of the giving of the undertaking or its total or partial fulfilment, subsections (1) to (3) above shall have effect as if a sum had instead been paid equal to the value of that consideration. " (2) Notwithstanding anything in section 74 of the Taxes Act 1988, any sum to which section 313 of that Act applies, and which is paid or treated as paid by a person carrying on a trade, profession or vocation, may be deducted as an expense in computing the profits or gains of the trade, profession or vocation for the purposes of tax. (3) Any sum to which section 313 of the Taxes Act 1988 applies, and which is paid or treated as paid by an investment company, shall for the purposes of section 75 of that Act be treated as an expense of management. (4) This section has effect in relation to sums paid or treated as paid in respect of the giving of, or the total or partial fulfilment of, undertakings given on or after 9th June 1988. 74 Payments on termination of office or employment etc(1) In section 188(4) of the Taxes Act 1988 (tax not chargeable by virtue of section 148 of that Act in respect of the first £25,000 of a payment on termination of office or employment etc.) for "ВЈ25,000" there shall be substituted "ВЈ30,000". (2) Paragraphs 4 to 7 of Schedule 11 to that Act (relief by reduction of tax on next £50,000 of such a payment) shall cease to have effect. (3) This section shall apply to any payment treated by section 148(4) of that Act as income received on 6th April 1988 or any later date, unless a notice is given in relation to it in accordance with paragraph 12 of that Schedule (payments in pursuance of pre-10th March 1981 obligations). 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