OpenLegislation

Finance Act 1988

1988 c. 39 · Enacted 29 July 1988 · Extends to United Kingdom

Not fully up to date. 3 changes made by later legislation have not yet been written into this text, which is revised to 22 February 2024.

See the changes not yet applied
ProvisionChangeMade by
Sch. 13 para. 12omittedFinance Act 2008 s. 41(7)(a)
s. 29repealedFinance Act 2012 Sch. 39 para. 28(1)
Sch. 3 para. 9repealedFinance Act 2012 Sch. 39 para. 28(1)
An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance.[29th July 1988]

I1X1Most 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:—

Contents

  1. Part I: Customs and Excise
  2. Duties of excise: rates
  3. 1Beer, wine, made-wine and cider.
  4. 2Tobacco products.
  5. 3Hydrocarbon oil.
  6. 4Vehicles excise duty.
  7. Duties of excise: other provisions
  8. 5Relief from excise duty on goods imported for testing etc.
  9. 6Remission of duty in respect of spirits used for medical or scientific purposes.
  10. 7Meaning of “sparkling” in relation to wine and made-wine.
  11. Management
  12. 8Disclosure of information as to imports.
  13. 9Approval and regulation of warehouses.
  14. 10Power to search persons.
  15. 11Time limits for arrest and proceedings.
  16. 12Punishment of offences.
  17. Part II: Value Added Tax
  18. Exemptions
  19. 13Medical services and goods.
  20. Administration
  21. 14Registration.
  22. 15Assessment of tax due.
  23. Civil penalties
  24. 16Serious misdeclaration or neglect resulting in understatements or overclaims.
  25. 17Persistent misdeclaration resulting in understatements or overclaims.
  26. 18Failures to notify and unauthorised issue of invoices.
  27. 19Breaches of regulatory provisions.
  28. Miscellaneous
  29. 20Repayment supplement.
  30. 21Set-off of credits.
  31. 22Invoices provided by recipients of goods or services.
  32. Part III: Income Tax, Corporation Tax and Capital Gains Tax
  33. Chapter I: General
  34. Tax rates and personal reliefs
  35. 23Charge and basic rate of income tax for 1988-89. Repealed
  36. 24Higher and additional rates of income tax. Repealed
  37. 25Personal reliefs. Repealed
  38. 26Charge and rate of corporation tax for financial year 1988.
  39. 27Corporation tax: small companies.
  40. 28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  41. 29Life assurance premium relief.
  42. 30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  43. 31Non-residents’ personal reliefs. Repealed
  44. Married couples
  45. 32Abolition of aggregation of income.
  46. 33Personal allowance and married couple’s allowance. Repealed
  47. 34Jointly held property. Repealed
  48. 35Minor and consequential provisions.
  49. Annual payments
  50. 36Annual payments.
  51. 37Maintenance payments under existing obligations: Repealed
  52. 38Maintenance payments under existing obligations: Repealed
  53. 39. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  54. 40Provisions supplementary to sections 37 to 39. Repealed
  55. Relief for interest
  56. 41Qualifying maximum for loans.
  57. 42. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  58. 43. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  59. 44. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  60. Benefits in kind
  61. 45Car benefits.
  62. 46Car parking facilities. Repealed
  63. 47Entertainment: non-cash vouchers.
  64. 48Entertainment: credit-tokens.
  65. 49Entertainment of directors and higher-paid employees.
  66. Business expansion scheme
  67. 50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  68. 51Restriction of relief.
  69. 52Valuation of interests in land.
  70. 53Approved investment funds. Repealed
  71. Pensions etc.
  72. 54Personal pension schemes: commencement. Repealed
  73. 55Personal pension schemes: other amendments. Repealed
  74. 56Occupational pension schemes. Repealed
  75. 57Lump sum benefits paid otherwise than on retirement. Repealed
  76. Underwriters
  77. 58Assessment and collection. Repealed
  78. 59Reinsurance: general.
  79. 60Reinsurance to close.
  80. 61Minor and consequential amendments.
  81. Oil licences
  82. 62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  83. 63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  84. 64. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  85. Miscellaneous
  86. 65Commercial woodlands. Repealed
  87. 66Company residence. Repealed
  88. 66AResidence of SE or SCE Repealed
  89. 67. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  90. 68Priority share allocations for employees etc. Repealed
  91. 69Share options: loans. Repealed
  92. 70Charities: payroll deduction scheme.
  93. 71Unit trusts: relief on certain payments. Repealed
  94. 72Entertainment of overseas customers. Repealed
  95. 73Consideration for certain restrictive undertakings.
  96. 74. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  97. 75Premiums for leases etc. Repealed
  98. 76Section 76 Repealed
  99. Chapter II: Unapproved Employee Share Schemes
  100. Preliminary
  101. 77Scope of Chapter. Repealed
  102. Charges to tax
  103. 78Charge where restrictions removed etc. Repealed
  104. 79Charge for shares in dependent subsidiaries. Repealed
  105. 80Charge on special benefits. Repealed
  106. Miscellaneous
  107. 81Changes in interest. Repealed
  108. 82Company reorganisations etc. Repealed
  109. 83Connected persons etc. Repealed
  110. 84Capital gains tax. Repealed
  111. 85Information. Repealed
  112. Supplementary
  113. 86Meaning of “dependent subsidiary”. Repealed
  114. 87Other interpretation provisions. Repealed
  115. 88Transitional provisions. Repealed
  116. 89Consequential amendments.
  117. Chapter III: Capital Allowances
  118. 90. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  119. 91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  120. 92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  121. 93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  122. 94. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  123. 95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  124. Chapter IV: Capital Gains
  125. Re-basing to 1982
  126. 96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  127. 97. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  128. Unification of rates of tax on income and capital gains
  129. 98. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  130. 99. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  131. 100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  132. 101. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  133. 102. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  134. 103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  135. Married couples
  136. 104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  137. Company migration
  138. 105Deemed disposal of assets on company ceasing to be resident in U.K.
  139. 106. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  140. 107. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  141. Miscellaneous
  142. 108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  143. 109. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  144. 110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  145. 111. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  146. 112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  147. 113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  148. 114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  149. 115. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  150. 116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  151. 117Definition of “investment trust”.
  152. 118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  153. Chapter V: Management
  154. Assessment
  155. 119Current year assessments. Repealed
  156. Returns of income and gains
  157. 120Notice of liability to income tax. Repealed
  158. 121. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  159. 122Notice of liability to capital gains tax. Repealed
  160. Other returns and information
  161. 123Three year time limit.
  162. 124Returns of fees, commissions etc.
  163. 125Other payments and licences etc.
  164. Production of accounts, books etc.
  165. 126Production of documents relating to a person’s tax liability. Repealed
  166. 127Production of computer records etc. Repealed
  167. Interest and penalties
  168. 128Interest on overdue or overpaid PAYE. Repealed
  169. 129Two or more tax-geared penalties in respect of same tax.
  170. Company migration
  171. 130Provisions for securing payment by company of outstanding tax. Repealed
  172. 131Penalties for failure to comply with section 130. Repealed
  173. 132Liability of other persons for unpaid tax. Repealed
  174. Appeals etc.
  175. 133Jurisdiction of General Commissioners. Repealed
  176. 134General Commissioners for Northern Ireland. Repealed
  177. 135Cases stated in Northern Ireland. Repealed
  178. Part IV: Miscellaneous and General
  179. Inheritance tax
  180. 136Reduction of rates.
  181. 137Gifts to political parties.
  182. Petroleum revenue tax
  183. 138Reduced oil allowance for certain Southern Basin and onshore fields.
  184. 139Assets generating tariff receipts: extension of allowable expenditure.
  185. Stamp duty and stamp duty reserve tax
  186. 140. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  187. 141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repealed
  188. 142Stamp duty: housing action trusts.
  189. 143Stamp duty: paired shares
  190. 144Stamp duty reserve tax: paired shares etc
  191. Miscellaneous
  192. 145Building societies: change of status.
  193. 146Post-consolidation amendments.
  194. 147Interpretation etc.
  195. 148Repeals.
  196. 149Short title.
  197. Schedule 1: Alcoholic Liquor Duties
  198. ITable of Rates of Duty on Wine and Made-Wine
  199. Part II: Beverages of an Alcoholic Strength not Exceeding 5.5 per cent.
  200. 1Paragraph 1
  201. 2Paragraph 2 Repealed
  202. 3Paragraph 3 Repealed
  203. 4Paragraph 4
  204. 5Paragraph 5
  205. 6Paragraph 6 Repealed
  206. 7Paragraph 7
  207. 8Paragraph 8 Repealed
  208. 9Paragraph 9
  209. 10Paragraph 10 Repealed
  210. 11Paragraph 11 Repealed
  211. 12Paragraph 12
  212. 13Paragraph 13
  213. Schedule 2: Vehicles Excise Duty
  214. IPart I
  215. Part II: Vehicles Carrying or Drawing Exceptional Loads
  216. 1Paragraph 1 Repealed
  217. 2Paragraph 2 Repealed
  218. 3Paragraph 3 Repealed
  219. 4Paragraph 4 Repealed
  220. 5Paragraph 5 Repealed
  221. 6Paragraph 6 Repealed
  222. Schedule 3: Married Couples: Minor and Consequential Provisions
  223. Part I: Amendments of the Taxes Act 1988
  224. Introductory
  225. 1Paragraph 1
  226. Commencement of trade etc.
  227. 2Paragraph 2 Repealed
  228. Discontinuance of trade etc.
  229. 3Paragraph 3 Repealed
  230. Underpayments
  231. 4Paragraph 4 Repealed
  232. Additional relief in respect of children
  233. 5Paragraph 5 Repealed
  234. 6Paragraph 6 Repealed
  235. Widow’s bereavement allowance
  236. 7Paragraph 7
  237. Blind person’s allowance
  238. 8Paragraph 8 Repealed
  239. Life assurance premiums
  240. 9Paragraph 9
  241. Payments securing annuities
  242. 10Paragraph 10 Repealed
  243. Married couples living together
  244. 11Paragraph 11 Repealed
  245. Business expansion scheme
  246. 12Paragraph 12
  247. Qualifying maintenance payments
  248. 13Paragraph 13 Repealed
  249. Home loans
  250. 14Paragraph 14 Repealed
  251. Loans for shares in employee-controlled company
  252. 15Paragraph 15 Repealed
  253. Close company loans
  254. 16Paragraph 16 Repealed
  255. Trade unions and employers’ associations
  256. 17Paragraph 17 Repealed
  257. Retirement benefit schemes
  258. 18Paragraph 18 Repealed
  259. Partnership retirement annuities
  260. 19Paragraph 19
  261. 20Paragraph 20 Repealed
  262. Earned income
  263. 21Paragraph 21 Repealed
  264. Total income
  265. 22Paragraph 22 Repealed
  266. Part II: Other Provisions
  267. Capital allowances
  268. 23Paragraph 23 Repealed
  269. 24Paragraph 24 Repealed
  270. The transition
  271. 25Paragraph 25
  272. Returns
  273. 26Paragraph 26
  274. 27Paragraph 27
  275. 28Paragraph 28
  276. Time limits for assessments
  277. 29Paragraph 29 Repealed
  278. Transfers of allowances
  279. 30Paragraph 30
  280. Class 4 social security contributions
  281. 31Paragraph 31 Repealed
  282. Annual payments
  283. 32Paragraph 32
  284. Maintenance payments
  285. 33Paragraph 33 Repealed
  286. Schedule 4
  287. Part I: Modifications Made by Section 50
  288. Preliminary
  289. 1Paragraph 1
  290. The relief
  291. 2Paragraph 2
  292. Restriction of relief where amounts raised exceed permitted maximum
  293. 3Paragraph 3
  294. Individuals qualifying for relief
  295. 4Paragraph 4
  296. Parallel trades
  297. 5Paragraph 5
  298. Qualifying companies
  299. 6Paragraph 6
  300. Companies with interests in land etc.
  301. 7Paragraph 7
  302. Qualifying trades etc.
  303. 8Paragraph 8
  304. Replacement capital
  305. 9Paragraph 9
  306. Claims
  307. 10Paragraph 10
  308. Subsidiaries
  309. 11Paragraph 11
  310. 12Paragraph 12
  311. Part II: Dwelling-Houses to Which Section 50 Does Not Apply
  312. Expensive dwelling-houses
  313. 13Paragraph 13
  314. Unfit and sub-standard dwelling-houses
  315. 14Paragraph 14
  316. Dwelling-houses already let etc.
  317. 15Paragraph 15
  318. Dwelling-houses already qualifying for relief
  319. 16Paragraph 16
  320. Dwelling-houses qualifying for capital allowances
  321. 17Paragraph 17
  322. Interpretation of certain expressions: Scotland
  323. 18Paragraph 18
  324. Schedule 5: Underwriters: Assessment and Collection of Tax Repealed
  325. Preliminary Repealed
  326. 1Paragraph 1 Repealed
  327. Returns by agent Repealed
  328. 2Paragraph 2 Repealed
  329. Payments on account of tax Repealed
  330. 3Paragraph 3 Repealed
  331. Determinations by inspector Repealed
  332. 4Paragraph 4 Repealed
  333. Appeals Repealed
  334. 5Paragraph 5 Repealed
  335. Modification of determinations pending appeal Repealed
  336. 6Paragraph 6 Repealed
  337. Apportionments of syndicate profit or loss Repealed
  338. 7Paragraph 7 Repealed
  339. Individual members: effect of determinations Repealed
  340. 8Paragraph 8 Repealed
  341. Assessment of individual members: time limits Repealed
  342. 9Paragraph 9 Repealed
  343. Supplemental: penalties Repealed
  344. 10Paragraph 10 Repealed
  345. Supplemental: interest Repealed
  346. 11Paragraph 11 Repealed
  347. Schedule 6: Commercial Woodlands Repealed
  348. Preliminary Repealed
  349. 1Paragraph 1 Repealed
  350. Abolition of charge under Schedule B Repealed
  351. 2Paragraph 2 Repealed
  352. Abolition of Schedule D election et ceteralaetc. Repealed
  353. 3Paragraph 3 Repealed
  354. Transitional provisions Repealed
  355. 4Paragraph 4 Repealed
  356. 5Paragraph 5 Repealed
  357. Consequential amendments Repealed
  358. 6Paragraph 6 Repealed
  359. Schedule 7: Exceptions to Rule in Section 66(1) Repealed
  360. Cases where rule does not apply Repealed
  361. 1Paragraph 1 Repealed
  362. 2Paragraph 2 Repealed
  363. Cases where rule does not apply until end of transitional period Repealed
  364. 3Paragraph 3 Repealed
  365. 4Paragraph 4 Repealed
  366. Supplemental Repealed
  367. 5Paragraph 5 Repealed
  368. Schedule 8
  369. Previous no gain/no loss disposals
  370. 1Paragraph 1 Repealed
  371. 2Paragraph 2 Repealed
  372. Capital allowances
  373. 3Paragraph 3 Repealed
  374. Part disposals
  375. 4Paragraph 4 Repealed
  376. Assets derived from other assets
  377. 5Paragraph 5 Repealed
  378. Group transactions
  379. 6Paragraph 6 Repealed
  380. Close companies
  381. 7Paragraph 7 Repealed
  382. Private residence relief
  383. 8Paragraph 8 Repealed
  384. Replacement of business assets
  385. 9Paragraph 9 Repealed
  386. Apportionment of pre-1965 gains and losses
  387. 10Paragraph 10 Repealed
  388. Indexation allowance
  389. 11Paragraph 11 Repealed
  390. Elections under section 96(5): excluded disposals
  391. 12Paragraph 12 Repealed
  392. Elections under section 96(5): groups of companies
  393. 13Paragraph 13 Repealed
  394. 14Paragraph 14 Repealed
  395. Schedule 9
  396. Reduction of deduction or gain
  397. 1Paragraph 1 Repealed
  398. Charges rolled-over or held-over
  399. 2Paragraph 2 Repealed
  400. 2AParagraph 2A Repealed
  401. Postponed charges
  402. 3Paragraph 3 Repealed
  403. Previous no gain/no loss disposals
  404. 4Paragraph 4 Repealed
  405. 5Paragraph 5 Repealed
  406. 6Paragraph 6 Repealed
  407. Assets derived from other assets
  408. 7Paragraph 7 Repealed
  409. Claims
  410. 8Paragraph 8 Repealed
  411. Schedule 10
  412. Charge on settlor with interest in settlement
  413. 1Paragraph 1 Repealed
  414. 2Paragraph 2 Repealed
  415. 3Paragraph 3 Repealed
  416. 4Paragraph 4 Repealed
  417. Right of recovery
  418. 5Paragraph 5 Repealed
  419. Meaning of “settlor” etc.
  420. 6Paragraph 6 Repealed
  421. Information
  422. 7Paragraph 7 Repealed
  423. Shares in non–resident companies
  424. 8Paragraph 8 Repealed
  425. Maintenance funds for historic buildings
  426. 9Paragraph 9 Repealed
  427. Commencement
  428. 10Paragraph 10 Repealed
  429. Schedule 11
  430. Debts
  431. 1Paragraph 1 Repealed
  432. 2Paragraph 2 Repealed
  433. Shares
  434. 3Paragraph 3 Repealed
  435. Linked companies
  436. 4Paragraph 4 Repealed
  437. Supplementary
  438. 5Paragraph 5 Repealed
  439. 6Paragraph 6 Repealed
  440. Commencement
  441. 7Paragraph 7 Repealed
  442. Schedule 12: Building Societies: Change of Status
  443. Introductory
  444. 1Paragraph 1
  445. Gilt-edged securities and other financial trading stock
  446. 2Paragraph 2 Repealed
  447. Capital allowances
  448. 3Paragraph 3
  449. Capital gains: assets acquired from society, etc.
  450. 4Paragraph 4 Repealed
  451. Capital gains: shares, and rights to shares, in successor company
  452. 5Paragraph 5 Repealed
  453. Distributions
  454. 6Paragraph 6
  455. Certified SAYE savings arrangements
  456. 7Paragraph 7
  457. Stamp duty
  458. 8Paragraph 8
  459. Schedule 13: Post-Consolidation Amendments
  460. Part I: Amendments of the Taxes Act 1988
  461. 1Paragraph 1
  462. 2Paragraph 2
  463. 3Paragraph 3 Repealed
  464. 4Paragraph 4 Repealed
  465. 5Paragraph 5
  466. 6Paragraph 6 Repealed
  467. 7Paragraph 7
  468. 8Paragraph 8 Repealed
  469. 9Paragraph 9
  470. 10Paragraph 10
  471. 11Paragraph 11
  472. 12Paragraph 12 Repealed
  473. 13Paragraph 13
  474. 14Paragraph 14
  475. 15Paragraph 15
  476. Part II: Amendments of Other Enactments
  477. The Capital Gains Tax Act 1979 (c.14)
  478. 16Paragraph 16 Repealed
  479. 17Paragraph 17 Repealed
  480. 18Paragraph 18 Repealed
  481. The Finance Act 1980 (c.48)
  482. 19Paragraph 19
  483. 20Paragraph 20
  484. The Finance Act 1981 (c.35)
  485. 21Paragraph 21 Repealed
  486. The Finance Act 1984 (c.43)
  487. 22Paragraph 22
  488. The Finance Act 1986 (c.41)
  489. 23Paragraph 23 Repealed
  490. The Finance Act 1987 (c.16)
  491. 24Paragraph 24
  492. Commencement
  493. 25Paragraph 25
  494. Schedule 14: Repeals
  495. ICustoms and Excise
  496. 1Paragraph 1
  497. 2Paragraph 2
  498. 3Paragraph 3
  499. IIVehicles Excise Duty
  500. IIIValue Added Tax
  501. IVIncome and Corporation Tax: General
  502. 1Paragraph 1
  503. 2Paragraph 2
  504. 3Paragraph 3
  505. 4Paragraph 4
  506. 5Paragraph 5
  507. 6Paragraph 6
  508. 7Paragraph 7
  509. 8Paragraph 8
  510. 9Paragraph 9
  511. VCommercial Woodlands
  512. 1Paragraph 1
  513. 2Paragraph 2
  514. 3Paragraph 3
  515. VIUnapproved Employee Share Schemes
  516. VIICapital Gains: General
  517. 1Paragraph 1
  518. 2Paragraph 2
  519. VIIIMarried Couples
  520. 1Paragraph 1
  521. 2Paragraph 2
  522. 3Paragraph 3
  523. 4Paragraph 4
  524. 5Paragraph 5
  525. 6Paragraph 6
  526. IXTax Appeals etc. in Northern Ireland
  527. XInheritance Tax
  528. XIStamp Duty