Minor Direct Tax Reliefs

Budget Statement – in the House of Commons at 12:00 am on 14th April 1964.

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Next in these matters, which I referred to as being extraneous to the main theme, but right to deal with at this stage, I come to two relieving provisions that have been put forward as desirable reforms by representatives of industry and commerce.

The first concerns cases where a company transfers part of its business to an associated company and, under existing law, two assessments to Income Tax may be made for a period after the change in respect of the profits of the transferred part. I propose to remedy this anomaly by providing, in effect, that the two parts of the original business should be treated as separate businesses, each continuing to be chargeable on the normal preceding year basis despite the change. The complaints which we have had of double assessment will thus be removed.

The second provision represents a small modification of the rules governing relief for double taxation. It will secure that a United Kingdom company which controls 25 per cent. or more of the voting power in an overseas company from which it receives dividends will be able to claim unilateral double tax relief in respect of the tax on the profits out of which the dividend came. I shall make it possible for it to do this without—as at present—having to show that its holding in the overseas company was the maximum permitted by the relevant overseas law or practice.