The Taxes (Interest Rate) (Amendment No. 4) Regulations 1996

S.I. 1996/3187 · Made 17 December 1996

INCOME TAX

INHERITANCE TAX

TAXES

Made 17th December 1996

Laid before House of Commons 18th December 1996

Coming into force 31st January 1997

The Treasury, in exercise of the powers conferred on them by section 178 of the Finance Act 1989^f1, hereby make the following Regulations:

Annotations to the whole text

Footnotes

f1: 1989 c. 26. Section 178 was amended by paragraph 107 of Schedule 2 to the Social Security (Consequential Provisions) Act 1992 (c. 6), paragraph 19(4) of Schedule 10 to the Taxation of Chargeable Gains Act 1992 (c. 12), paragraph 5 of Schedule 11 to the Finance (No. 2) Act 1992 (c. 48), paragraph 44 of Schedule 19 to the Finance Act 1994 (c. 9); and by paragraph 30 of Schedule 7, paragraph 13 of Schedule 18, paragraph 8 of Schedule 29 and Part V(2) and (8) of Schedule 41, to the Finance Act 1996 (c. 8).

1Citation and commencement
2Amendments to the Taxes (Interest Rate) Regulations 1989
Signature
Explanatory note

1Citation and commencement

These Regulations may be cited as the Taxes (Interest Rate) (Amendment No. 4) Regulations 1996 and shall come into force on 31st January 1997.

2Amendments to the Taxes (Interest Rate) Regulations 1989

In the Taxes (Interest Rate) Regulations 1989^f1 for regulation 3 there shall be substituted the following regulations—

“Applicable rates of interest on unpaid tax, tax repaid and repayment supplement

3

(1)

For the purposes of—

(a)

sections 86 and 88 of the Taxes Management Act 1970^f2,

(b)

paragraph 6B of Schedule 3 to the Income and Corporation Taxes Act 1988^f3, and

(c)

paragraph 6(2)(a) of Schedule 1 to the Social Security Contributions and Benefits Act 1992^f4,

the rate applicable under section 178 shall, subject to paragraph (2), be 8.5 per cent. per annum.

(2)

Where, on a reference date after 1st January 1997, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the percentage per annum found by applying the formula specified in paragraph (3).

(3)

The formula specified in this paragraph is—
$RR + 2.5,$
where

RR is the reference rate referred to in paragraph (2).

3AA

(1)

For the purposes of—

(a)

sections 86A and 87 of the Taxes Management Act 1970^f5,

(b)

paragraph 3 of Schedule 16A to the Finance Act 1973^f6,

(c)

paragraphs 15 and 16 of Schedule 2, and paragraph 8 of Schedule 5, to the Oil Taxation Act 1975^f7,

(d)

paragraph 59 of Schedule 8 to the Development Land Tax Act 1976^f8,

(e)

section 92 of the Finance Act 1986^f9, and

(f)

section 825 of, and paragraph 3 of Schedule 19A to, the Income and Corporation Taxes Act 1988^f10,

the rate applicable under section 178 shall, subject to paragraph (2), be 6.25 per cent. per annum.

(2)

Where, on a reference date after 1st January 1997, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the percentage per annum found by applying the formula specified in paragraph (3) and, if the result is not a multiple of one-quarter, rounding the result down to the nearest amount which is such a multiple.

(3)

The formula specified in this paragraph is—
$(RR + 2.5) \frac{(100 - BR)}{100,}$
where

RR is the reference rate referred to in paragraph (2) and BR is the percentage at which income tax at the basic rate is charged for the year of assessment in which the reference date referred to in that paragraph falls.

3AB

(1)

For the purposes of—

(a)

section 824 of the Income and Corporation Taxes Act 1988^f11,

(b)

paragraph 6(2)(b) of Schedule 1 to the Social Security Contributions and Benefits Act 1992, and

(c)

section 283 of the Taxation of Chargeable Gains Act 1992^f12,

the rate applicable under section 178 shall, subject to paragraph (2), be 4 per cent. per annum.

(2)

Where, on a reference date after 1st January 1997, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the percentage per annum found by applying the formula specified in paragraph (3) and, if the result is not a multiple of one-quarter, rounding the result down to the nearest amount which is such a multiple.

(3)

The formula specified in this paragraph is—
$(RR - 1) \frac{(100 - LR)}{100,}$
where

RR is the reference rate referred to in paragraph (2) and LR is the percentage at which income tax at the lower rate is charged for the year of assessment in which the reference date referred to in that paragraph falls.”

Signature

Richard Ottaway

Roger Knapman

Two of the Lords Commissioners of Her Majesty’s Treasury

17th December 1996

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Taxes (Interest Rate) Regulations 1989 (S.I. 1989/1297) by substituting three new regulations for regulation 3 of the 1989 Regulations. The new regulations specify different interest rates applicable under section 178 of the Finance Act 1989 in relation to unpaid income tax, capital gains tax, corporation tax (including advance corporation tax), petroleum revenue tax and development land tax, repayments of petroleum revenue tax, overpaid development land tax and stamp duty reserve tax and repayment supplement. The new regulations also make provision for changes in the applicable interest rate and for the formula to be used in calculating the new rate.