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undercharged. The section applies only to tax charge-
able for the year 1971-72 and subsequent years of
assessment.
Provisions corresponding to Sections
15-18
in relation
to corporation profits tax are contained in Sections 46
to 49 of the Bill.
Deduction of Tax at Source in Building Operations
Section
19
removes doubt that, with effect from 6th
April 1971 local authorities, housing associations, hous-
ing trusts and housing societies are within the scope of
Section 17 of the Finance Act, 1970, under which a
person making a payment in respect of construction
operations under a construction contract is, in certain
circumstances, obliged to deduct tax at 35 per cent from
the amount of the payment. The amendment will not
have effect in relation to payments made before the
passing of the Finance Act, 1971, unless tax has been
deducted.
The section also imposes interest on amounts deduc-
tible from payments to sub-contractors which have not
been paid over to the Collector General. The interest
rate of 1 per cent for each month or part of a month
during which an amount remains unpaid is the same
as that which applies in relation to deductions under
PAYE and to amounts of turnover atx and wholesale
tax which have not been remitted. Interest will not be
charged for any period prior to the passing of the
Finance Act, 1971.
Investment Allowance for Capital Expenditure
Section 20
provides that, where a person carrying on
a trade or profession incurs capital'expenditure between
1st April 1971 and 31st March 1973 on the provision of
new machinery or plant for use in a designated area, he
shall be entitled to an investment allowance of one-
fifth of such expenditure in the year of assessment in
the basis period for which the expenditure is incurred.
Section 21
defines "basis period" for the purposes of
investment allowance.
Section 22
secures that the investment allowance will
not be treated as diminishing the cost of machinery or
plant for purposes of free depreciation or ordinary wear
and tear allowances. (Under existing law the new invest-
ment allowance is excluded from the provisions relating
to balancing allowances and balancing charges.)
Section 23
provides for the withdrawal of the invest-
ment allowance where the relevant machinery or plant
is sold without having been used for the purposes of the
trade or profession or before two years from the date on
which it was first so used.
Provisions corresponding to Sections
20-23
in relation
to corporation profits tax are contained in Section 45 of
the Bill.
Depreciation for Machinery and Plant
Section 24
extends to the entire country the system of
free depreciation now confined to machinery or plant
provided for use in designated areas. The new relief
which will enable a trader to write off 100 per cent of
his expenditure in the first year, if he so desires, will
apply in respect of new machinery or plant (other than
road vehicles) provided for use outside the designated
areas in the period from 1st April 1971 to 31st March
1973.
A corresponding provision in relation to corporation
profits tax is contained in Section 45 of the Bill.
Death Duties
Section
29 is designed to remove any doubt in relation
to the definition of the expression "death duties".
Section
30 substitutes the following scale for the exist-
ing scale of rates of estate duty.
Principal Value of the Estate
Rate per cent
of Duty
£
£
Exceeding
5,000 and not exceding
6,000
1
7,000
2
8,000
3
10,000
4
12,500
6
15,000
8
17,500 - 10
20,000
12
25,000
14
30,000
16
35,000
18
40,000
21
45,000
24
50,000
27
55,000
30
60,000
33
75,000
37
100,000
41
150,000
45
200,000
50
55
Section
31 increases, from 4 per cent to 9 per cent per
annum, the rate of interest on death duties in arrear.
The section provides that the increased rate will not
apply to duty at present being paid by instalments. It
also provides an interest-free period of four months
from the date of death for estate duty on personal
property and further, that the new 9 per cent rate will
not come into operation until the expiration of four
months from the dae tof the passing of the Act.
Section
32 effects a technical change to enable estate
duty to be collected from trustees, beneficiaries, and
other persons in whom property liable to duty is vested
in cases in which, at present, the executor is the
only
person accountable. (The executor's liability remains
limited to the amount of the estate vested in him as
executor.)
Section
33 is designed to prevent the avoidance of
estate duty through the medium of the exemption, at
present available, for objects of national, scientific,
historic or artistic interest. The section provides that
the exemption will be revoked if the exempted articles
are sold within six years of the date of death, unless the
sale is to the National Gallery, National Museum or
other similar institution.
Grant and Lease Back Duty Payable
Section
34 is concerned with the avoidance of estate
duty by means of the device known as a "grant and
lease back" and is designed to ensure that property
disposed of by a person shall be liable to duty if such
person subsequently re-acquires the property through a
lease back from the grantee.
Controlled Company
Section
35 makes certain amendments of Section 20
of the Finance Act, 1965, designed to prevent avoid-
6,000
7,000
8,000
10,000
12,500
15,000
17,500
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
75,000
100,000
150,000
200.000
83