Finance Act 1974

• Citation: 1974 c. 30
• Sections: 104

Section 2 Increase of certain duties on betting.

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(2) For the purposes of pool betting duty on bets made at any time by reference to any event taking place after 31st March 1974, section 7(1) of the Betting and Gaming Duties Act 1972 and section 18(1) of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972 (under which the amount of the duty is 33⅓ per cent. of the amount on which the duty falls to be computed) shall each have effect with the substitution for the words “33⅓ per cent.” of the words “ 40 per cent. ” , except in the of bets made by way of pool betting in respect of a competition prize held by—

(a) the holder of a licence under the Pool Competitions Act 1971, or

(b) any person approved by the Secretary of State in that behalf on the recommendation of the Gaming Board for Great Britain,

in respect of which the amount of the pool betting duty shall be 33⅓ per cent.

Section 24 Returns of persons treated as employees.

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Section 38 Certain development gains from land to be taxed as income.

(1) This section applies to any disposal of any interest in land situated in the United Kingdom which is made after 17th December 1973.

(2) Where a gain accrues to a person on a disposal of an interest in land to which this section applies, so much (if any) of the gain as by virtue of this Chapter is a development gain shall be treated for all the purposes of the Tax Acts as income arising at the time of the disposal and as constituting profits or gains chargeable to tax under Case VI of Schedule D for the chargeable period in which the disposal is made, and (except for the purpose of computing the development gain, if any, accruing in respect of the disposal) shall not be a chargeable gain .

(3) Where a chargeable gain accrues to a person on a disposal of an interest in land to which this section applies, then, subject to the provisions of this Chapter, the development gain accruing to him in respect of that disposal shall be equal to whichever is the least of the following amounts (computed in accordance with any relevant provisions of this Chapter), that is to say—

(a) the net proceeds of the disposal reduced by an amount equal to 120 per cent. of the total sum that is by virtue of section 32(1)(a) and (b) of the Capital Gains Tax Act 1979 allowable as a deduction from the consideration for the disposal in computing the chargeable gain;

(b) the net proceeds of the disposal reduced by an amount equal to 110 per cent. of the current use value of the interest at the time of the disposal; and

(c) the amount of the chargeable gain reduced by the amount (if any) by which the current use value of the interest at the time of the disposal exceeds the current use value of the interest at the time of its acquisition by the person making the disposal or, if the interest was acquired by him before 6th April 1965, its current use value at that date.

(4) Schedule 3to this Act shall have effect for interpreting and supplementing this section, which is there referred to as the principal section.

(5) This section shall have effect subject to the transitional provisions in Schedule 4 to this Act .

Section 39 Exemption or relief for small disposals.

(1) Where the amount of chargeable gains that would, apart from this subsection, be a person’s development gains for any chargeable period does not exceed —

(a) in the case of an individual or the personal representatives of a deceased person as such, £10,000; or

(b) in the case of a company or the trustees of a settlement, £1,000,

no part of those chargeable gains shall be development gains; and where that amount exceeds the limit applicable to that person under paragraph (a) or (b) above only so much of that amount as exceeds the limit shall be development gains.

(2) For the purposes of this section a man and his wife living with him shall be treated as one individual .

(4) Where two or more persons carry on a trade or business in partnership, then, for the purposes of this section —

(a) notwithstanding section 60(b) of the Capital Gains Tax Act 1979 the firm shall be treated as a single individual, and all disposals of partnership assets by the firm shall be treated as made by that individual;

(b) a change in the persons carrying on the trade or business shall be disregarded if, assuming an election under section 154(2) of the Taxes Act to have been duly made, the trade or business would not by virtue of section 154(1) of that Act be treated as discontinued by reason of the change; and

(c) for any year of assessment in or in part of which a company is a member of the partnership, subsection (1) above , shall apply as if in paragraph (a) above for the words “a single individual” and “that individual” there were substituted respectively the words “a company” and “that company”.

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Section 40 Development losses.

(1) This section applies to any disposal of any interest in land situated in the United Kingdom which is made after 17 th December 1973.

(2) Where in any chargeable period a loss accrues to a person on a disposal of an interest in land to which this section applies, he may, by notice in writing given within two years after the end of that period, make a claim for relief from tax by reference to the amount of any development loss accruing to him in respect of the disposal.

(3) If, but only if, a claim under subsection (2) above is made in respect of a disposal to which this section applies, then, subject to the provisions of Schedule 6 to this Act —

(a) so much ( if any ) of the loss accruing on the disposal as by virtue of this Chapter is a development loss shall be treated as a loss to which section 176 or, as the case may be, section 179 of the Taxes Act ( Case VI losses ), applies, and ( except for the purpose of computing the development loss, if any, accruing in respect of the disposal ) shall not be an allowable loss within the meaning of the Capital Gains Tax Act 1979 ; and

(b) the said section 176 or 179 shall apply to any development loss accruing in respect of the disposal as if a claim under that section had been duly made with regard to it.

(4) Where an allowable loss accrues to a person on a disposal of an interest in land to which this section applies and a claim under subsection (2) above is made in respect of that disposal, then, subject to the provisions of this Chapter, the development loss accruing to him in respect of that disposal shall be equal to the amount of the allowable loss reduced by the amount ( if any ) by which the current use value of the interest at the time of the disposal is less than the current use value of the interest at the time of its acquisition by the person making the disposal or, if the interest was acquired by him before 6 th April 1965, its current use value at that date.

(5) Schedule 6 to this Act shall have effect for supplementing this section.

(6) Without prejudice to subsection (3) of section 41 or subsection (3) of section 42 of this Act, nothing in either of those sections shall be taken to extend the application of this section .

Section 41 Disposals of interests in land effected indirectly.

(1) Where after 17 th December 1973 a person disposes of shares in a company ( “the said company” ) and immediately before the disposal either —

(a) the said company is or has control of a land-owning company, and is a close company in which he has a material interest; or

(b) the said company, or a company of which it has control, has a material interest in a land-owning company which is a close company, and the said company is one of which he has control or of which he and persons connected with him have control,

the disposal shall be deemed to be a disposal of an interest in land to which section 38 of this Act applies.

(2) Where a chargeable gain accrues to a person on a disposal of shares in a company to which the preceding subsection applies, then, subject to the provisions of section 39 of this Act and this section, the development gain accruing to him in respect of the disposal shall be equal to that chargeable gain.

(3) Where, apart from this subsection, a development gain would by virtue of the preceding provisions of this section accrue to a person in respect of a disposal of shares in a company, then —

(a) a development gain shall not accrue to him in respect of the disposal unless an excess of development gains over development losses would have accrued to the company, being a land-owning company, or to a land-owning company mentioned in paragraph (a) or (b), as the case may be, of subsection (1) above, on the company disposing of its relevant land at market value at the time of his disposal and any such land-owning company disposing likewise of the relevant land of that company; and

(b) the development gain accruing to him in respect of the disposal shall not exceed one-half of the excess of the total development gains over the total development losses that would have accrued as mentioned in paragraph (a) above, or one-half of such part of that excess as is attributable to the shares disposed of by him.

If a claim under section 40(2) of this Act could have been made in respect of any disposal which is to be assumed for the purposes of this subsection, that claim shall for those purposes be assumed to have been made.

(4) Where a person disposes of shares in a company ( “the said company” ) in circumstances such that subsection (1) above would apply to the disposal if the said company or, as the case may be, a land-owning company mentioned in paragraph (b) of that subsection had been a close company at the material time ( that is to say, immediately before the disposal ), then, if the said company or that land-owning company was not resident in the United Kingdom at that time but would have been a close company at that time if it had been so resident, this Chapter shall apply in relation to the disposal as if the said company or, as the case may be, the land-owning company had been resident in the United Kingdom at that time.

(5) Where a person disposes of shares in a company ( “the said company” ) in a case falling within subsection (1)(a) above and at the material time ( that is to say, immediately before the disposal ) the said company had control of a land-owning company which, because it was not resident in the United Kingdom, was not a close company, then this Chapter shall apply in relation to the disposal as if that land-owning company had been resident in the United Kingdom at that time.

(6) For the purposes of this section —

(a) “ land-owning company ” means a company that owns relevant land to a value exceeding three-quarters of the net value of all its assets ( that is to say, their value less the value of the debts and liabilities of the company );

(b) subject to subsection (11) below, a person has a material interest in a company if under subsection (6) of section 285 of the Taxes Act he would have a material interest in it . . . if in the said subsection (6) for “5 per cent.”, in both places, there were substituted “10 per cent.” ;

(c) an unauthorised unit trust which owns relevant land to a value exceeding three-quarters of the net value of all its assets ( that is to say, their value less the value of the debts and liabilities of the unit trust ) shall be treated as if it were both a land-owning company and a close company;

(d) the part attributable to any shares in a company of the amount of an excess of total development gains over total development losses shall be the sum which that amount would add to the distributions made in respect of those shares in a winding-up of the company if the amount represented assets of the company, and if apart from that amount the assets of the company were enough, and no more than enough, to ensure the satisfaction of its liabilities ( including the return of share capital ), and the part of any such amount which is directly or indirectly attributable under this paragraph to shares held by a company shall ( so far as is necessary for the determination of any question as to the tax chargeable in consequence of this section ) be apportioned by the like method between the shares in that company to arrive at the part attributable to any of those shares.

In its application by virtue of section 93 of the Capital Gains Tax Act 1979 to an unauthorised unit trust, paragraph (d) above shall have effect with any necessary modifications.

(7) For the purposes of this and the preceding subsection —

(a) “relevant land” ( subject to subsections (8) to (10) below ) means any interest in land situated in the United Kingdom, other than an interest held as a trading stock;

(b) the value of the relevant land of a company or unauthorised unit trust shall be taken to be its value free of any liability charged or secured thereon;

(c) a company or unauthorised unit trust shall be treated as owning any interest in land which it has unconditionally contracted to acquire, but not as owning any interest in land which it has unconditionally contracted to dispose of;

(d) “ value ”, in relation to the relevant land of a company or unauthorised unit trust, means market value;

(e) the net value of the assets of a company other than a unit trust scheme is the net value they would have on a sale in the open market of the business of the company as a going concern; and

(f) an interest under a settlement shall be treated as an interest in land situated in the United Kingdom if a disposal thereof would fall within section 42(1) of this Act.

(8) The interest of a company in any building or part of a building —

(a) which the company occupies and uses for the purposes only of a trade carried on by it ( other than a trade of providing services for the occupier of land in which the company has an interest ); or

(b) which, in a case where the company is a member of a group of companies, some other member of the group occupies and uses for the purposes only of a trade carried on by that other member ( other than a trade of providing services for the occupier of land in which any member of the group has an interest ),

shall not be relevant land in relation to the company for the purposes of subsections (6) and (7) above, nor shall its interest in the site of any such building or part of a building ( including in the site any land in the immediate vicinity of the building which the company or, as the case may be, that other member of the group occupies for purposes ancillary to its occupation and use of the building or part of a building ).

(9) If, in the case of a building or part of a building in which a company has an interest, it is established to the satisfaction of the inspector or, on appeal, of the Commissioners concerned that the company or, in a case where the company is a member of a group of companies, some other member of the group intends within three years of the relevant disposal of shares to occupy and use that building or part as mentioned in paragraph (a) or, as the case may be, paragraph (b) of the preceding subsection, that paragraph shall have effect as if the company were so occupying that building or part.

(10) Subsections (8) and (9) above —

(a) shall apply in relation to any permanent or semi-permanent structure in the nature of a building as they apply in relation to a building; and

(b) shall apply in relation to the discharge of the functions of a public authority, and to the occupation of woodlands where the woodlands are managed by the occupier on a commercial basis and with a view to the realisation of profits, as they apply in relation to a trade;

and section 272 of the Taxes Act ( groups of companies: definitions ) shall apply for the purposes of those subsections as it applies for the purposes of sections 273 to 281 of that Act.

(11) In the case of a close company ( within the meaning of this Chapter ) which for the purposes of the Corporation Tax Acts is not a close company because it falls within section 282(4) or 283 of the Taxes Act, subsection (6)(b) above shall, except in relation to an excepted person, have effect as if for “ “10 per cent.”” there were substituted “ “20 per cent.””.

(12) In the preceding subsection “ excepted person ”, in relation to a company, means any of the following, namely —

(a) any director or associate of a director of the company; or

(b) any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate; or

(c) any associated company of the company; or

(d) the trustees of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c) above.

Expressions used in this subsection and in subsection (5) of section 283 of the Taxes Act have the same meaning in this subsection as in that.

(13) A disposal of an interest in shares in a company which under section 72 of the Capital Gains Tax Act 1979 ( capital distributions by companies ) a person is treated as having made in consideration of a capital distribution from the company in the form of an interest in land shall be disregarded for the purposes of this section if the distribution is made or due in respect of share capital in the course of a dissolution or winding-up of the company.

Section 42 Disposals of interests in settled property.

(1) Where after 17 th December 1973 a person disposes of an interest under a settlement which immediately before the disposal is a land settlement, the disposal shall be deemed to be a disposal of an interest in land to which section 38 of this Act applies.

(2) Where a chargeable gain accrues to a person on a disposal of an interest under a settlement to which the preceding subsection applies, then, subject to the provisions of section 39 of this Act and this section, the development gain accruing to him in respect of the disposal shall be equal to that chargeable gain.

(3) Where, apart from this subsection, a development gain would by virtue of the preceding provisions of this section accrue to a person in respect of a disposal of an interest under a settlement then —

(a) a development gain shall not accrue to him in respect of the disposal unless an excess of development gains over development losses would have accrued to the trustees of the settlement on their disposing of the relevant land comprised in the settled property at market value at the time of his disposal; and

(b) the development gain accruing to him in respect of the disposal shall not exceed the amount ( if any ) by which the market value of the interest at that time exceeds what its market value would then have been if the value of the relevant land then comprised in the settled property had been equal to the actual value of that relevant land at that time reduced by one-half of the excess of development gains over development losses that would have accrued as mentioned in paragraph (a) above.

If a claim under section 40(2) of this Act could have been made in respect of any disposal which is to be assumed for the purposes of this subsection, that claim shall for those purposes be assumed to have been made.

(4) Where a gain accrues to a person on a disposal of an interest under a settlement which immediately before the disposal is a land settlement and —

(a) section 58(1) of the Capital Gains Tax Act 1979 ( exemption for gains accruing on disposals of interests under settlements ) would, apart from this subsection, apply to that gain; and

(b) immediately before the disposal it was the case that under the terms of the settlement the person making the disposal would or might become absolutely entitled to all or any part of the settled property as against the trustee,

then the development gain accruing to him in respect of that disposal shall first be computed as if the said section 58(1) did not so apply, and the said section 58(1) shall then apply to so much, if any, of the gain as is not by virtue of this Chapter a development gain.

(5) Where by virtue of section 58(2) of the Capital Gains Tax Act 1979 a person who has acquired an interest in settled property is treated as disposing of the interest on the occasion of his becoming, as the holder of that interest, absolutely entitled to any settled property as against the trustee, then —

(a) subsection (4) above shall not apply in the case of that disposal if the trustee is chargeable to tax on that occasion by virtue of section 54(1) of the Capital Gains Tax Act 1979 ( settled property ); and

(b) where the preceding paragraph would apply if the trustee were resident and ordinarily resident in the United Kingdom, then, if any beneficiary under the settlement is by virtue of section 17 of the Capital Gains Tax Act 1979 ( non-resident trusts ) treated as if the whole or part of the relevant amount had been development gains accruing to that beneficiary, the development gain accruing to the first-mentioned person in respect of the said disposal shall not exceed the difference between what that development gain would be apart from this paragraph and the relevant fraction of what that development gain would be apart from this paragraph.

(6) For the purposes of this and the preceding subsection —

(a) “ the relevant amount ” means the amount on which the trustee of the settlement mentioned in that subsection would have been chargeable to income tax in respect of development gains by virtue of section 38(2) of this Act as mentioned in subsection (2) of the said section 17 ;

(b) “ the relevant fraction ” means the fraction of which the numerator is equal to so much of the relevant amount as is by virtue of subsection (2) of the said section 17 treated as development gains accruing to beneficiaries under the said settlement, and the denominator is the relevant amount; and

(c) references to the said section 17 are references to that section as it has effect in relation to development gains by virtue of paragraph 3 of Schedule 8 to this Act.

(7) Where, in a case to which subsection (4) above applies, a person having an interest in settled property is charged to tax in respect of a development gain accruing to him by virtue of this section, then, for the purposes of the computation under Chapter II of Part II of the Capital Gains Tax Act 1979 of the gain accruing to the trustees of the settlement on a disposal of all or any part of the relevant land which was comprised in the settled property immediately before the disposal in respect of which that development gain accrued to him, section 32(1)(a) of the Capital Gains Tax Act 1979 ( computation of chargeable gains: allowable expenditure ) shall apply —

(a) as if a sum equal to the amount of that development gain formed part of the consideration given by the trustees for the acquisition of the relevant land which was so comprised in the settled property; and

(b) if the relevant land which was so comprised in the settled property consisted of more than one interest in land, as if such proportion of that sum as is just and reasonable formed part of the consideration given by the trustees for the acquisition of each of those interests.

(8) For the purposes of this section —

(a) a settlement is a “land settlement” if the settled property comprises relevant land to a value exceeding three-quarters of the net value of all the settled property ( that is to say, its value less the value of any debts or liabilities of the trustees in their capacity as such ); and

(b) “ value ”, in relation to any settled property, means market value.

(9) For the purposes of this and the preceding subsection —

(a) “ relevant land ” ( subject to subsection (10) below ) means any interest in land situated in the United Kingdom, other than an interest held as trading stock;

(b) the value of the relevant land comprised in settled property shall be taken to be its value free of any liability charged or secured thereon;

(c) the net value of the assets of any business comprised in settled property shall be taken to be the net value they would have on a sale in the open market of the business as a going concern;

(d) the settled property comprised in a settlement shall be treated as including any interest in land which the trustees in their capacity as such have unconditionally contracted to acquire, but not as including any interest in land which the trustees in that capacity have unconditionally contracted to dispose of; and

(e) shares in a company shall be treated as an interest in land situated in the United Kingdom if a disposal thereof would fall within section 41(1) of this Act.

(10) Subsections (8) to (10) of section 41 of this Act, except paragraph (b) of subsection (8) and so much of subsection (9) as refers to, or relates to the case mentioned in, that paragraph, shall apply for the purposes of subsections (8) and (9) above as they apply for the purposes of subsections (6) and (7) of that section, subject to the modification that for references to a company there shall be substituted references to the trustees of settled property in their capacity as such.

Section 43 Special rates of charge for development gains accruing to trustees, personal representatives or unit trust schemes.

(1) Income arising in a year of assessment by virtue of section 38(2) of this Act to trustees or to the personal representatives of a deceased person as such or to an unauthorised unit trust shall ( unless chargeable to income tax under any of the following provisions of this section ) be chargeable to income tax at a rate equal to the sum of the basic rate and the additional rate for that year. . . .

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Section 44 Supplementary

(1) For the purposes of this Chapter —

“ authorised unit trust ” has the meaning given by section 358 of the Taxes Act, and “ unauthorised unit trust ” means a unit trust scheme which is not an authorised unit trust;

“ chargeable period ” means an accounting period of a company or a year of assessment;

“ close company ”, except for the purposes of Schedule 7 to this Act, has the meaning given by subsections (1) to (3) ( disregarding (1)(d) of section 282 of the Taxes Act, and ( except as aforesaid ) the exceptions made by subsections (4) and (5) of that section and section 283 of that Act shall not apply;

“ interest in land ” means any estate or interest in land, any right in or over land or affecting the use or disposition of land, and any right to obtain such an estate, interest or right from another which is conditional on that other’s ability to grant the estate, interest or right in question, except that it does not include the interest of a creditor ( other than a creditor in respect of a rentcharge ) whose debt is secured by way of a mortgage, an agreement for a mortgage or a charge of any kind over land, or, in Scotland, the interest of a creditor in a charge or security of any kind over land ;

“ land ” includes buildings;

“ securities ” includes securities as defined in section 82 of the Capital Gains Tax Act 1979 except that it does not include a security for a normal commercial loan as defined in paragraph 1 of Schedule 12 to the Finance Act 1973;

“ shares ”does not include fixed-rate preference shares as defined in paragraph 1 of Schedule 12 to the Finance Act 1973, but includes securities ( as well as, by virtue of section 64(1) of the Capital Gains Tax Act 1979 stock ) and, in relation to a company not limited by shares ( whether or not it has a share capital ), also includes the interest of a member of the company as such, whatever the form of that interest, and this Chapter shall apply in relation to any disposal of rights attached to or forming part of a share as if the rights included in the disposal and those not included were separate shares;

“ unit trust scheme ” means a unit trust scheme as defined in section 26(1) of the Prevention of Fraud ( Investments ) Act 1958, or, for Northern Ireland, in section 22(1) of the Prevention of Fraud ( Investments ) Act ( Northern Ireland ) 1940.

(2) In this Chapter references to the net proceeds of a disposal of an interest in land to which section 38 of this Act applies are . . . ) references to the amount which, in the computation of the chargeable gain accruing on the disposal, falls to be taken as the consideration, less any sum allowable in that computation as a deduction on account of the incidental costs to the person making the disposal of making it.

(3) Where a person disposing of an interest in land acquired it in circumstances such that, by virtue of any enactment, he and the person from whom he acquired it ( “the previous disposer” ) fall to be treated as if the acquisition were for a consideration of such amount as would secure that on the disposal under which he acquired it neither a gain nor a loss would accrue to the previous disposer, any reference in this Chapter to the acquisition of the interest by the person making the disposal shall be construed as a reference to its acquisition by the previous disposer, or, if the previous disposer himself acquired it in such circumstances as aforesaid, as a reference to its acquisition by the person from whom the previous disposer acquired it ( and likewise for any number of previous acquisitions of the interest each made in the like circumstances ).

(4) Schedule 7 to this Act shall have effect with respect to the treatment of development gains under the Tax Acts; and the enactments relating to the taxation of capital gains shall have effect subject to the provisions of Schedule 8 to this Act ( being provisions for adapting or amending those enactments in connection with this Chapter ).

(5) This Chapter shall be deemed to have come into force on 18 th December 1973.

Section 45 Charge to tax: first letting or occupation of building after material development.

(1) Subject to the provisions of this section and Schedule 9 to this Act, where after 17 th December 1973 a chargeable building is first let or occupied to a material extent after the commencement of the relevant development, any person who on the material date has an interest in the relevant land shall be deemed for the purposes of the Capital Gains Tax Act 1979 and Chapter I of this Part of this Act to have on that date disposed of and immediately reacquired that interest for a consideration equal to its market value .

(2) For the purposes of this Chapter a chargeable building is first let or occupied to a material extent after the commencement of the relevant development on the first occasion thereafter on which either —

(a) the floor area of the part or parts let under one or more leases granted after the commencement of that development; or

(b) the floor area of the part or parts occupied as of right otherwise than under any lease so granted ( whether or not the occupation began before the commencement of that development ); or

(c) the aggregate of the floor area of the part or parts let as aforesaid and the floor area of the part or parts occupied as aforesaid,

is more than 25 per cent. of what was or is the floor area of the whole chargeable building on the date on which the relevant development was or is substantially completed.

(3) Subsection (1) above shall not apply in the case of a chargeable building which was wholly or partly let or occupied before 18 th December 1973 if at any time before that date either —

(a) the floor area of the part or parts let under one or more leases granted after the commencement of the relevant development; or

(b) the floor area of the part or parts occupied as of right otherwise than under any lease so granted; or

(c) the aggregate of the floor area of the part or parts let as aforesaid and the floor area of the part or parts occupied as aforesaid,

was more than 25 per cent. of what was or is the floor area of the whole chargeable building on the date on which the relevant development was or is substantially completed.

For the purposes of this subsection a building or part of a building shall not be treated as let at a particular time unless it was then let under a lease granted by an instrument executed before that time.

(4) Schedule 9 to this Act shall have effect for supplementing this section.

Section 46 Interpretation, etc.

(1) In this Chapter —

“ chargeable building ” has the meaning given by subsections (3) to (5) below ;

“ interest in land ” and “ land ” have the same meaning as in Chapter I of this Part of this Act;

“ lease ” includes an underlease, sublease or tenancy, and “lessor”, “lessee”, “let” and “rent” shall be construed accordingly;

“ material development ” has the meaning given by paragraph 6 of Schedule 3 to this Act;

“ the material date ”, in relation to a chargeable building which after 17 th December 1973 is first let or occupied to a material extent after the commencement of the relevant development, means the later of the following dates, namely the date after 17 th December 1973 on which the chargeable building was first let or occupied as aforesaid and the date on which the relevant development is substantially completed;

“ the relevant development ”, in relation to a chargeable building, means the material development from which the building has resulted or of which it has been the subject, so far as that development directly concerns that building ;

“ the relevant land ”, in relation to a chargeable building, means the chargeable building and its site ( including in the site, subject to subsection (6) below, any land occupied for purposes ancillary to the use of the chargeable building ).

(2) For the purposes of this Chapter a person shall be treated as occupying land if, but only if, his occupation of it is or, but for any exemption from rates which he enjoys, would be such as to render him or some other person liable to be assessed to rates in respect thereof under the law relating to rating in the part of the United Kingdom in which the land is situated, and references to occupation shall be construed accordingly.

(3) Subject to subsections (4) and (5) below, every separate building in the United Kingdom that has resulted from or been the subject of material development ( whenever carried out ) shall be a chargeable building for the purposes of this Chapter, except that for those purposes —

(a) a separate building constructed or adapted for use wholly as one or more private dwellings shall not be a chargeable building; and

(b) a separate building constructed or adapted for use only partly as one or more private dwellings shall be a chargeable building but shall be deemed not to include any part constructed or adapted for use as a private dwelling.

(4) For the purposes of the preceding subsection a building which is physically connected with another building —

(a) shall, although so connected, be treated as a separate building if it is so constructed as to be capable of remaining in position and being used independently of the other building or as to require only minor modification to render it so capable; and

(b) shall not be treated as other than a separate building merely because it is so connected with the other building at or below ground level or by means of a bridge or similar structure ( whether affording access or accommodation or both ).

(5) Where —

(a) subsection (1) of section 45 of this Act has operated in the case of a chargeable building or would have so operated if that section had been enacted and come into force before the commencement of the relevant development, and had been so enacted with the omission of subsection (3) and of the words “after 17th December 1973” in subsection (1) ; and

(b) after the material date there is carried out in relation to that building further material development which, apart from this subsection, would make the said subsection (1) liable to operate as regards the whole of any chargeable building ( “the resulting chargeable building” ) consisting of or including the whole or part of the first-mentioned chargeable building; and

(c) one or more parts, but not the whole, of the resulting chargeable building has or have directly resulted from or been directly the subject of the further material development,

then, without prejudice to subsection (3)(a) and (b) above, the resulting chargeable building shall for the purposes of this Chapter be deemed not to include any part which has not directly resulted from or been directly the subject of the further material development.

(6) Where land is occupied for purposes ancillary to the use of two or more chargeable buildings, it shall for the purposes of this Chapter be apportioned between those buildings in a fair and reasonable manner; and so much of the land as is apportioned to any one chargeable building shall for those purposes be taken to form part of the site of that, and of no other, chargeable building.

(7) For the purposes of this Chapter “ floor area ” means gross floor area as ascertained by external measurement; and where different parts of a building are separately let or occupied, floor space used in common shall be apportioned rateably.

(8) In relation to a chargeable building, references in this Chapter to the commencement of the relevant development are references to the date on which that development was begun, determined in accordance with paragraph 9 of Schedule 3 to this Act.

(9) Where a lease of land is granted for a term commencing later than the date of the grant, the land shall for the purposes of this Chapter not be taken to become let under that lease until the commencement of the term.

(10) This Chapter shall be deemed to have come into force on 18 th December 1973 .

Section 47 Matters arising out of Chapters I and II of this Part.

Schedule 10 to this Act shall have effect with respect to the payment and recovery of tax payable by virtue of Chapter I or II of this Part, the obtaining of information for purposes of those Chapters, and other matters arising out of those Chapters .

Section 50 Vehicle excise duty-disabled persons.

In section 7 of the Finance Act 1971 for the words “specifically and extensively adapted” there shall be substituted the word “suitable” and the words from “conspicuous” to “and where” shall be omitted.

Section 54 Grants towards duty charged on bus fuel.

(1) In relation to fuel used in operating any bus service on or after 12th February 1974, subsection (2) of section 92 of the Finance Act 1965 shall have effect as if for the words from “but” onwards (which specify the maximum amount of any grant under subsection (1) of that section by the Secretary of State to the operator of a bus service towards defraying customs or excise duties charged on bus fuel) there were substituted (instead of the words substituted by section 33(1) of the Transport Act 1968) the words “but the amount of a grant shall not exceed such sum for every gallon of fuel used or estimated to have been used in operating the bus service during the period to which the grant relates as the Treasury may from time to time approve, being a sum not greater than the rate per gallon of the duty of excise chargeable on hydrocarbon oil produced in the United Kingdom at the date of use of the fuel, including any addition to that duty by virtue of an o\rder under section 9 of the Finance Act 1961.”.

(2) The preceding subsection shall be deemed to have come into operation on 12th February 1974.

(3) The preceding provisions of this section shall not extend to Northern Ireland, but it is hereby declared that for the purposes of the Northern Ireland Constitution Act 1973 a provision for purposes similar to the purposes of those provisions is not a provision dealing with an excepted matter.

Section 55 Power to authorise amendment of taxi fare byelaws.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 56 Trustee savings banks—special investments.

In section 18(1) of the Trustee Savings Banks Act 1969 (which provides that a special investment may be made only on behalf of a person who is a depositor to the extent of not less than £50) after “£50” there shall be inserted “or such smaller amount as may be specified in the rules of the bank”

Section 57 Citation, interpretation, construction and repeals.

(1) This Act may be cited as the Finance Act 1974.

(2) In this Act “ the Taxes Act ” means the Income and Corporation Taxes Act 1970.

(3) In this Act—

(a) Part I, . . ., so far as it relates to value added tax, shall be construed as one with Part I of the Finance Act 1972;

(b) Part II, so far as it relates to income tax, shall be construed as one with the Income Tax Acts; so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts . . . ;

(c) Part III , so far as it relates to capital gains tax or the computation of development gains, shall be construed as one with the Capital Gains Tax Act 1979 so far as it relates to income tax shall be construed as one with the Income Tax Acts and, so far as it relates to corporation tax, shall be construed as one with the Corporation Tax Acts; and

(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Except so far as the context otherwise requires, any reference in this Act to any enactment shall be construed as a reference to that enactment as amended, and as including a reference to that enactment as applied, by or under any other enactment, including this Act.

(5) If the Northern Ireland Assembly passes provisions amending or replacing any enactment of the Parliament of Northern Ireland, or any Order in Council made under section 1(3) of the Northern Ireland (Temporary Provisions) Act 1972, referred to in this Act, the reference shall be construed as a reference to the enactment or order as so amended or, as the case may be, as a reference to those provisions.

(6) The enactments mentioned in Schedule 14 to this Act (which include certain enactments which had ceased to have effect before the commencement of this Act) are hereby repealed to the extent specified in the third column of that Schedule, but subject to any provision at the end of any Part of that Schedule.

Section 1

(1) For the purpose of the principal section and this Schedule the current use value of an interest in land shall be ascertained in accordance with this Part of this Schedule; and in this Part of this Schedule the time as at which current use value is to be ascertained is referred to as “ the relevant time ”.

(2) Subject to the following provisions of this Part of this Schedule, the current use value of an interest in land at the relevant time is the market value of that interest at that time calculated on the assumption that it was at that time, and would continue to be, unlawful to carry out any material development of the land other than any material development thereof which, being authorised by planning permission in force at that time, was begun before that time .

(3) In this paragraph “ planning permission ”has the same meaning as in the Town and Country Planning Act 1971, or, in Scotland, the Town and Country Planning ( Scotland ) Act 1972, or, in Northern Ireland, the Planning ( Northern Ireland ) Order 1972; and in determining for the purposes of this paragraph what material development of any land was authorised by planning permission at a time when there was in force in respect of the land planning permission granted on an outline application ( that is to say, an application for planning permission subject to subsequent approval on any matters ), any such development of the land which at that time —

(a) was authorised by that permission without any requirement as to subsequent approval; or

(b) not being so authorised, had been approved in the manner applicable to that planning permission,

but no other material development, shall for the purposes be taken to have been authorised by that permission at that time.

Section 2

(1) Subject to sub-paragraphs (5) to (7) below, this paragraph shall apply as regards the current use value of an interest in land which has been disposed of by way of a part disposal of an asset ( in this paragraph referred to as “ the relevant asset ” ) consisting of an interest in land.

(2) The current use value at the relevant time of the interest disposed of shall be the relevant fraction of the current use value of the relevant asset at that time, calculated on the same assumptions as to the lawfulness or otherwise of any material development as fall to be made under this Schedule in calculating the current use value at that time of the interest disposed of.

(3) For the purposes of the preceding sub-paragraph “ the relevant fraction ”means that fraction of the sums mentioned in the following sub-paragraph which under [ subsection (2) of section 35 of the Capital Gains Tax Act 1979 ] is, or would but for [ subsection (4) of that section ] be, allowable as a deduction in computing under [ Chapter II of Part II of that Act ] the amount of the gain accruing on the part disposal.

(4) The sums referred to in the preceding sub-paragraph are the sums which, if the entire relevant asset had been disposed of at the time of the part disposal, would be allowable by virtue of [ section 32 (1)(a) and (b) of the Capital Gains Tax Act 1979 ] as a deduction in computing under [ Chapter II of Part II of that Act ] the gain accruing on that disposal of the relevant asset.

(5) Sub-paragraphs (2) to (4) above shall not apply —

(a) in the case of a disposal of an interest in land by way of a part disposal if, on making the disposal, the person doing so no longer has any interest in the land which is subject to that interest; or

(b) in a case to which the following provisions of this paragraph apply.

(6) In computing under this Chapter any gain accruing to a person on a part disposal of a lease which is a wasting asset by way of the grant of a sub-lease for a premium, the current use value of the lease at the time of its acquisition by the person making the disposal shall be the relevant fraction of what its current use value at that time would be apart from sub-paragraphs (2) to (4) above.

(7) For the purposes of the preceding sub-paragraphs “ the relevant fraction ” means that fraction of the expenditure attributable to the lease under [ section 32(1)(a) and (b) of the Capital Gains Tax Act 1979 ] which under paragraph 4 of [ Schedule 3 to that Act ( sub-leases out of short leases ) falls to be apportioned to what is disposed of.

Section 3

In computing under this Chapter any gain accruing to a person on a part disposal of an interest in land resulting under [ subsection (1) of section 20 of the Capital Gains Tax Act 1979 ] from the receipt as mentioned in paragraph (a), (c) or (d) of that subsection of a capital sum, the current use value at the relevant time of the interest out of which the part disposal was made shall be taken to be what it would have been at that time if the circumstances which caused the capital sum to be received had not arisen.

Section 4

(1) The current use value of an interest in land which is either —

(a) a freehold interest which is subject to a lease or an agreement for a lease; or

(b) an interest under a lease or agreement for a lease,

shall be ascertained without regard to any premium required under the lease or agreement for a lease or any sublease, or otherwise under the terms subject to which the lease or sublease was or is to be granted, but with regard to all other rights under the lease or prospective lease ( and, for the current use value of an interest under a lease subject to a sublease, under the sublease ).

(2) If under the preceding sub-paragraph an interest under a lease or agreement for a lease would have a negative value, the current use value of the interest shall be nil.

(3) If a lease is granted out of any interest in land after 17 th December 1973, then, in computing under this Chapter any gain accruing on any disposal of the reversion on the lease made while the lease subsists, the current use value of the reversion at any time after the grant of the lease shall not exceed what would have been at that time the current use value of the interest in the land of the person then owning the reversion if that interest had not been subject to the lease.

(4) In the application of this paragraph to Scotland, “ freehold ”means the estate or interest of the proprietor of the dominium utile or, in the case of property other than feudal property, of the owner, and “ reversion ”means the interest of the landlord in property subject to a lease.

Section 5

(1) In computing under this Chapter any gain accruing to a person on a disposal of a lease which is a wasting asset, the current use value of the lease at the time of its acquisition by the person making the disposal shall be the relevant fraction of what its current use value at that time would be apart from this paragraph.

(2) For the purposes of the preceding sub-paragraph “ the relevant fraction ”means the fraction of which the numerator is equal to so much of the expenditure attributable to the lease under [ section 32(1)(a) and (b) of the Capital Gains Tax Act 1979 ] as is not under paragraph 1 of [ Schedule 3 ] to that Act excluded therefrom for the purposes of the computation under [ Chapter II of Part II of that Act ] of the gain accruing on the disposal, and the denominator is equal to the whole of the expenditure which would be so attributable to the lease for those purposes apart from the said paragraph 1.

Section 6

In this Schedule, subject to the following paragraph, “ material development ”,in relation to any land, means the making of any change in the state, nature or use of the land .

Section 7

(1) The doing of any of the following things in the case of any land shall not be taken for the purposes of this Schedule to involve material development of the land, that is to say —

(a) the carrying out of works for the maintenance, improvement, enlargement or other alteration of any building, so long as the cubic content of the original building is not exceeded by more than one-tenth;

(b) the carrying out of works for the rebuilding, as often as occasion may require, of any building which was in existence at the relevant time, or of any building which was in existence in the period of ten years immediately preceding the day on which that time falls but was destroyed or demolished before the relevant time, so long as ( in either case ) the cubic content of the original building is not exceeded by more than one-tenth;

(c) the use of any land for the purposes of agriculture or forestry, the use for any of those purposes of any building occupied together with land so used, and the carrying out on any land so used of any building or other operations required for the purposes of that use;

(d) the carrying out of operations on land for, or the use of land for, the display of an advertisement, announcement or direction of any kind;

(e) the carrying out of operations for, or the use of the land for, car parking, provided that such use shall not exceed three years;

(f) in the case of a building or other land which at the relevant time was used for a purpose falling within any class specified in paragraph 8 below or which, being unoccupied at that time, was last used for any such purpose, the use of that building or land for any other purpose falling within the same class;

(g) in the case of a building or other land which at the relevant time was in the occupation of a person by whom it was used as to part only for a particular purpose, the use for that purpose of any additional part of the building or land not exceeding one-tenth of the cubic content of the part of the building used for that purpose at the relevant time or, as the case may be, one-tenth of the area of the land so used at that time;

(h) in the case of land which at the relevant time was being temporarily used for a purpose other than the purpose for which it was normally used, the resumption of the use of the land for the last-mentioned purpose;

(i) in the case of land which was unoccupied at the relevant time, the use of the land for the purpose for which it was last used before that time.

(2) In determining for the purposes of sub-paragraph (1)(a) or (b) above whether or not the cubic content of the original building has been exceeded by more than one-tenth, the cubic content of the building after the carrying out of the works in question shall be treated as reduced by the amount ( if any ) by which so much of that cubic content as is attributable to one or more of the matters mentioned in the following sub-paragraph exceeds so much of the cubic content of the original building as was attributable to one or more of the matters so mentioned.

(3) The matters referred to in the preceding sub-paragraph are the following, that is to say —

(a) means of escape in case of fire;

(b) car-parking or garage space;

(c) accommodation for plant providing heating, air-conditioning or similar facilities.

Section 8

The classes of purposes mentioned in paragraph 7(1)(f) above are the following —

Class A—Use as a dwelling-house or for the purpose of any activities which are wholly or mainly carried on otherwise than for profit, except use for a purpose falling within Class B, C or E.

Class B—Use as an office or retail shop.

Class C—Use as a hotel, boarding-house or guest-house, or as premises licensed for the sale of intoxicating liquors for consumption on the premises.

Class D—Use for the purpose of any activities wholly or mainly carried on for profit, except—

use as a dwelling-house or for the purposes of agriculture or forestry; and

use for a purpose falling within Class B, C or E.

Class E—Use for any of the following purposes, namely—

the carrying on of any process for or incidental to any of the following purposes, namely—

the making of any article or of any part of any article, or the production of any substance;

the altering, repairing, ornamenting, finishing, cleaning, washing, packing or canning, or adapting for sale, or breaking up or demolishing of any article; or

without prejudice to (i) or (ii) above, the getting, dressing or treatment of minerals,

being a process carried on in the course of a trade or business other than agriculture or forestry, but excluding any process carried on at a dwelling-house or retail shop;

storage purposes ( whether or not involving use as a warehouse or repository ) other than storage purposes ancillary to a purpose falling within Class B or C.

Section 9

(1) For the purposes of this Schedule material development shall be taken to be begun on the earliest date on which any specified operation comprised in the material development is begun.

(2) In this paragraph “ specified operation ”means any of the following, that is to say—

(a) any work of construction in the course of the erection of a building;

(b) the digging of a trench which is to contain the foundations, or part of the foundations, of a building;

(c) the laying of any underground main or pipe to the foundations, or part of the foundations, of a building or to any such trench as is mentioned in (b) above;

(d) any operation in the course of laying out or constructing a road or part of a road;

(e) any change in the use of any land .

Section 10

(1) In this Part of this Schedule, unless the context otherwise requires—

“ agriculture ”includes horticulture, fruit growing, seed growing, dairy farming, the keeping and breeding of livestock ( including any creature kept for the production of food, wool, skins or fur, or for the purpose of its use in the farming of land ), the use of land as grazing land, meadow land, osier land, market gardens and nursery grounds, and the use of land for woodlands where that use is ancillary to the farming of land for other agricultural purposes, and “agricultural”shall be construed accordingly;

“ article ”means an article of any description;

“ building ”includes part of a building, and references to a building may include references to land occupied therewith and used for the same purposes;

“ forestry ”includes afforestation;

“ minerals ”includes all minerals and substances in or under land of a kind ordinarily worked for removal by underground or surface working;

“ retail shop ”includes any premises of a similar character where retail trade or business ( including repair work ) is carried on;

“ substance ”means any natural or artificial substance or material, whether in solid or liquid form or in the form of a gas or vapour.

(2) Any reference in this Part of this Schedule to the cubic content of a building is a reference to that content as ascertained by external measurement.

(3) For the purposes of paragraph 7(1)(a) and (b) of this Schedule where two or more buildings are included in a single development the whole of that development may be regarded as a single building, and where two or more buildings result from the redevelopment of a single building the new buildings may together be regarded as a single building.

For the purposes of this sub-paragraph two or more buildings shall not be treated as included in a single development unless they are or were comprised in the same curtilage.

Section 11

(1) This paragraph shall apply in relation to a disposal of an interest in land to which the principal section applies if material development of the land has been carried out after 17 th December 1973 [ and ] since the person making the disposal acquired the interest [ but before the appointed day, within the meaning of the Development Land Tax Act 1976 ].

(2) Subsection (3) of the principal section shall apply in relation to the disposal as if paragraph (b) were omitted, and as if for the words “whichever is the least”there were substituted the words “whichever is the smaller”.

(3) For the purpose of computing the amount given by subsection (3)(c) of the principal section, the amount by which the current use value of the interest in land at the time of the disposal exceeds the current use value of the interest at the time of its acquisition by the person making the disposal or, if the interest was acquired by him before 6 th April 1965, its current use value at that date shall be taken to be equal to the sum of the amounts mentioned in the following sub-paragraph ( or, if both those amounts are nil, to be nil ).

(4) The amounts referred to in the preceding sub-paragraph are the following, that is to say —

(a) the amount ( if any ) by which the current use value of the interest immediately before the date on which the material development mentioned in sub-paragraph (1) above was begun exceeds the current use value of the interest at the time of its acquisition by the person making the disposal or on 6 th April 1965, as the case may be; and

(b) the amount ( if any ) by which the current use value of the interest at the time of the disposal exceeds the aggregate of the amounts mentioned in the following sub-paragraph.

(5) The amounts referred to in sub-paragraph (4)(b) above are the following, that is to say —

(a) the current use value of the interest immediately after the date on which the material development mentioned in sub-paragraph (1) above was begun, calculated on the assumption that it was lawful for that development to be carried out; and

(b) the amount of any expenditure attributable to that development which is allowable under [ section 32(1)(b) of the Capital Gains Tax Act 1979 ] as a deduction from the consideration for the disposal in computing the chargeable gain accruing thereon.

(6) Where material development of the land in question has been carried out on two or more different occasions after 17 th December 1973 [ and ] since the person making the disposal acquired the interets [ but before the appointed day, within the meaning of the Development Land Tax Act 1976 ], then for the purposes of this paragraph —

(a) there shall be calculated for the first of those occasions the amount mentioned in sub-paragraph (4)(a) above ( the reference there to the material development mentioned in sub-paragraph (1) above being for this purpose read as a reference to the material development carried out on that occasion );

(b) there shall be calculated for each of those occasions other than the first the amount ( if any ) by which the current use value of the interest immediately before the date on which the material development carried out on that occasion was begun exceeds the aggregate of the amounts mentioned in sub-paragraph (5) above ( the references there to the material development mentioned in sub-paragraph (1) above being for this purpose read as references to the material development carried out on the occasion preceding the one for which the calculation is being made ); and

(c) there shall be calculated the amount ( if any ) by which the current use value of the interest at the time of the disposal exceeds the aggregate of the amounts mentioned in sub-paragraph (5) above ( the references there to the material development mentioned in sub-paragraph (1) above being for this purpose read as references to the material development carried out on the last of those occasions );

and sub-paragraph (3) above shall apply as if for the words from “the sum of the amounts mentioned in the following sub-paragraph”to the end of the paragraph there were substituted the words “the sum of the amounts calculated under sub-paragraph (6)(a) to (c) below (or, if those amounts are each nil, to be nil)”.

Section 12

(1) This paragraph shall apply in relation to a disposal of an interest in land to which the principal section applies if any expenditure which is or, but for paragraph 1 of [ Schedule 3 to the Capital Gains Tax Act 1979 ], would be allowable under [ section 32(1)(b) of that Act ] as a deduction from the consideration for the disposal in computing the chargeable gain accruing thereon has been incurred since the person making the disposal acquired the interest, not being expenditure attributable to material development of the land carried out as mentioned in paragraph 11(1) of this Schedule ( that is, carried out after 17 th December 1973 [ and ] since the person making the disposal acquired the interest [ but before the appointed day, within the meaning of the Development Land Tax Act 1976 ]).

(2) For the purpose of computing the amount given by subsection (3)(c) of the principal section the current use value of the interest in land at the time of its acquisition by the person making the disposal or, if the interest was acquired by him before 6 th April 1965, its current use value at that date shall be taken to be equal to the sum of the amounts mentioned in the following sub-paragraph.

(3) The amounts referred to in the preceding sub-paragraph are the following, that is to say —

(a) the current use value of the interest at the time of its acquisition by the person making the disposal or on 6 th April 1965, as the case may be; and

(b) so much of the expenditure mentioned in sub-paragraph (1) above as is reflected in the current use value of the interest at the time of the disposal.

(4) Where material development of the land has been carried out ( whether on only one occasion or on two or more different occasions ) after 17 th December 1973 [ and ] since the person making the disposal acquired the interest [ but before the appointed day, within the meaning of the Development Land Tax Act 1976 ], sub-paragraphs (2) and (3) above shall not apply, and paragraph 11 of this Schedule shall have effect subject to the following provisions of this paragraph.

(5) Where any expenditure mentioned in sub-paragraph (1) above was incurred before the date on which the material development of the land carried out after 17 th December 1973 on the first or only occasion was begun, then in calculating under paragraph 11(4)(a) or 11(6)(a) of this Schedule the amount mentioned in the said paragraph 11(4)(a), the current use value of the interest at the time of its acquisition by the person making the disposal or on 6 th April 1965, as the case may be, shall be increased by so much of the expenditure so incurred as is reflected in the current use value of the interest immediately before the date on which the material development carried out on that occasion was begun.

(6) Where any expenditure so mentioned was incurred on or after the date on which the material development of the land so carried out on the last or only occasion was begun, then in calculating under paragraph 11(5)(b) or 11(6)(c) of this Schedule the expenditure attributable to that material development which is allowable as mentioned in the said paragraph 11(5)(b) there shall be included in that expenditure so much of the expenditure incurred as is reflected in the current use value of the interest at the time of the disposal.

(7) Where any expenditure so mentioned was incurred on or after the date on which the material development ( “the preceding development” ) so carried out on any but the last of two or more occasions was begun but before the date on which the material development ( “the following development” ) carried out on the next of those occasions was begun, then, in calculating under paragraph 11(6)(b) of this Schedule the expenditure attributable to the preceding development which is allowable as mentioned in paragraph 11(5)(b) of this Schedule, there shall be included in that expenditure so much of the expenditure so incurred as is reflected in the current use value of the interest immediately before the date on which the following development was begun.

Section 13

(1) Where paragraph 11 of this Schedule would, apart from this paragraph, apply in relation to a disposal of an interest in land because of any material development of the land carried out after 17 th December 1973 [ and ] since the person making the disposal acquired the interest [ but before the appointed day, within the meaning of the Development Land Tax Act 1976 ], the said paragraph 11 shall not so apply if the amount by which the current use value of the interest immediately after the date on which that material development was begun, calculated on the assumption that it was lawful for that development to be carried out, exceeds the current use value of the interest immediately before that date —

(a) is not greater than one-tenth of the current use value of the interest immediately before that date;

(b) does not exceed £2,500.

(2) Where material development of the land in question has been carried out on two or more different occasions after 17 th December 1973 [ and ] since the person making the disposal acquired the interest [ but before the appointed day, within the meaning of the Development Land Tax Act 1976 ] then for the purposes of this paragraph there shall be calculated for each of those occasions the amount by which the current use value of the interest immediately after the date on which the material development carried out on that occasion was begun, calculated on the assumption that it was lawful for that development to be carried out, exceeds the current use value of the interest immediately before that date, and the preceding sub-paragraph shall not apply in relation to the disposal if the aggregate of the amounts so calculated exceeds £2,500.

(3) Where by virtue of the preceding provisions of this paragraph paragraph 11 of this Schedule does not apply in relation to a disposal of an interest in land even though material development of the land has been carried out as aforesaid, the material development in question shall be disregarded for the purposes of paragraph 12 of this Schedule.

Section 14

(1) Subject to the following sub-paragraph, material development shall for the purposes of paragraphs 11 to 13 of this Schedule not be treated as carried out after a particular date if it was begun on or before that date.

(2) If, in the case of any land —

(a) material development thereof was begun on or before 17 th December 1973 but was not completed on or before that date; and

(b) the development was on that date to any extent not authorised by planning permission then in force,

then, for the purposes of paragraphs 11 to 13 of this Schedule, so much of the development carried out after that date as was not so authorised on that date shall be treated as begun on the earliest date after 17 th December 1973 on which any specified operation comprised therein is begun, and shall accordingly be treated as material development of the land carried out after 17 th December 1973.

(3) Sub-paragraph (3) of paragraph 1 of this Schedule shall apply for the purposes of this paragraph as it applies for the purposes of paragraph 1; and in this paragraph “ specified operation ”has the same meaning as in paragraph 9 of this Schedule .

Section 15

Where a chargeable gain accrues to a person on a disposal of an interest in land to which the principal section applies, being a disposal in relation to which [ paragraph 9 of Schedule 5 to the Capital Gains Tax Act 1979 ] ( sales of land in United Kingdom reflecting development value ) applies, then, if the amount of the gain is by virtue of sub-paragraph (4) of that paragraph computed without regard to [ the said Schedule 5 ] ( assets held on 6 th April 1965), this Chapter shall have effect in relation to that disposal as if in subsection (3)(c) of the principal section and paragraphs 11 and 12 of this Schedule any reference to the current use value of the interest at the time of its acquisition by the person making the disposal or, if the interest was acquired by him before 6 th April 1965, its current use value at that date referred only to its current use value at the time of its acquisition by him.

Section 16

(1) Subject to the provisions of paragraph 2 of Schedule 4 to this Act, the development gain, if any, accruing in respect of a disposal of an interest in land to which the principal section applies shall, if the disposal is one in relation to which [ sections 115 to 121 of the Capital Gains Tax Act 1979 ] ( replacement of business assets ) [ apply ], be computed as if any claim under [ those sections ] as respects the whole or a part of the consideration for the disposal had not been made.

(2) The preceding sub-paragraph shall not affect the subsequent operation of paragraph 4 ofSchedule 8 to this Act in relation to such a claim.

Section 17

Where under [ section 115(1)(b) or 116(1)(b) of the Capital Gains Tax Act 1979 ] or paragraph 18(4) of this Schedule the person making a disposal of an interest in land to which the principal section applies would, apart from this paragraph, be treated for the purposes of [ that Act ] as if the amount or value of the consideration for the acquisition of that interest were reduced or further reduced by some amount, the development gain, if any, accruing in respect of the disposal shall be computed as if the said [ section 115(1)(b) or 116(1)(b) ] or the said paragraph 18(4), as the case may be, did not apply to that consideration.

Section 18

(1) If the consideration which a person carrying on a trade obtains for the disposal of, or of his interest in, assets ( in this paragraph referred to as “ the old assets ” ) used, and used only, for the purposes of the trade throughout the period of ownership is wholly or partly applied by him in acquiring other assets, or an interest in other assets ( in this paragraph referred to as “ the new assets ” ) which on the acquisition are taken into use, and used only, for the purposes of the trade,and —

(a) the old assets and new assets are within the classes of assets listed in subsection (6) of [ section 118 ( with section 119) of the Capital Gains Tax Act 1979 ] ( replacement of business assets ) and the old assets consist of or include land in the United Kingdom; and

(b) some or all of the new assets are qualifying assets; and

(c) development gains accrue to the person carrying on the trade in respect of the disposal; and

(d) the amount of the consideration for the disposal applied as aforesaid is greater than the difference between the whole of that consideration and the amount of those development gains,

then, if the person carrying on the trade makes a claim as respects those development gains, the provisions of sub-paragraphs (2) to (5) below shall apply.

(2) There shall be ascertained the following amounts, that is to say —

(a) the amount by which so much of the consideration for the disposal as has been applied as described in sub-paragraph (1) above exceeds the difference mentioned in sub-paragraph (1)(d) above; and

(b) the amount of the consideration for the disposal which has been so applied in acquiring qualifying assets;

and in the following provisions of this paragraph “ the material amount ”means whichever of those amounts is the smaller ( or, if they are equal, the amount which is equal to each of them ).

(3) The income tax or corporation tax to which the person carrying on the trade is chargeable for the chargeable period in which the disposal was made shall be reduced by an amount equal to whichever of the following amounts is the smallest, that is to say —

(a) 30 per cent. of what is, under sub-paragraph (5) below, the appropriate amount;

(b) 30 per cent. of the amount, if any, by which the development gains accruing to him in that chargeable period exceed the development losses, if any, accruing to him in that period ( so that if the amount under this head is nil, no reduction will fall to be made under this sub-paragraph );

(c) the total amount of the income tax for which he is liable for that chargeable period or, in the case of a company, the total amount of the corporation tax for which the company is liable for that chargeable period after setting against that liability the amount of any advance corporation tax falling to be set against it under section 85 of the Finance Act 1972, but before any set-off under subsection (5) of section 240 of the Taxes Act ( income tax on distributions etc. received by U.K. company ).

For the purposes of paragraph (b) of this sub-paragraph a man and his wife living with him shall be treated as one person if the result of so treating them is to increase the amount given by that paragraph.

(4) Where a reduction falls to be made under the preceding sub-paragraph, the person carrying on the trade shall be treated for the purposes of [ the Capital Gains Tax Act 1979 ] as if the consideration for the acquisition of, or of the interest in, such of the new assets as are qualifying assets were reduced ( or further reduced ) by what is, under sub-paragraph (5) below, the appropriate amount; but this sub-paragraph shall not affect the treatment for those purposes of the other party to the transaction involving the old assets or of the other party to the transaction involving the new assets .

(5) For the purposes of sub-paragraphs (3)(a) and (4) above —

(a) if the material amount is equal to or greater than one-half of the development gains accruing in respect of the disposal, the appropriate amount is the full amount of the development gains so accruing;

(b) if the material amount is less than one-half of the development gains so accruing, the appropriate amount is an amount equal to twice the material amount.

(6) The following provisions of the Capital Gains Tax Act 1979 shall, with any necessary modifications, apply for the purposes of this paragraph as they apply for the purposes of section 115 of that Act, namely —

(a) subsections (3) to (8) of the said section 115,

(b) section 119,

(c) section 121.]

(7) Without prejudice to the provisions of [ section 43(4) of the Capital Gains Tax Act 1979 ] where consideration is given —

(a) for the acquisition or disposal of assets some or part of which are assets in relation to which a claim under this paragraph applies and some or part of which are not; or

(b) for the acquisition or disposal of assets some or part of which are, in relation to a claim under this paragraph, qualifying assets and some or part of which are not,

the consideration shall be apportioned in such manner as is just and reasonable.

(8) For the purposes of this paragraph assets are, in relation to a trade, qualifying assets if they are within the following classes of assets, that is to say the classes listed in [ section 118 of the Capital Gains Tax Act 1979 ], excluding assets within [ paragraph 2 ] of head A in class 1 other than land constituting the site of any asset within [ paragraph 1 ] of that head ( including in the site any land in the immediate vicinity of the asset which is occupied for purposes ancillary to the occupation and use of the asset ).

Section 19

(1) Paragraph 18 above shall have effect subject to the provisions of this paragraph, in which —

(a) the “ tax reduction ”means the reduction in the income tax or corporation tax to which the person carrying on the trade is chargeable which is made under sub-paragraph (3) of the said paragraph 18 in connection with a disposal of an asset ( called “asset No. 1” );

(b) the “ expenditure reduction ”means the related amount by which under sub-paragraph (4) of that paragraph, and apart from the provisions of this paragraph, the expenditure allowable in respect of another asset ( called “asset No. 2” ) is reduced;

(c) any reference to an expenditure reduction of any amount being carried forward to any asset is a reference to a reduction of that amount in expenditure allowable in respect of that asset.

(2) If asset No. 2 is a depreciating asset, the expenditure reduction shall not be carried forward, but —

(a) when the claimant disposes of asset No. 2, or

(b) when he ceases to use asset No. 2 for the purposes of a trade carried on by him, or

(c) on the expiration of a period of ten years beginning with the acquisition of asset No. 2,

whichever event comes first, an amount equal to the tax reduction may be assessed to tax and recovered accordingly.

Any assessment to income tax or corporation tax under this paragraph shall be made under Case VI of Schedule D.

(3) If, in the circumstances specified in sub-paragraph (4) below, the claimant acquires an asset ( called “asset No. 3” ) which is not a depreciating asset, and so claims under paragraph 18 above —

(a) the expenditure reduction shall be carried forward to asset No. 3, and

(b) the claim which applies to asset No. 2 shall be treated as withdrawn ( so that sub-paragraph (2) above does not apply ).

(4) The circumstances are that asset No. 3 is acquired not later than the occurrence of whichever of the events mentioned in sub-paragraph (2) above comes first and, assuming —

(a) that the consideration for asset No. 1 was applied in acquiring asset No. 3, and

(b) that the time between the disposal of asset No. 1 and the acquisition of asset No. 3 was within the time limited by section 115(3) of the Capital Gains Tax Act 1979 as applied by paragraph 18(6) above,

the whole amount of the expenditure reduction could be carried forward from asset No. 1 to asset No. 3; and the claim under sub-paragraph (3) above shall be accepted as if those assumptions were true.

(5) For the purposes of this paragraph an asset is a depreciating asset at any time if —

(a) at that time it is a wasting asset as defined in section 37(1) of the Capital Gains Tax Act 1979, or

(b) within the period of ten years beginning at that time it will become a wasting asset ( so defined ).

(6) This paragraph shall be construed as one with paragraph 18 above .]

Section 20

(1) Where a company issues shares or debentures to a person in exchange for shares in or debentures of another company in circumstances such that [ section 85 of the Capital Gains Tax Act 1979 ] ( company amalgamations ) applies, then, if section 41(1) of this Act applies to the disposal by him to the issuing company of the shares in or debentures of the other company, the amount of any development gain accruing to him in respect of that disposal shall be computed as if the said [ section 85 ] did not apply in relation to the exchange.

(2) Where, in the case of a disposal of shares in or debentures of a company made in the circumstances mentioned in the preceding sub-paragraph, the amount of any development gain accruing in respect of that disposal falls by virtue of that sub-paragraph to be computed as if the said [ section 85 ] did not apply in relation to the exchange, the provisions of paragraph 14 of Schedule 9 to this Act ( postponement of payment of tax ), excluding sub-paragraphs (2) and (6), shall, with any necessary modifications, apply in the case of that disposal as they apply in the case of a disposal of an interest in land which is deemed to have been made as mentioned in sub-paragraph (1) of the said paragraph 14, but as if in the said sub-paragraph (1) for the reference to the total tax chargeable in respect of a gain accruing on the disposal there were substituted a reference to such part of that total tax as is equal to the amount by which that total tax exceeds the tax which would have been chargeable but for sub-paragraph (1) of this paragraph.

Section 21

Where [ subsection (2) of section 102 of the Capital Gains Tax Act 1979 ] ( private residences ) would, apart from this paragraph, apply to a gain accruing to an individual on a disposal of an interest in land to which the principal section applies, then —

(a) there shall first be computed both the development gain that would accrue to him in respect of the disposal if that subsection did not so apply and the chargeable gain that would accrue to him thereon if that were so;

(b) the amount of the development gain accruing to him in respect of the disposal shall be equal to the amount of the development gain as computed under (a) above reduced by the fraction given by that subsection; and

(c) that subsection shall then be applied to so much of the gain accruing on the disposal as is equal to the chargeable gain as computed under (a) above .

Section 22

(1) Where a disposal within subsection (1) of [ section 124 of the Capital Gains Tax Act 1979 ( transfer of business on retirement ) involves a disposal by the individual in question of one or more interests in land to which the principal section applies, the development gains, if any, accruing to him in respect of the disposal shall be computed without reference to that section.

(2) Where any development gains accrue to an individual in respect of a disposal within subsection (1) of the said [ section 124 ], being gains which so accrue —

(a) where subsection (1)(a) of that section applies, on the disposal of chargeable business assets comprised in the disposal by way of sale or gift; or

(b) where subsection (1)(b) of that section applies, on the disposal of the shares or securities,

sub-paragraphs (3) to (5) below shall apply in relation to the disposal within the said subsection (1) made by that individual, instead of the provisions of that section.

(3) There shall be ascertained how much of the amount available for relief under [ the said section 124 ] would, under [ subsection (4) or (5) ] of that section, have fallen to be applied in giving relief to the individual as respects the disposal if this Chapter had not applied in relation to the disposal.

(4) An amount up to, but not exceeding, the amount ascertained under the preceding sub-paragraph shall be applied so as to give relief to the individual as respects the disposal by reducing or extinguishing one or both of the following amounts, that is to say —

(a) the aggregate of the development gains accruing to the individual in respect of the disposal, being gains which so accrue as mentioned in sub-paragraph (2)(a) or (b) above; and

(b) the aggregate of the chargeable gains accruing to him on the disposal, being gains which so accrue as mentioned in the said sub-paragraph (2)(a) or (b),

and as between those amounts shall be so applied in whatever way is to the individual’s best advantage.

(5) [ Subsection (7) of the said section 124 ] shall apply for the purpose of arriving at the aggregate mentioned in sub-paragraph (4)(b) above as it applies ( in cases where that section applies ) for the purpose of arriving at the aggregate under [ subsection (4) or (5) ] of that section.

(6) Any relief given under sub-paragraph (4) above as respects the disposal shall, for the purposes of the said [ section 124 ] as regards any other disposal within subsection (1) of that section, be taken into account in determining under subsection (4) of that section how far the amount available for relief under [ that section ] has been applied.

(7) In this paragraph “ chargeable business asset ” has the same meaning as in the said [ section 124 ].

Section 23

Where, in the case of an insurance company carrying on life assurance business, a profit arising from general annuity business and attributable to a disposal of an interest in land to which section 38 of this Act applies falls ( or would but for paragraph 7(2) of Schedule 7 to this Act fall ) to be taken into account in the computation under section 312 of the Taxes Act ( general annuity business and pension business: separate charge on profits ), the development gain, if any, accruing to the company in respect of the disposal shall be computed as if [ section 31(1) of the Capital Gains Tax Act 1979 ] ( computation of chargeable gains: exclusion of sums taken into account in computing income ) did not apply.

Section 24

No part of any chargeable gain which under section 29 of the Finance Act 1970 ( taxation of mineral royalties ) is treated as accruing to a person entitled to receive such royalties under a mineral lease or agreement shall be a development gain.

Section 25

(1) Without prejudice to any other provisions of this Schedule as to the computation of the amount given by subsection (3)(c) of the principal section, this paragraph shall apply in relation to a disposal of an interest in land to which the principal section applies if at the time of the disposal there is in force, as regards the land or any part of it, planning permission authorising material development consisting of the winning and working of minerals.

(2) For the purpose of computing the amount given by subsection (3)(c) of the principal section, the amount of the chargeable gain accruing on the disposal shall be taken to be what it would be if the amount which, in the computation of that chargeable gain, falls to be taken as the consideration were reduced to the sum of the following amounts, that is to say —

(a) the market value of the interest at the time of the disposal calculated on the assumption that it was at that time, and would continue to be, unlawful to carry out any material development of the land consisting of the winning and working of minerals; and

(b) one-half of the amount by which the actual consideration for the disposal exceeds the said market value.

In this sub-paragraph “ the actual consideration for the disposal ” means the amount which, in the computation ( apart from this paragraph ) of the chargeable gain accruing on the disposal, falls to be taken as the consideration.

(3) Sub-paragraph (3) of paragraph 1 of this Schedule shall apply for the purposes of this paragraph as it applies for the purposes of paragraph 1; and in this paragraph “ minerals ” has the meaning given by paragraph 10(1) of this Schedule.

(4) For the purposes of this paragraph the winning and working of minerals includes the carrying out of any ancillary operations requisite therefor.

Section 1

In this Schedule “ the principal section ” means section 38 of this Act.

Section 2

(1) This paragraph shall apply in relation to a disposal of an interest in land to which the principal section applies if the disposal is one in relation to which section 33 of the Finance Act 1965 ( replacement of business assets ) applies.

(2) Where —

(a) a claim is made by a person under the said section 33 as respects so much of the consideration for the disposal as has been applied by him in acquiring other assets, or an interest in other assets ( in this sub-paragraph referred to as “ the new assets ” ) as described in subsection (1) of that section; and

(b) the acquisition of, or of the interest in, some or all of the new assets took place either before 18 th December 1973, or under an unconditional contract for the acquisition entered into before that date, or under a contract to which sub-paragraph (4) below applies,

then the amount of any development gain accruing to him in respect of the disposal ( as computed before this sub-paragraph is applied ) shall be reduced by the amount, if any, by which so much of the consideration for the disposal as has been applied in acquiring before that date, or under such a contract, all or any of the new assets exceeds the sum of the amounts mentioned in the following sub-paragraph.

(3) The amounts referred to in the preceding sub-paragraph are the following, that is to say —

(a) the sum that is by virtue of paragraph 4(1)(a) and (b) of Schedule 6 to the Finance Act 1965 allowable as a deduction from the consideration for the disposal in computing the chargeable gain; and

(b) the chargeable gain, if any, accruing to him on the disposal ( as computed before the preceding sub-paragraph is applied ).

(4) This sub-paragraph applies to a contract made after 17 th December 1973 if —

(a) the parties thereto had before 18 th December 1973 arranged ( without entering into a binding contract ) to dispose of and acquire the interest in question on terms which do not differ materially from the terms of the contract subsequently made; and

(b) the arrangement was made in writing, or is evidenced by a memorandum or note thereof so made before that date.

Section 3

If the disposal of an asset under a conditional contract entered into before 18 th December 1973 is made for a consideration not depending wholly or mainly on the value of the asset at the time the condition is satisfied, then for the purposes of subsection (1) of the principal section the contract shall in relation to the disposal be treated ( on the condition being satisfied ) as if it had never been conditional.

Section 4

Where an owner of an interest in land to which the principal section applies had before 18 th December 1973 arranged ( without entering into a binding contract ) to dispose of that interest to another person and —

(a) the arrangement was made in writing, or is evidenced by a memorandum or note thereof so made before that date; and

(b) he disposes of the interest to that other person under a contract entered into before 18 th December 1974 of which the terms do not differ materially from the terms of the arrangement or, if they so differ, are not more beneficial to the said owner,

the contract —

(i) if not conditional, shall be treated for the purposes of subsection (1) of the principal section as if made before 18 th December 1973; or

(ii) if conditional, shall be treated for the purposes of the preceding paragraph as if entered into before that date.

Section 5

(1) Where a disposal of an interest in land to which the principal section applies is made to an authority exercising compulsory powers, then, if notice to treat in respect of that interest was ( or is by virtue of any enactment deemed to have been ) served before 18 th December 1973 on the person making the disposal, the disposal shall be treated for the purposes of this Chapter as having been made before that date.

(2) In this paragraph “ authority exercising compulsory powers ” means, in relation to any disposal of an interest in land, a person acquiring the interest compulsorily or who has been authorised to acquire it compulsorily ( whether for himself or some other person ).

Section 1

(1) In this Schedule “ the principal section ” means section 40 of this Act.

(2) Part I of Schedule 3 to this Act shall apply for the purposes of the principal section and this Schedule as it applies for the purposes of section 38 of this Act.

Section 2

A loss accruing to a person in a chargeable period during no part of which he is resident or ordinarily resident in the United Kingdom shall not be to any extent a development loss unless, under [ section 12 of the Capital Gains Tax Act 1979 ] as applied by paragraph 1 of Schedule 8 of this Act, he would ( or would but for section 39(1) of this Act ) be chargeable to income tax or corporation tax in respect of a development gain if there had been a gain instead of a loss on that occasion.

Section 3

In its application to a development loss in accordance with subsection (3) of the principal section —

(a) section 176 of the Taxes Act shall have effect with the omission of so much of subsection (5) as precedes the words “but the question”; and

(b) section 179 of that Act shall have effect with the omission of subsection (3).