Most Gracious Sovereign We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Most Gracious Sovereign
Value added tax
In section 18 of VATA 1994 (goods subject to warehousing regime: place and time of acquisition or supply), after subsection (1) insert—
Section 57 of VATA 1994 (determination of consideration for fuel supplied for private use) is amended as follows.
After subsection (4) (power of Treasury by order to substitute a different Table for Table A) insert—.
In subsection (5) (fuel supplied for 2 or more vehicles)—
in paragraph (a), for “Table A above, that Table” substitute “ Table A above or any Notes, that Table and those Notes ”;
in paragraph (b), after “that Table”, in both places, insert “ or those Notes ”.
In subsection (7) (cubic capacity of internal combustion engine with reciprocating pistons) after “for the purposes of Table A above” insert “ and any Notes ”.
In subsection (8) (cubic capacity in other cases) after “for the purposes of Table A above” insert “ and any Notes ”.
After subsection (8) insert—.
The amendments made by this section come into force on such day or days as the Treasury may appoint by order made by statutory instrument; and different days may be so appointed for different purposes.
Section 80 of VATA 1994 (recovery of overpaid VAT) is amended as follows.
For subsection (1) (liability of Commissioners to repay overpaid VAT) substitute—.
In subsection (2) (Commissioners only liable to repay an amount on a claim) before “repay” insert “ credit or ”.
After subsection (2) insert—.
In subsection (3) (defence of unjust enrichment) for “under this section, that repayment” substitute “ under this section by virtue of subsection (1) or (1A) above, that the crediting ”.
For subsection (3A) (cost of payment borne for practical purposes by third party) substitute—.
In subsection (3B) (loss or damage to be disregarded) in paragraph (a), for “repayment” substitute “ crediting ”.
For subsection (4) (time limit on claims) substitute—.
For subsections (4A) and (4B) (recovery of excess repayments) substitute—.
For subsection (7) (no other liability of Commissioners to repay VAT not due) substitute—.
The side-note to the section accordingly becomes “ Credit for, or repayment of, overstated or overpaid VAT ”.
Section 4 contains consequential and supplementary provision.
In consequence of the amendments made by section 3, VATA 1994 is amended as follows.
In section 78 (interest in certain cases of official error) in subsection (1)(a) (overstated output tax) for “and which they are in consequence liable to repay to him” substitute “ and, as a result, they are liable under section 80(2A) to pay (or repay) an amount to him, ”.
In section 80A (arrangements for reimbursing customers)—
in subsection (2)(a), for “repayment” substitute “ crediting ”;
in subsection (2)(b), for “the cost of the original payment of that amount to the Commissioners” substitute “ the amount brought into account as mentioned in paragraph (b) of subsection (1) or (1A) of that section ”;
in subsection (3)(a), for “repayment” substitute “ crediting of the amount ”;
for subsection (3)(b) substitute—;
in subsection (3)(c), for “repaid” substitute “ paid (or repaid) ”;
in subsection (4)(a), for “to make the repayments to the Commissioners that they are required to make” substitute “ to make the repayments, or give the notifications, to the Commissioners that they are required to make or give ”;
in subsection (7)—
for “repayment”, in the first place, substitute “ credit ”;
for “the making of any repayment” substitute “ the crediting of any amount ”.
In section 80B (assessment of amounts due under section 80A arrangements) after subsection (1) (person liable to pay an amount) insert—.
In section 83 (appeals)—
in paragraph (t) (repayment of amounts under section 80 etc) before “repayment” insert “ crediting or ”;
in paragraph (ta) (assessments under section 80B(1) etc) after “80B(1)” insert “ or (1B) ”.
The amendments made by section 3 and this section have effect in any case where a claim under section 80(2) of VATA 1994 is made on or after 26th May 2005, whenever the event occurred in respect of which the claim is made.
In paragraph 8 of Schedule 6 to VATA 1994 (valuation in case of reverse charge)—
after “8” insert “ , or any supply of goods is treated by virtue of section 9A, ”, and
after “the services” insert “ or goods ”.
This section has effect in relation to supplies made on or after 17th March 2005.
Schedule 1 (which contains amendments of Schedule 11A to VATA 1994) has effect.
Subsection (1) and Schedule 1 shall come into force on such day as the Treasury may by order made by statutory instrument appoint.
An order under subsection (2) may—
appoint different days for different purposes, and
contain transitional provisions and savings.
Income tax, corporation tax and capital gains tax
Social security pension lump sums
A charge to income tax arises where a person becomes entitled to a social security pension lump sum.
For the purposes of the Tax Acts (including subsection (5)) a social security pension lump sum—
is to be treated as income, but
is not to be taken into account in determining the total income of any person.
The person liable to a charge under this section is the person (“P”) entitled to the lump sum, whether or not P is resident ... ... in the United Kingdom.
The charge is imposed on P for the applicable year of assessment (see subsection (6)).
A charge under this section for a person who is neither a Scottish taxpayer nor a Welsh taxpayer in the applicable year of assessment is a charge in respect of the amount of the lump sum at the following rate—
if P's Step 3 income for the applicable year of assessment is nil, 0%;
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if P's Step 3 income for that year of assessment is greater than nil but does not exceed the basic rate limit for that year, the basic rate ... for that year;
if P's Step 3 income for that year of assessment exceeds the basic rate limit for that year but does not exceed the higher rate limit for that year, the higher rate ... for that year.
if P's Step 3 income for that year of assessment exceeds the higher rate limit for that year, the additional rate... for that year.
Where P is a Scottish taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—
if P’s Step 3 income for the applicable year of assessment is nil, 0%;
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if P’s Step 3 income for that year of assessment is greater than nil, the highest Scottish rate for that tax year that would be applicable to an amount of income that is equal to P’s Step 3 income(2) for that year if such amount were wholly chargeable to income tax at Scottish rates.
Where P is a Welsh taxpayer in the applicable year of assessment, a charge under this section is a charge in respect of the amount of the lump sum at the following rate—
if P’s step 3 income for the applicable year of assessment is nil, 0%;
if P’s step 3 income for that year of assessment is greater than nil but does not exceed the basic rate limit for that year, the Welsh basic rate for that year;
if P’s step 3 income for that year of assessment is greater than the basic rate limit but does not exceed the higher rate limit for that year, the Welsh higher rate for that year;
if P’s step 3 income for that year of assessment is greater than the higher rate limit for that year, the Welsh additional rate for that year.
Section 8 makes provision as to the meaning of “the applicable year of assessment” for the purposes of this section.
Section 9 contains further definitions and makes provision as to commencement.
Section 10 contains consequential amendments.
For the purposes of this section P's “Step 3 income” means P's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).
For the purposes of section 7 “the applicable year of assessment” has the meaning given by this section.
Subject to subsections (5) to (7), the applicable year of assessment is—
the year of assessment in which the first benefit payment day falls, or
if P dies before the beginning of that year of assessment, the year of assessment in which P dies.
For the purposes of subsection (2) “the first benefit payment day” is, subject to subsections (4), (4A) and (4B) , the day as from which P's—becomes payable following the period of deferment by virtue of which P's entitlement to the lump sum arises.
Category A or Category B retirement pension,
shared additional pension, or
graduated retirement benefit,
But where—the first benefit payment day is the day on which S died; and for this purpose “S” is the person by virtue of whose period of deferment P's entitlement to the lump sum arises.
the lump sum is a state pension lump sum to which P is entitled under paragraph 7A of Schedule 5 to SSCBA 1992 or paragraph 7A of Schedule 5 to SSCB(NI)A 1992 or a graduated retirement benefit lump sum to which P is entitled under a provision corresponding to either of those paragraphs, and
at the time of S's death, P was entitled to a Category A or Category B retirement pension or (as the case may be) graduated retirement benefit,
In a case where the social security pension lump sum is a lump sum under section 8 of the Pensions Act 2014 or under any corresponding provision under the law of Northern Ireland, “the first benefit payment day” for the purposes of subsection (2) is the day as from which the lump sum becomes payable.
In a case where the social security pension lump sum is a lump sum under regulations under section 10 of the Pensions Act 2014 which make provision corresponding or similar to section 8 of that Act or under any corresponding provision under the law of Northern Ireland, “the first benefit payment day” for the purposes of subsection (2) is the day as from which the lump sum becomes payable.
Subsections (6) and (7) apply where social security regulations make provision enabling the making of an election for a social security pension lump sum to be paid in the year of assessment (“the later year of assessment”) next following that given by subsection (2).
If such an election is made by P and is not revoked, the applicable year of assessment is—
the later year of assessment, or
if P dies before the beginning of that year of assessment, the year of assessment in which P dies.
If—the applicable year of assessment is the later year of assessment.
P dies after the beginning of the later year of assessment,
by the time of P's death, P has not notified the Secretary of State as to whether or not P wishes to make such an election,
social security regulations make provision enabling the making of such an election in such a case by the personal representatives of P, and
P's personal representatives make such an election in accordance with the regulations,
For the purposes of determining the applicable year of assessment, it does not matter when the lump sum is actually paid.
In this section—“Category A or Category B retirement pension” means Category A or Category B retirement pension under Part 2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992;“graduated retirement benefit” means graduated retirement benefit under section 36 or 37 of NIA 1965 or section 35 or 36 of NIA(NI) 1966;“shared additional pension” means shared additional pension under Part 2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992;“social security regulations” means any regulations under—the Social Security Administration Act 1992 (c. 5), or the Social Security Administration (Northern Ireland) Act 1992 (c. 8).
This section is to be construed as one with section 7.
a state pension lump sum,
a shared additional pension lump sum, or
a graduated retirement benefit lump sum.
In section 8 and this section—“graduated retirement benefit lump sum” means a lump sum payable under—section 36 or 37 of NIA 1965, or section 35 or 36 of NIA(NI) 1966;“shared additional pension lump sum” means a lump sum payable under—section 55C of, and Schedule 5A to, SSCBA 1992, or section 55C of, and Schedule 5A to, SSCB(NI)A 1992;“state pension lump sum” means a lump sum payable under—section 8 of the Pensions Act 2014 or under any corresponding provision under the law of Northern Ireland, regulations under section 10 of the Pensions Act 2014 which make provision corresponding or similar to section 8 of that Act or under any corresponding provision under the law of Northern Ireland, 1992, or section 55 of, and Schedule 5 to, SSCBA 1992, or section 55 of, and Schedule 5 to, SSCB(NI)A 1992.
In section 8 and this section—“NIA 1965” means the National Insurance Act 1965 (c. 51);“NIA(NI) 1966” means the National Insurance Act (Northern Ireland) 1966 (c. 6 (N.I.));“SSCBA 1992” means the Social Security Contributions and Benefits Act 1992 (c. 4);“SSCB(NI)A 1992” means the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).
ITEPA 2003 is amended as follows.
In section 577 (UK social security pensions) after subsection (1) insert—.
In section 683 (PAYE income) in subsection (3) (meaning, subject to subsection (4), of “PAYE pension income”) in the opening words, for “subsection (4)” substitute “ subsections (3A) and (4) ”.
In that section, after subsection (3) insert—.
In section 686 (meaning of “payment”) in subsection (1) (rules as to when payment of, or on account of, PAYE income is to be treated as made for the purposes of PAYE regulations) at the end of the subsection insert— “ But this is subject to subsection (5) (PAYE pension income: social security pension lump sums). ”.
In that section, after subsection (4) insert—.
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Gift aid
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Employee securities
Schedule 2 contains amendments relating to employee securities.
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Section 88 of ITTOIA 2005 (income tax deduction for payments to research associations etc.) is amended as follows.
In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “research” in paragraph (b) substitute—.
In subsection (4), omit paragraph (a) (meaning of “approved” in relation to scientific research association).
In subsection (5) (references to scientific research related to a class of trade), for “references in this section” substitute “ reference in subsection (1)(b) ”.
This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).
Section 82B of ICTA (corporation tax deduction for payments to research associations etc.) is amended as follows.
In subsection (1) (conditions for deduction), for the words from the beginning of paragraph (a) to “above” in paragraph (b) substitute—.
In subsection (3) (reference to scientific research related to a class of trade), for “this section” substitute “ subsection (1)(b) above ”.
This section has effect in relation to sums paid to an Association during any accounting period of the Association beginning on or after the day appointed under section 13(6).
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The following provisions shall cease to have effect—
sections 468H to 468Q of ICTA (authorised unit trusts),
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section 373(4) and (6) of ITTOIA 2005 (open-ended investment company: interest distributions), and
section 376(4) and (6) of ITTOIA 2005 (authorised unit trust: interest distributions).
In this Chapter “authorised investment funds” means—
authorised unit trust schemes, and
open-ended investment companies.
The Treasury may, by regulations—
make provision about the treatment of authorised investment funds for the purposes of an enactment relating to taxation;
provide for the modification of an enactment relating to taxation in its application in relation to—
authorised investment funds,
shareholders or unit holders in authorised investment funds, or
transactions involving authorised investment funds;
impose requirements on persons responsible for the management of an authorised investment fund in relation to the provision of information, the form of accounts, the keeping of records or other administrative matters.
For the purposes of this Chapter—
“unit trust scheme” has the meaning given by section 237 of the Financial Services and Markets Act 2000 (c. 8),
a unit trust scheme is authorised in relation to an accounting period if an order under section 243 of the Financial Services and Markets Act 2000 is in force in relation to that scheme during the whole or part of that accounting period,
“unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme,
a reference to a shareholder or unit holder includes a person beneficially entitled to shares or units (and a reference to owning units or shares shall be construed accordingly),
“open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies,
“associate” has the meaning given by section 417 of ICTA,
“net asset value” means the value of the assets of the authorised investment fund, after the deduction of specified liabilities,
a reference to a distribution includes investing an amount on behalf of a unit holder or shareholder in respect of his accumulation units or accumulation shares,
“distribution accounts” means accounts showing—
the total amount available for distribution to unit holders or shareholders, and
how that amount is computed,
the “distribution date” for a distribution period in relation to an authorised investment fund means—
the date specified by or in accordance with the terms of the trust or the instrument of incorporation of the company for any distribution for that distribution period, or
if no date is specified, the last day of that distribution period,
“distribution period” in relation to an authorised investment fund means a period by reference to which the total amount available for distribution to unit holders or shareholders is ascertained,
“umbrella company” has the meaning given by section 615 of the Corporation Tax Act 2010,
“umbrella scheme” has the meaning given by section 619 of the Corporation Tax Act 2010, and
section 1122 of the Corporation Tax Act 2010 (connected persons) applies.
require an authorised investment fund to comply with prescribed rules for determining (whether by reference to a formula or otherwise) what proportion of an amount shown in distribution accounts as available for distribution is to be distributed by way of dividends and what proportion is to be distributed by way of yearly interest;
permit persons responsible for the management of an authorised investment fund to elect to distribute entirely by way of dividends;
require distribution accounts to show the amount available for distribution—
by way of dividends;
by way of yearly interest;
allow a distribution of yearly interest for a distribution period to be deducted, in the prescribed manner, in computing the profits of the authorised investment fund for the accounting period in which the last day of that distribution period falls;
make provision for determining the distribution date in relation to a distribution period of an authorised investment fund;
permit distributions to be made, in prescribed circumstances, to or for the benefit of a person not ... resident in the United Kingdom without deducting tax;
permit distributions to be made without deducting tax, in prescribed circumstances, to a person ... resident in the United Kingdom who is unlikely to be liable to pay an amount by way of income tax for the year of assessment in which the distribution is made;
include provision, in respect of a unit holder or shareholder who is within the charge to corporation tax, about—
the liability to corporation tax resulting from receipt of a distribution, and
the method of computing that liability.
make special provision for loan relationships held by an authorised investment fund;
make special provision for derivative contracts held by an authorised investment fund;
modify the meaning of “relevant holding” for the purposes of—
section 587 of that Act (derivative contracts).
make special provision in relation to the treatment of umbrella companies and umbrella schemes (or shareholders or unit holders in umbrella companies or umbrella schemes);
prohibit action which favours a class of unit holders or shareholders.
make special provision in relation to a person who, alone or together with associates or connected persons, owns (otherwise than as a nominee) units or shares, in a fund designated by the Financial Conduct Authority as a Qualified Investor Scheme, which represent 10% or more (or such other percentage as the regulations may specify) of the net asset value of the fund;
include exceptions from provision made by virtue of paragraph (a) above including, in particular, an exception relating to units or shares held—
by a charity ...,
by a registered pension scheme (within the meaning of section 150 of FA 2004),
by such other persons, in such circumstances, as the regulations may specify.
Regulations under section 17(3)(c) may, in particular, require persons responsible for the management of an authorised investment fund to supply information to, and make available books, documents and other records for inspection by, the Commissioners for Her Majesty's Revenue and Customs.
Regulations under section 17(3) may, in particular—
amend a reference in an enactment to a provision repealed by section 17(1);
make different provision for different circumstances;
make incidental, consequential, supplemental or transitional provision.
Section 17(1) shall come into force on such day as the Treasury may appoint by order.
An order under subsection (1) may—
commence only a specified repeal;
commence different repeals at different times;
commence a repeal at different times for different purposes;
include savings.
Regulations under section 17(3) shall be subject to annulment by a resolution of the House of Commons.
But the first set of regulations under section 17(3) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.
Section 100 of TCGA 1992 (exemption for authorised unit trusts, etc) shall be amended as follows.
After subsection (2) insert—
This section shall have effect for the year 2005-06 and subsequent years of assessment.
In Chapter 3 of Part 3 of TCGA 1992 (collective investment schemes, etc) after section 99A insert—
This section shall have effect in relation to a disposal of units on or after 16th March 2005.
Section 349B(4) of ICTA (requirement for individual to be entitled to income tax exemption) shall be amended as follows.
In paragraph (a) after “of a plan” insert “ of a kind to which regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) apply ”.
Paragraph (b) shall cease to have effect.
This section shall have effect in relation to payments made on or after 6th April 2005.
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Residence, location of assets etc
Section 10A of TCGA 1992 is amended as follows.
In subsection (3) (certain gains or losses to be excluded from being treated by virtue of subsection (2) as accruing to the taxpayer in year of return)—
in paragraph (a), for “he was neither resident nor ordinarily resident in the United Kingdom” substitute—;
in paragraph (d), after “152(1)(b)” insert “ , 153(1)(b) ”.
In subsection (8) (definitions) in the definition of “relevant disposal”, after “United Kingdom” insert “ and was not Treaty non-resident ”.
For subsection (9) substitute—.
After subsection (9B) (as inserted by subsection (4) above) insert—.
Omit subsection (10) (section to be without prejudice to right to claim relief under double taxation relief arrangements).
The amendments in subsections (2)(a), (4), (5) and (6) have effect—
in any case in which the year of departure is, or (on the assumption that the amendment in subsection (4) had always had effect) would be, the year 2005-06 or a subsequent year of assessment; and
in any case in which—
the year of departure is, or (on that assumption) would be, the year 2004-05, and
at a time in that year on or after 16th March 2005, the taxpayer was resident or ordinarily resident in the United Kingdom and was not Treaty non-resident (within the meaning given by section 10A(9A) of TCGA 1992, as inserted by subsection (4)).
The amendment in subsection (2)(b) has effect in relation to relevant disposals made on or after 16th March 2005.
The amendment in subsection (3) has effect for determining whether a disposal of an asset is a relevant disposal for the purposes of section 10A of TCGA 1992 in any case in which the person making the disposal acquired the asset on or after 16th March 2005.
After section 83 of TCGA 1992 insert—.
The amendment made by this section has effect in relation to disposals made on or after 16th March 2005.
Schedule 4 (which makes provision in relation to the situation of assets for the purposes of TCGA 1992 and which makes minor amendments in that Act in relation to non-resident companies with United Kingdom permanent establishments) has effect.
Miscellaneous
Schedule 5 (which makes provision, for the purposes of the taxation of chargeable gains, in relation to options) has effect.
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Accounting practice and related matters
Schedule 6 (accounting practice and related matters) has effect.
Financial avoidance etc
Section 338A of ICTA (meaning of “charges on income” for the purposes of corporation tax) is amended as follows.
In subsection (2) (what are charges on income) paragraph (a) (annuities or other annual payments that meet the conditions in section 338B) shall cease to have effect.
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In section 434A(2)(a) of ICTA (loss resulting to insurance company from computation in accordance with Case I of Schedule D: reduction by specified amounts) omit sub-paragraph (i) (which relates to charges on income).
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The amendment made by subsection (4) has effect for accounting periods beginning on or after 1st April 2004.
The other amendments made by this section have effect in relation to payments made on or after the commencement date in respect of annuities or other annual payments.
Where—subsection (9) applies.
an accounting period of a company begins before, and ends on or after, the commencement date,
a payment in respect of an annuity or other annual payment is made by the company in that period but before the commencement date, and
the payment is deductible as a charge on income for the purposes of corporation tax,
In any such case, so much of any amount as represents that payment—for that or any subsequent accounting period.
is not deductible under section 75 of ICTA (expenses of management), and
is not to be brought into account under section 76 of that Act (expenses of insurance companies) as expenses payable,
Subsection (12) applies in any case where—
a payment in respect of an annuity or other annual payment is made by a company on or after the commencement date, and
the condition in subsection (11) is satisfied.
The condition is that the payment represents an amount which (apart from subsection (12))—by reason only of section 337A(1)(b) of that Act (company's income from any source to be computed without any deduction in respect of charges on income) as it applies by virtue of section 338A(2)(a) of that Act.
would not be deductible under section 75 of ICTA, or
would not fall to be brought into account under section 76 of that Act,
In any such case, the amount represented by the payment—for the accounting period in which the payment is made.
is deductible under section 75 of ICTA, or
falls to be brought into account under section 76 of that Act as expenses payable,
In this section “the commencement date” means 16th March 2005.
Schedule 7 (which makes provision in relation to tax avoidance involving financial arrangements) has effect.
Financing of companies etc
Intangible fixed assets
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Insurance companies etc
Schedule 9 (which makes provision about insurance companies etc) has effect.
International matters
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Section 750 of ICTA (controlled foreign companies: territories with a lower level of taxation) is amended as follows.
In subsection (1), after “if” insert “ , after giving effect to subsections (1A) and (1B) below, ”.
After subsection (1) insert—.
The amendments made by this section have effect in relation to accounting periods of companies resident outside the United Kingdom beginning on or after 2nd December 2004.
Where an accounting period of a company resident outside the United Kingdom—an accounting period of the company shall be deemed for the purposes of Chapter 4 of Part 17 of ICTA to have ended with 1st December 2004.
would, without amendment, have ended on or after 2nd December 2004, but
is amended on or after that date so as to end before that date,
In this section “accounting period” has the same meaning as in Chapter 4 of Part 17 of ICTA (see section 751).
Miscellaneous
Omit section 173 of, and Schedule 19 to, FA 1993 (Lloyd's underwriters: assessment and collection of tax).
In section 182 of that Act (regulations) in subsection (1)(a) (power of Commissioners for Her Majesty's Revenue and Customs to make regulations providing for assessment and collection of tax charged in accordance with section 171 of FA 1993, so far as not provided for by Schedule 19 to that Act) omit “(so far as not provided for by Schedule 19 to this Act)”.
In that section, at the end insert—.
Omit section 221 of FA 1994 (Lloyd's underwriters: corporations etc: assessment and collection of tax).
Renumber section 229 of that Act (regulations) as subsection (1) of that section.
In subsection (1) of that section (as amended by subsection (5) above), in paragraph (a) (power of Commissioners for Her Majesty's Revenue and Customs to make regulations providing for assessment and collection of tax charged in accordance with section 219 of FA 1994, so far as not provided for by Schedule 19 to FA 1993 as applied by section 221 of FA 1994) omit “(so far as not provided for by Schedule 19 to the 1993 Act as applied by section 221 above)”.
In that section, at the end insert—.
For the purpose of enabling the making of any regulations under—subsections (1) to (7) come into force on the day on which this Act is passed.
section 182(1)(a) of FA 1993 (as amended by subsection (2)), or
section 229(1)(a) of FA 1994 (as amended by subsection (6)),
Subject to that, those subsections come into force in accordance with provision made by the Treasury by order.
Section 828(3) of ICTA shall not apply in relation to an order under subsection (9).
The Commissioners for Her Majesty's Revenue and Customs may by regulations make such amendments, repeals or revocations in any enactment (including an enactment amended by this section) as appear to them to be appropriate in consequence of any one or more of the following—
any amendment made by this section;
the exercise by them of the power in section 182(1)(a) of FA 1993 (as amended by subsection (2));
the exercise by them of the power in section 229(1)(a) of FA 1994 (as amended by subsection (6)).
Any power conferred by this section to make an order or regulations includes power to make—
different provision for different cases or different purposes, and
incidental, supplemental or transitional provision and savings.
In this section—“enactment” includes an enactment comprised in subordinate legislation;“subordinate legislation” has the same meaning as in the Interpretation Act 1978 (c. 30) (see section 21 of that Act).
This section provides for certain enactments to cease to have effect which relate to—
the United Kingdom Atomic Energy Authority (“UKAEA”),
the National Radiological Protection Board (“NRPB”), or
pension schemes run by UKAEA.
In ICTA the following provisions shall cease to have effect—
section 349B(3)(g) (no deduction of tax from certain payments to UKAEA);
section 349B(3)(h) (no deduction of tax from certain payments to NRPB);
section 512(1) and (3) (certain exemptions from income tax and corporation tax for UKAEA and NRPB);
section 512(2) (treatment of certain income of pension schemes run by UKAEA).
In section 271(7) of TCGA 1992 (miscellaneous exemptions from tax in respect of chargeable gains)—
for “Memorial Fund, the” substitute “ Memorial Fund and the ”;
omit “, the United Kingdom Atomic Energy Authority”;
omit “and the National Radiological Protection Board”;
omit from “; and for the purposes” to the end of the subsection (treatment of gains accruing to pension schemes run by UKAEA).
In subsection (2)—
paragraph (a) has effect in relation to payments made on or after 1st April 2005;
paragraph (b) has effect in relation to payments made after 1st April 2005;
paragraph (c), so far as relating to UKAEA, has effect on and after 1st April 2005;
paragraph (c), so far as relating to NRPB, has effect after 1st April 2005;
paragraph (d) has effect in relation to income arising on or after 1st April 2005.
In subsection (3)—
paragraphs (a) and (c) have effect in relation to gains accruing after 1st April 2005;
paragraphs (b) and (d) have effect in relation to gains accruing on or after 1st April 2005.
The repeal of subsection (3)(g) of section 349B of ICTA does not affect the application of any other provision of that section in relation to UKAEA.
Nothing in this section affects—
any accounting period of UKAEA ending before 1st April 2005, or
any accounting period of NRPB ending on or before 1st April 2005.
Stamp taxes
Stamp duty land tax
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In section 79(1) of FA 2003 (registration of land transactions) after “in relation to the transaction” insert “ or such information about compliance as the Commissioners for Her Majesty's Revenue and Customs may specify in regulations. ”
In section 119(1) of FA 2003 (land transactions: effective date) for “the date of completion” substitute—
After paragraph 7(1) of Schedule 10 to FA 2003 (land transaction returns: correction of errors) insert—
The Commissioners for Her Majesty's Revenue and Customs—
may make regulations conferring administrative functions on a land registrar in connection with stamp duty land tax, and
may make payments to land registrars in respect of the exercise of those functions.
In subsection (5) “land registrar” means—
in relation to England and Wales, the Chief Land Registrar,
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in relation to Northern Ireland, the Registrar of Titles or the registrar of deeds, and
in any case, such other persons with functions relating to the registration of land as regulations under subsection (5) may specify.
Regulations under subsection (5)—
shall be made by statutory instrument, and
shall be subject to annulment in pursuance of a resolution of the House of Commons.
After section 78 of FA 2003 insert—
In section 245 of FA 1994 (production of documents: supplementary) for subsection (2) substitute—
For the heading to Part 6 of FA 1994 substitute “ Stamp duty ”.
Regulation 3 of the Stamp Duty Land Tax (Consequential Amendment of Enactments) Regulations 2005 (S. I. 2005/82) is hereby revoked.
Subsections (1) to (4) come into force on such day as the Treasury may by order appoint.
Section 114(3) of FA 2003 (negative resolution procedure) does not apply to an order made under subsection (5).
Schedule 10 (which makes miscellaneous amendments of Part 4 of FA 2003) has effect.
Stamp duty and stamp duty reserve tax
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European company statute
After section 140D of TCGA 1992 (transfer of non-UK trade) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
After paragraph 85 of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transfer of trade) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
After paragraph 87 of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transfer of non-UK trade) insert—
Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
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Subsection (1) shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
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After section 561 of CAA 2001 (transfer of UK trade to company in another member State) insert—
Subsection (1) shall have effect in relation to a transfer made on or after 1st April 2005.
At the end of section 99(4) of FA 1986 (stamp duty reserve tax: interpretation: chargeable securities) add—
Subsection (1) shall have effect for the purposes of determining, in relation to anything occurring on or after 1st April 2005, whether securities (whenever issued or raised) are chargeable securities for the purposes of Part 4 of FA 1986.
In section 90(3C)(a) of FA 1986 (stamp duty reserve tax: bearer instruments) after “United Kingdom” insert “ (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ”.
In section 90(3E)(a) of FA 1986 (stamp duty reserve tax: bearer instruments) after “United Kingdom” insert “ (other than an SE which has its registered office outside the United Kingdom following a transfer in accordance with Article 8 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea)) ”.
In paragraph 11 of Schedule 15 to FA 1999 (bearer instruments) for the definition of “UK company” substitute—.
This section shall have effect for the purposes of determining whether or not stamp duty or stamp duty reserve tax is chargeable in respect of anything done on or after 1st April 2005.
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In section 140A of TCGA 1992 (transfer of UK trade)—
in subsection (1)(b) for “securities” substitute “ shares or debentures ”, and
in subsection (7) omit the definition of “securities”.
In section 140C of TCGA 1992 (transfer of non-UK trade)—
in subsection (1)(c) for “securities” substitute “ shares or debentures ”, and
in subsection (9) omit the definition of “securities”.
In paragraph 88(1) and (5) of Schedule 29 to FA 2002 (intangible fixed assets: gains and losses: transferred assets: application for clearance) after “85(5),” insert “ 85A(5), 87A(6), ”.
In paragraph 127 of that Schedule (acquired assets to be treated as existing assets) after sub-paragraph (1)(b)(ii) insert—.
Subsections (3) and (4) shall have effect in relation to an issue effected on or after 1st April 2005.
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After section 170(10) of TCGA 1992 (groups: merger, etc) insert—
Subsection (1) shall have effect in relation to the formation of an SE (including its formation by transformation) which occurs on or after 1st April 2005.
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In section 116(11) of TCGA 1992 (shares: reorganisation, etc) after “140A,” insert “ 140E, ”.
After section 140(6A) of that Act (postponement of charge on transfer of assets to foreign company) insert—
After section 154(2) of that Act (held over gains: depreciating assets) insert—
After section 179(1A) of that Act (company ceasing to be member of group) insert—
This section shall have effect in relation to the formation of an SE in accordance with Article 2 of Council Regulation (EC) 2157/2001 on the Statute for a European Company (Societas Europaea) which occurs on or after 1st April 2005.
Schedule 7A to TCGA 1992 (restrictions on set-off of pre-entry losses) shall be amended as follows.
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In paragraph 1(6)(a) after “subsection (10)” insert “ or (10A) ”.
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This section shall have effect in relation to the formation of an SE which occurs on or after 1st April 2005.
Miscellaneous matters
VERA 1994 is amended as follows.
Section 7A (supplement payable on late renewal of vehicle licence) is amended as follows.
In subsection (1) (cases in which regulations may provide for supplement to be payable), for the words from “in prescribed cases” to the end substitute
After that subsection insert—
In subsection (2)(c) (amount of supplement variable according to length of period between expiry of licence and payment of supplement or renewal of licence), for sub-paragraphs (i) and (ii) substitute—
In subsection (3)(b) (supplement not to cease to be payable by reason of taking out of vehicle licence), for “a vehicle licence being taken out for the vehicle” substitute “ the vehicle being again appropriately covered ”.
Omit subsection (4)(a)(definition of “expiry of a vehicle licence”).
In the heading, for “late renewal of vehicle licence” substitute “ vehicle ceasing to be appropriately covered ”.
Section 7B (late-renewal supplements: further provisions) is amended as follows.
In subsection (1) (notification of person in whose name vehicle is registered)—
for “on non-renewal of a vehicle licence for” substitute “ in relation to ”, and
for “failure to renew a vehicle licence” substitute “ the vehicle ceasing to be appropriately covered ”.
In the heading, for “Late-renewal” substitute “ Section 7A ”.
In this section “relevant transfer” means a transfer of property, rights or liabilities where—
the transfer is of property, rights or liabilities which—
are specified or described in or determined in accordance with a scheme, and
consist of or include relevant property, rights or liabilities,
the transfer is from a Northern Ireland department or persons which include a Northern Ireland department to a company or companies specified in the scheme (“transferee company”), and
the transfer is effected by or under an enactment which—
is made after the coming into force of this section, and
relates to the provision of water or sewerage services in Northern Ireland.
In this section “relevant property, rights or liabilities” means property, rights or liabilities connected with the provision of any water or sewerage services.
The Treasury may by regulations make provision for or in connection with varying the way in which a relevant tax or duty would, apart from the regulations, have effect in relation to, or in connection with, any of the following—
anything done for the purpose of, or under or in consequence of, a relevant transfer of relevant property, rights or liabilities from a Northern Ireland department to a transferee company;
any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company;
any relevant property, rights or liabilities of a transferee company.
The provision that may be made by the regulations includes provision for or in connection with any of the following—
a tax provision not to apply or to apply with modifications in prescribed cases or circumstances;
anything done to have or not to have a specified consequence for the purposes of a tax provision in prescribed cases or circumstances;
any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company to be treated in a specified way for the purposes of a tax provision in prescribed cases or circumstances;
the withdrawal of relief (whether or not granted by virtue of the regulations), and the charging of tax, in prescribed cases or circumstances;
requiring or enabling the Secretary of State, with the consent of the Treasury, to determine or to specify the method to be used for determining anything (including amounts or values, or times or periods of time) which needs to be determined for the purposes of any tax provision (whether or not modified by the regulations) as it applies in relation to, or in connection with,—
anything done for the purpose of, or under or in consequence of, a relevant transfer of relevant property, rights or liabilities from a Northern Ireland department to a transferee company, or
any relevant property, rights or liabilities which are the subject of a relevant transfer from a Northern Ireland department to a transferee company.
A provision of regulations made by virtue only of subsection (3)(c) (“a subsection (3)(c) provision”) (whether or not also by virtue of subsection (4)) shall not have effect for an accounting period of a transferee company unless the company is wholly owned by the Crown during the whole of that accounting period.
Regulations under this section may provide that, for the purposes of a subsection (3)(c) provision, an accounting period of a transferee company shall be taken to have ended on the company ceasing to be wholly owned by the Crown.
For the purposes of this section, a company shall be regarded as wholly owned by the Crown at any time when each of the issued shares in the company is held by, or by a nominee of,—
the Treasury,
the Secretary of State,
a Northern Ireland department, or
another company which is wholly owned by the Crown.
In this section—“enactment” includes a provision comprised in—Northern Ireland legislation, or an instrument made under an enactment;“prescribed” means prescribed by or determined in accordance with regulations under this section;“relevant tax or duty” means income tax, corporation tax, capital gains tax, stamp duty or stamp duty reserve tax;“tax provision” means a provision of an enactment about a relevant tax or duty.
Any power to make regulations under this section is exercisable by statutory instrument.
A statutory instrument containing regulations under this section shall be subject to annulment in pursuance of a resolution of the House of Commons.
Any power to make regulations under this section includes power—
to make different provision for different cases or circumstances;
to make incidental, supplemental, consequential or transitional provision or savings.
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After the coming into force of this section, no further disputes shall be referred to a person appointed under section 84 of the Friendly Societies Act 1992 (c. 40) (adjudicator for disputes under the National Savings Bank Act 1971 and the National Debt Act 1972).
This section comes into force on 1st September 2005.
Supplementary provisions
The enactments mentioned in Schedule 11 (which include provisions that are spent or of no practical utility) are repealed to the extent specified.
The repeals specified in that Schedule have effect subject to the commencement provisions and savings contained or referred to in the notes set out in that Schedule.
In this Act—“CAA 2001” means the Capital Allowances Act 2001 (c. 2);“CTA 2009” means the Corporation Tax Act 2009;“FA”, followed by a year, means the Finance Act of that year;“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1);“ITA 2007” means the Income Tax Act 2007;“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1);“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5);“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12);“VATA 1994” means the Value Added Tax Act 1994 (c. 23);“VERA 1994” means the Vehicle Excise and Registration Act 1994 (c. 22).
This Act may be cited as the Finance (No. 2) Act 2005.
Disclosure of value added tax avoidance schemes
Introduction
Schedule 11A to VATA 1994 (disclosure of avoidance schemes) is amended in accordance with this Schedule.
Interpretative provisions
In paragraph 1 (interpretation), after the definition of “designated scheme” insert—.
For paragraph 2 substitute—
After paragraph 2 insert—
Duty to notify Commissioners
Paragraph 6 (duty to notify Commissioners) is amended as follows.
In sub-paragraph (1)—
omit the word “or” at the end of paragraph (a), and
after paragraph (b) insert
After sub-paragraph (2) insert—
For sub-paragraph (5) substitute—
In paragraph 7 (exemptions from duty to notify) in the definition of “relevant period” in sub-paragraph (9) for “6(1)(a) or (b)” substitute “ 6(1)(a), (b) or (c) ”.
Amount of penalty
Paragraph 11 (amount of penalty) is amended as follows.
In sub-paragraph (3)—
omit the word “and” at the end of paragraph (a), and
after paragraph (b) insert
In sub-paragraph (4), after “(3)(a)” insert “ and (c) ”.
After sub-paragraph (4) insert—
Penalty assessments
In paragraph 12 (penalty assessments) for sub-paragraph (3) substitute—
Employee securities: anti-avoidance
Introductory
ITEPA 2003 is amended as follows.
Rights under certain insurance contracts to be securities
Section 420 (income and exemptions relating to securities: meaning of “securities” etc.) is amended as follows.
In subsection (1), after paragraph (a) insert—.
In paragraph (b) of that subsection, insert at the end “ (other than contracts of insurance) ”.
In paragraph (g) of that subsection, insert at the end “ (other than contracts of insurance) ”.
After that subsection insert—
In subsection (5)—
at the end of paragraph (c) insert “ and ”, and
omit paragraph (d) (exclusion of insurance contracts).
In Part 2 of Schedule 1 (index of defined expressions), insert at the appropriate place—
This paragraph has effect on and after 2nd December 2004 and applies in relation to rights under contracts of insurance acquired before that date, as well as those acquired on or after that date; and—
for the purposes of the application of Chapter 3B of Part 7 of ITEPA 2003 (securities with artificially enhanced market value) by reason of this paragraph in relation to rights under contracts of insurance acquired before that date, section 446O of that Act (meaning of “relevant period”) has effect as if they were acquired on that date, and
for the purposes of section 420(1A)(c) of ITEPA 2003, section 50 of FA 2004 (meaning of “generally accepted accounting practice”) has effect on and after that date, in spite of subsection (6) of that section.
Restricted securities
Chapter 2 of Part 7 (restricted securities) is amended as follows.
Section 424 (employment-related securities which are not restricted securities or restricted interest in securities) is renumbered as subsection (1) of that section.
In that subsection—
at the end of paragraph (a) insert “ or ”, and
omit paragraph (c) (employment-related securities which are, or are an interest in, redeemable securities) and the word “or” before it.
After that subsection insert—
This paragraph has effect on and after 2nd December 2004 and applies in relation to employment-related securities acquired before that date, as well as those acquired on or after that date; and section 422 of ITEPA 2003 (application of Chapter 2 of Part 7) applies to employment-related securities in relation to which this paragraph has effect and which were acquired before that date with the omission of the words “at the time of the acquisition”.
In section 428 (amount of charge under section 426), after subsection (9) insert—
This paragraph has effect where something such as is mentioned in section 428(10) of ITEPA 2003 has been done on or after 2nd December 2004.
In section 429 (exception from charge under section 426 for certain company shares), for subsection (1A) substitute—
This paragraph has effect where something such as is mentioned in section 429(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
After section 431A insert—
This paragraph has effect in relation to employment-related securities acquired on or after 2nd December 2004.
Convertible securities
Chapter 3 of Part 7 (convertible securities) is amended as follows.
In section 436(a) (meaning of “convertible securities”), for “immediate or conditional entitlement” substitute “ entitlement (whether immediate or deferred and whether conditional or unconditional) ”.
Section 437 (adjustment of acquisition charge) is renumbered as subsection (1) of that section.
After that subsection insert—
This paragraph has effect in relation to acquisitions on or after 2nd December 2004.
In section 440 (amount of charge under section 438), after subsection (3) insert—
This paragraph has effect on and after 2nd December 2004.
In section 443 (exception from charge under section 438 for certain company shares), for subsection (1A) substitute—
This paragraph has effect where something such as is mentioned in section 443(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
Securities acquired for less than market value
Chapter 3C of Part 7 (securities acquired for less than market value) is amended as follows.
In section 446R (exception from Chapter for certain company shares), for subsection (1A) substitute—
This paragraph has effect where something such as is mentioned in section 446R(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
In section 446U(1) (discharge of notional loan), insert at the end
This paragraph has effect where something such as is mentioned in section 443U(1)(c) of ITEPA 2003 has been done on or after 2nd December 2004.
After section 446U insert—
This paragraph has effect in relation to acquisitions on or after 2nd December 2004.
Section 698 (PAYE: special charges on employment-related securities) is amended as follows.
In subsection (1), after paragraph (e) insert—.
In subsection (6), after paragraph (d) insert—.
This paragraph has effect on and after the day on which this Act is passed.
Post-acquisition benefits from securities
Chapter 4 of Part 7 (post-acquisition benefits from securities) is amended as follows.
Section 447 (charge on other chargeable benefits from securities) is amended as follows.
In subsection (1), for “by virtue of the ownership of employment-related securities by that person or another associated person” substitute “ in connection with employment-related securities ”.
For subsection (4) substitute—
Sub-paragraph (2) has effect on and after 2nd December 2004 and sub-paragraph (3) has effect where something such as is mentioned in section 447(4) of ITEPA 2003 has been done on or after that date.
In section 449 (exception from charge under section 447 for certain company shares), for subsection (1A) substitute—
This paragraph has effect where something such as is mentioned in section 449(1A) of ITEPA 2003 has been done on or after 2nd December 2004.
Corporation tax relief: minor and consequential amendments
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Qualifying scheme
Introductory
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Schemes involving hybrid entities
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Schemes involving hybrid effect
Schemes involving hybrid effect
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Instruments of alterable character
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Shares subject to conversion
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Securities subject to conversion
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Debt instruments treated as equity
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Schemes involving hybrid effect and connected persons
Schemes involving hybrid effect and connected persons
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Scheme including issue of shares not conferring a qualifying beneficial entitlement
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Scheme including transfer of rights under a security
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Interpretation
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Chargeable gains: location of assets etc
Location of assets
Exceptions from sections 713 and 714 of ICTA
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Foreign securities: delayed remittances
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Designated international organisations
Section 265 of TCGA 1992 is amended as follows.
In subsection (3) (securities issued by designated international organisations to be taken to be situated outside UK for the purposes of capital gains tax) for “capital gains tax” substitute “ this Act ”.
Location of assets: general
Section 275 of TCGA 1992 is amended as follows.
Re-number that section as subsection (1) of that section.
In that subsection, in paragraph (d) (location of shares or securities issued by municipal or governmental authority etc) for “securities” substitute “ debentures ”.
In that subsection, after that paragraph insert—.
In that subsection, in paragraph (e) (location of registered shares or securities)—
for “subject to paragraph (d)” substitute “ subject to paragraphs (d) and (da) ”;
for “securities” substitute “ debentures ”.
In that subsection, for paragraph (h) (location of patents, trade marks and registered designs) substitute—.
In that subsection, for paragraph (j) (location of copyright, design right and franchises) substitute—.
After that subsection insert—.
Location of certain intangible assets
After section 275 of TCGA 1992 insert—.
Location of assets: interests of co-owners
After section 275B of TCGA 1992 (as inserted by paragraph 5) insert—.
Minor amendments: non-resident company with UK permanent establishment
Computation of losses
Section 16 of TCGA 1992 is amended as follows.
In subsection (3) (loss accruing to person in year of assessment during which he is not resident or ordinarily resident in UK not to be allowable loss unless, under section 10, he would be chargeable to tax in respect of chargeable gain if the loss had been a gain) after “section 10” insert “ or 10B ”.
Reallocation within group of gain or loss accruing under section 179
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Exemptions for disposals by companies with substantial shareholding
Schedule 7AC to TCGA 1992 is amended as follows.
In paragraph 3(2)(c)(ii) (one of conditions for exemption that chargeable gain accruing to company on disposal would by virtue of section 10(3) form part of company's chargeable profits for corporation tax) for “section 10(3)” substitute “ section 10B ”.
Commencement
Commencement
The amendments made by Part 1 of this Schedule have effect for determining for the purposes of TCGA 1992—at any time on or after 16th March 2005 (irrespective of when the asset was acquired by the person holding it).
the situation of any asset, or
whether the situation of any asset is in the United Kingdom,
The amendment made by paragraph 7 has effect in relation to any loss accruing to a company in an accounting period ending on or after 16th March 2005.
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The amendment made by paragraph 9 has effect in relation to disposals on or after 16th March 2005.
Chargeable gains: options
Application of market value rule in case of exercise of option
Application of market value rule in case of exercise of option
Section 144ZA of TCGA 1992 is amended as follows.
In subsection (1) (cases in which the section applies) at the beginning insert “ Subject to section 144ZB, ”.
In subsection (4) (where market value rule is set aside by the section, amount or value to be taken into account is, subject to section 120, to be actual amount or value) for “(subject to section 120) the actual amount or value” substitute “ (subject to section 119A) the exercise price ”.
After that subsection insert—.
For subsection (5) substitute—.
Application of market value rule in case of exercise of option: exception
After section 144ZA of TCGA 1992 insert—
Miscellaneous amendments relating to share options etc
Shares acquired on same day: election for alternative treatment
Section 105A of TCGA 1992 is amended as follows.
In subsection (1) (cases in which subsection (2) applies) in paragraph (b) (some of the acquired shares to be approved-scheme shares) for sub-paragraphs (i) and (ii) substitute—.
Employment-related securities options
Section 149A of TCGA 1992 is amended as follows.
In subsection (1) (cases in which the section applies) for paragraph (b) (option to consist of right to acquire shares in body corporate and to be obtained by individual by reason of his office or employment) substitute—.
In that subsection, in paragraph (c) (section 17(1) to apply for calculating consideration for grant of option) after “section 17(1)” insert “ of this Act ”.
The heading of the section accordingly becomes “ Employment-related securities options ”.
Interpretation of TCGA 1992
Section 288 of TCGA 1992 is amended as follows.
In subsection (1A) (employment-related securities options) for the second sentence substitute— “ In this subsection “employment-related securities option” means a securities option within the meaning of Chapter 5 of Part 7 of ITEPA 2003 (see section 420(8) of that Act) to which that Chapter applies or would, apart from section 474 of that Act, apply (see section 471 of that Act); and other expressions used in this subsection and that Chapter have the same meaning in this subsection as in that Chapter. ”.
Commencement
Commencement
The amendments made by paragraphs 1 to 3 have effect in relation to cases where the option in question is exercised on or after 2nd December 2004 (whenever the option was acquired).
The amendments made by paragraphs 4 and 5 have effect in relation to options granted on or after 2nd December 2004.
Accounting practice and related matters
Adjustment on change of accounting basis
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Meaning of “statutory insolvency arrangement”
For section 259 of ITTOIA 2005 (trading income: meaning of “statutory insolvency arrangement”) substitute—.
This amendment has effect for the tax year 2005-06 and subsequent tax years in relation to periods of account beginning on or after 1st January 2005.
Minor corrections
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Deemed release of liability on impaired debt becoming held by connected company
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Adjustment on change to international accounting standards: bad debt debits formerly disallowed
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Loan relationships with embedded derivatives
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In section 116(8A) of TCGA 1992 (reorganisations, conversions and reconstructions: application of loan relationships regime in certain cases)—
after “shall have effect” insert “ , subject to subsection (8B) below, ”, and
for “that subsection” substitute “ subsection (6) above ”.
After that subsection insert—.
These amendments have effect in relation to transactions occurring after 26th May 2005.
Exchange gains and losses
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Avoidance involving financial arrangements
Rent factoring
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Section 730: restriction to income consisting of distributions in respect of company shares etc
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Change in ownership of company with investment business
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Transfers of rights to receive annual payments
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Disposals and acquisitions of company loan relationships with or without interest
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Manufactured interest and the accrued income scheme
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Consideration due after time of disposal: creditor relationships etc
Section 48 of TCGA 1992 (consideration due after time of disposal) is amended as follows.
At the beginning insert “ (1) ”.
At the end add—.
Corporate strips: manipulation of price: associated payment giving rise to loss
In TCGA 1992, after section 151C (strips: manipulation of price: associated payment giving rise to loss) insert—.
Transactions within a group: shares subject to third party obligations
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Shares treated as loan relationships
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Related transactions in relation to right to receive manufactured interest
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Money debts etc not arising from lending of money: discounts and profits from transactions
Section 100 of FA 1996 (money debts etc not arising from the lending of money) is amended as follows.
In subsection (1)(c) (money debts to which the section applies) after sub-paragraph (iii) insert.
After subsection (1) insert—.
In subsection (2), as it has effect for periods of account beginning on or after 1st January 2005, in paragraph (a), for “matters mentioned in subsection (1)(c) above” substitute “ matters mentioned in subsection (1)(c)(i) to (iii) above or subsection (2ZA) below ”.
After subsection (2) insert—.
After subsection (3) (amounts treated as interest under Schedule 28AA to ICTA) insert—.
Omit subsections (4) to (6) and (8) (which relate to whether debits or credits are trading or non-trading etc and which are unnecessary, in view of the application of sections 82(2) and 103(2) of FA 1996 by virtue of section 100(2) of that Act).
Omit subsection (13) (express subjection to Schedules 9 and 11 to FA 1996, which is unnecessary in view of the closing words of subsection (2) of the section).
In consequence of the amendments made by this paragraph, paragraph (c) of the Case III of Schedule D substituted for the purposes of corporation tax by section 18(3A) of ICTA (tax in respect of discount arising otherwise than in respect of a loan relationship) shall not have effect in relation to any discount arising in an accounting period beginning on or after the commencement date.
Subject to sub-paragraph (9), the amendments made by this paragraph have effect in relation to any money debt to which a company is party as a creditor on or after the commencement date.
Where, on or after the commencement date but in a period of account beginning before 1st January 2005, a company is party to a relationship to which section 100 of FA 1996 applies, then, in the application of that section for that period of account, subsection (2) of it shall have effect as follows—
paragraph (a) shall have effect in relation to—as it has effect (or would have effect) in relation to interest payable to the company under the relationship,
any discount arising to the company from the money debt, and
any profits, impairment of discount, or reversal of impairment of discount, arising to the company as mentioned in subsection (2ZA) of that section,
paragraph (b) shall have effect as if the reference to interest included a reference to the matters mentioned in paragraph (a)(i) and (ii) above, and
the closing words shall have effect accordingly.
None of the following shall be brought into account for the purposes of Chapter 2 of Part 4 of FA 1996 by virtue of this paragraph—
credits in respect of discount arising from a money debt, to the extent that the discount accrued before the commencement date;
credits in respect of profits arising as mentioned in section 100(2ZA)(a) or (b)(ii) of that Act where the related transaction took place before the commencement date;
debits in respect of any impairment arising in respect of discount arising from a money debt, to the extent that the discount accrued before the commencement date;
credits in respect of any reversal of any such impairment, to the extent that the discount accrued before the commencement date.
In this paragraph “the commencement date” means 16th March 2005.
Meaning of “commercial rate of interest”
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Capital redemption policies: removal of exclusion from loan relationships computations
Schedule 9 to FA 1996 (loan relationships: special computational provisions) is amended as follows.
In paragraph 1A(1) (credits and debits relating to life policies and capital redemption policies not to be brought into account) paragraph (b) (capital redemption policies) shall cease to have effect.
This paragraph has effect in relation to a capital redemption policy on and after 10th February 2005 (whenever the capital redemption policy was effected).
Where a capital redemption policy—sub-paragraphs (5) and (6) apply.
is held by a company immediately before 10th February 2005, and
on or after that date, is, for the purposes of Chapter 2 of Part 4 of FA 1996 or Part 5 of CTA 2009, a creditor relationship of the company,
In any such case, Chapter 2 of Part 13 of ICTA (life policies etc: chargeable events) shall have effect as if—and Chapter 2 of Part 4 of FA 1996 and Part 5 of CTA 2009 shall have effect as if, immediately after 9th February 2005, the company had acquired the creditor relationship at a cost equal to that carrying value.
immediately before 10th February 2005, the company had assigned the whole of the rights conferred by the policy for money or money's worth, and
the value of the consideration for the assignment had been equal to what the carrying value of the creditor relationship would have been had an accounting period of the company ended on that date;
But if—are not the same accounting period, any gain which, by virtue of the deemed assignment, would have fallen to be brought into account in accordance with section 547(1)(b) of ICTA for the assignment period shall instead be brought into account for the cessation period.
the accounting period in which the assignment is deemed to have happened (“the assignment period”), and
the accounting period in which the company ceases to be party to the creditor relationship (“the cessation period”),
In this paragraph—“assignment”, in relation to Scotland, means an assignation;“carrying value” has the same meaning as it has for the purposes of paragraph 19A of Schedule 9 to FA 1996, as it has effect for periods of account beginning on or after 1st January 2005.
Deemed disposal of assets and liabilities on company ceasing to be resident in UK etc
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Transactions not at arm's length: exceptions relating to groups of companies
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Continuity of treatment of groups etc: treatment of transferee company
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Transferee leaving group after replacing transferor as party to loan relationship
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Avoidance involving repos or stock lending
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Capital redemption policies: computations on the I minus E basis
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Relevant discounted securities: corporate strips
Schedule 13 to FA 1996 (discounted securities: income tax) is amended as follows.
In paragraph 3 (meaning of “relevant discounted security”) in sub-paragraph (1), for “paragraph 14(1)” substitute “ paragraphs 13B(1) and 14(1) ”.
In paragraph 4 (meaning of “transfer”)—
in sub-paragraph (1), after “Subject to sub-paragraph (2)” insert “ and paragraph 13B(4) ”;
in sub-paragraph (5), after “without prejudice to paragraph” insert “ 13B(2) to (5) or ”.
In paragraph 5 (redemption to include conversion), in sub-paragraph (3), after “This paragraph does not apply to” insert.
After paragraph 13 (excluded indexed securities) insert—.
In paragraph 15(1) (general interpretation) insert each of the following definitions at the appropriate place—;;.
In paragraph 15(1)—
in the definition of “relevant discounted security”, after “paragraphs 3” insert “ , 13B(1) ”;
in the definition of “strip”, after “ “strip”” insert “ , except in the expression “corporate strip”, ”.
The amendments made by this paragraph have effect in any case where a person acquires a corporate strip on or after 2nd December 2004 otherwise than in pursuance of an agreement entered into before that date.
Transactions within groups: treatment of transferee company
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Transactions within groups: fair value accounting
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Transferee leaving group after replacing transferor as party to derivative contract
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Deeply discounted securities: corporate strips
Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) is amended as follows.
In section 430 (meaning of “deeply discounted security”) in subsection (6)(subjections) omit “and” before the entry relating to section 443(1) and at the end of that entry add “ , and section 452A(1) (corporate strips). ”.
In section 437 (transactions which are disposals) after subsection (4) insert—.
In section 438 (timing of transfers and acquisitions) for subsection (4) substitute—.
In section 440 (market value disposals) for subsection (5) substitute—.
In section 441 (market value acquisitions) for subsection (3) substitute—.
In section 444 (meaning of “strip” in Chapter 8) after subsection (5) insert—.
After section 452 insert—.
In Schedule 4 (abbreviations and defined expressions) in Part 2 (expressions defined in the Act or in ICTA) insert each of the following entries at the appropriate place—;;.
ITTOIA 2005 shall have effect as if it had been originally enacted with the amendments made by this paragraph.
Financing of companies etc: transfer pricing and loan relationships
Amendments of Schedule 28AA to ICTA
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Amendments of Schedule 9 to FA 1996
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Commencement and transitional provisions
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Insurance companies etc
Expenses of insurance companies
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Interpretative provisions relating to insurance companies
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Amendment of Chapter 1 of Part 12 of ICTA etc
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Apportionment of income and gains
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Section 432B apportionment: participating funds
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Transfers of business: deemed periodical return
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Transfers of business: modification of section 444AC of ICTA
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Transfers of business: transferor shares are assets of transferee's long-term insurance fund etc
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Equalisation reserves for general business
Section 444BA of ICTA is amended as follows.
In subsection (11) (meaning of “equalisation reserves rules”) for “Chapter 6 of the Prudential Sourcebook (Insurers)” substitute “ chapter 7.5 of the Integrated Prudential Sourcebook ”.
The amendment made by this paragraph has effect in relation to periods of account ending on or after 31st December 2004.
Unappropriated surplus on valuation
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Relevant financial reinsurance contracts
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Receipts to be taken into account
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Meaning of “brought into account”
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Changes in recognised accounts: attribution of amounts carried forward under s.432F of ICTA
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Charge of certain receipts of basic life assurance business
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Corporation tax: policy holders' fraction of profits
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Overseas life insurance companies
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Meaning of “pension business”
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Miscellaneous references to “class” of business
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The amendments made by this paragraph have effect in relation to periods of account beginning on or after 1st January 2005.
Transfers of business: references to accounting period ending with day of transfer
Section 12 of ICTA (corporation tax: basis of, and periods for, assessment) is amended as follows.
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The amendments made by sub-paragraphs (2) to (5) have effect in relation to insurance business transfer schemes taking place on or after 16th March 2005.
The amendment made by sub-paragraph (6) has effect where the accounting period for which the net amount represents an excess of losses over gains is an accounting period beginning on or after 1st January 2003.
Stamp duty land tax: miscellaneous amendments
Amendments coming into force in accordance with paragraph 16
Introduction
Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this Part of this Schedule.
Transfer of rights: exclusion of transaction to which alternative finance provisions apply
In section 45 (contract and conveyance: effect of transfer of rights) at the end of subsection (3) insert “ except in a case where the secondary contract gives rise to a transaction that is exempt from charge by virtue of subsection (3) of section 73 (alternative property finance: land sold to financial institution and re-sold to individual) ”.
Group relief
In paragraph 1 of Schedule 7 (group relief), in sub-paragraph (7) for “paragraph 3” substitute “ paragraphs 3 and 4A ”.
In paragraph 3 of Schedule 7 (withdrawal of group relief)—
for sub-paragraph (2) substitute—, and
at the end of sub-paragraph (5) insert “ and paragraph 4A (withdrawal of group relief in certain cases involving successive transactions) ”.
In paragraph 4 of Schedule 7 (cases in which group relief is not withdrawn)—
in sub-paragraph (3), for paragraph (b) substitute—, and
in sub-paragraph (5), for “this purpose” substitute “ the purposes of sub-paragraphs (3) and (4) ”.
After paragraph 4 of Schedule 7 insert—
In Schedule 17A (further provisions relating to leases) in paragraph 11(5)(a) for the words from “the purchaser” to the end substitute “ the event falling within paragraph 3(1)(a) of Schedule 7 (purchaser ceasing to be a member of the same group as the vendor), as read with paragraph 4A of that Schedule ”.
Reconstruction and acquisition reliefs
In paragraph 8 of Schedule 7 (acquisition relief)—
in sub-paragraph (1)(b) for “the first and second conditions” substitute “ all the conditions ”, and
after sub-paragraph (5) insert—
In paragraph 9 of Schedule 7 (withdrawal of reconstruction or acquisition relief) for sub-paragraph (2) substitute—
Withdrawal of money etc from partnership after transfer of chargeable interest
In Schedule 15 (partnerships) after paragraph 17 insert—
Grant of lease to bare trustee
For paragraph 3 of Schedule 16 substitute—
In paragraph 11 of Schedule 17A (cases where assignment of lease treated as grant of lease), for sub-paragraph (1) substitute—
Variation of lease
In paragraph 15A of Schedule 17A (leases: reduction of rent or term)—
after sub-paragraph (1) insert—, and
for the heading preceding that paragraph substitute “ Reduction of rent or term or other variation of lease ”.
Loan or deposit in connection with grant or assignment of lease
After paragraph 18 of Schedule 17A insert—
In section 80 (adjustment where contingency ceases or consideration is ascertained) after subsection (4) insert—
Commencement
Subject to sub-paragraph (7), paragraphs 3 to 7 have effect where the effective date of the relevant transaction (within the meaning of paragraph 3 or 4A of Schedule 7 to FA 2003) is after 19th May 2005.
Subject to sub-paragraph (7), paragraph 9 has effect where the effective date of the relevant transaction (within the meaning of paragraph 9 of Schedule 7 to FA 2003) is after 19th May 2005.
Subject to sub-paragraph (7), paragraph 10 has effect where the effective date of the transaction transferring the chargeable interest to the partnership is after 19th May 2005.
Subject to sub-paragraph (7), paragraphs 11 and 12 have effect where the effective date of the land transaction consisting of the grant of the lease is after 19th May 2005.
Subject to sub-paragraph (7), the amendments made by the other provisions of this Part of this Schedule have effect in relation to any transaction of which the effective date is after 19th May 2005.
In sub-paragraphs (7) and (8) “the specified date” means—
in relation to the amendments made by paragraphs 4(a) and 9, 19th May 2005, and
in relation to the amendments made by the other provisions of this Part of this Schedule, 16th March 2005.
The amendments made by this Part of this Schedule do not have effect—
in relation to any transaction which is effected in pursuance of a contract entered into and substantially performed on or before the specified date, or
subject to sub-paragraph (8), in relation to any other transaction which is effected in pursuance of a contract entered into on or before the specified date.
The exclusion by sub-paragraph (7)(b) of transactions effected in pursuance of contracts entered into on or before the specified date does not apply—
if there is any variation of the contract or assignment of rights under the contract after that date,
if the transaction is effected in consequence of the exercise after that date of any option, right of pre-emption or similar right, or
if after that date there is an assignment, subsale or other transaction (relating to the whole or part of the subject-matter of the contract) as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance to him.
In this paragraph “assignment”, “effective date” and “substantially performed” have the same meaning as in Part 4 of FA 2003.
Amendments coming into force in accordance with paragraph 22
Introduction
Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this Part of this Schedule.
Transfers involving public bodies
In section 66 of FA 2003 (transfers involving public bodies) after subsection (5) insert—
Group relief: avoidance arrangements
In paragraph 2 of Schedule 7 (restrictions on availability of group relief) after sub-paragraph (4) insert—
Acquisition relief: avoidance arrangements
In paragraph 8 of Schedule 7 (acquisition relief)—
for sub-paragraph (5) substitute—, and
after sub-paragraph (5A) (inserted by paragraph 8 of this Schedule) insert—
Stamp duty on transfers of partnership interests
In Schedule 15 (stamp duty land tax: partnerships), paragraph 33 (which relates to stamp duty on transfers of partnership interests) is amended as follows.
For sub-paragraphs (1) and (2) substitute—
In sub-paragraph (3)—
at the beginning insert “ If the relevant partnership property includes stock or marketable securities, ”,
in paragraph (a), for the words from “the stock” to “property” substitute “ that stock and those securities ”, and
for paragraph (b) substitute—
After sub-paragraph (3) insert—
Omit sub-paragraph (4).
In sub-paragraph (5), for “That” substitute “ The appropriate ”.
Commencement
Subject to sub-paragraph (2), paragraphs 18 to 20 have effect in relation to any transaction of which the effective date is on or after the day on which this Act is passed.
Paragraphs 19 and 20 do not have effect—
in relation to any transaction which is effected in pursuance of a contract entered into and substantially performed on or before 16th March 2005, or
(subject to sub-paragraph (3)) in relation to any other transaction which is effected in pursuance of a contract entered into on or before that date.
The exclusion by sub-paragraph (2)(b) of transactions effected in pursuance of contracts entered into on or before 16th March 2005 does not apply—
if there is any variation of the contract or assignment of rights under the contract after that date,
if the transaction is effected in consequence of the exercise after that date of any option, right of pre-emption or similar right, or
if after that date there is an assignment, subsale or other transaction (relating to the whole or part of the subject-matter of the contract) as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance to him.
Paragraph 21 has effect in relation to any instrument executed on or after the day on which this Act is passed.
In this paragraph “assignment”, “effective date” and “substantially performed” have the same meaning as in Part 4 of FA 2003.
Repeals
Value added tax
In Schedule 11A—in paragraph 6(1), the word “or” at the end of paragraph (a), and in paragraph 11(3), the word “and” at the end of paragraph (a).
Income tax, corporation tax and capital gains tax
Section 420(5)(d).
In section 424(1), paragraph (c) and the word “or” before it.
Section 88(4)(a).
In Schedule 1, paragraph 55(b).
Section 349B(4)(b).
Sections 468H to 468Q.
Section 373(4) and (6).
Section 376(4) and (6).
Paragraph 151(2) of Schedule 1.
Paragraph 350(2) and (3) of Schedule 1.
In section 125(1), the words “and shall not be a charge on income for the purposes of corporation tax”.
Section 338A(2)(a) and (4).
Section 338B.
In section 402(6)(b), the words “or a charge on income”.
Section 434A(2)(a)(i).
In section 487(3), the words “or be treated for those purposes as a charge on income”.
In section 494—in subsection (1), the words “Section 338 of this Act and”; subsection (3).
In section 494A—in subsection (2), paragraph (b) and the word “or” before it; in subsection (3), paragraph (b) and the word “and” before it.
In Schedule 28AA—in paragraph 7A(2)(b), the words “or charges on income”; in paragraph 7C(2)(b), the words “or charges on income”.
In section 171A(5)(b), the words “or a charge on income”.
In section 179A(11)(b), the words “or a charge on income”.
In section 18, paragraph (c) of the Case III of Schedule D substituted by subsection (3A).
Section 43C(1).
Section 43E(1)(a) and (b).
In section 730—subsection (1)(c); subsection (2A); in subsection (8), the words from “and for the purpose” onwards.
In section 97—in subsection (2), paragraph (b) and the word “but” before it, and subsections (3) and (3A).
Section 100(4) to (6), (8) and (13).
In Schedule 9—in paragraph 1A(1), paragraph (b) and the word “or” before it; paragraph 11(5); in paragraph 15(4A), paragraph (b) and the word “and” before it.
In section 430(6), the word “and” before the entry relating to section 443(1).
In Schedule 1, paragraph 300(5).
In Schedule 9—in paragraph 2(1B), the words “, but not a CIS-based close company,”, the word “or” preceding paragraph (c) and the words after paragraph (c); in paragraph 18(1), paragraph (aa), and paragraph (c) and the word “and” preceding it; in paragraph 18(4), the word “and” preceding the definition of “participator”.
In section 76(8), in the second sentence, the word “or” at the end of paragraph (a).
In section 431(2), the definition of “long-term liabilities”.
Section 82C(4), (5), (8) and (9).
In section 83A(2), the words from “Paragraph (b) above” to the end of the subsection.
In section 88(3A), the word “and” at the end of paragraph (a).
In Schedule 6—in paragraph 1(2)(b), the definitions of ”liabilities“ and “value”; paragraph 2.
Section 173.
In section 182(1)(a), “(so far as not provided for by Schedule 19 to this Act)”.
Schedule 19.
Section 221.
In section 229(1)(a), “(so far as not provided for by Schedule 19 to the 1993 Act as applied by section 221 above)”.
In Schedule 21, paragraphs 9 and 10.
Section 349B(3)(g) and (h).
Section 512.
In section 271(7)—the words “, the United Kingdom Atomic Energy Authority”; the words “and the National Radiological Protection Board”; the words from “; and for the purposes” to the end of the subsection.
Stamp taxes
European company statute
In section 140A(7) the definition of “securities”.
In section 140C(9) the definition of “securities”.
Miscellaneous matters
In section 27, the definition of “the adjudicator”.
Section 84.
In Schedule 21, paragraphs 2 to 4.