Annex 1: Minor changes in the law made by the Act: Change 9: Exceptions to the rule restricting deductions for business gifts: section 47
This change provides for the monetary limit on the cost of gifts excluded from the general rule prohibiting deduction for expenses incurred in providing gifts in section 45 to be increased by Treasury order.
Section 47(3) is based on section 577(8)(b) of ICTA. The £50 limit in section 577(8)(b) of ICTA (previously £10) was inserted with effect from 2001-02 by section 73 of FA 2001 in line with an increase in the corresponding VAT provision made by Treasury order.
Section 577(8)(b) of ICTA was rewritten as it applied to employees in section 358(3)(b) of ITEPA. Section 716(2) of ITEPA provides that the Treasury may by order increase, or further increase, the sum specified in various provisions in ITEPA including section 358(3)(b) of ITEPA. Incorporating a similar provision in section 47 allows the limit to be increased in line with the corresponding limits in ITEPA and in the VAT provisions by Treasury order rather than by primary legislation.
This change has no implications for the amount of tax paid, who pays it or when. It affects (in principle but not in practice) only administrative matters.