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14 1980

FINANCE ACT, 1980

Chapter III

Taxation of Farming Profits

Extension of tax charge on farming profits.

22. —As respects the year 1980-81 and subsequent years of assessment—

(a) section 15 (farming profits to be charged under Schedule D) of the Finance Act, 1974 , is hereby amended by the substitution in subsection (3) of “£40” for “£50”, and

(b) section 19 (limit on amount of tax to be charged in certain cases) of the said Act (inserted by the Finance Act, 1978 ) is hereby amended—

(i) by the substitution in the definition of V in subsection (1) of “£39” for “£49”, and

(ii) by the substitution in subsection (2) of “£49” for “£59”,

and the said subsection (3) (apart from the proviso), the said definition and the said subsection (2), as so amended, are set out in the Table to this section.

TABLE

(3) Subsection (1) shall not apply, as respects any year of assessment, in the case of an individual who shows that the rateable valuation of all farm land occupied by him did not, at any time during that year of assessment, amount to £40 or more.

V is 1 or, if greater, the number equivalent to the amount by which the rateable valuation of the farm land occupied by him for that year exceeds £39.

(2) This section shall not apply in any case where the rateable valuation of the farm land occupied by the individual at any time during the year of assessment exceeds £49.

Application for 1980-81 of section 20A (optional basis of assessment) of Finance Act, 1974.

23. Section 20A (inserted by the Finance Act, 1978 ) of the Finance Act, 1974 , shall have effect for the year 1980-81 as if —

(a) “1980-81” were substituted for “1978-79” in each place where it occurs,

(b) “section 22 of the Finance Act, 1980” were substituted for “ section 13 of the Finance Act, 1978 ” in paragraph (a) (ii), and

(c) “1980” were substituted for “1978” in paragraph (a) (II).

Cesser of sections 20 (basis of assessment) and 21 (notional basis of assessment) of Finance Act, 1974.

24. Sections 20 and 21 (inserted by the Finance Act, 1978 ) of the Finance Act, 1974 , shall not apply or have effect in relation to the year 1980-81 or any subsequent year of assessment.

Application of section 28 (farming profits: restriction of personal allowances) of Finance Act, 1974.

25. —(1) In any case where section 28 of the Finance Act, 1974 , applies for any year of assessment in relation to an individual—

(a) if the other income, within the meaning of that section, of the individual is income of his spouse, the individual and his spouse shall be assessed to tax for that year in accordance with the provisions of section 193 of the Income Tax Act, 1967 , and the proviso to the said section 193 shall not have effect,

(b) if the individual makes a claim for the year of assessment under section 1 or 2 of the Finance Act, 1980, “the specified amount” in each of those sections shall, in relation to the individual for that year of assessment, be construed as meaning the amount so specified as reduced by the amount by which it would be reduced by virtue of the said section 28 if the specified amount was the aggregate amount of the deductions to be made from the total income of the individual concerned in respect of personal reliefs claimed by him for that year of assessment.

(2) In this section “personal reliefs” has the same meaning as in section 197 of the Income Tax Act, 1967 .

Farming: provision relating to capital allowances.

26. —(1) In this section—

farming” has the same meaning as in Chapter II of Part I of the Finance Act, 1974 :

specified machinery or plant” means machinery or plant in use or intended for use for the purposes of a trade of farming but not including fixed machinery and fixed plant designed to be used exclusively in a farm building and which is in use or is intended to be used in such a building;

specified provisions” means section 251 of the Income Tax Act, 1967 , section 11 of the Finance Act, 1967 and section 26 of the Finance Act, 1971 .

(2) In determining what capital allowances fall to be made to a person for any chargeable period commencing on or after the 6th day of April, 1980, in taxing a trade of farming—

(a) in a case where the aggregate of the capital allowances which would fall to be so made to the person for the chargeable period if the specified provisions did not apply or have effect for that chargeable period in relation to specified machinery or plant, or the expenditure on the provision thereof, amounts to or exceeds 30 per cent. of the amount of the profits or gains from farming on which the person is chargeable to tax for that chargeable period, the said specified provisions shall not apply or have effect in the case of that person for that chargeable period in relation to specified machinery or plant, and

(b) in any other case the amount or the aggregate amount of—

(i) any capital allowance or allowances given under any of the specified provisions, and

(ii) any amount or amounts by which any capital allowance or allowances may be increased under any of the specified provisions, shall be limited to the maximum amount which will secure that the aggregate of the capital allowances falling to be made to the person for the chargeable period in taxing the trade of farming shall not exceed 30 per cent. of the profits or gains from farming on which the person is chargeable to tax for the chargeable period.

Farming: allowances for capital expenditure on construction of buildings and other works.

27. —As respects expenditure incurred on or after the 6th day of April, 1980, section 22 (inserted by the Corporation Tax Act, 1976 ) of the Finance Act, 1974 , is hereby amended by the substitution for subsection (2) of the following subsection:

“(2) Where a person to whom this section applies incurs, for the purpose of a trade of farming land occupied by him, any capital expenditure on the construction of farmhouses, farm buildings, cottages, fences or other works, there shall be made to him during a writing-down period of ten years beginning with the chargeable period related to that expenditure, writing-down allowances (in this section referred to as ‘farm buildings allowances’) in respect of that expenditure and such allowances shall be made in taxing the trade:

Provided that—

(a) the farm buildings allowance to be granted for any chargeable period shall, subject to paragraph (b), be increased by such amount as is specified by the person to whom the allowance is to be made in making his claim for the allowance and, in relation to a case in which this proviso has had effect, any reference in the Tax Acts to a farm buildings allowance made under this section shall be construed as a reference to that allowance as increased under this proviso, and

(b) the maximum farm buildings allowance to be made under this section for any chargeable period shall not exceed three-tenths of the capital expenditure to which the said farm buildings allowance relates.”.

Farming: provision relating to relief in respect of increase in stock values.

28. —(1) Where, in computing profits from the trade of farming, a deduction allowed by virtue of section 12 of the Finance Act, 1976 , has effect for the year 1980-81—

(a) section 31 (4) (a) of the Finance Act, 1975 (as applied by section 12 (2) (a) of the Finance Act, 1976 ) shall apply and have effect as if the reference to 20 per cent. were a reference to 10 per cent., and

(b) the said section 12 shall have effect as if subsection (2) (c) (inserted by the Finance Act, 1979 ) had not been enacted.

(2) Where a deduction falls to be made under section 31A (2) (inserted by the Finance Act, 1976 ) of the Finance Act, 1975 , in relation to the trade of farming, the said section 31A shall have effect as respects any accounting period which ends on or after the 6th day of April, 1979, as if—

(i) in subsection (4) (a) the reference to 20 per cent. were a reference to 10 per cent., and

(ii) paragraph (iii) (inserted by the Finance Act, 1979 ) of the proviso to the said subsection (4) (a) had not been enacted.

(3) (a) In this subsection—

accounting period” has the same meaning as in section 12 of the Finance Act, 1976 ;

farming” has the same meaning as in Chapter II of Part I of the Finance Act, 1974 ;

person” has the same meaning as in section 12 of the Finance Act, 1976 ;

stock to which this subsection applies” means livestock forming part of the trading stock of a trade of farming which is compulsorily disposed of under any statute relating to the eradication or control of diseases in livestock;

trading stock” has the same meaning as in section 31 of the Finance Act, 1975 .

(b) Where—

(i) any stock to which this subsection applies is disposed of in an accounting period by a person carrying on a trade of farming, and

(ii) apart from the provisions of this subsection, the value of the trading stock of the said trade of farming at the beginning of the accounting period exceeds the value of the trading stock at the end of the accounting period, the person may elect, by notice in writing given to the inspector not later than one year after the end of the accounting period, that for the purpose of section 31 of and the third Schedule to the Finance Act, 1975 , and section 12 of the Finance Act, 1976

(I) the value of the trading stock of the trade of farming at the end of the accounting period, and

(II) the value of the said trading stock at the beginning of the immediately succeeding accounting period,

shall be computed as if the said stock to which this subsection applies had not been disposed of:

Provided that—

(A) this subsection shall not be construed as enabling the value of trading stock at the end of an accounting period or at the beginning of an immediately succeeding accounting period to exceed the value of the trading stock at the beginning of the first mentioned accounting period,

(B) nothing in this subsection shall affect the provisions of section 12 (8) (inserted by the Finance Act, 1977 ) of the Finance Act, 1976 , and

(C) this subsection shall not have effect in relation to any year of assessment prior to the year 1980-81.

Amendment of provisions relating to the occupation of farm land by individuals and the deeming of farm land to be so occupied.

29. —As respects the year 1980-81 and subsequent years of assessment, section 17 of the Finance Act, 1974 , is hereby amended—

(a) by the addition to subsection (1) of the following proviso:

“Provided that farm land shall not be deemed to be occupied by an individual by reason of the fact that it is farm land of which his wife is the beneficial owner, if the individual does not have the use of that farm land and his wife—

(i) has the use of that farm land, or

(ii) is chargeable to tax under Case V of Schedule D on payments received in respect of the occupation of that farm land and those payments are not less than the payments which, having regard to values prevailing at the time, are not less than the payments which could have been obtained in respect of that land on the basis that negotiations for the payments had been at arm's length.”

(b) by the addition thereto of the following subsection:

“(8) In determining for the purposes of section 15 (3) and of section 30 (1) of the Finance Act, 1980 whether the rateable valuation of all farm land occupied by an individual did not at any time during a year of assessment amount to or exceed a particular amount in a case where farm land is beneficially owned by an individual jointly with any other person or persons, the individual shall, in relation to the farm land so owned, be deemed, notwithstanding the preceding provisions of this section, to occupy farm land the rateable valuation of which is an amount equal to the total rateable valuation of the farm land so owned.”.