Income Tax Act, 1967.

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Exemptions and reliefs in respect of tax under section 114.

115.—(1) Tax shall not be charged by virtue of section 114 in respect of the following payments, that is to say—

(a) any payment made in connection with the termination of the holding of an office or employment by the death of the holder, or made on account of injury to or disability of the holder of an office or employment;

(b) any sum chargeable to sur-tax under section 525;

(c) a benefit provided in pursuance of any such scheme or agreement as is referred to in section 227, where the holder of the office or employment was chargeable to tax in respect of sums paid, or treated as paid, with a view to the provision of the benefit;

(d) a benefit paid in pursuance of any such scheme or fund as is described in section 228 (1) (2).

(2) Tax shall not be charged by virtue of section 114 in respect of a payment in respect of an office or employment in which the holder's service included foreign service where—

(a) in the case of a payment of compensation for loss of office, the foreign service comprised the whole of the three years immediately preceding the relevant date (or the whole period of service if less than three years), or

(b) in the case of any other payment, the foreign service comprised either—

(i) in any case, three-quarters of the whole period of service down to the relevant date, or

(ii) where the period of service down to the relevant date exceeded ten years, the whole of the last ten years, or

(iii) where the period of service down to the relevant date exceeded twenty years, one-half of that period, including any ten of the last twenty years.

(3) Tax shall not be charged by virtue of section 114 in respect of a payment of an amount not exceeding £3,000, and in the case of a payment which exceeds that amount shall be charged only in respect of the excess:

Provided that where two or more payments in respect of which tax is chargeable by virtue of that section, or would be so chargeable apart from the foregoing provisions of this subsection, are made to or in respect of the same person in respect of the same office or employment, or in respect of different offices or employments held under the same employer or under associated employers, this subsection shall apply as if those payments were a single payment of an amount equal to that aggregate amount; and the amount of any one payment chargeable to tax shall be ascertained as follows, that is to say—

(a) where the payments are treated as income of different years of assessment, the said sum of £3,000 shall be deducted from a payment treated as income of an earlier year before any payment treated as income of a later year; and

(b) subject as aforesaid, the said sum shall be deducted rateably from the payments according to their respective amounts.

(4) The person chargeable to tax by virtue of section 114 in respect of any payment may, before the expiration of six years after the end of the year of assessment of which it is treated as income, by notice in writing to the inspector claim any such relief in respect of the payment as is applicable thereto under Schedule 3; and where such a claim is duly made and allowed, all such repayments and assessments of tax shall be made as are necessary to give effect thereto.

(5) For the purposes of this section and of Schedule 3 offices or employments in respect of which payments to which section 114 applies are made shall be treated as held under associated employers if, on the date which is the relevant date in relation to any of those payments, one of those employers is under the control of the other or of a third person who controls or is under the control of the other on that or any other such date.

(6) In this section “control”, in relation to a body corporate, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

(7) In this section “the relevant date”, “payment of compensation for loss of office” and “foreign service” have the same meaning as in Schedule 3, and references to an employer or to a person controlling or controlled by an employer include references to his successors.

(8) For the purposes of any provision of this Act requiring income of any description to be treated as the highest part of a person's income, that income shall be calculated without regard to any payment chargeable to tax by virtue of section 114.