HC Deb 07 December 1993 vol 234 cc259-61

Resolved,

That the Income and Corporation Taxes Act 1988 shall have effect as follows.

(1) The provisions of section 256 of that Act shall become subsection (1) of that section and after that subsection there shall be inserted the following subsections— (2) Where under any provision of this Chapter the relief to which a person is entitled for any year of assessment consists in an income tax reduction calculated by reference to a specified amount, the effect of that relief shall be that the amount of that person's liability for that year to income tax on his total income shall be the amount to which he would have been liable apart from that provision less whichever is the smaller of—

  1. (a) the amount equal to 20 per cent. of the specified amount; and
  2. (b) the amount which reduces his liability to nil.
(3) In determining for the purposes of subsection (2) above the amount of income tax to which a person would be liable apart from any provision providing for an income tax reduction, no account shall be taken—
  1. (a) where that provision is section 259 or 261A, of any income tax reduction under any of the other provisions of this Chapter;
  2. (b) where that provision is section 262(1), of any income tax reduction under any of the other provisions of this Chapter except section 259 or 261A; or
  3. (c) whatever that provision—
    1. (i) of any relief by way of a reduction of liability to tax which is given in accordance with any arrangements having effect by virtue of section 788 or by way of a credit under section 790(1); or
    2. (ii) of any tax at the basic rate on so much of that person's income as is income the income tax on which he is entitled to charge againt any other person or to deduct, retain or satisfy out of any payment;
but paragraph (a) above, so far as it relates to any income tax reduction under section 261A, is without prejudice to the provisions of subsection (2) of that section.

(2) In section 257A of that Act—

  1. (a) in subsection (1), for the words from "to a deduction" onwards there shall be substituted "for that year to an income tax deduction calculated by reference to £1,720";
  2. (b) in subsection (2), for the words from "to a deduction" to "the deduction" there shall be substituted "for that year to an income tax reduction calculated by reference to £2,665 (instead of to the reduction";
  3. (c) in subsection (3), for the words from "to a deduction" to "the deduction" there shall be substituted "for that year to an income tax reduction calculated by reference to £2,705 (instead of to the reduction"; and
  4. (d) in subsection (6), for "deduction" there shall be substituted "income tax reduction".

(3) In subsections (1) and (2) of section 257BA of that Act—

  1. (a) for the words "to deduct from her total income", in each place where they occur, there shall be substituted "to an income tax reduction calculated by reference to"; and
  2. (b) for the words "that he is entitled to deduct under section 257A", in each place where they occur, there shall be 260 substituted "by reference to which the calculation of the income tax reduction to which he is entitled under section 257A is to be made".

(4) In subsection (3) of section 257BA of that Act—

  1. (a) for "to deduct from his total income" there shall be substituted "to an income tax reduction calculated by reference to";
  2. (b) for "the amount, if any, that he is already entitled to deduct" there shall be substituted "any income tax reduction to which he is already entitled"; and
  3. (c) for "that she is entitled to deduct by virtue of that election" there shall be substituted "by reference to which the calculation of the income tax reduction to which she is entitled by virtue of that election is to be made".

(5) Any election made for the purposes of section 257BA of that Act before 6th April 1994 which, apart from this Resolution, would have effect in accordance with that section for the year 1994–95 shall so have effect as if it were an election for the purposes of that section as amended by this Resolution.

(6) In subsection (1) of section 257BB of that Act, for paragraph (b) and the words after that paragraph there shall be substituted— (b) the amount of the reduction to which he is entitled is determined in accordance with section 256(2)(b) or, by virtue of his having no income tax liability to which that reduction is applicable, is nil, his wife shall be entitled (in addition to any reduction to which she is entitled by virtue of an election under section 257BA) to an income tax reduction calculated by reference to an amount equal to the unused part of the amount by reference to which her husband's income tax reduction fell to be calculated in pursuance of section 257A and any election under section 257BA."

(7) In subsection (3) of section 257BB of that Act, for paragraph (b) and the words after that paragraph there shall be substituted— (b) the amount of the reduction to which she is entitled is determined in accordance with section 256(2)(b) or, by virtue of her having no income tax liability to which that reduction is applicable, is nil, her husband shall be entitled (in addition to any other reduction to which he is entitled by virtue of section 257A) to an income tax reduction calculated by reference to an amount equal to the unused part of the amount by reference to which his wife's income tax reduction fell to be calculated in pursuance of that election."; and after that subsection there shall be inserted the following subsection— (3A) In this section references, in relation to such an amount as is mentioned in subsection (1)(b) or (3)(b), to the unused part of an amount by reference to which any income tax reduction fell to be calculated are references to so much of it (including, where the amount so mentioned is nil, all of it) as has no practical effect on the determination of the amount so mentioned.

(8) Subsection (6) of section 257BB of that Act shall cease to have effect.

(9) Where the year in question for the purposes of subsection (5) of section 257D of that Act is the year 1994–95, deductions by virtue of any of sections 257A to 262 of that Act shall be disregarded in determining the deductions which a wife is taken for the purposes of paragraph (c) of that subsection to have been entitled to make from her total income for the year immediately preceding the year in question.

(10) In section 257D(5)(d) of that Act, the words "section 257A and" shall be omitted.

(11) In section 257F(c) of that Act, after "257A" there shall be inserted "or, as the case may be, an income tax reduction under that section".

(12) In subsection (1)(b) of section 259 of that Act, for "to a deduction from his total income" there shall be substituted "to an income tax reduction".

(13) In section 259(2) of that Act, for "to a deduction from his total income of there shall be substituted "for that year to an income tax reduction calculated by reference to".

(14) In subsection (3) of section 259 of that Act, for "deduction" there shall be substituted "income tax reduction".

(15) In subsection (4A) of section 259 of that Act—

  1. (a) for the words "a deduction", in the first and third places where they occur, there shall be substituted "an income tax reduction"; and
  2. (b) for the words "a deduction", in the second place where they occur, there shall be substituted "a reduction".

(16) In subsection (1)(b) of section 260 of that Act, for the words from "the deduction" to "equal" there shall be substituted "the income tax reduction to which each of them is entitled under that section shall be calculated, subject to subsection (2) below, by reference".

(17) In subsection (2) of section 260 of that Act, for the words from "the deduction" to "equal" there shall be substituted "the income tax reduction to which he is entitled for that year under section 259 shall be calculated by reference".

(18) In section 261A(1) of that Act, for "to a deduction from his total income of" there shall be substituted "for that year to an income tax reduction calculated by reference to".

(19) In subsection (1) of section 262 of that Act—

  1. (a) in paragraph (a), for "to a deduction from her total income of' there shall be substituted "to an income tax reduction calculated by reference to"; and
  2. (b) in paragraph (b), for "to a deduction of" there shall be substituted "to an income tax reduction calculated by reference to".

(20) In section 265(3)(b) of that Act, the words from "section 257A" to "or under" shall be omitted.

(21) In section 276 of that Act, after subsection (1) there shall be inserted the following subsection— (1A) In subsection (1) above the references to relief under this Chapter do not include references to relief consisting in such an income tax reduction as is mentioned in section 256(2) above.

(22) This Resolution shall apply for the year 1994–95; and section 257C(1) of that Act, so far as relating to section 257A(1) to (3) of that Act, shall not apply for the year 1994–95.

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.