UKPGA-2006-25 Finance Act 2006 UK

For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—

This section shall be deemed to have come into force at 6 o'clock in the evening of 22nd March 2006.

After section 7 of the Tobacco Products Duty Act 1979 (c. 7) (regulations for management of duty) insert—

At the end of section 9 of the Tobacco Products Duty Act 1979 (c. 7) (regulations) (which becomes subsection (1)) add—

This section shall come into force in accordance with provision made by the Treasury by order.

An order under subsection (3)—

In section 36(1AA)(a) of ALDA 1979 (rate of duty on beer) for “£12.92” substitute “ £13.26 ”.

This section shall be deemed to have come into force at midnight on 26th March 2006.

For Part 1 of the Table of rates of duty in Schedule 1 to ALDA 1979 (rates of duty on wine and made-wine) substitute—

This section shall be deemed to have come into force at midnight on 26th March 2006.

The following provisions of ALDA 1979 shall cease to have effect—

In consequence of the repeal of section 55A of ALDA 1979, that Act is amended as follows.

In section 54 (wine: charge of excise duty), in subsection (4A), for “wine to which section 55A below applies” substitute “ wine of a strength not exceeding 5.5 per cent ”.

In section 55 (made-wine: charge of excise duty), in subsections (4A) and (5)(d), for “made-wine to which section 55A below applies” substitute “ made-wine of a strength not exceeding 5.5 per cent ”.

HODA 1979 is amended as follows.

In section 6(1A) (hydrocarbon oil: rates of duty)—

In section 6AA(3) (biodiesel) for “£0.2832” substitute “ £0.2710 ”.

In section 6AD(3) (bioethanol) for “£0.2832” substitute “ £0.2710 ”.

In section 8(3) (road fuel gas)—

In section 13A(1) (rebate on unleaded petrol) for “£0.0617” substitute “ £0.0601 ”.

The following statutory instruments shall cease to have effect—

HODA 1979 is amended as follows.

In section 6(1A) (hydrocarbon oil: rates of duty)—

In section 6AA(3) (biodiesel) for “£0.2710” substitute “ £0.2835 ”.

In section 6AD(3) (bioethanol) for “£0.2710” substitute “ £0.2835 ”.

In section 8(3) (road fuel gas)—

In section 11(1) (rebate on heavy oil)—

In section 13A(1) (rebate on unleaded petrol) for “£0.0601”substitute “ £0.0617 ”.

In section 14(1) (rebate on light oil for use as furnace oil) for “£0.0604” substitute “ £0.0729 ”.

This section comes into force on 1st September 2006.

In section 2(2) of the Betting and Gaming Duties Act 1981 (c. 63) (general betting duty: exemptions) after paragraph (c) add—

This section shall have effect in respect of anything done on or after 6th December 2005 (with the reference to section 23 of the Value Added Tax Act 1994 being a reference to that definition as it is treated as having effect in relation to things done on or after that date by virtue of section 16(6) and (7) below).

For the Table in section 11(2) of FA 1997 (rates of gaming duty) substitute—

This section has effect in relation to accounting periods beginning on or after 1st April 2006.

For section 25(1) to (1B) of the Betting and Gaming Duties Act 1981 (c. 63) (amusement machine licence duty: definition of “amusement machine”) substitute—

In section 25(1C) of the Betting and Gaming Duties Act 1981 (“prize machine”) for “an amusement machine is a prize machine” substitute “ a machine is a prize machine ”.

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Subsections (1) and (2) shall have effect in relation to the provision of a machine on or after 1st August 2006.

Subsection (3) shall have effect in relation to accounting periods beginning on or after 1st August 2006.

For section 21(3AA) to (3E) of the Betting and Gaming Duties Act 1981 (c. 63) (special licences and excepted machines) substitute—

In section 22(2) of that Act (gaming machines) paragraph (b) shall cease to have effect.

For section 23(2) and (3) of that Act (rates) substitute—

For section 25(4) to (7) of the Betting and Gaming Duties Act 1981 (c. 63) substitute—

Section 25A of that Act (power to modify definitions) shall cease to have effect.

In section 26(2) of that Act (supplemental) the following shall cease to have effect—

Paragraphs 2 and 3 of Schedule 4 to that Act (exemptions) shall cease to have effect.

Subsections (1) to (7) shall have effect in relation to the grant of an amusement machine licence on or after 1st August 2006.

An amusement machine licence granted before that time shall continue to have effect (for which purpose the Betting and Gaming Duties Act 1981 shall have effect without the amendments effected by this section).

But subsection (9) shall not apply in relation to machines which become gaming machines by virtue of section 11 of this Act.

For the purpose of the application of Schedule 4A to that Act (default licences) in respect of a period before 1st August 2006 no account shall be taken of an amendment effected by subsections (1) to (7) above or by section 11 above.

Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.

In paragraph 1(2) (general rate of duty), for “£170” substitute “ £175 ”.

For paragraph 1B (rates for light passenger vehicles) substitute—

In paragraph 1C (reduced rate for light passenger vehicles)—

In paragraph 1J(a) (rates for light goods vehicles), for “£165” substitute “ £170 ”.

In paragraph 1K(a) (lower-emission vans), after “1st March 2003” insert “ and before 1st January 2007 ”.

In paragraph 2(1) (rates for motorcycles)—

In Schedule 2 to VERA 1994 (exempt vehicles), after paragraph 24 insert—

Subsection (8) comes into force on 23rd March 2006; but nothing in that subsection has the effect that a nil licence is required to be in force in respect of a vehicle while a vehicle licence is in force in respect of it.

The rest of this section has effect in relation to licences taken out on or after that date.

Section 23 of VATA 1994 (gaming machines) shall be amended as follows.

In subsection (1)—

In subsection (2) for “playing” substitute “ gambling ”.

In subsection (3)—

For subsection (4) substitute—

This section shall have effect in relation to anything done on or after 6th December 2005.

In the application of section 23(5)(c) of VATA 1994 as substituted by this section in relation to anything done before 1st November 2006, “game of chance” shall have the same meaning as in the Gaming Act 1968 (c. 65).

The Treasury may by order—

The Treasury may by order make provision repealing—The power conferred by this subsection is not to be regarded as affecting in any way the power to vary Schedule 9 to that Act conferred by section 31(2) of that Act.

The Treasury may by order make provision repealing—

Any power to make an order under this section includes power—

The consequential provision that may be made under subsection (4)(b) includes provision amending any Act or any instrument made under any Act.

Any order under this section—

But, if an order so ceases to have effect, this does not affect—

In reckoning the period of 28 days no account is to be taken of any time—

Section 21 of VATA 1994 (value of imported goods) is amended as follows.

In subsection (2) (value of imported goods to include taxes and expenses), after “shall” insert “ (subject to subsection (2A) below) ”.

After subsection (2) insert—

Subsections (1) to (3) come into force on such day as the Treasury may by order made by statutory instrument appoint.

After section 55 of VATA 1994 (customers to account for tax on supplies of gold etc) insert—.

After section 26A of VATA 1994 (disallowance of input tax where consideration not paid) insert—.

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In section 69 of VATA 1994 (breaches of regulatory provisions), in subsection (1) (failure to comply with a requirement imposed under provisions mentioned in the paragraphs in that subsection), after paragraph (b) insert—.

In section 97 of VATA 1994 (orders, rules and regulations), in subsection (4) (orders which cease to have effect unless approved by House of Commons), after paragraph (e) insert—.

In Schedule 11 to VATA 1994 (administration, collection and enforcement), in paragraph 2 (accounting for VAT and payment of VAT), after sub-paragraph (3) insert—.

The amendments made by this section have effect in relation to supplies made on or after such day as the Treasury may by order made by statutory instrument appoint. But no order may be made under this subsection on or after 22nd March 2009.

An order under subsection (8) may contain transitional provision and savings.

VATA 1994 is amended as follows.

After section 69A (breach of record-keeping requirements etc in relation to transactions in gold) insert—.

In section 76(1) (assessment of amounts due by way of penalty, interest or surcharge) for “69A”, in both places, substitute “ 69B ”.

In section 83 (appeals)—

In section 84 (further provision relating to appeals) after subsection (7A) (appeals against directions mentioned in section 83(wa)) insert—.

In Schedule 11 (administration, collection and enforcement), after paragraph 6 (duty to keep records) insert—.

VATA 1994 is amended as follows.

In section 97 (orders, rules and regulations), in subsection (4) (orders which cease to have effect unless approved by House of Commons), after paragraph (f) insert—.

In paragraph 3 of Schedule 10A (treatment of credit vouchers), after sub-paragraph (3) (circumstances in which consideration for supply of credit voucher not to be disregarded under sub-paragraph (2) for the purposes of Act) insert—.

Section 13AA of ICTA (corporation tax starting rate) shall cease to have effect.

Section 13AB of ICTA (the non-corporate distribution rate), and Schedule A2 to that Act (supplementary provisions in relation to that rate), shall cease to have effect.

In section 13A of ICTA (close investment-holding companies), in subsection (1) (meaning of “close investment-holding company” for purposes of sections 13(1) and 13AA(8)), omit “or 13AA(8)”.

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In paragraph 1(a) of Schedule 12 to FA 1989 (provision of information for the purposes of close companies provisions), for “13 to 13A” substitute “ 13, 13ZA, 13A ”.

In paragraph 8(1) of Schedule 18 to FA 1998 (tax calculation in company tax return), in the second step, omit “or 13AA(2)”>.

The amendments made by this section have effect for the financial year 2006 and subsequent financial years (but see also subsections (9) to (11)).

In the case of an accounting period (a “straddling period”)—sections 13AA and 13AB of, and Schedule A2 to, ICTA (“the repealed provisions”) apply as if the different parts of the straddling period falling in the different financial years were separate accounting periods.

Where the rate of corporation tax charged on a company's basic profits for any such separate accounting period ending with 31st March 2006 is determined in accordance with any of the repealed provisions, section 13 of ICTA (small companies' relief) also so applies.

For the purpose of treating different parts of the straddling period as separate accounting periods in accordance with subsections (9) and (10), the profits and basic profits of the straddling period are to be apportioned between those separate accounting periods.

Schedule 5 to this Act contains further provisions about film tax relief.

In that Schedule—. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part 2 provides for the certification of British films for the purposes of the relief; Part 3 makes provision for claims for the relief;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sections 40A to 40D of F(No.2)A 1992 (treatment of expenditure on production or acquisition of film) do not apply—

Section 41 of that Act (preliminary expenditure) does not apply to expenditure incurred after the date on which this Act is passed.

Section 42 of that Act and section 48 of F(No.2)A 1997 (special reliefs for British films) do not apply—

References in this section to expenditure on the acquisition of a film, or to sums received from the disposal of a film, are to expenditure on the acquisition of, or sums received from the disposal of, the original master version of the film.

For this purpose—

The provisions of sections 1181 to 1187 of CTA 2009 apply for the purposes of this section as if this section were contained in Part 15 of that Act.

Sections 134 and 135 of ITTOIA 2005 (treatment of expenditure on production or acquisition of film) do not apply—

Section 137 of that Act (preliminary expenditure) does not apply to expenditure incurred after the date on which this Act is passed.

Sections 138 to 144 of that Act (special reliefs for British films) do not apply—

References in this section to expenditure on the acquisition of a film, or to sums received from the disposal of a film, are to expenditure on the acquisition of, or sums received from the disposal of, the original master version of the film.

For this purpose—

The provisions of sections 1181 to 1187 of CTA 2009 apply for the purposes of this section as if this section were contained in Part 15 of that Act.

The provisions of this Chapter come into force on such day as the Treasury may appoint by order.

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In section 266(2) of ITEPA 2003 (exemption of non-cash vouchers for exempt benefits), insert at the end

In section 267(2) of that Act (exemption of credit-tokens used for exempt benefits), after paragraph (f) insert—

For section 319 of that Act (employment income: exemption for mobile telephones) substitute—

This section has effect for the year 2006-07 and subsequent years of assessment.

But the amendment made by subsection (3) does not cause any liability to income tax to arise in respect of the provision of a mobile telephone for an employee, or a member of an employee's family or household, if the mobile telephone was first provided to him before 6th April 2006.

Omit section 320 of ITEPA 2003 (employment income: limited exemption for computer equipment).

This section has effect for the year 2006-07 and subsequent years of assessment.

But it does not cause any liability to income tax to arise in respect of the provision of computer equipment by making it available to an employee, or a member of an employee's family or household, if the computer equipment was first made available to him before 6th April 2006.

Part 4 of ITEPA 2003 (employment income: exemptions) is amended as follows.

In Chapter 11 (miscellaneous exemptions), before section 321 (and the cross-heading “Awards and gifts”) insert—

In section 266 (exemption of non-cash vouchers for exempt benefits), at the end of subsection (3) insert

In section 267 (exemption of credit-tokens used for exempt benefits), at the end of subsection (2) insert

This section has effect for the year 2006-07 and subsequent years of assessment.

In section 369 of ITTOIA 2005 (charge to tax on interest), in subsection (3) (non-exhaustive list of exemptions), in paragraph (e) (exemptions under sections 749 to 756)—

After section 756 of ITTOIA 2005 (which securities and loans are foreign currency ones for section 755) insert—.

In section 783 of ITTOIA 2005 (general disregard of exempt income for income tax purposes)—

After section 268 of TCGA 1992 (decorations for valour or gallant conduct) insert—.

If at any time before claims could have been made under any qualifying compensation scheme—that deposit is to be ignored for all purposes of IHTA 1984.

For this purpose “qualifying compensation scheme” and “qualifying deposit” have the same meaning as in section 756A of ITTOIA 2005.

Subsection (2) has effect (and is deemed always to have had effect)—

Subsection (4) has effect (and is deemed always to have had effect) in relation to disposals made on or after 6th April 1996; but no loss accruing on a disposal made before 6th April 2006 is, as a result of that subsection, to cease to be an allowable loss.

In relation to any time before 6th April 2005 (the commencement of ITTOIA 2005)—

In relation to the year 2005-06 or any earlier year of assessment, all such adjustments are to be made as are required to give effect to the exemptions conferred as a result of this section.

But the adjustments are to be made only if the person entitled to the exemption makes a claim for the exemption on or before 31st January 2012.

The adjustments may be made by discharge or repayment of tax, the making of an assessment or otherwise.

In this section “LOCOG” means the private company limited by guarantee incorporated on 22nd October 2004 with the Company Number 05267819 and with the name The London Organising Committee of the Olympic Games Limited.

LOCOG shall be exempt from corporation tax.

The duties to deduct under Chapters 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income tax at source) shall not apply to payments to LOCOG.

A claim may be made for any repayment of income tax required as a result of an exemption conferred by this section.

The Treasury may by regulations provide for subsections (2) to (4) to apply to a wholly-owned subsidiary of LOCOG (within the meaning of section 736 of the Companies Act 1985 (c. 6)) as they apply to LOCOG.

Subsection (7) applies if it appears to the Treasury—

The Treasury may make regulations—and provision made under any of paragraphs (b) to (h) may relate to LOCOG or to the other person mentioned in subsection (6).

If it appears to the Treasury that LOCOG has undertaken, is undertaking or may undertake activities other than in pursuance of the Host City Contract, the Treasury may make regulations restricting the application of a provision of this section to a specified extent.

Regulations under subsection (5) may include provision of a kind similar to that which may be made under subsection (7) or (8).

Regulations under section 65(5) to (8)—

Regulations under section 65 shall be made by statutory instrument.

Regulations under section 65(5)—

Regulations under section 65(7) or (8) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.

In section 65 “the Host City Contract” has the meaning given by section 1 of the London Olympic Games and Paralympic Games Act 2006.

Section 65 shall be treated as having come into force on 22nd October 2004.

The Treasury may by order made by statutory instrument repeal section 65 and this section.

The Treasury may make regulations—

The Treasury may make regulations—

Regulations under this section—

Regulations under this section—

A claim may be made for any repayment of income tax required as a result of an exemption conferred under this section.

The Treasury may make regulations—

The regulations may specify classes of person wholly or partly by reference to—

Regulations under this section—

Regulations under this section—

In this section “London Olympic event” and “the London Olympics” have the meaning given by section 1 of the London Olympic Games and Paralympic Games Act 2006.

TCGA 1992 is amended as follows.

After section 184 insert—.

In Schedule 7A (restriction on set-off of pre-entry losses), in paragraph 1(1) (application of Schedule), at the end insert “ , but this Schedule shall have no effect in any case where section 184A (restrictions on buying losses: tax avoidance schemes) has effect in relation to those losses ”.

Section 177B and Schedule 7AA (restrictions on setting losses against pre-entry gains) shall cease to have effect.

In section 213 (insurance companies: spreading of gains and losses under section 212)—The amendments made by this subsection have effect where the accounting period for which the net amount represents an excess of losses over gains is an accounting period ending on or after 5th December 2005.

The amendments made by this section, other than subsection (5), have effect for calculating the amount to be included in respect of chargeable gains in a company's total profits for any accounting period ending on or after 5th December 2005.

But, in respect of any such accounting period, those amendments do not have effect in relation to the deduction of any loss from chargeable gains that accrue on any disposal made before 5th December 2005 unless that loss accrues on a disposal made on or after that date.

For the purposes of those amendments, it does not matter whether a qualifying change of ownership in relation to a company occurs—

Subsections (10) to (12) apply so long as each of the following conditions is met—

Subsection (2) of that section has effect in relation to that qualifying loss subject to the following modifications.

That subsection has effect as if there were inserted at the end of it unless the gains accrue to the company on a disposal of a pre-change asset.

That subsection (modified as mentioned above) has effect as if the reference to a pre-change asset included an asset held before the relevant time by any company—

Expressions which are used in subsections (9) to (12) have the same meaning as in sections 184A and 184C of TCGA 1992.

After section 184F of TCGA 1992 (as inserted by section 70 above) insert—.

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The amendments made by this section have effect in relation to chargeable gains accruing on any disposal that is made on or after 5th December 2005.

Section 106 of TCGA 1992 (disposal of shares and securities by company within prescribed period of acquisition) shall cease to have effect.

In consequence of that repeal—

The amendments made by this section have effect in relation to any disposal that is made on or after 5th December 2005.

TCGA 1992 is amended as follows.

For section 204 (policies of insurance) substitute—.

In section 237 (superannuation funds, annuities and annual payments)—

The amendments made by this section have effect in relation to disposals made on or after 5th December 2005.

TCGA 1992 is amended as follows.

In section 106A (identification of securities: general rules for capital gains tax), after subsection (5) (acquisition of securities within 30 days after disposing of securities of same class) insert—.

In section 288 (interpretation), after subsection (7A) (meaning of “surrender” in application of Act to Scotland) insert—.

In consequence of the amendment made by subsection (3)—

The amendment made by subsection (2) has effect in relation to any acquisition made at any time on or after 22nd March 2006.

The amendments made by subsections (3) and (4) have effect in relation to any time on or after 22nd March 2006.

Section 90 of FA 2002 (controlled foreign companies and treaty non-resident companies) is amended as follows.

In subsection (2) (application of subsection (1), which inserted section 747(1B) of ICTA (disregard of section 249 of FA 1994 for most purposes of Chapter 4 of Part 17 of ICTA (controlled foreign companies))), for paragraph (b) (exclusion for companies which were non-resident immediately before 1st April 2002) substitute—.

After that subsection insert—.

Schedule 15 to FA 2004 (charge to income tax on benefits received by former owner of property) is amended as follows.

In paragraph 11 (exemptions from charge)—

In paragraph 21 (election for application of inheritance tax provisions where paragraph 3 (land) or 6 (chattels) would otherwise apply)—

In paragraph 22 (election for application of inheritance tax provisions where paragraph 8 (intangible property) would otherwise apply), in sub-paragraph (2)(b) (application of the gifts with reservation rules)—

The amendments made by this section have effect—

If—his personal representatives (within the meaning of IHTA 1984) may make any election under paragraph 21 or 22 of that Schedule that he might have made.

If—that amount is to be treated instead as falling due at the end of the period of 14 days beginning with that day.

This section is deemed to have come into force on 5th December 2005.

Schedule 8 (which makes provision in relation to leases of plant or machinery) has effect.

Schedule 9 (which makes miscellaneous amendments relating to such leases) has effect.

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After section 261 of CAA 2001 (special leasing: life assurance business) insert—.

The amendments made by this section have effect in relation to any business carried on by a company in partnership in any accounting period of the partnership ending on or after 5th December 2005.

But, in relation to any accounting period of the partnership beginning before 5th December 2005 and ending on or after that date, those amendments have effect only if—

A relevant change in the interest of the company in the business occurs at any time if—

CAA 2001 is amended as follows.

In section 66 (list of provisions outside Chapter 5 of Part 2 about disposal values), after the entry relating to section 222 of CAA 2001, insert—.

After section 228J (plant or machinery subject to further operating lease) insert—.

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The amendments made by this section have effect in relation to any disposal made on or after 5th December 2005.

But any rentals that are receivable by the lessor before 22nd March 2006 are to be left out of account in calculating the income of the lessor's leasing business for corporation tax purposes.

CAA 2001 is amended as follows.

In section 266 (election where predecessor and successor are connected persons), in subsection (7) (sections 104, 108 and 265 not to apply if election is made), at the end insert “ (but see section 267A) ”.

In section 267 (effect of election), at the end insert—.

After that section insert—.

The amendments made by this section have effect in relation to any succession occurring on or after 5th December 2005.

Schedule 15 to ICTA (provisions for determining whether an insurance policy is a “qualifying policy” for the purposes of the Tax Acts) is amended as follows.

In paragraph 18 (variations), in sub-paragraph (3) (paragraph does not apply by reason of certain variations), at the end insert.

In paragraph 22 (certificates from body issuing policy), in sub-paragraph (3) (sub-paragraph (2) does not apply by reason of certain variations), at the end insert.

In the case of a variation effected as part of, or in connection with, an insurance business transfer scheme, the amendments made by this section are deemed always to have had effect.

In any other case, the amendments made by this section have effect in relation to variations effected on or after 7th October 2005.

In this section an “insurance business transfer scheme” means—and for the purposes of this subsection any reference to an enactment is a reference to the enactment as it had effect from time to time.

Schedule 14 contains amendments of the provisions relating to—. . .. . . the corporate venturing scheme.

Those amendments have effect as mentioned in that Schedule.

Section 420 of ITEPA 2003 (meaning of securities etc) is amended as follows.

In subsection (1)(f), insert at the beginning “ options and ”.

In subsection (5)(e), insert at the beginning “ securities ”.

In subsection (8), in the definition of “securities option”, after “acquire securities” insert “ other than a right to acquire securities which is acquired pursuant to a right or opportunity made available under arrangements the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions ”.

This section has effect in relation to options acquired on or after 2nd December 2004; but subsection (4) also has effect in relation to an option acquired before that date where something is done on or after that date as part of the arrangements under which it was made available.

ITEPA 2003 is amended as follows.

In section 222 (payments by employer on account of tax where deduction not possible)—

In section 684(2) (PAYE regulations), in item 1—

In section 710 (notional payments: accounting for tax)—

The provisions of ITEPA 2003 amended by this section have effect in relation to notional payments treated by virtue of this Act as made before the date on which this Act is passed as if for the references to the date on which the Act is passed in—there were substituted references to such date as the Commissioners for Her Majesty's Revenue and Customs may by order made by statutory instrument appoint.

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Section 29 of the Energy Act 2004 (c. 20) (disregard for tax purposes of cancellation etc of decommissioning provisions) is amended as follows.

In subsection (1)—

For subsections (3) and (4) substitute—

In subsection (5)—

After that subsection insert—

The amendments made by this section have effect in relation to accounting periods of a BNFL company ending on or after 22nd March 2006.“BNFL company” has the same meaning as in section 29 of the Energy Act 2004 (c. 20) as amended by this section.

Section 30 of the Energy Act 2004 (disregard for tax purposes of decommissioning provisions recognised by Nuclear Decommissioning Authority) is amended as follows.

In subsection (1)—

For subsection (3) substitute—

In subsection (4), for the words after “in connection with” substitute “ an adjustment not falling within paragraph (b) of that subsection ”.

In subsection (5), after the definition of “BNFL company” insert—.

The amendments made by this section have effect in relation to accounting periods of the Nuclear Decommissioning Authority ending on or after 22nd March 2006.

Section 83 of FA 2005 (application of accounting standards to securitisation companies) is amended as follows.

In subsection (1)(b) (periods of account in relation to which old UK GAAP is to apply) for “1st January 2007” substitute “ 1st January 2008 ”.

In subsection (3) (meaning of “note-issuing company”)—

In subsection (5) (meaning of “intermediate borrowing company”)—insert “ (or another intermediate borrowing company) ”.

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The amendments in this section shall be deemed always to have had effect, subject as follows.

A company that would have been a securitisation company for the purposes of section 83 of FA 2005 if the amendments in this section had not been made, being either—may elect to be taxed as if the amendments in subsection (3) had not been made.

Any such election must be made not later than 31st March 2007 and has effect for all relevant periods of account.

Schedule 15 to this Act (accountancy change: spreading of adjustment) has effect.

In that Schedule—Part 1 makes provision for income tax purposes, and Part 2 makes provision for corporation tax purposes.

In section 21B of ICTA (corporation tax: application to Schedule A business of other rules applicable to Case 1 of Schedule D) for “section 44 of and Schedule 6 to the Finance Act 1998” substitute “ section 64 of and Schedule 22 to the Finance Act 2002 ”.

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Section 143 shall have effect in relation to accounting periods beginning on or after the day on which this Act is passed.

In OTA 1975, in Schedule 3 (petroleum revenue tax: miscellaneous provisions) before paragraph 2 (definition of market value of oil) insert—.

Paragraph 2 of that Schedule (definition of market value of oil) is amended as follows.

In sub-paragraph (1) (market value of oil in any calendar month to be determined in accordance with the paragraph) for “any oil in any calendar month” substitute “ any particular quantity of oil of any kind on any day ”.

After sub-paragraph (1) insert—.

For sub-paragraph (2) substitute—.

For sub-paragraphs (2A) to (2D) substitute—.

Omit sub-paragraph (3) (which relates to the market value of disposals in a calendar month).

In sub-paragraph (3A) (oil that has been subjected to initial treatment)—

In sub-paragraph (4) (application of sub-paragraphs (2) and (3) in relation to paragraph 2(2) of Schedule 2) for “sub-paragraphs (2) and (3)” substitute “ sub-paragraphs (2) and (2AA) ”.

After paragraph (4) insert—.

Schedule 18 (which makes minor and consequential amendments) has effect.

The amendments made by section 146 and Schedule 18 have effect in relation to oil delivered or appropriated on or after 1st July 2006 (disregarding section 12A of that Act).

Those amendments also have effect for the purpose of determining for any chargeable period ending on or after 31st December 2006—

Subsections (1) and (2) are subject to any express provision in Schedule 18 as to the commencement or application of any provision of that Schedule.

In the following provisions of this section—

Subsection (6) applies in relation to oil which was won from an oil field before 1st July 2006 and which—

If the oil is or was disposed of crude by a participator in sales otherwise than at arm's length, but the market value of the oil—the date on which the oil is to be taken for the purposes of section 2(5)(b) of that Act to have been delivered is instead to be the first business day of the first new period.

Any power to make regulations that is conferred under or by virtue of any of the amendments made by section 146 or Schedule 18 includes power to make regulations having effect for, or in relation to,—notwithstanding that the period in question has begun or ended before the making of the regulations.

Any regulations made by virtue of subsection (7) must be made before 31st December 2006.

In section 2(5) of OTA 1975 (profits from oil field) for “subsection (5A)” substitute “ subsections (5A) and (5B) ”.

After section 2(5A) of that Act insert—

Regulations under section 2(5B) of OTA 1975 (inserted by subsection (2) above) may have effect for the purpose of calculating profits in relation to a chargeable period ending at any time on or after 1st July 2006.

Section 61 of FA 1987 (oil taxation: nominations) shall be amended as follows.

In subsection (1) omit “, supplies and appropriations”.

For subsections (3) and (4) substitute—

Subsections (6) and (7) shall cease to have effect.

In subsection (8) for “9th February 1987” substitute “ 1st July 2006 ”.

In subsection (9)—

This section shall have effect in relation to chargeable periods ending on or after 1st July 2006.

Schedule 10 to FA 1987 (oil taxation: nominations) shall be amended as follows.

In paragraph 1—

In paragraph 2 omit—

Omit paragraph 3.

In paragraph 4—

In paragraph 5—

After paragraph 5 insert—

In paragraph 6—

Omit paragraph 7(2) and (5).

After paragraph 7(5) insert—

Omit paragraphs 8 to 11.

In paragraph 12(1) omit “, supply or appropriation”.

After paragraph 12 insert—

This section shall have effect in relation to a transaction whenever proposed, but shall not have effect in relation to a proposed transaction with a transaction base date (within the meaning given by regulations under paragraph 4 of Schedule 10 to FA 1987) on or before 30th June 2006.

Regulations under paragraph 4(1B) of Schedule 10 to FA 1987 (inserted by subsection (5) above) may have retrospective effect.

In section 501A of ICTA (supplementary charge in respect of ring fence trades), in subsection (1) (charge of 10 per cent on adjusted ring fence profits), for “10 per cent” substitute “ 20 per cent ”.

The amendment made by subsection (1) has effect in relation to any accounting period beginning on or after 1st January 2006 (but see also subsection (3)).

For the purpose of calculating the amount of the supplementary charge on a company for an accounting period (a “straddling period”) beginning before 1st January 2006 and ending on or after that date—

The amount of the supplementary charge on the company for the straddling period is the sum of the amounts of supplementary charge that would, in accordance with subsection (3), be chargeable on the company for those separate accounting periods.

In the case of a company's straddling period—

In that separate application of those Regulations as mentioned in subsection (5)(b), those Regulations have effect as if, for the purposes of those Regulations,—

Any reference in the Instalment Payments Regulations to the total liability of a company is, accordingly, to be read—

For the purposes of the Instalment Payments Regulations—

If the Instalment Payments Regulations—those Regulations have effect as if the payment were due and payable instead at the end of the period of 14 days beginning with that date.

In this section—“adjusted ring fence profits” has the meaning given by section 501A of ICTA,“the Instalment Payments Regulations” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/ 3175),“supplementary charge” means any sum chargeable under section 501A(1) of ICTA as if it were an amount of corporation tax.

This section applies if—

The company may elect for the relevant expenditure to be treated instead as if it were incurred on the first day of the company's first accounting period beginning on or after 1st January 2006.

The election—

Expenditure is relevant expenditure if it falls within any of Cases A to C.

Expenditure falls within Case A if—

Expenditure falls within Case B—The reference in paragraph (b) to any asset representing the expenditure is to be read in accordance with section 416B(4) of CAA 2001.

Expenditure falls within Case C if—

In this section—“disposal event”—in relation to first-year qualifying expenditure under section 45F of CAA 2001, means an event of a kind that requires a disposal value to be brought into account under Part 2 of that Act (whether under section 61(1) or otherwise), in relation to first-year qualifying expenditure under section 416B of CAA 2001, means an event of a kind that requires a disposal value to be brought into account under section 421 or 422 of that Act, in relation to qualifying expenditure on research and development under Part 6 of CAA 2001, means an event of a kind that requires a disposal value to be brought into account under section 443(1) of that Act,“the relevant period”, in relation to any expenditure for the purposes of or in relation to a company's ring fence trade, means the period—beginning with the day on which the expenditure would (but for this section) be treated as incurred for the purposes of CAA 2001, and ending with the first day of the company's first accounting period beginning on or after 1st January 2006,“ring fence trade” means a ring fence trade in respect of which tax is chargeable under section 501A of ICTA (supplementary charge in respect of ring fence trades).

Chapter 5 of Part 12 of ICTA (petroleum extraction activities) is amended as follows.

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Schedule 19B (petroleum extraction activities: exploration expenditure supplement) is amended as follows.

In paragraph 1 (about the Schedule)—

In paragraph 3 (accounting periods)—

In paragraph 6 (qualifying E&A expenditure), in sub-paragraph (2) (condition that expenditure incurred on or after 1st January 2004), after “2004” insert “ but before 1st January 2006 ”.

In paragraph 15 (supplement in respect of a post-commencement period), in sub-paragraph (2) (supplement to be treated as a loss for the purposes of Corporation Tax Acts), for “this Schedule)” substitute “ this Schedule or Part 4 of Schedule 19C) ”.

In paragraph 16 (amount of post-commencement supplement for a post-commencement period), after sub-paragraph (2) (proportionate reduction of supplement if post-commencement period less than 12 months) insert—.

After paragraph 18 (ring fence losses and non-qualifying losses) insert—.

In paragraph 22 (reductions in respect of utilised ring fence profits), at the end insert—.

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For the Table in Schedule 1 to IHTA 1984 (rates and rate bands), as it has effect in relation to chargeable transfers made on or after 6th April 2008, there shall be successively substituted—

Subsection (1)(b) is without prejudice to the application of section 8 of IHTA 1984 (indexation) by virtue of the difference between the retail prices index for the month of September in 2008 or any later year and that for the month of September in the following year.

The 2008-09 Table is—

The 2009-10 Table is—

Section 8(1) of IHTA 1984 (indexation of rate bands) shall not have effect as respects any difference between the retail prices index—

Schedule 20 contains—

Those amendments have effect as mentioned in that Schedule.

Section 48 of IHTA 1984 (settled property: excluded property) is amended as follows.

In subsection (3) (circumstances in which settled property situated outside the United Kingdom is excluded property), after paragraph (b) insert— “ ; but this subsection is subject to subsection (3B) below. ”.

In subsection (3A) (circumstances in which a holding in an authorised unit trust or a share in an open-ended investment company comprised in settled property is excluded property), after paragraph (b) insert— “ ; but this subsection is subject to subsection (3B) below. ”.

After subsection (3A) insert—.

If, in consequence of the amendments made by this section, an amount of inheritance tax would (but for this subsection) fall due before the day on which this Act is passed, that amount is to be treated instead as falling due at the end of the period of 14 days beginning with that day.

This section is deemed to have come into force on 5th December 2005.

Schedule 21 (taxable property held by investment-regulated pension schemes) has effect.

This section and that Schedule are deemed to have come into force on 6th April 2006.

In Schedule 29 to FA 2004 (authorised lump sums), after paragraph 3 insert—

This section is deemed to have come into force on 6th April 2006.

Schedule 22 (provisions about inheritance tax in relation to registered pension schemes) has effect.

This section and that Schedule are deemed to have come into force on 6th April 2006.

Schedule 23 (miscellaneous amendments relating to pension schemes etc) has effect.

This section and that Schedule are deemed to have come into force on 6th April 2006.

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In Schedule 5 to FA 2003 (stamp duty land tax: amount of tax chargeable: rent), in paragraph 2(3) (calculation of tax chargeable in respect of rent), in Table A (bands and percentages for residential property), for “£120,000”, in both places, substitute “ £125,000 ”.

In Schedule 13 to FA 1999 (stamp duty: instruments chargeable and rates of duty), in paragraph 4 (bands and percentages for conveyance or transfer on sale of property other than stock or marketable securities), for “£120,000”, in both places, substitute “ £125,000 ”.

The amendments made by subsections (1) and (2) have effect in relation to any transaction of which the effective date (within the meaning of Part 4 of FA 2003) is after 22nd March 2006.

The amendment made by subsection (3) has effect in relation to instruments executed after 22nd March 2006.

In section 77 of FA 2003 (notifiable transactions), for subsection (2A) substitute—

In Schedule 5 to FA 2003 (amount of tax chargeable: rent), in paragraph 3 (net present value of rent payable over term of lease), for “in year i” substitute “ in respect of year i ”.

Subsection (1) has effect in relation to any assignment of which the effective date (within the meaning of Part 4 of FA 2003) is on or after the day on which this Act is passed.

Subsection (2) has effect in relation to any lease granted or treated as granted on or after that day.

Schedule 25 (amendments of Schedule 17A to FA 2003) has effect.

In Schedule 16 to FA 2003 (trusts and powers), after paragraph 7 insert—

Subsection (1) has effect in relation to any acquisition of which the effective date (within the meaning of Part 4 of FA 2003) is on or after the day on which this Act is passed.

Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

Omit section 64A (initial transfer of assets to trustees of unit trust scheme).

In section 101 (unit trust schemes)—

This section has effect in relation to any land transaction of which the effective date is, or is after, 22nd March 2006 (but see subsections (5) and (6)).

This section does not have effect in relation to—

For this purpose, a land transaction effected in pursuance of a contract is an excluded transaction if—

For the purposes of subsection (6)(b) the contract is varied in a way that significantly affects the land transaction if (and only if)—

Expressions which are used in Part 4 of FA 2003 and in this section have the same meaning in this section as in that Part.

Schedule 7 to FA 2003 (stamp duty land tax: group relief etc) is amended as follows.

In paragraph 2 (restrictions on availability of group relief) in sub-paragraph (1) (no relief if arrangements by virtue of which a person has or could have control of purchaser but not vendor) at the end insert— “ For another exception to this, see sub-paragraph (3A). ”.

In that paragraph after sub-paragraph (3) (arrangements which are within sub-paragraph (2)(a)) insert—.

In paragraph 4 (cases in which group relief not withdrawn under paragraph 3)—

The amendments made by this section have effect in relation to any transfer which takes place, or is intended to take place, after 22nd March 2006.

In sections 71A to 73 of FA 2003 (alternative property finance) for “individual” substitute “ person ” (and for “an individual” substitute “ a person ”).

Sections 71A(6), 72(6), 72A(6) and 73(4) shall cease to have effect.

In section 73(3) after “chargeable” insert “ on a chargeable consideration that is not less than the market value of the interest and, in the case of the grant of a lease at a rent, the rent. ”

After section 73 insert—

This section shall have effect in relation to arrangements in which the effective date of the first transaction (within the meaning of sections 71A to 73 of FA 2003) is on or after the date on which this Act is passed; and section 119(1) of FA 2003 shall have effect for determining the effective date for the purposes of this subsection.

Part 3 of FA 1986 (stamp duty) is amended as follows.

In section 75 (relief for acquisition of target company's undertaking in pursuance of reconstruction scheme)—

In section 76 (other relief for acquisition of target company's undertaking), in subsection (3) (condition as to registered office etc) omit “that the registered office of the acquiring company is in the United Kingdom and”.

In section 77 (relief for acquisition of target company's share capital), in subsection (3) (conditions for relief),—

The amendments made by this section have effect in relation to instruments executed after the day on which this Act is passed.

In section 42 of FA 1996 (amount of landfill tax) for the amount specified in subsection (1)(a), and the corresponding amount specified in subsection (2), substitute “ £21 ”.

The amendments made by this section have effect in relation to taxable disposals made, or treated as made, on or after 1st April 2006.

In Schedule 6 to FA 2000 (climate change levy) for the Table in paragraph 42(1) (amount payable by way of levy) substitute—

This section has effect in relation to supplies treated as taking place on or after 1st April 2007.

For the purposes of climate change levy, no supply made on or after 1st April 2006 is a half-rate supply.

Subsections (3) to (6) have effect for determining when a supply is to be regarded as made for the purposes of subsection (1).

A supply—is to be regarded as made at the time when the electricity or gas is actually supplied.

In the case of a supply of a taxable commodity not falling within subsection (3) by a person who is resident in the United Kingdom—This subsection does not apply if subsection (6) (deemed self-supply) applies in the case of the supply.

In the case of a supply of a taxable commodity not falling within subsection (3) by a person who is not resident in the United Kingdom, the supply is to be regarded as made—This subsection does not apply if subsection (6) (deemed self-supply) applies in the case of the supply.

In any case where, by virtue of paragraph 23(3) of Schedule 6 to FA 2000, a person is, for the purposes of that Schedule, deemed to make a supply to himself of a quantity of a taxable commodity—the supply is to be regarded as made at the time when he produced that particular quantity of the taxable commodity.

In paragraph 34 of Schedule 6 to FA 2000 (deemed supplies of commodities other than electricity and certain gas), in sub-paragraph (2) omit the words “(or, in the case of electricity, consumed)” (which are unnecessary, because the paragraph does not apply in the case of electricity).

In consequence of subsection (1), Schedule 6 to FA 2000 (climate change levy) is amended as follows.

In paragraph 37 (supplies of electricity or gas spanning change of rate etc) in sub-paragraph (1)(c) omit “half-rate supplies or”.

In paragraph 38 (other supplies spanning change of rate etc) in sub-paragraph (1)(c) omit “half-rate supplies or”.

In paragraph 42(1) (amount payable by way of levy)—

Paragraph 43 (half-rate for supplies to horticultural producers) shall cease to have effect.

In paragraph 62 (tax credits) in subsection (1)—

In paragraph 101 (civil penalties: incorrect notifications) in sub-paragraph (2)(a)—

In paragraph 147 (interpretation: general) omit the definition of “half-rate supply”.

Subsections (8) to (15) come into force on such day as the Treasury may by order made by statutory instrument appoint.

The power to make an order under subsection (16)—

If Her Majesty by Order in Council declares that—those arrangements have effect (and do so in spite of anything in any enactment or instrument).

For the purposes of subsection (1) arrangements relate to international tax enforcement if they relate to any or all of the following—

In this section—“UK tax” means any tax or duty imposed under the domestic law of the United Kingdom, and“foreign tax” means any tax or duty imposed under the law of the territory, or any of the territories, in relation to which the arrangements have been made.

Where any arrangements have effect by virtue of this section, no obligation of secrecy (whether imposed by statute or otherwise) prevents a public authority or anyone acting on its behalf from making a disclosure to the Commissioners for Her Majesty’s Revenue and Customs —

Where any arrangements have effect by virtue of this section, no obligation of secrecy (whether imposed by statute or otherwise) prevents the Commissioners for Her Majesty’s Revenue and Customs or any other authorised Revenue and Customs official from making a disclosure to a person outside the United Kingdom—

But information may not be disclosed by virtue of subsection (4A) unless the person making the disclosure is satisfied that the recipient of the information—

An Order in Council made under this section revoking an earlier such Order may contain any transitional provisions that appear appropriate.

An Order under this section is not to be submitted to Her Majesty in Council unless a draft of the Order has been laid before and approved by a resolution of the House of Commons.

Any provisions which—have effect after that time as if included in an Order in Council under this section.

If any such provisions relate to arrangements covering UK taxes or foreign taxes (or both) other than those in relation to which the Order in Council had effect, the provisions also have effect after the passing of this Act (by virtue of subsection (8)) in relation to those other UK taxes or foreign taxes (or both).

The provisions referred to in subsection (8)(a) are—

In this section “Revenue and Customs official” has the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005 (c. 11) (confidentiality).

The Treasury may by regulations make provision for the recovery in the United Kingdom of debts relating to any relevant foreign tax pursuant to arrangements having effect by virtue of section 173.

“Relevant foreign tax” means any tax or duty—

Regulations under this section may make provision for the taking of action to recover debts relating to any relevant foreign tax by way of legal proceedings, distress, diligence or otherwise.

Such provision may in particular be made by applying, with any appropriate modifications, any enactment or rule of law that applies in relation to the recovery of any tax or duty imposed under the domestic law of the United Kingdom (including any enactment relating to penalties or interest on unpaid amounts).

The power to make regulations under this section is exercisable by statutory instrument.

A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

After section 352 of the Gambling Act 2005 (c. 19) (disclosure of information: data protection) insert—

Section 352A of the Gambling Act 2005 (c. 19) as inserted by subsection (1) above shall come into force on the passing of this Act.

The enactments mentioned in Schedule 26 (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.

The amendments made by this Schedule, other than those made by paragraphs 4(2) and 5, have effect—

If an accounting period (a “straddling period”) of a claimant company begins before 1st April 2006 and ends on or after that date—are to be treated as separate accounting periods for the purposes of the amendments made by this Schedule other than those made by paragraphs 4(2) and 5.

The amount of the claimant company's profits for the straddling period is to be attributed, on an apportionment in accordance with this paragraph, to those separate accounting periods.

If the loss period of the non-resident company begins before 1st April 2006 and ends on or after that date—are to be treated as separate periods for the purposes of the amendments made by this Schedule other than those made by paragraphs 4(2) and 5.

The amount of the loss or other amount of the non-resident company for the loss period is to be attributed, on an apportionment in accordance with this paragraph, to those separate periods.

Any apportionment under this paragraph is to be made on a just and reasonable basis.

Paragraph 10 (other claims and elections to be included in return) is amended as follows.

In sub-paragraph (2) (claims to which Part 8, 9 or 9A of Schedule 18 applies) for “R&D tax credit” substitute “ R&D tax relief ”.

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This paragraph applies where a company is entitled to relief under Schedule 20 to FA 2000 or Schedule 12 or 13 to FA 2002 for any accounting period of the company falling within sub-paragraph (2).

An accounting period of a company falls within this sub-paragraph if it ends on a day falling after 31st March 2002 but before 31st March 2006.

Sub-paragraphs (4) and (5) apply to any claim by the company for such relief for an accounting period falling within sub-paragraph (2), other than a claim by the company for—

A claim to which this sub-paragraph applies may be made, amended or withdrawn by the company at any time up to and including 31st March 2008.

A claim to which this sub-paragraph applies may be made, amended or withdrawn by the company at a later date if an officer of Revenue and Customs allows it.

Paragraph 5 of that Schedule (excluded films) is amended as follows.

For sub-paragraph (1) substitute—.

After sub-paragraph (2) insert—.

Section 826 of ICTA (interest on tax overpaid etc) is amended as follows.

In subsection (1) (payments that carry interest) after paragraph (e) insert—.

After subsection (3B) insert—.

In subsection (8A) (recovery of overpaid amounts)—

In subsection (8B) after “life assurance company tax credit” (twice) insert “ or film tax credit ”.

Sections 43A to 43G of ICTA (rent factoring) shall cease to have effect.

The amendment made by this paragraph has effect in relation to transactions entered into on or after 6th June 2006.

Section 730 of ICTA (transfers of rights to receive distributions in respect of shares) is amended as follows.

Omit subsection (3) (proceeds of subsequent sales etc of rights to receive distributions not to be regarded as income of the seller etc).

The amendment made by this paragraph has effect in relation to sales or other realisations on or after 20th January 2006.

After section 263D of TCGA 1992 (gains accruing to persons paying manufactured dividends) insert—.

The amendment made by this paragraph has effect in relation to disposals made on or after 6th June 2006.

The amendment made by this paragraph also has effect in relation to any disposal made by a person before that date if the person makes a claim to that effect under this sub-paragraph.

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The following provisions of this paragraph apply for the purposes of TCGA 1992 if—

The company is treated as if—

Any chargeable gain or loss accruing to the company on the disposal is treated as accruing to the company when it ceases to be a party to the relationship.

For the purposes of this paragraph an asset is a chargeable asset in relation to the company at any time if any gain accruing to it on the disposal of the asset at that time would be a chargeable gain for the purposes of TCGA 1992.

In ITTOIA 2005, section 468 (gains from contracts of life insurance etc: non-UK resident trustees and foreign institutions) is amended as follows.

In subsection (2) (section 740 of ICTA to apply with the modifications in subsection (3) or (4))—

In subsection (3) (cases within subsection (1)(a)) for “section 740 applies” substitute “ sections 739 and 740 apply ”.

In subsection (4) (cases within subsection (1)(b)) for “section 740 applies” substitute “ sections 739 and 740 apply ”.

The amendments made by this paragraph apply in relation to gains treated as arising on or after 5th December 2005.

Section 46 is amended as follows.

In subsection (2) (the general exclusions) in general exclusion 8—

Section 61 (disposal events and disposal values) is amended as follows.

In subsection (1) (disposal events) after paragraph (e) insert—.

In subsection (2) (disposal values) in the Table (disposal event, disposal value) after item 5 insert—.

In item 6 in that Table (which refers to the occurrence of an event within items 1 to 5) for “5” substitute “ 5B ”.

The Table in section 84 is amended as follows.

In paragraph 1 after sub-paragraph (a) insert—

In section 172 (scope of Chapter 14 of Part 2 (fixtures)) after subsection (2) insert—.

After section 172 insert—.

Section 272 is amended as follows.

In the Table in subsection (2), insert at the appropriate place—

The amendments made by this Schedule have effect in the case of a lease if—unless the lease was finalised (see paragraph 23) before 21st July 2005 and on 17th May 2006 the lessor was within the charge to tax. As respects any time before 18th May 2006, this sub-paragraph has effect with the omission of the words “and on 17th May 2006 the lessor was within the charge to tax”. This sub-paragraph is subject to sub-paragraphs (5) and (6).

Condition A is that—and the lease is not an excepted lease (see paragraph 17).

Condition B is that—

The amendments made by this Schedule also have effect in relation to a lease, in the case of the lessor, if—

Where the amendments made by this Schedule do not have effect in relation to a lease in the case of the lessor but—the amendments made by this Schedule do not have effect in relation to the new lease in the case of the new lessor. In this sub-paragraph—“the new lease” means the lease that would be the new lease for the purposes of section 70W of CAA 2001, if that section applied;“the new lessor” means the person who would be the new lessor for the purposes of that section, if that section applied; and section 70W(7) of CAA 2001 (construction of references to transfer of plant or machinery) also has effect for the purposes of this sub-paragraph.

Where the amendments made by this Schedule do not have effect in relation to a lease in the case of the lessee but—the amendments made by this Schedule do not have effect in relation to the new lease in the case of the new lessee. In this sub-paragraph—“the new lease” means the lease that would be the new lease for the purposes of section 70X of CAA 2001, if that section applied;“the new lessee” means the person who would be the new lessee for the purposes of that section, if that section applied; and section 70X(7) of CAA 2001 (construction of references to transfer of plant or machinery) also has effect for the purposes of this sub-paragraph.

In the application of section 70W(4)(b) or 70X(4)(b) of CAA 2001 for the purposes of sub-paragraph (5) or (6), the lease mentioned in the opening words of the sub-paragraph in question is to be regarded as a lease which is not a long funding lease.

The Treasury may by regulations make provision enabling a person of a prescribed description who is, or is to be, the lessor under a plant or machinery lease of a prescribed description to make an election for the lease to be treated in his case as a long funding lease.

The power to make regulations under this paragraph includes power to make provision for or in connection with any of the following—

The power to make regulations under this paragraph includes—

In this paragraph—“election” means an election under this paragraph;“long funding lease” means a lease which is a long funding lease for the purposes of Part 2 of CAA 2001;“prescribed” means specified in, or determined in accordance with, regulations under this paragraph.

A lease is an excepted lease if the following conditions are met.

Condition 1 is that before 21st July 2005 there was evidence in writing that there was agreement, or a common understanding, between the lessor's side and the lessee's side as to the principal terms of the lease (the “pre-existing heads of agreement”). The definitions of “the lessor's side”, “the lessee's side” and “the principal terms” are in paragraph 27.

Condition 2 is that the leased plant or machinery was under construction (see paragraph 24) before 1st April 2006.

Condition 3 is that the lease has been finalised before 1st April 2007 (but see sub-paragraph (8)).

Condition 4 is that the commencement of the term of the lease is before 1st April 2007 (but see sub-paragraph (8)).

Condition 5 is that the lessee is the particular person or persons identified as such in the pre-existing heads of agreement.

Condition 6 is that the principal terms of the lease are not (or, apart from section 70M of CAA 2001, would not be) materially different from those in the pre-existing heads of agreement.

Sub-paragraphs (4) and (5) have effect with the substitution of “ 2009 ” for “2007” if the additional conditions in paragraph 18 are met.

The additional conditions mentioned in paragraph 17(8) are as follows.

Condition A is that the commencement of the term of the lease is before 1st April 2009.

Condition B is that, at the latest, the commencement of the term of the lease is as soon as is reasonably practicable after construction of the asset is substantially complete.

Condition C is that construction of the asset proceeded continuously on and after 1st April 2006.

Condition D is that construction of the asset proceeded at the normal pace for an asset of its type. For this purpose, “normal pace” is the pace required to construct the asset in a reasonable time without delays or interruptions and consistent with normal business practice.

This paragraph is supplemented by paragraph 19.

Condition B, C or D in paragraph 18 is not failed by reason only of breaches due to events that meet the conditions in sub-paragraph (2).

The conditions are that—

In this paragraph “the principal parties” are—

This paragraph has effect for the purposes of this Part in any case where the pre-existing heads of agreement relates to two or more assets.

The treatment of any of the assets varies according to whether the asset—

Where any of the assets is for use individually, this Part has effect in relation to that asset separately, as if it were the subject of—See sub-paragraph (5) for the method of determining the terms.

Where any of the assets are constituent assets of a combined asset—and sub-paragraph (3) applies accordingly.

For the purposes of sub-paragraph (3), the principles in sections 70L and 70M of CAA 2001 are to be applied, with any necessary modifications, for the purpose of determining the terms of—

This paragraph applies where the following conditions are met—

In this paragraph—

Treat the old expenditure—

Treat the new expenditure as if it had been incurred on the provision of a separate asset for leasing under a separate long funding lease in relation to which the amendments made by this Schedule have effect. That is without prejudice to the application of any provisions of this Part which treat that deemed separate long funding lease as if it were two or more leases.

The rentals under the actual long funding lease are to be apportioned between the two deemed leases in such manner as is just and reasonable.

This paragraph has effect for the purpose of determining liability to income tax or corporation tax in the case of any person who is or has been the lessor or the lessee under the actual long funding lease.

Paragraph 22 has effect for determining when an amount of expenditure is to be treated for the purposes of this paragraph as incurred by the person mentioned in sub-paragraph (1).

This paragraph has effect for determining, for the purposes of paragraph 21, when an amount of expenditure is to be treated as incurred by the person mentioned in sub-paragraph (1) of that paragraph.

The general rule is that an amount of expenditure is to be treated as incurred as soon as there is an unconditional obligation to pay it.

The general rule applies even if the whole or a part of the expenditure is not required to be paid until a later date.

There are the following exceptions to the general rule.

If, under an agreement,—the expenditure is to be treated as incurred on the day before the passing of this Act.

If, under an agreement,—the amount is to be treated as incurred on the date on or before which it is required to be paid.

If the terms of an agreement are varied on or after 22nd March 2006 with respect to the times for payment and—the amount is to be treated as incurred on the date on which it would have been treated as incurred apart from the variation.

Sub-paragraph (7) does not apply if the long funding lease mentioned in paragraph 21 was finalised before 22nd March 2006.

For the purposes of this Part, a lease is “finalised” on the earliest day on which the following conditions are met.

Condition 1 is that there is a contract in writing for the lease between the lessor and the lessee.

Condition 2 is that either—

Condition 3 is that no terms remain to be agreed.

An asset is “under construction” at any time in the period which—

An asset consisting of two or more component parts is to be taken to be under construction at any time after the start of construction of any of those component parts which meets the condition in subsection (3).

The condition is that the component part has been identified as a component part of the particular asset before construction of the component part begins.

Sub-paragraphs (1) and (2) are subject to sub-paragraph (5).

The leased asset is not to be regarded as under construction at any time after the commencement of the term of the lease.

This paragraph has effect for the purposes of this Part.

A “combined asset” is an asset which meets the conditions in sub-paragraph (2).

The conditions are that—

Plant or machinery that can be used individually is not a constituent asset just because—

This paragraph has effect for the purposes of this Part.

This paragraph applies in any case where there is a mixed lease (see section 70L of CAA 2001).

In any such case, determine whether the mixed lease is an excepted lease.

If the mixed lease is an excepted lease, section 70L of CAA 2001 and the amendments made by this Schedule accordingly do not have effect in relation to it.

If the mixed lease is not an excepted lease, then apply sections 70L and 70M of CAA 2001 and determine separately in the case of each derived lease whether that derived lease is an excepted lease.

In this Part—“combined asset” is to be construed in accordance with paragraph 25;“constituent asset” is to be construed in accordance with paragraph 25;“finalise”, in relation to a lease, is to be construed in accordance with paragraph 23;“lease” includes—a plant or machinery lease, and a mixed lease, and “lessor”, “lessee” and other related expressions are to be construed accordingly;“the lessee's side” means any of the following—the lessee, a person who controls (or is to control) the lessee, any two or more persons who together control (or are to control) the lessee, and for this purpose “control” has the meaning given by section 574 of CAA 2001 ;“the lessor's side” means any of the following—the lessor, a person who controls (or is to control) the lessor, any two or more persons who together control (or are to control) the lessor, and for this purpose “control” has the meaning given by section 574 of CAA 2001 ;“the main constructor” means the contractor under the main contract for the construction of the plant or machinery;“pre-existing heads of agreement” is to be construed in accordance with paragraph 17(2);“the principal terms”, in relation to a lease, are the following—the identity of the lessee; the identity or description of the asset to be leased; particulars, or a description, of the rentals payable under the lease; particulars, or a description, of the term of the lease;“qualifying activity” has the same meaning as in Part 2 of CAA 2001;“under construction”, in the case of an asset, is to be construed in accordance with paragraph 24.

Chapter 6A of Part 2 of CAA 2001 (interpretation of that Part so far as relating to long funding leases) also applies for the purposes of this Part.

After section 25 of TCGA 1992 (non-residents: deemed disposals) insert—

The amendment made by this paragraph has effect where the commencement of the term of the lease is on or after 1st April 2006.

After section 41 of TCGA 1992 (restriction of losses by reference to capital allowances and renewals allowances) insert—

The amendment made by this paragraph has effect in relation to disposals on or after 1st April 2006.

Section 272 of TCGA 1992 (valuation: general) is amended as follows.

In subsection (6) (subjection to other provisions) after “subject to” insert “ sections 25A and 41A and ”.

In Part 7 (the ring fence: general provisions) paragraph 63 (meaning of finance costs) is amended as follows.

In sub-paragraph (2), for the word “and” at the end of paragraph (d) substitute the following paragraph—.

At the end of the paragraph insert—.

The amendments made by this paragraph have effect in relation to payments due on or after 1st April 2006.

Part 10 (the ring fence: capital allowances: ship leasing) is amended as follows.

In paragraph 89 (introduction), in sub-paragraph (1), after the paragraph relating to paragraphs 90 and 91 (defeased leasing) insert— “ paragraphs 91A to 91F (long funding leases), ”.

After paragraph 91 (defeased leasing: excepted forms of security) insert—.

In paragraph 93 (certificates required to support claim by lessor), in sub-paragraph (1)(b) after “in relation to the lease” insert “ and, if the lease is one that would (apart from paragraph 91A) fall to be regarded as a long funding lease for the purposes of Part 2 of the Capital Allowances Act 2001, that paragraph 91A(2) has effect in relation to the lease. ”

Paragraph 15 of Schedule 8 (commencement) also has effect in relation to the amendments made by this paragraph.

Section 67 of CAA 2001 is amended as follows.

After “qualifying activity”, in each place where those words occur in the section, insert “ or corresponding overseas activity ”.

In subsection (2), insert at the end— “ This subsection has effect subject to, and in accordance with, subsections (2A) to (2C). ”.

After subsection (2) insert—.

Renumber subsection (5) as subsection (7).

Before that subsection, as so renumbered, insert—.

At the end of the section insert—.

The amendments made by this paragraph have effect in relation to contracts that are finalised (within the meaning of Part 4 of Schedule 8) on or after 1st April 2006.

Section 105 of CAA 2001 (basic terms: “leasing”, “overseas leasing” etc) is amended as follows.

After subsection (2) (“overseas leasing”) insert—.

Section 219 of CAA 2001 (meaning of “finance lease” in Chapter 17 of Part 2) is amended as follows.

In subsection (1)(b), after sub-paragraph (ii) insert— “ and which are not a long funding lease in the case of the lessor. ”.

Paragraph 15 of Schedule 8 (commencement) also has effect in relation to the amendment made by this paragraph.

Section 220 of CAA 2001 is amended as follows.

Before subsection (1) insert—.

In subsection (1)—

After subsection (2) insert—.

In consequence of the amendments made by this paragraph, the italic cross-heading preceding section 219 becomes “ Finance leases and certain operating leases ”.

The amendments made by this paragraph have effect in relation to expenditure incurred on or after 1st April 2006.

In section 68 of TCGA 1992 for the definition of “settled property” substitute “ “settled property” means any property held in trust other than property to which section 60 applies (and references, however expressed, to property comprised in a settlement are references to settled property). ”

After section 68 of TCGA 1992 insert—

The amendment of section 68 made by sub-paragraph (1) shall come into force on 6th April 2006 (in relation to settlements whenever created).

Sections 68A and 68B (as inserted by sub-paragraph (2)) shall come into force on 6th April 2006 (in relation to settlements whenever created).

Section 68C (as inserted by sub-paragraph (2)) shall have effect in respect of variations occurring on or after 6th April 2006 (irrespective of the date on which the deceased person died).

For section 69(1) and (2) of TCGA 1992 (residence of trustees, etc) substitute—

This paragraph shall have effect—

In section 169F of TCGA 1992 (meaning of “interest in a settlement” for purposes of sections 169B to 169D)—

Sub-paragraph (1) shall have effect for the purpose of determining whether for the purposes of sections 169B to 169D and 169F an individual is to be regarded as having an interest in a settlement (whenever created) on or after 6th April 2006.

But sub-paragraph (1) shall not have effect in relation to section 169C if the relevant disposal (within the meaning of section 169C(1)) is made on or before 5th April 2006.

In paragraph 7(5) of Schedule 4A to TCGA 1992 (disposal of interest in settled property)—

Sub-paragraph (1) shall have effect for the purpose of determining whether a settlor is regarded as having an interest in a settlement (whenever created) for the purposes of Schedule 4A to TCGA 1992 on or after 6th April 2006.

After section 69 of TCGA 1992 insert—

After Schedule 4 to TCGA 1992 insert—

This paragraph shall have effect in relation to years of assessment beginning on or after 6th April 2006 (but a sub-fund election may not be treated as having taken effect before 6th April 2006).

In section 13(10) (participators in non-resident companies) for “trustees who are participators” substitute “ the trustees of a settlement who are participators ”.

This paragraph shall have effect in relation to gains accruing on or after 6th April 2006.