
1 
These Regulations may be cited as the Taxes (Interest Rate) (Amendment No. 4) Regulations 1996 and shall come into force on 31st January 1997.
2 
In the Taxes (Interest Rate) Regulations 1989 for regulation 3 there shall be substituted the following regulations—“
3 

(1) For the purposes of—
(a) sections 86 and 88 of the Taxes Management Act 1970,
(b) paragraph 6B of Schedule 3 to the Income and Corporation Taxes Act 1988, and
(c) paragraph 6(2)(a) of Schedule 1 to the Social Security Contributions and Benefits Act 1992,
the rate applicable under section 178 shall, subject to paragraph (2), be 8.5 per cent. per annum.
(2) Where, on a reference date after 1st January 1997, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the percentage per annum found by applying the formula specified in paragraph (3).
(3) The formula specified in this paragraph is—RR+2.5,where
 RR is the reference rate referred to in paragraph (2).
3AA 

(1) For the purposes of—
(a) sections 86A and 87 of the Taxes Management Act 1970,
(b) paragraph 3 of Schedule 16A to the Finance Act 1973,
(c) paragraphs 15 and 16 of Schedule 2, and paragraph 8 of Schedule 5, to the Oil Taxation Act 1975,
(d) paragraph 59 of Schedule 8 to the Development Land Tax Act 1976,
(e) section 92 of the Finance Act 1986, and
(f) section 825 of, and paragraph 3 of Schedule 19A to, the Income and Corporation Taxes Act 1988,
the rate applicable under section 178 shall, subject to paragraph (2), be 6.25 per cent. per annum.
(2) Where, on a reference date after 1st January 1997, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the percentage per annum found by applying the formula specified in paragraph (3) and, if the result is not a multiple of one-quarter, rounding the result down to the nearest amount which is such a multiple.
(3) The formula specified in this paragraph is—(RR+2.5)(100-BR)100,where
 RR is the reference rate referred to in paragraph (2) and BR is the percentage at which income tax at the basic rate is charged for the year of assessment in which the reference date referred to in that paragraph falls.
3AB 

(1) For the purposes of—
(a) section 824 of the Income and Corporation Taxes Act 1988,
(b) paragraph 6(2)(b) of Schedule 1 to the Social Security Contributions and Benefits Act 1992, and
(c) section 283 of the Taxation of Chargeable Gains Act 1992,
the rate applicable under section 178 shall, subject to paragraph (2), be 4 per cent. per annum.
(2) Where, on a reference date after 1st January 1997, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the percentage per annum found by applying the formula specified in paragraph (3) and, if the result is not a multiple of one-quarter, rounding the result down to the nearest amount which is such a multiple.
(3) The formula specified in this paragraph is—(RR-1)(100-LR)100,where
 RR is the reference rate referred to in paragraph (2) and LR is the percentage at which income tax at the lower rate is charged for the year of assessment in which the reference date referred to in that paragraph falls.”
Richard Ottaway
Roger Knapman
Two of the Lords Commissioners of Her Majesty’s Treasury
17th December 1996