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27 1974

FINANCE ACT, 1974

PART I

Income Tax, Sur-Tax and Corporation Profits Tax

Chapter I

Method of Charging Income Tax for 1974-75 and Subsequent Years

Amendment of section 1 of Income Tax Act, 1967.

1. Section 1 (1) of the Income Tax Act, 1967 , is hereby amended—

(a) by the deletion of the definition of “assessable income”,

(b) by the substitution for the definitions of “standard rate of tax”, “tax” and “year of assessment” of the following definitions, respectively, that is to say:

“‘standard rate’, in relation to tax, means the rate of tax provided for by section 3 (1) of the Finance Act, 1974;”,

“‘tax’ means income tax;”, and

“‘year of assessment’ means a year for which income tax is imposed by any Act imposing duties of income tax;”,

(c) by the insertion, after the definition of “foreign life insurance fund”, of the following definition:

“‘higher rates’, in relation to tax, means the rates of tax provided for by section 3 (2) (c) of the Finance Act, 1974;”,

(d) by the insertion, after the definition of “rating authority”, of the following definition:

“‘reduced rate’, in relation to tax, means the rate of tax provided for by section 3 (2) (a) of the Finance Act, 1974;” and

(e) by the insertion, after the definition of “taxable income” of the following definition:

“‘total income’ means total income from all sources as estimated in accordance with the provisions of this Act;”.

Amendment of section 4 of Income Tax Act, 1967.

2. Section 4 of the Income Tax Act, 1967 , is hereby amended by the substitution of “at any rate or rates, tax at that rate or at those rates, as may be appropriate,” for “at any rate, the tax at that rate” and the said section 4, as so amended, is set out in the Table to this section.

TABLE

4. Where any Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or at those rates, as may be appropriate, shall, subject to the provisions of this Act, be charged for that year in respect of all property, profits, or gains respectively described or comprised in the Schedules contained in the sections of this Act enumerated below, that is to say—

Schedule C—Section 47;

Schedule D—Section 52; and

Schedule E—Section 109

and in accordance with the provisions of this Act respectively applicable to those Schedules.

Charge of income tax for 1974-75 and subsequent years.

3. —(1) Income tax shall be charged for the year 1974-75 and for each subsequent year of assessment and, subject to subsection (2), shall be so charged at the rate of 35 per cent, (which shall be known as the standard rate).

(2) Where a person, who is charged to income tax for the year 1974-75 or any subsequent year of assessment is an individual (other than an individual acting in a fiduciary or representative capacity), he shall, subject to section 5 (3), be charged to tax—

(a) in respect of so much of his taxable income as does not exceed £1,550, at the rate of 26 per cent, (which shall be known as the reduced rate),

(b) in respect of so much (if any) of his taxable income as exceeds £1,550 but does not exceed £4,350, at the standard rate, and

(c) in respect of so much (if any) of his taxable income as exceeds £4,350, at the rates (which shall be known as the higher rates) specified in the following Table:

Table

Part of excess over £4,350

Higher rate

The first £2,000

50 per cent.

The next £2,000

65 per cent.

The remainder

80 per cent.

Charge to tax of income from which tax has been deducted.

4. —Where income (in this section referred to as the relevant income)—

(a) from which tax is deductible by virtue of the provisions of Schedule C or Schedule D, or

(b) from which tax is deductible by virtue of section 433 , 434 or 456 of the Income Tax Act, 1967 , or

(c) which, by virtue of section 525 of the Income Tax Act, 1967 , is treated as if it were a net amount of an annual payment from the gross amount of which tax had been duly deducted under section 434 of the said Act,

is to be taken into account in computing the total income of an individual for any year of assessment, then, for the purpose of charging the said total income to tax at the rate or rates of tax charged for that year of assessment, the following provisions shall apply—

(d) the relevant income shall be regarded as income chargeable to tax under Case IV of Schedule D and shall be charged accordingly;

(e) in determining the amount of tax payable on the said total income credit shall be given for the tax deducted from the relevant income and the amount of the credit shall, subject to the provisions of sections 233 and 525 of the Income Tax Act, 1967 , be the amount of tax deducted from the relevant income:

Provided that where tax is deducted from a dividend at a rate as reduced by virtue of section 363 , 396 or 410 of the Income Tax Act, 1967 , or section 14 of the Finance Act, 1973 , such adjustment shall be made in the amount of the credit as may be necessary for the purpose of giving effect to the relief provided by those sections.

Provisions as to tax charged by way of deduction.

5. —(1) The provisions of the Income Tax Acts which provide that tax may be deducted from any payment at the rate or rates of tax in force during the period through which the payment was accruing due, or that there may be deducted from any dividend the tax appropriate thereto shall have effect as if they provided that tax may be deducted or shall be allowed at the standard rate for the year in which the amount payable becomes due:

Provided that this subsection shall not affect the deduction of tax at a rate less than the standard rate by virtue of section 363 , 396 or 410 of the Income Tax Act, 1967 , or section 14 of the Finance Act, 1973 .

(2) In estimating under the Income Tax Acts the total income of any person, any income which is chargeable with tax by way of deduction at the standard rate in force for any year shall be deemed to be income of that year, and any deductions which are allowable on account of sums payable under deduction of tax at the standard rate in force for any year out of the property or profits of that person shall be allowed as deductions in respect of that year, notwithstanding that the income or sums, as the case may be, accrued or will accrue in whole or in part before or after that year.

(3) Where a person is required to be assessed and charged with tax in respect of any property, profits or gains out of which he makes any payment in respect of any annual interest, annuity or other annual sum, or any royalty or other sum in respect of the user of a patent, he shall, in respect of so much of the property, profits or gains as is equal to the said payment and may be deducted in computing his total income, be charged at the standard rate only.

Personal reliefs.

6. —(1) Where a deduction falls to be made from the total income of an individual for the year 1974-75 or any subsequent year of assessment in respect of relief to which the individual is entitled under a provision mentioned in column (1) of the Table to this section and the amount of the deduction would, but for this section, be an amount specified in column (2) of the said Table, the amount of the deduction shall, in lieu of being the amount specified in the said column (2) be the amount specified in column (3) of the said Table opposite the mention of the amount in the said column (2).

TABLE

Statutory provision

Amount to be deducted for 1973-74

Amount to be deducted from total income for 1974-75 and subsequent years

(1)

(2)

(3)

£

£

Income Tax Act, 1967 :

section 138 (married man)

494

800

(single person)

299

500

(widowed person)

324

550

(working wife)

104 or, if less, three-fourths of amount of wife's earned income

200 or, if less, amount of wife's earned income

sections 139 and 140 (housekeeper)

100

140

section 141 (child)—under 11 years

155

200

—11 years or over

170

200

section 142 (dependent relative)

  60

  80

Finance Act, 1969 :

section 3 (housekeeper taking care of incapacitated person)

100

140

Finance Act, 1971 :

section 11 (blind person)

100

140

(both spouses blind)

200

280

(2) Part I of the First Schedule shall have effect for the purpose of supplementing this section.

Amendment of section 142 of Income Tax Act, 1967.

7. Section 142 (1) of the Income Tax Act, 1967 , is hereby amended by the substitution of “£489” for “£407” (inserted by the Finance Act, 1973 ) in both places where it occurs, by the substitution of “£80” for “£60”, in both places where it occurs, and by the substitution of “£409” for “£347” (inserted by the said Finance Act, 1973 ) and the said section 142 (1), as so amended, is set out in the Table to this section.

TABLE

142.—(1) If the claimant proves that he maintains at his own expense any person, being a relative of his or of his wife who is incapacitated by old age or infirmity from maintaining himself, or his or his wife's widowed mother, whether incapacitated or not, and being a person whose total income from all sources is less than £489 a year, he shall be entitled to a deduction of £80 in respect of each person whom he so maintains, and a like deduction shall be made in the case of a claimant who, by reason of old age or infirmity, is compelled to depend upon the services of a person (being a person whose total income from all sources is less than £489 a year and being a son or daughter of the claimant) resident with and maintained by him or her:

Provided that each of the foregoing provisions of this subsection shall have effect, in a case in which the total income from all sources of the person in respect of whom the deduction is to be made exceeds £409 a year, as if, instead of specifying a deduction of £80, it specified a deduction of that amount reduced by the amount of the excess.

Age allowance.

8. —(1) Where, for the year 1974-75 or any subsequent year of assessment, an individual is entitled to a deduction under section 138 of the Income Tax Act, 1967 , and he proves that at any time during that year of assessment he was, or in the case of a married man whose wife is living with him, either he or his wife was, of the age of sixty-five years or upwards, he shall, in addition to the allowance to which he is entitled under the said section 138 for that year of assessment, be entitled to a deduction—

(a) in case he is a married man whose wife is living with him, of £50, and

(b) in any other case, of £25.

(2) All such provisions of the Income Tax Acts as apply in relation to every deduction specified in sections 138 to 143 of the Income Tax Act, 1967 , shall apply in relation to a deduction under this section.

Amendment of section 152 of Income Tax Act, 1967.

9. Section 152 of the Income Tax Act, 1967 , is hereby amended by the substitution for subsection (1) of the following subsection:

“(1) The aggregate of the premiums or other sums in respect of which relief is given to any person under sections 143 and 151 shall not exceed one-sixth of the total income of the person or £1,000, whichever is the lesser:

Provided that in any case where the aggregate of the premiums paid on policies of insurance or on contracts for deferred annuities exceeds £1,000 and the insurance or contract was made before the 3rd day of April, 1974, relief in respect of the said premiums or other sums shall be given under the sections aforesaid without regard to the restriction of £1,000 provided for in this subsection.”.

Cesser of charge to sur-tax.

10. —Sur-tax shall not be charged for the year 1974-75 or any subsequent year of assessment.

Consequential amendments.

11. —Part II of the First Schedule shall have effect for the purpose of supplementing this Chapter.

Commencement of Chapter 1.

12. —The provisions of this Chapter shall have effect for the year 1974-75 and subsequent years of assessment and, accordingly, the amendments effected by those provisions and the First Schedule and the repeals effected by section 86 and mentioned in Part I of the Second Schedule shall not be taken to affect tax for an earlier year of assessment or the doing of anything in relation to tax for such a year.