Finance Act, 1974

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Amendment of section 236 of and Schedule 5 to Income Tax Act, 1967.

67.—(1) Section 236 of the Income Tax Act, 1967 , is hereby amended by the substitution for subsections (1) and (2) of the following subsections:

“(1) Where relief is to be given under this section in respect of any qualifying premium paid by an individual, the amount of that premium shall, subject to the provisions of this section, be deducted from or set off against his relevant earnings for the year of assessment in which the premium is paid.

(1A) Subject to the provisions of this section and of Schedule 5, the amount which may be deducted or set off in any year of assessment (whether in respect of one or more qualifying premiums and whether or not including premiums in respect of a contract approved under section 235A)—

(a) shall not be more than the sum of £1,500, and

(b) shall not be more than 15 per cent. of the individual's net relevant earnings for that year,

and the amount to be deducted shall to the greatest extent possible include qualifying premiums in respect of contracts approved under section 235A.

(1B) Subject to the provisions of this section, the amount which may be deducted or set off in any year of assessment in respect of qualifying premiums paid under a contract approved under section 235A (whether in respect of one or more such premiums)—

(a) shall not be more than the sum of £500, and

(b) shall not be more than 5 per cent. of the individual's net relevant earnings for that year.

(1C) Where the condition in section 235 (1) (a) is satisfied as respects part only of the year, then for the said sums of £1,500 and £500 mentioned in subsections (1A) and (1B) there shall be substituted sums which respectively bear to £1,500 and £500 the same proportion as that part bears to the whole year.

(2) If in any year of assessment a reduction or a greater reduction would be made under this section in the relevant earnings of an individual but for either or both of the following reasons, that is—

(a) an insufficiency of net relevant earnings, or

(b) the operation of subsection (1B) (b) (as respects a qualifying premium paid under a contract approved under section 235A),

the amount of the reduction which would be made but for those reasons less the amount of any reduction which is made in that year, shall be carried forward to the next following year, and shall be treated for the purposes of relief under this section as the amount of a qualifying premium paid in that following year.

(2A) If and so far as an amount once carried forward under subsection (2) (and treated as the amount of a qualifying premium paid in the said following year) is not deducted from or set off against the individual's net relevant earnings for that year of assessment, it shall be carried forward again to the next following year (and treated as the amount of a qualifying premium paid in that year), and so on for succeeding years.

(2B) The provisions of this subsection shall have effect for determining whether and how far an amount carried forward under subsection (2) is to be treated as paid under an individual's contract on the one hand or a contract approved under section 235A on the other.

Any part of the amount carried forward which is referable to a qualifying premium paid under a contract approved under section 235A shall, when carried forward on the first or any subsequent occasion, be treated for the purposes of this Chapter as the amount of a qualifying premium paid under a contract so approved. The balance (if any) of the amount shall when similarly carried forward be treated as a qualifying premium paid under an individual's contract.

In this subsection ‘individual's contract’ means an approved annuity contract other than one approved under section 235A.

(2C) Subsections (2), (2A) and (2B) shall have effect as respects amounts carried forward from years before the year 1974-75 as well as respects later years.”.

(2) Section 236 of the Income Tax Act, 1967 , is hereby further amended by the insertion after subsection (10) of the following subsection:

“(11) Where a relevant assessment to tax becomes final and conclusive on a date after the 5th day of October in the year of assessment to which it relates, a qualifying premium paid—

(a) after that year of assessment, and

(b) not more than six months after that date,

may, if the individual so elects not more than six months after that date, be treated for the purposes of this section as paid in the year of assessment (and not in the year in which it is paid):

Provided that where either—

(i) the amount of that premium, together with any qualifying premiums paid by him in the year to which the assessment relates (or treated as so paid by virtue of any previous election under this subsection), exceeds the maximum amount of the reduction which may be made under this section in his relevant earnings for that year, or

(ii) the amount of that premium itself exceeds the increase in that maximum amount which is due to taking into account the income on which the assessment is made,

then the election shall have no effect as respects the excess.

In this subsection ‘relevant assessment to tax’ means an assessment on the individual's relevant earnings.”.

(3) Schedule 5 to the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution for paragraph 1 of the following paragraph:

“1. Subject to the following paragraphs, in the case of an individual who is the holder of a pensionable office or employment, subsections (1A) and (1C) of section 236 shall have effect with the substitution for references to £1,500 of references to £1,500 less 15 per cent. of his pensionable emoluments for the year of assessment.”,

(b) by the substitution for subparagraph (b) of paragraph 2 of the following subparagraph:

“(b) if the condition is satisfied at such a time and is also satisfied at a time during the remainder of the year, paragraph 1 shall apply, but for 15 per cent. there shall be substituted therein such less proportion as may be just.”, and

(c) by the substitution for paragraph 4 of the following—

“4. Subject to paragraph 5, in the case of an individual born at a time specified in the first column of the Table set out below, section 236 (1A) and (1C) and Part I of this Schedule, shall have effect with the substitution for references to £1,500 and to 15 per cent. of references respectively to such sum and such percentage as are specified for his case in the second and third columns of the Table.