Finance Act - legislation

1 Finance Act 1986 CHAPTER 41 ARRANGEMENT OF SECTIONS PART I CUSTOMS AND excise AND VALUE ADDED TAX CHAPTER I CUSTOMS AND excise The rates of duty Section 1. Tobacco products. 2. Hydrocarbon oil. 3. Vehicles excise duty . Other provisions 4. Beer duty : minor amendments. 5. Warehousing regulations. 6. Betting duties and bingo duty in Northern Ireland. 7. Betting and gaming duties: evidence by certificate, etc. 8. Licences under the customs and excise Acts. CHAPTER 11 VALUE ADDED TAX 9. Fuel for private use. 10. Registration of two or more persons as one taxable person. 11. Long-stay accommodation. 12. Conditions for zero-rating of goods exported etc. 13. Transfer of import relief. 14. Penalty for tax evasion: liability of directors etc. 15. Breaches of Treasury orders etc. A ii c. 41 Finance Act 1986 PART II INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX CHAPTER I GENERAL Tax rates and main reliefs Section 16. Charge of income tax for 1986-87. 17. Rate of advance corporation tax.

2 18. Corporation tax: small companies. 19. Personal reliefs: operative date for PAYE. 20. Relief for interest. 21. Deduction rate for sub-contractors in construction industry. Employee shareholding 22. Employee share schemes: shares subject to restrictions. 23. Employee share schemes: general amendments. 24. Approved profit sharing schemes: workers' co-operatives. 25. Savings-related share option schemes. 26. Shares and rights to acquire shares obtained by directors and employees. Charities 27. Relief for donations under payroll deduction scheme. 28. Payroll deduction scheme: further provisions. 29. Donations by companies to charities etc. 30. Certain payments to charities. 31. Charities: restriction of tax exemptions. 32. Higher rate relief for covenanted payments. 33. Disclosure of information to Charity Commissioners. Foreign element: expenses 34. Expenses connected with work abroad. 35. Expenses connected with foreign trades etc. 36. Travel between trades etc. 37. Travelling expenses of employees not domiciled in UK.

3 38. Section 37: commencement. Miscellaneous 39. Personal equity plans. 40. Business expansion scheme. 41. Enterprise allowance. 42. Company reconstructions: restriction of relief. 43. Loans to participators. Finance Act 1986 c. 41 Section 44. Entertainers and sportsmen. 45. Payments on retirement or removal from office or employment etc. 46. Pension scheme surpluses. 47. Building societies. 48. Foreign dividends in recognised clearing system. 49. Double taxation relief: advance corporation tax. 50. Offshore funds: conditions for certification. 51. Pensions paid to victims of National-Socialist persecution. 52. Temporary disregard of increases in certain pensions and allowances. 53. Tax treatment of VAT penalties etc. and repayment supplement. 54. Associated companies: oil and gas industry. CHAPTER II CAPITAL ALLOWANCES 55. New code of allowances for capital expenditure on mineral extraction. 56. Agricultural land and buildings. 57. New expenditure on leased assets etc. CHAPTER III CAPITAL GAINS 58.

4 Gifts into dual resident trusts. 59. Disposals of options and contracts for gilt-edged securities etc. 60. Small part disposals. CHAPTER IV SECURITIES 61. Stock lending. 62. Amendments of Finance Act 1985. 63. Other provisions. PART III STAMP duty Securities 64. Stock or marketable securities: reduction of rate. 65. Bearers: consequential provisions etc, 66. Company's purchase of own shares. 111 A2 iv c. 41 Finance Act 1986 Depositary receipts Section 67. Depositary receipts. 68. Depositary receipts: notification. 69. Depositary receipts: supplementary. Clearance services 70. Clearance services. 71. Clearance services: notification. 72. Clearance services: supplementary. Reconstructions and acquisitions 73. Reconstructions etc: amendments. 74. Reconstructions etc: repeals. 75. Acquisitions: reliefs. 76. Acquisitions: further provisions about reliefs. 77. Acquisition of target company's share capital. Loan capital, letters of allotment etc. 78. Loan capital. 79. Loan capital: new provisions.

5 80. Bearer letters of allotment etc. Changes in financial institutions 81. Sales to market makers. 82. Borrowing of stock by market makers. 83. Composition agreements. 84. Miscellaneous exemptions. 85. Supplementary. PART IV STAMP duty RESERVE TAX Introduction 86. The tax: introduction. The principal charge 87. The principal charge. 88. Section 87: special cases. 89. Section 87: exceptions for market makers etc. 90. Section 87: other exceptions. 91. Liability to tax. 92. Repayment or cancellation of tax. Finance Act 1986 c. 41 v Other charges Section 93. Depositary receipts. 94. Depositary receipts: supplementary. 95. Depositary receipts: exceptions. 96. Clearance services. 97. Clearance services: exceptions. General 98. Administration etc. 99. Interpretation. PART V INHERITANCE TAX 100. Capital transfer tax to be known as inheritance tax. 101. Lifetime transfers potentially exempt etc. 102. Gifts with reservation. 103. Treatment of certain debts and incumbrances. 104. Regulations for avoiding double charges etc.

6 105. Application of business and agricultural relief where transfer partly exempt. 106. Changes in financial institutions: business property. 107. Changes in financial institutions: interest. PART VI OIL TAXATION 108. The on-shore/off-shore boundary. 109. Alternative valuation of light gases. 110. Attribution of certain receipts and expenditure between oil fields. PART VII MISCELLANEOUS AND SUPPLEMENTARY 111. Broadcasting: additional payments by programme contractors. 112. Limit for local loans. 113. "Securities" for purposes of Exchange Equalisation Account Act 1979. 114. Short title, interpretation, construction and repeals. A3 vi c. 41 Finance Act 1986 SCHEDULES: Schedule 1-Vehicles excise duty : hackney carriages and farmers' goods vehicles. Schedule 2-Vehicles excise duty : miscellaneous amendments. Schedule 3-Warehousing regulations. Schedule 4-Extension to Northern Ireland of pro- visions of Betting and Gaming Duties Act 1981. Schedule 5-Licences under the customs and excise Acts.

7 Schedule 6-Consideration for fuel supplied for priv ate use. Schedule 7-Charities: qualifying expenditure, invest- ments and loans. Schedule 8-Personal equity plans. Schedule 9-Business expansion scheme. Schedule 10-Company reconstructions. Schedule 11-Entertainers and sportsmen. Schedule 12-Pension scheme surpluses. Schedule 13-Mineral extraction: the new code of reliefs. Schedule 14-Mineral extraction: old expenditure. Schedule 15-Agricultural land and buildings. Schedule 16-New expenditure on leased assets and on certain vehicles. Schedule 17-Securities: amendments of Finance Act 1985. Schedule 18-Securities: other provisions. Schedule 19-Inheritance tax. Schedule 20-Gifts with reservation. Schedule 21-Modifications of Finance Act 1982, Schedule 18 in relation to elections under section 109 of this Act. Schedule 22-Broadcasting: additional payments by programme contractors. Schedule 23-Repeals. Finance Act 1986 c. 41 ELIZABETH II Finance Act 1986 1986 CHAPTER 41 An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance .

8 [25th July 1986] Most Gracious Sovereign, WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:- 1 2 c. 41 Finance Act 1986 PART I CUSTOMS AND excise AND VALUE ADDED TAX CHAPTER I CUSTOMS AND excise The rates of duty Tobacco products. 1979 c. 7. Hydrocarbon oil. 1979 c. 5. (1) For the Table in Schedule 1 to the Tobacco Products duty Act 1979 there shall be substituted- "TABLE 1. Cigarettes.

9 An amount equal to 21 per cent. of the retail price plus per thousand cigarettes. 2. Cigars .. per kilogram. 3. Hand-rolling tobacco per kilogram. 4. Other smoking tobacco and chewing tobacco per kilogram." (2) This section shall be deemed to have come into force on 21st March 1986. (1) In section 6(1) of the Hydrocarbon Oil Duties Act 1979 for " " (light oil) and " " (heavy oil) there shall be substituted " " and " " respectively. (2) In subsection (1) of section 11 of that Act (rebate on heavy oil) for paragraphs (a) and (b) there shall be substituted- "(a) in the case of fuel oil, of a litre less than the rate at which the duty is for the time being chargeable; (b) in the case of gas oil, of a litre less than the rate at which the duty is for the time being chargeable; and (c) in the case of heavy oil other than fuel oil and gas oil, equal to the rate at which the duty is for the time being chargeable." (3) For subsection (2) of section 11 of that Act (definition of types of heavy oil), there shall be substituted- "(2) In this section- 'fuel oil' means heavy oil which contains in solution an amount of asphaltenes of not less than per cent.

10 Or which contains less than per cent. but not less than per cent. of asphaltenes and has a closed flash point not exceeding 150 C; and `gas oil' means heavy oil of which not more than 50 per cent. by volume distils at a temperature not exceeding 240 C and of which more than 50 per cent. by volume distils at a temperature not exceeding 340 C." (4) This section shall be deemed to have come into force at 6 o'clock in the evening of 18th March 1986. Finance Act 1986 c. 41 3 PART 1 (1) The Vehicles ( excise ) Act 1971 and the Vehicles Vehicles excise ( excise ) Act (Northern Ireland) 1972 shall be amended in accord- duty . ance with this section. 1971 c. 10. 1972 c. 10 (2) For Part II of Schedule 2 to each of the Acts of 1971 and (N-0- 1972 (annual rates of duty on hackney carriages) there shall be substituted the provisions set out in Part I of Schedule 1 to this Act. (3) In Schedule 4 to each of the Acts of 1971 and 1972 (annual rates of duty on goods vehicles)- (a) in Part I, in sub-paragraph (2) of paragraph 6 (farmer's goods vehicle or showman's goods vehicle having a plated gross weight or a plated train weight) in paragraph (b) (weight exceeding tonnes but not exceeding 12 tonnes) for " 135" (which applies to farmers' goods vehicles only) there shall be substituted " 155"; and (b) in Part II, for Tables A(1), C(1) and D(1) (rates for farmers' goods vehicles having plated weight exceeding 12 tonnes) there shall be substituted the Tables set out in Part II of Schedule I to this Act.)