Finance Act 2003
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Income tax: ring-fence on use of certain capital allowances on certain industrial buildings and other premises. |
13.—(1) Chapter 4 of Part 12 of the Principal Act is amended by inserting the following section after section 409D (inserted by section 12 ): | |
“409E.—(1) In this section— | ||
‘company’ has the same meaning as in section 4; | ||
‘rent’ has the same meaning as in Chapter 8 of Part 4; | ||
‘relevant interest’ has the same meaning as in section 269; | ||
‘residue of expenditure’ shall be construed in accordance with section 277; | ||
‘specified amount of rent’, in relation to a specified building and an individual for a year of assessment, means the amount of the surplus in respect of the rent from the specified building to which the individual becomes entitled for the year of assessment, as computed in accordance with section 97(1); | ||
‘specified building’ means— | ||
(a) a building or structure, or a part of a building or structure, which is or is to be an industrial building or structure by reason of its use or deemed use for a purpose specified in section 268(1) and in relation to which an allowance has been, or is to be, made to a company under Chapter 1 of Part 9, or | ||
(b) any other building or structure, or a part of any other building or structure, in relation to which an allowance has been, or is to be, so made to a company by virtue of Part 10 or section 843 or 843A, | ||
in respect of— | ||
(i) the capital expenditure incurred or deemed to be incurred on the construction or refurbishment of the building or structure or, as the case may be, the part of the building or structure, or | ||
(ii) the residue of that expenditure. | ||
(2) This section applies where— | ||
(a) at any time beginning on or after 1 January 2003 a company is entitled to the relevant interest in relation to any capital expenditure incurred or deemed to be incurred on the construction or refurbishment of a specified building, | ||
(b) subsequent to the time referred to in paragraph (a) an individual becomes entitled to that relevant interest or any part of that relevant interest, whether or not subsequent to that time any other person or persons had previously become so entitled, and | ||
(c) the individual is entitled, in charging income under Case V of Schedule D, to an allowance under Chapter 1 of Part 9 in respect of the capital expenditure referred to in paragraph (a) or the residue of that expenditure. | ||
(3) Where this section applies, then, notwithstanding any other provision of the Income Tax Acts— | ||
(a) any allowance to be made to the individual for any year of assessment (being the year of assessment 2003 or any subsequent year of assessment) under Chapter 1 of Part 9, in respect of the capital expenditure referred to in subsection (2)(a) or the residue of that expenditure, shall— | ||
(i) not exceed the specified amount of rent for that year of assessment, | ||
(ii) be made in charging the specified amount of rent under Case V of Schedule D for that year of assessment, and | ||
(iii) be available only in charging the specified amount of rent, | ||
(b) section 278 shall apply with any modifications necessary to give effect to paragraph (a), and | ||
(c) section 305(1)(c) shall apply in relation to an allowance to be made in accordance with paragraph (a).”. | ||
(2) Section 305(1) of the Principal Act is amended by inserting the following after paragraph (b): | ||
“(c) Notwithstanding any other provision of this subsection, where under this Part an allowance, the amount of which has been determined in accordance with section 409E(3)(a)(i), is to be made to an individual for any year of assessment and the allowance is to be— | ||
(a) made in charging the specified amount of rent (within the meaning of section 409E) under Case V of Schedule D for that year of assessment, and | ||
(b) is to be available only in charging that specified amount of rent, | ||
then— | ||
(i) in charging income under Case V of Schedule D the amount of that allowance shall be deducted from or set off against that specified amount of rent, and | ||
(ii) if the amount of the allowance which would have been made in charging income under Case V of Schedule D if section 409E had not been enacted is greater than that specified amount of rent, the excess shall— | ||
(I) be added to the amount of the allowance to be made to the individual for the next year of assessment under Chapter 1 of this Part in respect of the capital expenditure incurred on the construction or refurbishment of the specified building (within the meaning of section 409E) or the residue of that expenditure (within the meaning of section 409E), and be deemed to be part of the allowance to be so made for that next year, or | ||
(II) if there is no such allowance for that next year, be deemed to be the allowance for that next year, | ||
and so on for subsequent years of assessment, and section 409E(3) shall apply in relation to the resulting allowance to be made for that next year or, as the case may be, for any subsequent year of assessment.”. |