Finance (No. 2) Act 1955
| Jurisdiction | UK Non-devolved |
| Citation | 1955 c. 17 |
| Year | 1955 |
Finance (No. 2) Act , 1955
(4 & 5 Eliz. 2) CHAPTER 17
An Act to increase certain taxes and otherwise to amend the law relating to the Public Revenue.
Most Gracious Sovereign,
We , Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom 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 Queen'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
Purchase Tax
1 Purchase tax.
(1) Section nine of the Finance Act, 1952 (which provides for reducing or discharging purchase tax on certain wearing apparel, textiles and domestic furniture by making a deduction from wholesale value), shall cease to have effect.
(2) Part I of the Eighth Schedule to the Finance Act, 1948, shall have effect subject to the amendments in the First Schedule to this Act (of which those set out in Part I of that Schedule comprise amendments reducing the rate of tax chargeable on wearing apparel, textiles and domestic furniture).
(3) In Part I of the said Eighth Schedule as amended by the First Schedule to this Act—
(a ) each rate of 25 per cent. in any Group shall be increased to 30 per cent.;
(b ) each rate of 50 per cent. in Group 11 or any following Group shall be increased to 60 per cent., and
(c ) each rate of 75 per cent. in any Group shall be increased to 90 per cent.
(4) This section shall have effect subject to any order made by the Treasury under section twenty-one of the Finance Act, 1948, after the passing of this Act.
(5) This section shall have effect as from the twenty-seventh day of October, nineteen hundred and fifty-five.
Part II
The Profits Tax and Income Tax
Amendments of profits tax
2 Rates of profits tax, etc.
(1) The enactments relating to the profits tax shall be amended as respects any chargeable accounting period ending after the end of October, nineteen hundred and fifty-five, by substituting—
(a ) twenty-seven and a half per cent. for twenty-two and a half per cent. as the rate of any tax not being a distribution charge; and
(b ) twenty-five per cent. for twenty per cent. as the rate of any relief for non-distribution.
(2) Where a period which, apart from this section, would be a chargeable accounting period of a trade or business falls partly before and partly after the end of October, nineteen hundred and fifty-five, the parts thereof falling before and after the end of that month shall be separate chargeable accounting periods.
(3) The consequential and transitional provisions contained in the Second Schedule to this Act shall have effect in relation to the preceding provisions of this section.
Amendments of Income Tax Acts
3 Lloyd's and other underwriters.
(1) The Twenty-first Schedule to the Income Tax Act, 1952 (which contains provisions as to arrangements for special reserve funds in relation to Lloyd's and other underwriters), of paragraph 6 thereof (which specifies the maximum gross amount which the underwriter may pay into his special reserve fund or funds), for the words—
‘five thousand pounds or thirty-five per cent. of that profit, whichever is the less’
there were substituted the words—
‘seven thousand pounds or fifty per cent. of that profit, whichever is the less’:
Provided that the amendment effected by the foregoing provisions of this subsection shall not apply to any arrangements which permit an underwriter, by reason of the making of a profit for an underwriting year corresponding to a year of assessment earlier than the year 1955-56, to pay into his special reserve fund or funds more than is provided for by the said sub-paragraph (1) as in force apart from this subsection.
(2) Where an underwriter dies while carrying on his business and, after giving effect to the requirements of paragraph 7 of the said Schedule (under which withdrawals are to be made to meet losses), his special reserve fund or funds include an amount which represents an excess in the payments made into the fund or funds for any underwriting year over the limit permitted by sub-paragraph (1) of the said paragraph 6, as in force apart from subsection (1) of this section,—
(a ) he shall be deemed for all income tax purposes to have received in the year of assessment corresponding to the said underwriting year a payment of the said amount—
(i) which was an annual payment chargeable to income tax by way of deduction and paid out of profits or gains brought into charge to tax, and
(ii) which was payable in the year of assessment in which it is deemed to have been paid, and
(b ) the payment (to the said actual amount) shall be deemed for the purposes of the said Schedule and for all income tax purposes to be a net amount corresponding to a gross amount from which income tax has been duly deducted at the standard rate for the year of assessment in which the amount is deemed as aforesaid to have been payable and paid.
(3) Where, to give effect to the requirements of the said paragraph 7 as to the meeting of a loss, any withdrawal was made at any time from the capital of the underwriter's special reserve fund or funds, the amount withdrawn shall be regarded for the purposes of subsection (2) of this section—
(a ) as having been met out of payments into the fund or funds made for underwriting years before that in which the loss was incurred, and as having been met before any withdrawal to meet a loss for a later underwriting year, and
(b ) as having been met out of so much of the payments made for any underwriting year (including a year corresponding to a year of assessment earlier than 1955-56) as was not in excess of the limit permitted by sub-paragraph (1) of paragraph 6 of the said Schedule, as in force apart from subsection (1) of this section, rather than out of such part of the payments made for any underwriting year corresponding to a year of assessment after 1954-55 as was in excess of the said limit, and
(c ) subject to that, as having been met out of payments in excess of the said limit for a later year, rather than out of payments in excess of the said limit for an earlier year,
and where payments have been made into the underwriter's special reserve fund or funds for any underwriting year in excess of the said limit, his fund or funds shall be deemed at all subsequent times to include an amount representing that excess except to the extent that any withdrawal is, under the provisions of this subsection, to be regarded as having been met out of that amount.
(4) Any tax chargeable by virtue of this section shall be assessed and charged upon the underwriter's personal representatives, and assessments may be made in respect of tax so chargeable at any time within the period permitted by subsection (2) of section forty-seven of the Income Tax Act, 1952 (which, as extended by subsection (3) of section two hundred and twenty-nine of that Act provides that surtax and other assessments on the personal representatives of a deceased person in respect of income arising before the death must be made within three years from the year in which the death occurred), notwithstanding the time limit in subsection (1) of that section (which provides that assessments shall be made within six years from the year to which the assessments relate); and the tax so charged shall be a debt due from and payable out of the underwriter's estate.
(5) Expressions occurring in the foregoing provisions of this section to which a meaning is assigned by the said Twenty-first Schedule shall be construed as if they occurred in that Schedule and references in this section to payments made into a special reserve fund or funds for a particular underwriting year are references to payments made, as described in sub-paragraph (1) of paragraph 6 of the said Schedule, by reference to the profits made for that underwriting year.
4 Purchases of shares by financial concerns and persons exempted from tax.
(1) Where a person engaged in carrying on a trade which consists of or comprises dealings in shares or other investments becomes entitled to receive a dividend on a holding of shares of any class to which this section applies, being shares sold or issued to him or otherwise acquired by him after the twenty-sixth day of October, nineteen hundred and fifty-five, and not more than six years before the date on which the dividend becomes payable, and the dividend is to any extent paid out of profits accumulated before the date on which the shares were so acquired, then, if those shares, or those shares together with—
(a ) any other shares the dividend on which is payable to that person and which were sold or issued to him or otherwise acquired by him after the said twenty-sixth day of October and not more than six years before the date on which the dividend becomes payable, and
(b ) in a case where the trade is under the same control as another trade which consists of or comprises dealings in shares or other investments, any shares the dividend on which is payable to the person engaged in carrying on that other trade and which were sold or issued to him or otherwise acquired by him after the said twenty-sixth day of October and not more than six years before the date on which the dividend becomes payable, and
(c ) any such shares as are to be brought into account under subsection...
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