Annex 1: Minor Changes in the Law Change 36: Trading income etc: extend pools payments treatment to the 1995 reduction: sections 138 and 978
This change extends the treatment of payments in consequence of reductions in pool betting duty so that it applies to the reduction in pool betting duty made in any year.
It brings the income tax and corporation tax codes back into line.
Pool betting duty was reduced in 1990 and 1991 in exchange for agreements that the money saved would be paid to particular good causes (the Football Trust 1990 and the Foundation for Sport and the Arts, respectively).
Sections 126 of FA 1990 and 121 of FA 1991 were enacted to ensure that the money could flow through to the beneficiaries without tax consequences.
In 1995 pool betting duty was reduced again, with half of the money saved to be paid to the Football Trust and the other half to the Foundation for Sport and the Arts. But no equivalent tax legislation was enacted. In practice the payments are treated in the same way as those made from the 1990 and 1991 reductions.
Section 138 of this Act allows a trading deduction for payments made because of any reduction in pool betting duty. So the 1995 reduction and any further reductions which result in payments being made to the two “good causes” lead to the payments being allowed as a trading deduction.
Section 978 of this Act adopts the same approach to rewriting section 126(3) of FA 1990 and section 121(3) of FA 1991. The payments made are not treated as annual payments.
The payments covered by this change are allowed as trading deductions. And the payer does not have to deduct income tax from them.
This change is in taxpayers’ favour in principle. But is expected to have no practical effect as it is in line with generally accepted practice.