Finance Act, 1986

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THIRD SCHEDULE

Tax Appropriate to the Profits or Gains from Farming

Section 16 .

1. “Tax appropriate to the profits or gains from farming”, in relation to an individual who is chargeable to income tax for a year of assessment in respect of profits or gains from farming, means the amount of tax determined by the formula—

where—

A is, subject to paragraph 2, the amount of the profits or gains from farming in respect of which the individual is chargeable to tax for that year of assessment (including in the case of a husband who is chargeable to tax for the year of assessment in accordance with the provisions of section 194 (inserted by the Finance Act, 1980 ) of the Income Tax Act, 1967 , any such profits or gains of his wife),

B is the individual's income, other than income included in A, for that year from all sources (including in the case of a husband who is chargeable to tax in accordance with the provisions of the said section 194, any such income of his wife) after deducting from the income from each source the aggregate of the amounts specified in paragraph 3, and

C is the amount of income tax chargeable on the individual's total income for that year before taking account of any relief provided by section 361 of the Income Tax Act, 1967 , and section 16 .

2. In determining A in paragraph 1, the amount of profits or gains from farming shall be reduced by the aggregate of—

(a) so much of any capital allowance as is to be taken into account in charging the profits or gains to income tax, and

(b) so much of any loss within the meaning of Chapter I of Part XIX of the Income Tax Act, 1967 , as is to be, or is regarded as being, deducted from or set off against those profits or gains.

3. In determining B in paragraph 1, the amount to be deducted from the income from a source, in arriving at the amount of income from that source to be included in B is the aggregate of—

(a) so much of the following amounts as is to be deducted from or set off against that income, or as is to be allowed in charging that income to income tax—

(i) any deduction in respect of expenses,

(ii) any deduction in respect of contributions, and

(iii) any capital allowance, and

(b) so much of any loss within the meaning of Chapter I of Part XIX of the Income Tax Act, 1967 , as is to be, or is regarded as being, deducted from or set off against the income from that source.

4. In this Schedule “capital allowance”, “deduction in respect of expenses” and “deduction in respect of contributions” have the same meanings as in section 16 of the Finance Act, 1976 , and “farming” has the same meaning as in Chapter II of Part I of the Finance Act, 1974 .