Britain: An official handbook > 1977

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Petroleum
Revenue Tax
BRITAIN 1977: AN OFFICIAL HANDBOOK
distribution in respect of which the advance payment was made is entitled to a
tax credit, which satisfies the liability to income tax at the basic rate.
The rate of corporation tax is fixed retrospectively in the Budget for the past
financial year; for the financial year 1975 (1st April 1975-3151 March 1976)
it is 52 per cent with a reduced rate of 42 per cent for small companies (as
defined in the Finance Acts 1972, 1974 and 1976). The tax is assessed on the
profits of accounting periods, the rate of tax being the rate for the financial
vear in which the accounting period falls. Where an accounting period
straddles 31st March the profits are apportioned on a time basis. Relief for
the effect of inflation on the value of stocks was given in the November 1974
Budget and further extended in those of April 1975 and April 1976.
Under the Oil Taxation Act 1975 a petroleum revenue tax of 45 per cent
(deducted in computing profits for corporation tax) is charged on profits from
the winning, as opposed to refining or other form of processing, of hydro¬
carbons under licence in Britain and on its continental shelf. Each licensee
of an oilfield is to be charged on the profits for that field, computed for half-
yearly periods.
A comprehensive tax, capital transfer tax, applies to transfer of personal
wealth in three main areas: lifetime gifts; transfers on death; and transfers
relating to settled property (that is, any property held in trust). The tax is
chargeable in respect of a person’s lifetime transfers as they occur and on a
cumulative basis. The final stage of cumulation is the inclusion of the property
‘passing’ on an assumed transfer of the whole of the deceased s estate immedi¬
ately before the death. The rates of tax applicable are progressively higher on
successive slices of the cumulative total of chargeable transfers, with a lower
scale of tax for lifetime transfers than for transfers on death. Under both scales
the first £15,000 of transfers is exempt; the rates on the remainder rise from
5 per cent on the slice between £15,000 and £20,000 to 75 per cent on t e
excess over £2 million for lifetime transfers and from 10 per cent on the
slice between £15,000 and £20,000 to 75 per cent on the excess over £2
million for transfers on death.
Capital Gains Capital gains accruing on the disposal of assets are liable to capital gains tax
Tax or, in the case of companies, to corporation tax. The rate of tax is normally 30
per cent, but in the case of individuals may be less, depending on their circum¬
stances. Certain assets may be exempt from tax, including the principa
private residence, chattels worth less than £1,000 (and any chattels, except
those used for the purpose of a trade, with a predictable life of less than 50
years), private motor cars, and National Savings Certificates. An individual
is exempt from capital gains tax where the total proceeds of disposals do not
exceed £1,000 in any year. In addition gains on gilt-edged securities are
exempt from the tax if the securities were held for more than 12 months.
Development Land The Development Land Tax Act 1976 introduced a development land tax
jax (DLT) on development value in place of the charge on development gains
and on first letting introduced in the Finance Act 1974. The rate of DLT is
80 per cent but the first £10,000 of development value realised in any financial
year is completely exempt and for a transitional period up to 31st March 1979
the next £150,000 in any financial year will be liable at a rate of 66-6 per cent.
Exemptions from DLT include the sale or development of owner-occupied
residences.
Taxes on Capital
Capital Transfer
Tax