Finance Act, 1974

Farming profits: restriction of personal allowances.

28.—(1) Where, for any year of assessment, farm land is occupied by an individual in respect of whom, by virtue of section 15 (3), subsection (1) of that section does not apply and—

(a) the rateable valuation of the farm land occupied by him exceeds £20, and

(b) he is chargeable to tax for that year of assessment in respect of income other than income from farming (hereinafter referred to as other income),

this section shall apply.

(2) In any case in which this section applies for any year of assessment, the aggregate amount of the deductions to be made from the total income of the individual concerned for that year of assessment in respect of personal reliefs claimed by him shall be reduced by whichever of the following amounts is the lowest:

(a) an amount equal to one-half of the aggregate amount of the said deductions,

(b) the amount arrived at by multiplying by eighty the amount by which the rateable valuation exceeds £20, or

(c) the total amount of the profits or gains for that year of assessment from farming farm land, computed in the same way as they would be computed if they were profits or gains chargeable to tax under Case I of Schedule D.

(3) Where the individual concerned shows that the actual profits or gains from farming are of such an amount that the tax payable by him for that year of assessment is greater than the tax appropriate to the other income, the tax so payable shall be reduced to the amount of tax appropriate to the other income.

(4) For the purposes of this section, the tax appropriate to the other income shall be so much of the tax as would be payable in respect of the individual's total income, if the actual profits or gains from farming were chargeable to tax in accordance with the provisions of section 15 (1), as bears to that tax the same proportion as the other income bears to such total income.

(5) (a) Where, by virtue of an application under section 197 of the Income Tax Act, 1967 , tax is to be assessable and chargeable on the incomes of a husband and wife as if they were not married—

(i) the aggregate amount of the personal reliefs, the benefit flowing from which is to be allocated to the husband and wife, shall not exceed the total amount of the deductions in respect of those reliefs which are to be allowed in accordance with the provisions of this section; and

(ii) in the allocation of the said benefit between the husband and the wife in accordance with the provisions of section 193 of the said Income Tax Act, 1967 , account shall be taken of any reduction in the total amount of the said deductions by virtue of the provisions of this section and the amount of benefit flowing to the husband or the wife in respect of each particular relief as specified in the said section 193 shall be reduced in the proportion which the total amount of the deductions in respect of personal reliefs allowable by virtue of this section bears to the total amount of the said allowances which, but for the provisions of this section, would be allowable.

(b) Where in accordance with the provisions of subsection (3) of the said section 193, the amount of relief allocated to the husband or the wife exceeds the tax chargeable on his or her income, as the case may be, any balance calculated for the purpose of that subsection shall be reduced by the amount of tax which would be chargeable on the income of the husband or the wife, as the case may be, if any profits or gains from farming were chargeable to tax in accordance with the provisions of this Chapter.

(6) In this section—

“personal reliefs” has the same meaning as in section 193 of the Income Tax Act, 1967 .