Finance Act, 1918

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FINANCE ACT 1918

CHAPTER 15.

An Act to grant certain duties of Customs and Inland Revenue (including Excise), to alter other duties, and to amend the Law relating to Customs and Inland Revenue (including Excise) and the National Debt, and to make further provision in connection with Finance. [30th July 1918.]

Most Gracious Sovereign,

We, Your Majesty's most dutiful and loyal subjects the Commons of the United Kingdom of Great Britain and Ireland in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the King's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

Part I.

Customs and Excise.

Continuation of Customs duties imposed under 5 & 6 Geo. 5. c. 89.

1. The following duties of Customs, imposed by Part I. of the Finance (No. 2) Act, 1915, shall continue to be charged, levied and paid until the first day of August nineteen hundred and nineteen, that is to say:—

Continuation of temporary Excise duties imposed under 5 & 6 Geo. 5. c. 89.

2. The following duties of Excise, imposed by Part I. of the Finance (No. 2) Act, 1915, shall continue to be charged, levied and paid until the first day of August nineteen hundred and nineteen, that is to say:—

Increased duties on spirits.

3.—(1) In lieu of the duties of Customs payable on spirits imported into Great Britain or Ireland, there shall, as from the twenty-third day of April, nineteen hundred and engiteen, be charged, levied, and paid, subject as hereinafter provided, the duties specified in Part I. of the First Schedule to this Act, together with the additional duties specified in Part II. of that Schedule.

(2) In lieu of the Excise duty payable for every gallon computed at proof of spirits distilled in Great Britain or Ireland there shall, as from the twenty-third day of April, nineteen hundred and eighteen, be charged, levied, and paid, an Excise duty of one pound and ten shillings, together with the additional duties specified in Part III. of the First Schedule to this Act.

And so in proportion for any less quantity.

Reduction and allowance of duty in respect of spirits used in medical preparations or for scientific purposes.

5 & 6 Geo. 5. c. 46.

4.—(1) In the case of any mixture, compound or preparation which, on importion, is charged with duty in respect of the spirit contained in it, or used in its preparation or manufacture, the duties specified in Part I. of the First Schedule to this Act shall be reduced by the sum of fifteen shillings and threepence, or if the mixture, compound, or preparation is entered in such a manner as to indicate that the strength is not to be tested by the sum of one pound and sixpence, and the additional duty specified in Part II. of that Schedule shall not be charged, if the mixture, compound, or preparation is one which is recognised by the Commissioners of Customs and Excise as being used for medical purposes.

(2) If any person proves to the satisfaction of the Commissioners of Customs and Excise that any spirits in respect of which the duties imposed by this Act have been paid have been delivered to him and used solely in the manufacture or preparation of any article recognised by the Commissioners as being used for medical purposes, or have been used for scientific purposes, he shall, subject to such regulations as the Commissioners of Customs and Excise may prescribe, be entitled to obtain from the Commissioners repayment of the sum of fifteen shillings and threepence in respect of every gallon computed at proof of spirits so used, and shall also, if he proves to the satisfaction of the Commissioners that the spirits so used were spirits to which the restrictions contained in the Immature Spirits (Restriction) Act, 1915, did not apply, be entitled to obtain from the Commissioners repayment of the amount of the additional duty in respect of immature spirits (if any) paid under this Act in respect of the spirits.

(3) Regulations made under this section may provide that a person shall not be entitled to claim repayment unless he has kept such books and taken such account of stock as may be prescribed by the regulations, and may apply to any such person any of the enactments relating to any duty of customs or excise and to persons carrying on any trade subject to the laws of Excise, and may contain such other provisions as the Commissioners of Customs and Excise may consider necessary for the protection of the revenue.

(4) If any person contravenes or fails to comply with the regulations made by the Commissioners under this section, or if any person for the purpose of obtaining any repayment of duty under this section or in connection with any application for any such repayment, makes any false statement or false representation, he shall in respect of each offence be liable to an Excise penalty of five hundred pounds.

Increased Customs duties on beer.

5.—(1) In lieu of the duties of Customs payable on beer of the descriptions called or similar to mum, spruce or black beer, or Berlin white beer, or other preparations, whether fermented or not fermented, of a similar character, imported into Great Britain or Ireland, there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged, levied, and paid the following duties (that is to say):—

(2) In lieu of the duties of Customs payable on every description of beer other than that specified in the preceding subsection imported into Great Britain or Ireland, there shall, as from the twenty-third day of April Nineteen hundred and eighteen, be charged, levied, and paid the following duty (that is to say):—

(3) In lieu of the Customs drawback now payable there shall be allowed and paid on the exportation, shipment for use as stores, or removal to the Isle of Man, of beer imported into Great Britain or Ireland, on which it is shown that the increased Customs duty charged by this Act has been paid, a drawback calculated according to the original gravity thereof (that is to say):—

(4) In the case of beer which is of a gravity different from the gravity aforesaid, the duty or the drawback, as the case may be, shall be varied proportionately.

Increased Excise duty on beer.

6. In lieu of the duty of Excise payable in respect of beer brewed in the United Kingdom there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged, levied, and paid—

and in lieu of the drawback of Excise payable in respect of beer exported from the United Kingdom as merchandise or shipped for sue as ship's stores, there shall be allowed and paid in respect of beer on which it is shown that the increased Excise duty charged by this Act has been paid a drawback calculated according to the original gravity thereof (that is to say):—

and so to bothduty and drawback in proportion for any difference in quantity or gravity.

Duties and drawbacks on tobacco.

26 & 27 Vict. c. 7.

7 & 8 Geo. 5. c. 31.

4 Edw. 7. c. 7.

3 & 4 Vict. c. 18.

7.—(1) In lieu of the duties of Customs payable on tobacco there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged, levied, and paid upon tobacco imported into Great Britain or Ireland, the duties specified in Part I. of the Scotland Schedule to this Act.

(2) In lieu of the Excise duties payable on tobacco grown in Great Britain or Ireland there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged, levied and paid on tobacco grown in Great Britain or Ireland the duties specified in Part II. of the Second Schedule to this Act.

(3) Drawback allowed under section one of the Manufactured Tobacco Act, 1863, as extended or amended by any subsequent Act on tobacco exported from Great Britain or Ireland or deposited in a bonded or King's warehouse shall, in cases where it is shown that the increased duties imposed by this section have been paid, be allowed at the rates set out in Part III. of the Second Schedule to this Act, instead of at the rates set out in the First Schedule to the Finance Act, 1917, but subject to the provisions affecting allowance of drawback contained in the Schedule to the Finance Act, 1904.

(4) So much of section one of the Manufactured Tobacco Act, 1863, as provides that drawback is not to be allowed on any tobacco unless the tobacco stalks therein contained have been fairly cut in the same with portions of the lamina of the leaf adhering thereto, and section thirteen of the Tobacco Act, 1840, shall cease to have effect.

Increased Customs duties on sugar.

8. In lieu of the present Customs duties, drawbacks, and allowance in respect of sugar, molasses, glucose, and saccharin there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged levied and paid the duties specified in the first column of Part I. of the Third Schedule to this Act, and there shall be paid and allowed the drawbacks and allowance set out in Part II. of that Schedule.

Increased Customs duties on sugar.

9.—(1) In lieu of the present Excise duties, drawbacks, and allowance in respect of sugar, molasses, glucose, and saccharin there shall as from the twenty-third day of April nineteen hundred and eighteen be charged, levied, and paid the duties specified in the second column of Part I. of the Third Schedule to this Act, and there shall be paid and allowed the drawbacks and allowance set out in Part II. of the Schedule.

(2) The provisions of Part III. of the First Schedule to the Finance (No. 2) Act, 1915, shall apply to the Excise duties under this section.

Increased duties on matches.

10.—(1) In addition to the duties of Customs payable on matches imported into Great Britain or Ireland there shall, as from the twenty-third day of April, nineteen hundred and eighteen, be charged, levied, and paid an additional duty at the rate of one shilling and eightpence for every ten thousand matches so imported.

(2) In addition to the duties of Excise now payable on matches made in Great Britain or Ireland there shall, as from the twenty-third day of April, nineteen hundred and eighteen, be charged, levied, and paid an additional duty at the rate of one shilling and eightpence for every ten thousand matches so made, and so in proportion for any less quantity.

Reduction in certain cases of entertainments duty. 6 & 7 Geo. 5. c. 11.

11. On and after the first day of August, nineteen hundred and eighteen, section one of the Finance (New Duties) Act, 1916, as amended by section three of the Finance Act, 1917, shall have effect as if for the words—

Limit of time for payment of beer duty. 43 & 44 Vict. c. 20.

12. The power of the Commissioners of Customs and Excise to defer the time for payment of beer duty under section sixteen of the Inland Revenue Act, 1880, may be exercised so as to delay the time for payment for a period not exceeding two months beyond the time limited in that section.

Deposit of British glucose in warehouse on drawback.

13.—(1) Where any glucose on which the full duties of Excise have been paid is deposited in a warehouse approved by the Commissioners of Customs and Excise under section two of the Manufactured Tobacco Act, 1863, for the manufacture of cavendish and negrohead, drawback in respect ofthe glucose so deposited shall, subject to such regulations and security as the Commissioners may prescribe, be allowed and paid as if the deposit in the warehouse were the exportation of the glucose.

(2) If any person contravenes or fails to comply with any regulations made by the Commissioners under this section, he shall in respect of each offence be liable to an Excise penalty of fifty pounds.

Amendment of 39 & 40 Vict. c. 36, with respect to Excise drawbacks.

14. The provisions of section one hundred and four and of section one hundred and five of the Customs Consolidation Act, 1876 (which relate to the entry and shipment of goods for exportation) shall apply respectively to goods entitled to any drawback of Excise and goods upon which any drawback of Excise is claimed, as they apply to goods entitled to any drawback of Customs and goods upon which any drawback of Customs is claimed, and accordingly in those sections the word “drawback” shall be substituted for the words “drawback of Customs.”

Drawback and allowance on goods damaged or destroyed after shipment.

26 Geo. 3. c. 40.

15.—(1) Where it is proved to the satisfaction of the Commissioners of Customs and Excise that any goods after being duly shiped for exportation have, before exportation, been destroyed by accident onboard the exporting ship, any drawback or allowance payable in respect of the goods shall be payable in the same manner as if the goods had been actually exported.

(2) Where it is proved to the satisfaction of the Commissioners of Customs and Excise that any goods after being duly shipped for exportation have been materially damaged by accident on board the exporting ship, any drawback or allowance payable in respect of the goods shall, if they are with the consent of the Commissioners of Customs and Excise relanded in the United Kingdom and abandoned to the Commissioners, be payable as if the goods had been actually exported and had not been relanded.

(3) So much of section six of the Customs and Inland Revenue Act, 1879, as requires British goods brought back into the United Kingdom to be treated as foreign unless any drawback allowed in respect of the goods is repaid shall not apply as respects any goods in respect of which drawback is payable under the provisions of the last preceding subsection.

(4) The Commissioners of Customs and Excise may modify the form of declaration required under section one hundred and eighteen of the Customs Consolidation Act, 1876, in such manner as they think necessary for the purpose of adapting it to the provisions of this section.

(5) If after any goods on the exportation of which a drawback or allowance is payable have been shipped for exportation, the goods are without the consent of the Commissioners of Customs and Excise relanded in the United Kingdom, or the packages in which the goods are contained are, without such consent as aforesaid, opened, or the marks, letters, or devices thereon are, without such consent as aforesaid, cancelled, obliterated, or altered, the goods shall be forfeited, and any person who relands any such goods or who opens any such packages, or cancels, obliterates, or alters the marks, letters, or devices thereon, shall for each such offence forfeit either treble the value of the goods or one hundred pounds at the election of the Commissioners.

(6) The Exports Act, 1786, shall cease to have effect.

Molasses used as food for stock. 3 Edw. 7. c. 46.

16.—(1) Subsection (1) of section one of the Revenue Act, 1903 (which exempts from duty imported molasses to be used solely as food for stock), shall apply to molasses produced by a refiner in Great Britain or Ireland from sugar upon which no duty has been paid asit applies to molasses imported into Great Britain or Ireland.

(2) If any person uses, or is in any way concerned in using, any duty-free molasses otherwise than as food for stock, he shall be liable to a penalty of fifty pounds, and the molasses and any articles compounded therewith or manufactured therefrom shall be forfeited.

In this section the expression “duty-free molasses” means molasses which have been allowed to be imported or delivered without payment of duty under subsection (1) of section one of the Revenue Act, 1903, as amended by any other enactment, or in respect of which an allowance has been made under subsection (2) of that section as amended by any other enactment.

Part II.

Income Tax.

Income tax for 1918–19.

6 & 7 Geo. 5. c. 24.

16 & 17 Vict. c. 34.

32 & 33 Vict. c. 67.

17.—(1) Income tax for the year beginning on the sixth day of April, nineteen hundred and eighteen, shall be charged at the rate of six shillings, and the additional income tax under section twenty-seven of the Finance Act, 1916, on securities which the Treasury are willing to purchase, shall be charged, levied, and paid for that year at the same rate as was charged for the year beginning on the sixth day of April, nineteen hundred and seventeen.

(2) All such enactments relating to income tax, including the said additional income tax, as were in force with respect to the duties of income tax granted for the year beginning the sixth day of April, nineteen hundred and seventeen, shall have full force and effect with respect to any duties of income tax granted by this Act.

(3) The annual value of any property which has been adopted for the purpose either of income tax under Schedule A. and B. in the Income Tax Act, 1853, or of inhabited house duty, for the year ending on the fifty day of April, nineteen hundred and eighteen, shall be taken as the annual value of that property for the same purpose for the next subsequent year:

Provided that this subsection—

(a) so far as respects the duty on inhabited houses in Scotland shall be construed with the substitution of the twenty-fourth day of May for the fifty day of April; and

(b) shall not apply to the Metropolis as defined by the Valuation (Metropolis) Act, 1869.

Modification of relief given in respect of earned income.

7 Edw. 7. c. 13.

18.—(1) The following subsection shall be substituted for subsection (1) of section nineteen of the Finance Act, 1907 (which provides for the reduction of the income tax payable in respect of earned income), in lieu of that substituted by section twenty-five of the Finance Act, 1916, namely:—

“(1) Any individual who claims and proves in manner provided by this section that his total income from all sources does not exceed two thousand five hundred pounds, and that any part of that income is earned income shall be entitled, subject to the provisions of this section, to such relief from income tax as will reduce the amount payable on the earned income to the amount which would be payable if the tax were charged on that income at the rate of—

“Two shillings and threepence if the total income does not exceed five hundred pounds;

“Three shillings if the total income exceeds five hundred pounds and does not exceed one thousand pounds;

“Three shillings and ninepence if the total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;

“Four shillings and sixpence if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds;

“Five shillings and threepence if the total income exceeds two thousand pounds and does not exceed two thousand five hundred pounds.”

(2) Paragraph (a) of subsection (7) of section nineteen of the Finance Act, 1907, shall have effect as though there were inserted therein after the words “in any office or employment of profit” the words “or given to the individual in respect of “the past services of any deceased person.”

Graduation of tax on unearned income in case of incomes not exceeding 2,000l.

19. Section twenty-six of the Finance Act, 1916, shall have effect as if for the rates of tax specified in that section there were substituted the following rates, namely—

Three shillings if the total income does not exceed five hundred pounds;

Three shillings and ninepence if the total income exceeds five hundred pounds and does not exceed one thousand pounds;

Four shillings and sixpence if the total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;

Five shillings and threepence if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds.

Super-tax for 1918–19.

20.—(1) In addition to the income tax charged at the rate of six shillings under this Act and the additional income tax under section twenty-seven of the Finance Act, 1916, there shall be charged, levied, and paid for the year beginning on the sixth day of April, nineteen hundred and eighteen, in respect of the income of any individual, the total of which from all sources exceeds two thousand five hundred pounds, an additional duty of income tax (in this Act referred to as “super-tax”) at the following rates:—

(2) All such enactments relating to super-tax as were in force with respect to the super-tax granted for the year beginning the sixth day of April, nineteen hundred and seventeen, shall have full force and effect with respect to the super-tax granted under this section.

Charge of Schedule B. tax. 59 & 60 Vict. c. 28.

21. Sections twenty-six and twenty-seven of the Finance Act, 1896 (which relate respectively to the application of the Income Tax Acts and to annual value for the purpose of exemption from or abatement of income tax under Schedule B.), shall, as respects income tax under Schedule B., have effect as if for the references to one-third of the annual value there were substituted references to an amount equal to twice the annual value:

Provided that where it is proved to the satisfaction of the Income Tax Commissioners concerned that any person occupying any lands and assessed to income tax in respect thereof under Schedule B. is not occupying those lands for the purposes of husbandry only, or mainly for those purposes, the above provision shall, unless the Board of Agriculture and Fisheries, on a reference to the Board by the Commissioners of Inland Revenue, certify that the use of the lands by that person for purposes other than purposes of husbandry is unreasonable, apply in relation to those lands as if for the reference to an amount equal to twice the annual value there were substituted a reference to an amount equal to the annual value.

The expression “Board of Agriculture and Fisheries” means in the application of this section to Scotland the Board of Agriculture for Scotland, and in the application of this section to Ireland the Department of Agriculture and Technical Instruction for Inland.

Continuance of certain relief from income tax.

22. The provisions of section twenty-nine, section thirty (as amended and extended by section eleven of the Finance Act, 1917), and section forty-three of the Finance Act, 1916, (which give relief from income tax in certain cases for the then current income tax year) shall have effect as if herein re-enacted and in terms made applicatble to the income tax year beginning on the sixth day of April, nineteen hundred and eighteen:

Provided that the said section thirty as so amended shall apply to an person who during the current income tax year has serged as a member of the Air Force, but a person shall not be deemed to have served as a member of the Air Force unless he has served as an airman in air force service or as an officer of the Air Force on full pay or at a rate of pay which appears to the Income Tax Commissioners concerned, after consultation with the Air Council, to be equivalent to full pay, and either out of the British Islands or for at least one month continuously in the British Islands.

Continuance of relief under 5 Geo. 5. c. 7. s. 13.

5 & 6 Geo. 5. c. 62.

23.—(1) Section thirteen of the Finance Act, 1914 (Session 2) (which gives relief in respect of diminution of income due to war), shall apply to income tax (including super-tax) for the current income-tax year, but with the substitution, as regards postponed super-tax, of the first day of January, nineteen hundred and twenty, for the first day of January, nineteen hundred and sixteen, as the date on which the postponed super-tax is to become payable.

(2) Any payment of super-tax for any year (hereinafter referred to as the year of charge) which has been postponed under section thirteen of the Finance Act, 1914 (Session 2), as continued by section twenty of the Finance Act, 1915, section twenty-eight of the Finance Act, 1916, and section twelve of the Finance Act, 1917, or which has been postponed and further postponed under those sections may be further postponed until the first day of January, nineteen hundred and twenty, if the individual from whom the payment is due proves to the satisfaction of the Special Commissioners that his actual income from all sources for the current income-tax year is or will be less than two-thirds of the income on which he was liable to be charged to super-tax for the year charge.

Provision with respect to deductions for wear and tear of plant, &c.

41 & 42 Vict. c. 15.

61 & 62 Vict. c. 10.

24.—(1) Where an application is made to the Commissioners of Inland Revenue for the alteration of the amount of any deduction for wear and tear, the Commissioners, unless they are of opinion that the application is frivolous or vexatious, shall refer the case to the Board of Referees, and that Board shall, if they are satisfied that the application is made by or on behalf of any considerable number of persons engaged in any class of trade or business, take the application into their consideration, and determine the deduction to be allowed.

In this section—

The expression “deduction for wear and tear” has the same meaning as in section twenty-six of the Finance Act, 1907; and

The expression “Board of Referees” means any Board of Referees appointed for the purpose of Part III. of the Finance (No. 2) Act, 1915, or, if there is no such Board, a Board of Referees to be appointed for the purpose of this section by the Treasury.

(2) Section twelve of the Customs and Inland Revenue Act, 1878, as amended by section twenty-six of the Finance Act, 1907, shall have effect as if the references therein to diminished value by reason of wear and tear during the year of any machinery or plant included references to diminished value by reason of any machinery or plant having been temporarily out of use at any time during the year through circumstances attributable, directly or indirectly, to the present war.

(3) In estimating the profits or gains of any trade, manufacture, adventure, or concern in the nature of trade chargeable under Schedule D., or the profits of any concern chargeable by reference to the rules of that Schedule, there shall be allowed to be deducted as expenses incurred in any year so much of any amount expended in that year in replacing any plant or machinery which has become obsolete as is equivalent to the cost of the plant or machinery replaced after deducting from that cost the total amount of any allowances which have at any time been made in estimating profits or gains as aforesaid on account of the wear and tear of that plant and machinery and any sum realised by the sale of that machinery or plant.

(4) Section nine of the Finance Act, 1898 (which relates to the amount of the deduction to be allowed on account of the annual value of premises), shall not apply in the case of any premises being mills, factories, or other similar premises.

Basis of charge where non-resident is chargeable in name of agent in respect of profits arising from the sale of foreign goods.

25. Where a non-resident person is chargeable to income tax in the name of any branch, manager, agent, factor, or receiver in respect of any profits or gains arising from the sale of goods or produce manfactured or produced out of the United Kingdom by the non-resident person, the person in whose name the non-resident person is so chargeable may, if he thinks fit apply to the Commissioners by whom the assessment is made or, in case of an appeal, to the General or Special Commissioners to have the assessment to income tax in respect of those profits or gains made or amended on the basis of the profits which might reasonably be expected to have been earned by a merchant or, where the goods are retailed by or on behalf of the manufacturer or producer, by a retailer of the goods sold who had bought from the manufacturer or producer direct, and, on proof to the satisfaction of the Commissioners concerned of the amount of the profits on the basis aforesaid, the assessment shall be made or amended accordingly.

No deduction to be allowed on account of annual value of premises abroad.

26. Where any lands, tenements, hereditaments or other premises of whatsoever description used for the purpose of any trade, manufacture, adventure, concern, profession, employment or vocation, are situtated outside the United Kingdom, no deduction or set-off shall, in estimating the amount of annual profits or gains arising or accruing from that trade, manufacture, adventure, concern, profession, employment or vocation, in any manner be allowed on account or in respect of the annual value of those premises.

Extension of relief in respect of children and grant of relief in respect of wife and dependent relatives.

10 Edw. 7. c. 8.

27.—(1) Section sixty-eight of the Finance (1909–10) Act, 1910 (which, as amended by section thirty-three of the Finance Act, 1916, gives to individuals whose total income does not exceed seven hundred pounds relief from income tax in respect of children), as amended by any subsequent enactments, and section thirteen of the Finance Act, 1917, shall have effect as if eight hundred pounds were substituted as the limit of income for seven hundred pounds.

(2) If any individual, who has been assessed or charged to income tax or has paid income tax either by deduction or otherwise, claims and proves in manner prescribed by the Income Tax Acts that his total income from all sources, although it exceeds one hundred and thirty pounds, does not exceed eight hundred pounds, and that for the year for which the income tax is charged he has a wife living with him, or maintains at his own expense any person being a relative of his or of his wife who is incapacitated by old age or infirmity from maintaining himself, and whose income from all sources does not exceed twenty-five pounda a year, he shall be entitled in respect of his wife and in respect of every such person as aforesaid whom he so maintains to relief from income tax equal to the amount of income tax on twenty-five pounds.

The provisions of this subsection which give relief to an individual in respect of a wife shall in the case of any individual being a widower be extended so as to give relief in respect of a person, being a female relative of his or of his deceased wife, who is resident with him for the purpose of having the charge and care of any child of his.

(3) If any individual who has been assessed or charged to income tax or has paid income tax by deduction or otherwise claims and proves in manner prescribed by the Income Tax Acts that his total income from all sources, although it exceeds eight hundred pounds does not exceed one thousand pounds, and that he would if his income did not exceed eight hundred pounds be entitled under section sixty-eight of the Finance (1909–10) Act, 1910, as amended by any other enactment, or under section thirteen of the Finance Act, 1917, to relief in respect of three or more children, he shall be entitled in respect of each of those children above the number of two to relief from income tax equal to the amount of income tax on twenty-five pounds.

In this section the expression “realtive” includes any person of whom the individual in question had the custody and whom he maintained at his own expense while that person was under the age of sixteen years, and the expression “child” means a child in respect of whom relief is given under section sixty-eight of the Finance Act (1909–10) Act, 1910, as amended by any other enactment or under section thirteen of the Finance Act, 1917.

The provisions of subsections (2) and (3) of section sixty-eight of the Finance (1909–10) Act, 1910, as amended by any subsequent enactments, shall apply to the relief given by this section, to the manner of claiming such relief, and to the proof to be given with respect thereto, as if they were herein re-enacted and in terms made applicable to this section.

Extension of relief to clergymen or ministers of religion in respect of dwelling-houses.

28. Where a clergyman or minister of any religious denomination is in the occupation of a dwelling-house, but pays no rent therefor, he shall for the purposes of section twenty-eight of the Finance Act, 1907 (which allows deductions by clergymen and ministers in respect of dwelling-houses), be deemed to pay a rent equal to the annual value of the dwelling-house as assessed to income tax under Schedule A., and that section shall have effect accordingly.

Payment of interest on war securities in certain cases without deduction of income tax.

29. The Treasury may direct that any securities issued under the War Loan Acts, 1914 to 1917, or any Act amending those Acts, shall be issued or shall be deemed to have been issued subject to the condition that the interest on those securities shall be paid without deduction of income tax, and the interest shall be so paid accordingly, but any such interest shall be accounted for and charged to income tax under the third case of Schedule D., subject, however, to any provisions of the Income Tax Acts with respect to exemptions or abatements.

Payment of Schedule A. income tax by instalments.

30. The provisions of subsections (1) and (3) of section thirty-three of the Finance (No. 2) Act, 1915 (which provides the payment of income tax by instalments in certain cases), shall apply to the case of income tax charged under No. I. or No. II. of Schedule A. as they apply to the cases mentioned in subsection (2) of that section.

Excess profits duty charged in respect of profits arising from the sale of trading stock not to be allowed as a deduction.

31. Any excess profits duty which becomes chargeable by virtue only of the provisions of this Act relating to profits arising from the sale of trading stock, otherwise than in the ordinary course of trade, shall not for the purpose of the provisions of section thirty-five of the Finance (No. 2) Act, 1915, which enacts that, where a person has paid excess profits duty under that Act, the amount so paid shall be allowed as a deduction in computing profits and gains for the purpose of income tax, be deemed to be excess profits duty under that Act.

Exemption from income tax of certain funds under the National Insurance (Health) Acts, 1911 to 1918.

1 & 2 Geo. 5. c. 55.

7 & 8 Geo. 5. c. 62.

32.—(1) An insurance committee established under Part I. of the National Insurance Act, 1911, shall in respect of income derived from any funds or credits of the committee under the National Insurance (Health) Acts, 1911 to 1918, or any investment thereof, and the trustees of the special fund constituted by subsection (6) of section forty-eight of the National Insurance Act, 1911, as amended by the National Health Insurance Act, 1918, shall in respect of income derived from that fund, be entitled to exemption from income tax, and the National Health Insurance Joint Committee shall be entitled to a similar exemption in respect of any income derived from any funds held by that Committee or under the control or management of that Committee under or for the purpose of the National Insurance (Health) Acts, 1911 to 1918.

(2) Any exemption granted under this section shall be claimed and allowed in the same manner as in the case of income applicable and applied to charitable purposes and shall be in addition to and not in derogation of any other exemption under any other Act.

Effect of s. 97 of Texas Management Act, 1880.

43 & 44 Vict. c. 19.

33. For the purpose of removing doubts, it is heeby declared that any person who has made default in paying any sum which may be levied on him in respect of income tax or inhabited house duty may, notwithstanding that he was not named in the assessment, be entered as a defaulter in a certificate under section ninety-seven of the Texas Management Act, 1880, which relates to the recovery of duty refused in Scotland.

Part III.

Excess Profits Duty.

Continuation of excess profits duty.

34. The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as “the principal Act”), as amended or extended by any subsequent enactment, shall, so far as it relates to excess profits duty, apply, unless Parliament otherwise determines, to any accounting period ending on or after the first day of August, nineteen hundred and nineteen, as it applies to accounting periods ended after the fourth day of August, nineteen hundred and fourteen, and before the first day of August, nineteen hundred and eighteen.

Profits arising form sale of trading stock.

35.—(1) For the purposes of excess profits duty the profits arising from the sale at any time after the twenty-second day of April, nineteen hundred and eighteen, otherwise than in the ordinary course of trade of the trading stock or part of the trading stock belonging or formerly belonging to any trade or business, shall be deemed to be profits arising from a trade or business, and where any such sale takes place after a trade or business has ceased the trade or business shall be deemed to have been carried on up to and including the date on which the sale takes place, and the accounting period shall be taken to be such as the Commissioners of Inland Revenue may determine.

(2) Where a trade or business has ceased but is deemed for the purposes of this section to have been carried on for any period—

(a) the person by whom or by whose authority any trading stock is sold whether as owner, agent, liquidator, trustee, or receiver or other person acting in a similar capacity shall be deemed to be the person carrying on the trade or business and excess profits duty shall be assessed on and recoverable from that person and nothing in subsection (2) of section forty-five of the principal Act shall operate as so to impose any liability to duty on the purchaser of the trading stock; and

(b) the appointment of any such liquidator, trustee or receiver, or other person shall not be treated as a change of ownership of the trade or business, and subsection (3) of section thirty-eight of the principal Act and paragraph seven of Part I. of the Fourth Schedule to that Act as amended by any subsequent enactment shall have effect as if the profits arising from the sale of the trading stock had been made by the owner of the business immediately before th appointment of the liquidator, trustee, receiver, or other person, and as if the duty were payable by him.

(3) Where any trading stock is sold together with other assets of the trade or business, the part of the consideration attributable to the trading stock shall, subject to appeal in manner provided by subsection (5) of section forty-five of the principal Act, be determined by the Commissioners of Inland Revenue, and the part of the consideration so determined shall be deemed to be the price paid for the trading stock by the purchaser.

(4) For the purpose of this section any trading stock which has been disposed of otherwise than by way of sale shall be deemed to have been sold, and any such trading stock so disposed of, and any trading stock which has been sold for a consideration other than cash, not being a consideration the value of which can be easily ascertained, shall be deemed to have realised the market price of the day on which it was so disposed of or sold.

No person shall at any time after the fourteenth day of May, nineteen hundred and eighteen, dispose otherwise than by way of sale of any trading stock unless he has previously made provision to the satisfaction of the Commissioners of Inland Revenue for securing the payment of any excess profits duty which may be chargeable by virtue of the provisions of this section, and if any person attempts to dispose of any trading stock in contravention of this provision the disposal shall be void and of no effect.

(5) In this section the expression “trading stock” includes—

(a) any goods such as are sold in the ordinary course of a trade or business whether in a firnished condition or not; and

(b) any raw or other materials used in the manufacture or preparation of any such goods,

and references to disposal of trading stock do not include disposal by way of testamentary disposition.

Part IV.

Stamps.

Increase of stamp duty on certain bills of exchange 54 & 55 Vict. c. 39.

36.—(1) Twopence shall be substituted for one penny as the stamp duty on all bills of exchange and promissory notes chargeable under the First Schedule to the Stamp Act, 1891, with duty at the rate of one penny and drawn on or after the first day of September, nineteen hundred and eighteen, and twopence shall accordingly be substituted for one penny in sections thirty-four and thirty-eight of the Stamp Act, 1891.

(2) The provisions of subsection (2) of section thirty-eight of the Stamp Act, 1891, shall apply so as to enable an adhesive penny stamp to be fixed on any bills of exchange to which that subsection applis being bills which are liable to a duty of twopence under this section and are stamped only with a penny stamp, as they apply with respect to the fixing of a stamp on an unstamped bill.

(3) Subsection (1) of section thirty-eight of the Stamp Act, 1891, shall not operate so as to render any bill of exchange which is liable to a duty of twopence under this section and is stamped with a penny stamp invalid for any purpose until the first day of December, nineteen hundred and eighteen, if the person who takes or receives the bill fixes thereto an adhesive stamp of one penny and cancels the stamp.

Part V.

General.

Suespension of new sinking fund.

50 & 51 Vict. c. 16.

37. In the financial year ending the thirty-first day of March, nineteen hundred and nineteen, that portion of the permanent annual charge for the national debt which is not required for the annual charge directed by the National Debt and Local Loans Act, 1887, or any other Act to be paid out of that charge, shall not be paid.

Provision for dealing with small amounts of Government stock belonging to deceased persons.

5 & 6 Geo. 5. c. 93.

33 & 34 Vict. c. 71. 1 & 2 Geo. 5. c. 48.

57 & 58 Vict. c. 30.

7 Will. 4. and 1 Vict. c. 26.

7 & 8 Geo. 5. c. 58.

38.—(1) Where the bank have reason to believe that any person in whose name any war stock of an amount not exceeding in the aggregate one hundred pounds in nominal value or in actual value, whichever is the less, is standing has died the Bank may, in such manner as may be prescribed by regulations made under section one of the War Loan (Supplemental Provisions) Act, 1915, transfer the stock from the books of the Bank to the Post Office Stock Register established under that Act, and may in such manner as may be so prescribed remit any dividends accrued thereon on the Postmaster General to be dealt with in the same manner as if the stock had been inscribed in the said register at the time when they accrued due.

(2) Where the Bank have reason to believe than any person in whose name any Government stock of a nominal amount not exceeding in the aggregate five hundred pounds is standing has died in actual military service, and that he was a person resident in some part of His Majesty's dominions outside the British Islands, the Bank may on an application inthat behalf made under this section by the proper authority and on an undertaking by the proper authority to answer for any death duties leviable in respect of the stock and any dividends accrued thereon, and to deal with the stock or the proceeds of sale thereof and any dividends thereon in accordance with the provisions of this section, hold the stock together with any dividends which have accrued, or which may thereafter accrue thereon at the disposal of the proper authority, and thereupon the stock shall become transferable by, and any dividends thereon shall become payable to, the proper authority as if that authority were the legal personal representative of the deceased person.

(3) Where any stock is transferred or where any dividends are remitted or paid under or in pursuance of this section, the transfer, remittance, or payment, as the case may be, shall be deemed to have been properly made and the Bank shall be discharged from all liability in respect of the stock transferred and the dividends remitted or paid.

(4) Where any stock is held at the disposal of or any dividends thereon are paid to the proper authority under or in pursuance of this section, that authority may, after making provision for the payment of any death duties leviable in respect of the stock and of the dividends, transfer the stock or any part of the stock to, or pay the proceeds of sale thereof or any part of those proceeds, to any person who, in the opinion of the proper authority, establishes a valid claim to the said stock or the proceeds of sale or any part thereof, and the receipt of any person to whom payment is made under or in pursuance of this subsection shall be a good discharge to the proper authority for the sum paid and any stock transferred to any person under or in pursuance of this subsection shall be deemed to have been properly transferred, and the proper authority shall be discharged from all liability in respect of the sum paid or the stock transferred.

(5) For the purposes of this section—

The expression “the Bank” means the Bank of England or the Bank of Ireland, as the case may be;

The expression “proper authority” means the High Commissioner or agent in London of the Dominion or Colony in which the deceased person was resident, or any other person recognised by the Treasury as being in relation to the deceased person the proper authority for the purposes of this section;

The expression “Government stock” means any stock or bonds which are for the time being transferable in the books of the Bank under the National Debt Act, 1870, or by deed under section seventeen of the Finance Act, 1911;

The expression “war stock” means any Government stock issued in connection with any loan raised for the purposes of the present war;

This expression “death duties” has the same meaning as in subsection (3) of section thirteen of the Finance Act, 1894;

A person shall be deemed to have died in actual military service if he was a person to whom at the time of his death the provisions of section eleven of the Wills Act, 1837, as amended by the Wills (Soliders and Sailors) Act, 1918, applied or would have applied if he had been domiciled in England.

Amendment of s. 35 of 7 & 8 Geo. 5. c. 31.

39.—(1) Section thirty-five of the Finance Act, 1917, which empowers trustees to borrow and invest in war securities, shall have, and shall be deemed always to have had, effect as if for the words “are hereby expressly authorised to exercise without “the consent of any other person, such powers of borrowing, “subsection, investment, sale, or conversion, notwithstanding “anything in any instrument creating the trust” in subsection (1) thereof there were substituted the words “are hereby “expressly authorised to exercise such powers of borrowing, “subscription, investment, sale, or conversion, notwithstanding “anything to the contrary in any instrument creating the “trust, and without the consent of any other person, notwith-” standing that such consent is required by the instrument “creating the trust.”

Amendment of s. 42 of 6 & 7 Geo. 5. c. 24.

40. Section forty-two of the Finance Act, 1916, which exempts interest payable in respect of war savings certificates from income tax, shall have effect as though for the words “held by the purchaser” there were substituted the words “held by the person who is for the time being the holder of the certificate.”

Power to extend currency of war savings certificates.

41. Notwithstanding anything in the War Loan Acts, 1914 to 1917, or in any regulations made with respect to, or in any conditions relating to the issue of, war savings certificates, any such certificate issued under those Acts shall not, if the Treasury so direct, and subject to such conditions with respect to interest and otherwise, as they may impose, be required to be repaid or redeemed within five years after the date on which it was issued, in any case in which the holder of the certificate is at the date on which the certificate becomes repayable the holder of other war savings certificates which do not become repayable till a later date, and section forty-two of the Finance Act, 1916, shall apply with respect to any interest payable in respect of the certificate for the period after the expiration of five years from the date on which it was issued up to the date on which it is repaid or redeemed as it applies to the accumulated interest mentioned in that section:

Provided that nothing in this section shall prejudice any right of the holder of any war savings certificates, if he so desires, to have the amount payable under the certificate paid to him or or before the expiration of five years after the date on which the certificate was issued.

Amendment of s. 34 of 7 & 8 Geo. 5. c. 31.

42. Section thirty-four of the Finance Act, 1917, shall have effect as though there were inserted therein after the words “price of issue,” in subsection (3) and subsection (4) thereof, the words “or such other price price as was specified in the conditions “subject to which the stock or bonds were issued as the price “at which the stock or bonds were to be valued for the purposes “of this section.”

Provision for enabling the Post Office to exercise powers in relation to insurance stamps.

1 & 2 Geo. 5. c. 48.

43. Section twenty of the Finance Act, 1911 (which enables His Majesty by Order in Council to provide for the exercise and performance by the Postmaster-General or any powers and duties of the Commissioners of Inland Revenue with reference to certain stamps), shall have effect as though the reference therein to any stamps used to denote duties other than duties of postage included a reference to stamps required for the purposes of the National Insurance Act, 1911, and any Orders made under than section may be varied or revoked by any subsequent Orders so made.

Extension of 4 & 5 Geo. 5. c. 76. to property passing to certain collaterals.

63 & 64 Vict. c. 7.

44. The Death Duties (Killied in War) Act, 1914 (which extends as respects the present war the relief from death duties given by section fourteen of the Finance Act, 1900), shall have effect, and shall be deemed always to have had effect, as though the references therein to lineal ancestors included references to brothers and sisters and the descendants of brothers and sisters of the decesased.

Construction repeals and short title.

45.—(1) Part I. of this Act so far as related to duties of customs shall be construed as one with the Customs (Consolidation) Act, 1876, and any enactment amending that Act, and so far as it relates to duties of excise shall be construed together with the Acts relating to duties of excise and the management of those duties.

Part II. of this Act shall be construed with the Income Tax Acts, 1842 to 1853, and any other enactments relating to income tax, and those enactments and Part II. of this Act are in this Act referred to as the Income Tax Acts.

Part III. of this Act shall be construed with the Finance (No. 2) Act, 1915.

(2) The Acts specified in the Fourth Schedule to this Act are hereby repealed to the extent specified in the third column of that Schedule.

(3) This Act may be cited as the Finance Act, 1918.

SCHEDULES.

First Schedule.

Sections 3, 4.

Part I.

Ordinary Customs Duties on Spirits.

Part II.

Additional Customs Duties in respect of Immature Spirits.

Part III.

Additional Excise Duties in respect of Immature Spirits.

Note.—The additional duties under Part II. and Part III. of this Schedule shall, in the case of blended spirits, be subejct to the modifications enacted by the provisions in Part III. of the Schedule to the Finance Act, 1915, as though those provisions were herein re-enacted with the substitution for the reference to Parts I. and II. of that Schedule of a reference to Parts II. and III. of this Schedule.

Second Schedule.

Section 7 .

Tobacco.

Part I.

Customs Duties.

Part II.

Excise Duties.

Part III.

Rates of Drawback.

Third Schedule.

Sections 8,9 .

Sugar & c.

Part I.—Duties.

[Note.— The charge under this Schedule of a specified amount of duty on a specific weight of any article includes a charge of a proportionately less duty on any less weight of any article so charged.]

*Part II.—Drawbacks and Allowances.

(1) Customs Drawbacks under the Second Schedule of the Finance Act, 1901.

(2) Excise Drawbacks.

(3) Allowances on Molasses used solely for the Purpose of Food for Stock.

*The substituted drawbacks and allowances shall only take effect where it is shown that duty has been paid at the increased rate.

Fourth Schedule.

Section 45 .

Part I.

Enactments Repealed.