Section 19 | Pension funds no longer entitled to payment of tax credits. ^F1

(1)In section 231 of the Taxes Act 1988 (tax credits for certain recipients of qualifying distributions)—^F1

(a)in subsection (2) (payment of tax credits to companies resident in the United Kingdom) for “Subject to section 241(5)” there shall be substituted “ Subject to sections 231A and 241(5) ”; and^F1

(b)at the beginning of subsection (3) (claims by other persons to set tax credits against income tax liability and to receive payment of any excess of tax credit over that liability) there shall be inserted “ Subject to section 231A, ”.^F1

(2)After section 231 of the Taxes Act 1988 there shall be inserted—^F1

231ARestrictions on the use of tax credits by pension funds.

(1)No claim shall be made under section 231(2) for payment of the amount of a tax credit if or to the extent that the qualifying distribution to which the credit relates is income of a pension fund.

(2)In the case of any pension fund, for any year of assessment the aggregate amount of the tax credits in respect of which claims are made under section 231(3) must not exceed the aggregate amount of the tax credits in respect of the qualifying distributions comprised in the income of the pension fund and brought into charge to tax.

(3)Accordingly, no payment shall be made under section 231(3) in respect of so much of the excess there mentioned as is referable to a tax credit in respect of a qualifying distribution if or to the extent that the qualifying distribution is income of a pension fund.

(4)In this section—

“income”, in relation to a pension fund, means income derived from investments or deposits held for the purposes of the pension fund;

“pension fund” means any scheme, fund or other arrangements established and maintained (whether in the United Kingdom or elsewhere) for the purpose of providing pensions, retirement annuities, allowances, lump sums, gratuities or other superannuation benefits (with or without subsidiary benefits);

“scheme” includes any deed, agreement or series of agreements.

(5)For convenience of identification only, the schemes, funds or other arrangements which are “pension funds” for the purposes of this section by virtue of the definition of that expression in subsection (4) above include, in particular, those whose income is, in whole or in part, exempt, or eligible for exemption, from tax under or by virtue of any of the following provisions—

(a)section 512(2);

(b)section 592(2);

(c)section 608(2)(a);

(d)section 613(4);

(e)section 614(2), (3), (4) or (5);

(f)section 620(6);

(g)section 643(2).

(6)The preceding provisions of this section do not have effect in relation to—

(a)claims made in respect of tax credits to which entitlement arises by virtue of section 232(3); or

(b)claims made by virtue of arrangements having effect under section 788.

(3)This section has effect in relation to qualifying distributions made on or after 2nd July 1997.^F1