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
Charges, rates, allowances etc
Income tax
Income tax is charged for the tax year 2011-12.
For that tax year—
the basic rate is 20%,
the higher rate is 40%, and
the additional rate is 50%.
For the tax year 2011-12 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “ £35,000 ”.
Accordingly section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.
For the tax year 2011-12 the amount specified in section 35(1) of ITA 2007 (personal allowance for those aged under 65) is replaced with “ £ 7,475 ”.
Accordingly section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply for that tax year.
Corporation tax
In section 2(2)(a) of FA 2010 (main corporation tax rate for financial year 2011 on profits other than ring fence profits), for “27%” substitute “ 26% ”.
The amendment made by this section is treated as having come into force on 1 April 2011.
Corporation tax is charged for the financial year 2012.
For that year the rate of corporation tax is—
24% on profits of companies other than ring fence profits, and
30% on ring fence profits of companies.
In subsection (2) “ring fence profits” has the same meaning as in Part 8 of CTA 2010 (see section 276 of that Act).
For the financial year 2011 the small profits rate is—
20% on profits of companies other than ring fence profits, and
19% on ring fence profits of companies.
For the purposes of Part 3 of CTA 2010, for that year—
the standard fraction is 3/200ths, and
the ring fence fraction is 11/400ths.
In subsection (1) “ring fence profits” has the same meaning as in Part 8 of that Act (see section 276 of that Act).
In section 330 of CTA 2010 (supplementary charge in respect of ring fence trades), in subsection (1), for “20%” substitute “ 32% ”.
The amendment made by subsection (1) has effect in relation to accounting periods beginning on or after 24 March 2011 (but see also subsection (3)).
Subsections (4) to (10) apply where a company has an accounting period beginning before 24 March 2011 and ending on or after that date (“the straddling period”).
For the purpose of calculating the amount of the supplementary charge on the company for the straddling period—
so much of that period as falls before 24 March 2011, and so much of that period as falls on or after that date, are treated as separate accounting periods, and
the company's adjusted ring fence profits for the straddling period are apportioned to the two separate accounting periods in proportion to the number of days in those periods.
But if the basis of apportionment in subsection (4)(b) would work unjustly or unreasonably in the company's case, the company may elect for its profits to be apportioned on another basis that is just and reasonable and specified in the election.
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 subsections (4) and (5), be chargeable on the company for those separate accounting periods. See also sections 330A and 330B of CTA 2010 (which have effect in relation to the separate accounting period consisting of so much of the straddling period as falls on or after 24 March 2011).
In relation to the straddling period—
the Instalment Payments Regulations apply as if the amendment made by subsection (1) had not been made, but
those Regulations also apply separately, in accordance with subsection (8), in relation to the increase in the amount of any supplementary charge on the company for that period that arises as a result of that amendment.
In the separate application of those Regulations under subsection (7)(b), those Regulations have effect as if, for the purposes of those Regulations—
the straddling period were an accounting period beginning on 24 March 2011,
supplementary charge were chargeable on the company for that period, and
the amount of that charge were equal to the increase in the amount of the supplementary charge for the straddling period that arises as a result of the amendment made by subsection (1).
Any reference in the Instalment Payment Regulations to the total liability of a company is, accordingly, to be read—
in their application as a result of subsection (7)(a), as a reference to the amount that would be the company's total liability for the straddling period if the amendment made by subsection (1) had not been made, and
in their application as a result of subsection (7)(b), as a reference to the amount of the supplementary charge on the company for the deemed accounting period under subsection (8)(a).
For the purposes of the Instalment Payment Regulations—
a company is to be regarded as a large company as respects the deemed accounting period under subsection (8)(a) if (and only if) it is a large company for those purposes as respects the straddling period, and
any question whether a company is a large company as respects the straddling period is to be determined as it would have been determined if the amendment made by subsection (1) had not been made.
In this section—“adjusted ring fence profits” has the same meaning as in section 330 of CTA 2010;“the Instalment Payments Regulations” means the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175);“supplementary charge” means any sum chargeable under section 330(1) of CTA 2010 as if it were an amount of corporation tax.
Capital gains tax
Section 3 of TCGA 1992 (annual exempt amount) is amended as follows.
For subsection (2) substitute—
For subsections (3) and (4) substitute—
The amendment made by subsection (2) has effect for the tax year 2011-12 and subsequent tax years.
For the tax year 2011-12, section 3(3) of TCGA 1992 (indexation) does not apply.
The amendment made by subsection (3) has effect for the tax year 2012-13 and subsequent tax years.
In section 169N of TCGA 1992 (amount of relief: general)—
in subsection (4) for “£5 million” substitute “ £10 million ”, and
in subsection (4A) for “£5 million” substitute “ £10 million ”.
The amendments made by this section have effect in relation to qualifying business disposals occurring on or after 6 April 2011.
Capital allowances
Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
In section 56 (amount of allowances and charges), in subsection (1) for “20%” substitute “ 18% ”.
In section 104D (writing-down allowances: special rate expenditure)—
in subsection (1) for “10%” substitute “ 8% ”, and
after that subsection insert—
Accordingly—
in the heading for section 104D, after “at” insert “ 8% or ”, and
in sections 56(2)(a) and 104E(1)(a), before “10%” insert “ 8% or ”.
In each of the following provisions, for “20%” (in each place) substitute “ 18% ”
paragraph 94(3)(a) and (4),
paragraph 95(4),
paragraph 97(2) and (3),
paragraph 98(8), and
paragraph 99(2) and (5).
In each of the following provisions, for “10%” substitute “ 8% ”
paragraph 94(3)(b) and (4),
paragraph 95(4),
paragraph 97(2), (3) and (4),
paragraph 98(8), and
paragraph 99(2).
The amendments made by this section have effect in relation to—
chargeable periods beginning on or after the relevant day, and
chargeable periods beginning before, and ending on or after, the relevant day.
But in respect of a chargeable period within subsection (8)(b), they have effect as if—
in section 56(1) of CAA 2001 and the provisions of Schedule 22 to FA 2000 mentioned in subsection (6), references to 18% were references to X%, and
in section 104D(1) of CAA 2001 and the provisions of Schedule 22 to FA 2000 mentioned in subsection (7), references to 8% were references to Y%.
For the purposes of subsection (9)—X=(20 BRD CP)+(18 ARD CP) Y=(10 BRD CP)+(8 ARD CP)
Where X or Y would be a figure with more than 2 decimal places, it is to be rounded up to the nearest second decimal place.
In subsection (10)—BRD is the number of days in the chargeable period before the relevant day, ARD is the number of days in the chargeable period on and after the relevant day, and CP is the number of days in the chargeable period.
The relevant day is—
for corporation tax purposes, 1 April 2012, and
for income tax purposes, 6 April 2012.
Section 51A of CAA 2001 (entitlement to annual investment allowance) is amended as follows.
In subsection (5) (maximum allowance), for “£100,000” substitute “ £25,000 ”.
In subsection (8) (power to amend maximum allowance), for “other” substitute “ greater ”.
The amendment made by subsection (2) has effect in relation to expenditure incurred on or after the relevant day.
Subsections (6) and (7) apply in relation to a chargeable period (“the actual chargeable period”) which—
begins before the relevant day, and
ends on or after that day.
The maximum allowance under section 51A of CAA 2001 for the actual chargeable period is the sum of each maximum allowance that would be found if—were treated as separate chargeable periods.
the period beginning with the first day of the chargeable period and ending with the day before the relevant day, and
the period beginning with the relevant day and ending with the last day of the chargeable period,
But, so far as concerns expenditure incurred on or after the relevant day, the maximum allowance under section 51A of CAA 2001 for the actual chargeable period is the maximum allowance, calculated in accordance with subsection (6), for the period mentioned in paragraph (b) of that subsection.
Subsections (6) and (7) are also to apply for the purpose of determining the maximum allowance under section 51K of CAA 2001 (operation of annual investment allowance where restrictions apply) in a case where one or more chargeable periods in which the relevant AIA qualifying expenditure is incurred are chargeable periods within subsection (5), but the modifications in subsections (9) to (11) are to apply.
There is to be taken into account for the purpose mentioned in subsection (8) only chargeable periods of one year or less (whether or not they are chargeable periods within subsection (5)), and if there is more than one such period, only that period which gives rise to the greatest maximum allowance.
For the purposes of subsection (9) any chargeable period—is to be treated as being a chargeable period of one year ending at the same time as it actually ends.
which is longer than a year, and
which ends in the tax year 2012-13,
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Nothing in subsections (8) to (11) affects the operation of sections 51M and 51N of that Act.
In this section “the relevant day” means—
for corporation tax purposes, 1 April 2012, and
for income tax purposes, 6 April 2012.
Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
In section 86 (short-life asset pool)—
in subsection (2), for “four-year” (in each place) substitute “ relevant ”,
for subsection (3) substitute—, and
in subsection (4), for “four-year” substitute “ relevant ”.
In section 65 (the final chargeable period), in subsection (3), for “four-year” substitute “ relevant ”.
In section 87 (short-life assets provided for leasing), in subsection (1)—
in paragraph (b), for “four-year” substitute “ relevant ”, and
in paragraph (c), for “4 years” substitute “ 8 years ”.
In section 89 (disposal to connected person), in subsections (1) and (5), for “four-year” (in each place) substitute “ relevant ”.
In Schedule 1 (defined expressions)—
at the appropriate place insert—, and
omit the entry for “four-year cut-off (in Chapter 9 of Part 2)”.
Alcohol duties
ALDA 1979 is amended as follows.
In section 5 (rate of duty on spirits), for “£23.80” substitute “ £25.52 ”.
In section 36(1AA)(a) (standard rate of duty on beer), for “£17.32” substitute “ £18.57 ”.
In section 62(1A) (rates of duty on cider)—
in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for “£217.83” substitute “ £233.55 ”,
in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for “£50.22” substitute “ £53.84 ”, and
in paragraph (c) (rate of duty per hectolitre in any other case), for “£33.46” substitute “ £35.87 ”.
For the table in Schedule 1 substitute—.
The amendments made by this section are treated as having come into force on 28 March 2011.
Part 3 of ALDA 1979 (beer) is amended as follows.
In section 36 (general beer duty), in subsection (1AA) (rates of duty)—
before paragraph (a) insert—,
in paragraph (a), after “that” insert “ is of a strength which exceeds 2.8 per cent and ”,
in paragraph (b), after “small brewery beer” insert “ that is of a strength which exceeds 2.8 per cent and is ”, and
in paragraph (c), after “small brewery beer” insert “ that is of a strength which exceeds 2.8 per cent and is ”.
For the italic heading immediately preceding section 36A substitute “ Beer from small breweries ”.
In section 36D (rate of general beer duty for small brewery beer from singleton breweries)—
in subsection (2), after “section” insert “ , unless the beer is within section 36(1AA)(za) (rate for lower strength beer) ”, and
in the heading after “beer” insert “ (other than lower strength beer) ”.
In section 36F (rate of general beer duty for small brewery beer from co-operated breweries)—
in subsection (2), after “section” insert “ , unless the beer is within section 36(1AA)(za) (rate for lower strength beer) ”, and
in the heading after “beer” insert “ (other than lower strength beer) ”.
Immediately above section 36H (power to vary reduced rate provisions) insert as an italic heading “ Power to vary rates ”.
The amendments made by this section come into force on 1 October 2011.
Schedule 1 contains provision for and in connection with a duty of excise on high strength beer.
The Commissioners for Her Majesty's Revenue and Customs are responsible for the collection and management of that duty.
Tobacco duties
For the table in Schedule 1 to TPDA 1979 substitute—.
The amendment made by this section is treated as having come into force at 6 pm on 23 March 2011.
Gambling duties
In section 11(2) of FA 1997 (rates of gaming duty), for the table substitute—.
The amendment made by this section has effect in relation to accounting periods beginning on or after 1 April 2011.
In section 23(2) of BGDA 1981 (amount of duty payable on amusement machine licence), for the table substitute—.
The amendment made by this section has effect in relation to cases where the application for the amusement machine licence is received by the Commissioners for Her Majesty's Revenue and Customs after 4 pm on 25 March 2011.
Fuel duties
HODA 1979 is amended as follows.
In section 6(1A) (main rates)—
in paragraph (a) (unleaded petrol), for “£0.5895” substitute “ £0.5795 ”,
in paragraph (aa) (aviation gasoline), for “£0.3835” substitute “ £0.3770 ”,
in paragraph (b) (light oil other than unleaded petrol or aviation gasoline), for “£0.6867” substitute “ £0.6767 ”, and
in paragraph (c) (heavy oil), for “£0.5895” substitute “ £0.5795 ”.
In section 8(3) (road fuel gas)—
in paragraph (a) (natural road fuel gas), for “£0.2615” substitute “ £0.2470 ”, and
in paragraph (b) (other road fuel gas), for “£0.3304” substitute “ £0.3161 ”.
In section 11(1) (rebate on heavy oil)—
in paragraph (a) (fuel oil), for “£0.1088” substitute “ £0.1070 ”, and
in paragraph (b) (gas oil), for “£0.1133” substitute “ £0.1114 ”.
In section 14(1) (rebate on light oil for use as furnace fuel), for “£0.1088” substitute “ £0.1070 ”.
In section 14A(2) (rebate on certain biodiesel), for “£0.1133” substitute “ £0.1114 ”.
The amendments made by this section are treated as having come into force at 6 pm on 23 March 2011.
HODA 1979 is amended as follows.
In section 6(1A) (main rates)—
in paragraph (a) (unleaded petrol), for “£0.5795” substitute “ £0.6097 ”,
in paragraph (aa) (aviation gasoline), for “£0.3770” substitute “ £0.3966 ”,
in paragraph (b) (light oil other than unleaded petrol or aviation gasoline), for “£0.6767” substitute “ £0.7069 ”, and
in paragraph (c) (heavy oil), for “£0.5795” substitute “ £0.6097 ”.
In section 8(3) (road fuel gas)—
in paragraph (a) (natural road fuel gas), for “£0.2470” substitute “ £0.2907 ”, and
in paragraph (b) (other road fuel gas), for “£0.3161” substitute “ £0.3734 ”.
In section 11(1) (rebate on heavy oil)—
in paragraph (a) (fuel oil), for “£0.1070” substitute “ £0.1126 ”, and
in paragraph (b) (gas oil), for “£0.1114” substitute “ £0.1172 ”.
In section 14(1) (rebate on light oil for use as furnace fuel), for “£0.1070” substitute “ £0.1126 ”.
In section 14A(2) (rebate on certain biodiesel), for “£0.1114” substitute “ £0.1172 ”.
The amendments made by this section come into force on 1 January 2012.
Vehicle excise duty
Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.
In paragraph 1 (general)—
in sub-paragraph (2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder not exceeding 1,549cc), for “£205” substitute “ £215 ”, and
in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£125” substitute “ £130 ”.
In paragraph 1B (graduated rates of duty for light passenger vehicles)—
for the tables substitute—;
in the sentence immediately following the tables, for paragraphs (a) and (b) substitute—
In paragraph 1J (VED rates for light goods vehicles)—
in paragraph (a), for “£200” substitute “ £210 ”, and
in paragraph (b), for “£125” substitute “ £130 ”.
In paragraph 2(1) (VED rates for motorcycles)—
in paragraph (a), for “£15” substitute “ £16 ”,
in paragraph (b), for “£33” substitute “ £35 ”,
in paragraph (c), for “£50” substitute “ £53 ”, and
in paragraph (d), for “£70” substitute “ £74 ”.
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2011.
Part 8 of Schedule 1 to VERA 1994 (rates for goods vehicles) is amended as follows.
In—after “(3)” insert “ and paragraph 11D ”.
paragraph 9(1) (rigid vehicles exceeding 3,500 kilograms revenue weight in case of which pollution requirements are not satisfied), and
paragraph 9A(2) (rigid vehicles exceeding that weight in case of which pollution requirements are satisfied),
In—for “paragraph 11C” substitute “ paragraphs 11C and 11D ”.
paragraph 11(1) (tractive units exceeding 3,500 kilograms revenue weight in case of which pollution requirements are not satisfied), and
paragraph 11A(2) (tractive units exceeding that weight in case of which pollution requirements are satisfied),
In paragraph 11C(2) (tractive units between 41,000 and 44,000 kilograms revenue weight, with 3 or more axles and used for conveyance of semi-trailers with 3 or more axles and usable on public road in accordance with law immediately before 21 March 2000), for “The” substitute “ Subject to paragraph 11D, the ”.
After paragraph 11C insert—
The amendments made by this section have effect in relation to licences taken out on or after 1 April 2011.
Environmental taxes
In Schedule 6 to FA 2000 (climate change levy), for the table in paragraph 42(1) substitute—.
The amendment made by this section has effect in relation to supplies treated as taking place on or after 1 April 2012.
Section 16 of FA 2010 (increase in rate of aggregates levy from 1 April 2011) is repealed.
Accordingly, the amendment made by section 20 of FA 2008 (increase in rate of aggregates levy from 1 April 2009) continues to have effect in relation to aggregate subjected to commercial exploitation on or after 1 April 2011.
This section is treated as having come into force on 31 March 2011.
In section 42(1)(a) and (2) of FA 1996 (amount of landfill tax), for “£56” substitute “ £64 ”.
The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2012.
Income tax, corporation tax and capital gains tax
Anti-avoidance provisions
Schedule 2 contains provision about steps which are taken in pursuance of, or which have some other connection with, arrangements concerned with the provision of rewards or recognition or loans in connection with current, former or prospective employments.
Schedule 3 contains provision about gifts and other disposals to charities and community amateur sports clubs.
Schedule 4 contains amendments of Parts 5 and 7 of CTA 2009 (loan relationships and derivative contracts) relating to cases where amounts are not fully recognised for accounting purposes.
In section 418 of CTA 2009 (loan relationships involving connected debtor and creditor where debits exceed credits), in subsection (2), after “creditor company” insert“ or any company connected with it ”.
In section 419 of that Act (section 418: supplementary), after subsection (6) insert—
The amendments made by this section have effect in relation to loan relationships to which a company is a party (or to which it is treated as a party under section 418(6A) of CTA 2009) on or after 6 December 2010.
But amounts are to continue to be brought into account for the purposes of Part 5 of CTA 2009 disregarding those amendments if the amounts relate to a time before that day.
Schedule 5 contains provision about group mismatch schemes.
Section 179 of TCGA 1992 (company ceasing to be member of group: post-appointed day cases) is amended as follows.
In subsection (2A)—
for “Where” substitute “ Subsection (2AA) applies where ”, and
for paragraphs (c) and (d) and the words following those paragraphs substitute—
After that subsection insert—
In subsection (2B) for “if, at the time when company A ceases to be a member of the second group” substitute “ at a particular time if, at that time, ”.
The amendments made by this section have effect in relation to a company in any case in which the time of the company's ceasing to be a member of the first group is on or after 23 March 2011.
Schedule 6 contains provision about leasing businesses carried on by companies alone or in partnership.
Chapter 6 of Part 2 of CAA 2001 (which includes provision about lessees under long funding leases) is amended as follows.
In section 70C (long funding finance lease: amount of capital expenditure), after subsection (4) insert—
In section 70D (long funding finance lease: additional expenditure: allowances for lessee), after subsection (1) insert—
In section 70E (disposal events and disposal values), in subsection (2C)(b), after “section 70YE)” insert “ other than any relievable payment ”.
In that section, after subsection (2D) insert—
The amendments made by subsections (2) and (3) have effect in cases where the arrangement is entered into on or after 9 March 2011.
The amendments made by subsections (4) and (5) have effect in relation to payments made on or after 9 March 2011 (regardless of when the arrangement was entered into).
Schedule 7 contains provision about investment companies.
Exemptions and reliefs
Schedule 8 contains provision for reducing childcare relief for higher earners.
In section 270A of ITEPA 2003 (limited exemption for qualifying childcare vouchers), after subsection (5) insert—
In section 318A of that Act (exemption for childcare other than employer-provided care), after subsection (5) insert—
The amendments made by this section have effect for the tax year 2005-06 and subsequent tax years.
In section 292 of ITEPA 2003 (accommodation expenses of MPs), after subsection (4) insert—
The amendment made by this section has effect in relation to payments made under section 5(1) of the Parliamentary Standards Act 2009 on or after 1 November 2010.
In Chapter 8 of Part 4 of ITEPA 2003 (employment income: special kinds of employment), after section 304 insert—
The amendment made by this section has effect in relation to subsistence allowances paid in respect of periods beginning on or after 1 January 2011.
In Chapter 11 of Part 4 of ITEPA 2003 (employment income: miscellaneous exemptions), after section 326 insert—
The amendment made by this section has effect for the tax year 2010-11 and subsequent tax years.
Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) is amended in accordance with subsections (2) to (5).
In section 694 (income from individual investment plans), after subsection (1) insert—
After section 695 insert—
In section 699 (non-entitlement to exemption), at the end insert—
In section 701 (general and supplementary powers), at the end insert—
In section 151 of TCGA 1992 (personal equity plans), in subsection (2)—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
for the words from “but with” to the end substitute
In section 418 of ITA 2007 (gifts to charities by individuals: restrictions on associated benefits), in subsection (3), for “£500” substitute “ £2,500 ”.
In section 197 of CTA 2010 (gifts to charities by companies: restrictions on associated benefits), in subsection (3), for “£500” substitute “ £2,500 ”.
Accordingly, omit section 60(1)(b) of FA 2007.
The amendments made by subsections (1) and (3) have effect in relation to gifts made on or after 6 April 2011.
The amendment made by subsection (2) has effect in relation to gifts made in an accounting period ending on or after 1 April 2011.
Part 5 of ITA 2007 (enterprise investment scheme) is amended in accordance with subsections (2) to (4).
In section 158 (form and amount of EIS relief), in subsection (2A) for “20%” substitute “ 30% ”.
In the following provisions for “EIS rate” substitute “ EIS original rate ”
section 209(3);
section 210(1)(b);
section 213(2);
section 220(1)(b);
section 224(2);
section 229(1)(b).
After section 256 insert—
In Schedule 4 to that Act (index of defined expressions), at the appropriate place insert—
This section comes into force on such day as the Treasury may by order appoint.
The amendments made by this section have effect in relation to the tax year 2011-12 and subsequent tax years.
But where the EIS relief attributable to shares was obtained for the tax year 2007-08 or an earlier tax year, the references to the EIS original rate in the provisions mentioned in paragraph (a) to (f) of subsection (3) are to be read as references to 20%.
Part 13 of CTA 2009 (additional relief for expenditure on research and development) is amended as follows.
Chapter 2 (relief for small or medium-sized enterprises (“SMEs”)) is amended in accordance with subsections (3) to (6).
In section 1044 (additional deduction in calculating profits of trade), in subsection (8), for “75%” substitute “ 100% ”.
In section 1045 (alternative treatment for pre-trading expenditure: deemed trading loss), in subsection (7), for “175%” substitute “ 200% ”.
In section 1055 (tax credit: meaning of “Chapter 2 surrenderable loss”), in subsection (2)(b), for “175%” substitute “ 200% ”.
In section 1058 (amount of tax credit), in subsection (1)(a), for “14%” substitute “ 12.5% ”.
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This section comes into force on such day as the Treasury may by order appoint.
The amendments made by this section have effect in relation to expenditure incurred on or after 1 April 2011.
Chargeable gains
Schedule 9 contains provision about value shifting.
Schedule 10 contains provision about the consequences, for the purposes of corporation tax on chargeable gains, of a company ceasing to be a member of a group.
Schedule 11 contains provision about losses accruing to a company before the time when it becomes a member of a group of companies and losses accruing on assets held by a company at such a time.
Foreign profits
Schedule 12 contains provision in relation to controlled foreign companies.
Schedule 13 contains provision about the profits of foreign permanent establishments of UK resident companies etc.
Investment trusts
Chapter 4 of Part 24 of CTA 2010 (investment trusts) is amended as follows.
For section 1158 (meaning of “investment trust” in the Corporation Tax Acts) substitute—
For section 1159 (conditions for approval) substitute—
Omit sections 1160 to 1165 (which relate to the interpretation of the provisions replaced by this section).
In Schedule 4 (index of defined expressions), omit the following entries—“company (in Chapter 4 of Part 24)”“scheme of reconstruction (in Chapter 4 of Part 24)”“shares (in Chapter 4 of Part 24)”.
The amendments made by this section have effect in relation to accounting periods beginning on or after such day as the Treasury may by order appoint.
In Part 13 of CTA 2010 (special types of company etc), after Chapter 3 insert—
Miscellaneous
In section 139 of ITEPA 2003 (cars with a CO 2 emissions figure: the appropriate percentage), as substituted by section 59 of FA 2010 with effect for the tax year 2012-13 and subsequent tax years, in subsection (5) for “100 grams” substitute “ 95 grams ”.
The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.
Schedule 14 contains provisions about furnished holiday lettings.
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In section 398A(1)(a) of CTA 2010 (election out of qualifying change of ownership), after “day”)” insert “ before 23 March 2011 ”.
The amendment made by this section is to be treated as having come into force on 23 March 2011.
For section 27 of CTA 2010 (meaning of “associated company”: attribution to persons of rights and powers of their partners) substitute—
The amendment made by this section has effect in relation to accounting periods ending on or after 1 April 2011.
But a company may elect that the amendment made by this section is of no effect in relation to an accounting period that begins before that date.
An election under subsection (3) must be made within one year from the end of the accounting period to which it relates.
The first order under section 27(3) of CTA 2010 (as substituted by subsection (1) of this section) may be made so as to have effect in relation to accounting periods ending on or after 1 April 2011.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part 10 of Schedule 22 to FA 2000 (companies within tonnage tax: capital allowances in respect of ship leasing) is amended as follows.
In paragraph 94 (quantitative restrictions on allowances)—
in sub-paragraph (3)(a), for “a rate of 20% per annum” substitute “ the rate determined under sub-paragraph (3A) ”,
in sub-paragraph (3)(b), for “a rate of 10% per annum” substitute “ the rate specified in section 104D(1) of the Capital Allowances Act 2001 ”,
after sub-paragraph (3) insert—,
in sub-paragraph (4)—
omit the words “within each of those bands”,
after “separate pools” insert “ in accordance with sub-paragraph (4A) ”, and
omit the second sentence, and
after that sub-paragraph insert—
In paragraph 95(4)—
for “(4)” substitute “ (4A) ”, and
for “20%” substitute “ tonnage tax (main rate) ” and for “10%” substitute “ tonnage tax (special rate) ”.
In paragraph 97—
in sub-paragraphs (2) and (3), for “20%” substitute “ tonnage tax (main rate) ” and for “10%” substitute “ tonnage tax (special rate) ”, and
in sub-paragraph (4), for “10%” substitute “ tonnage tax (special rate) ”.
In paragraph 98(8), for “20%” substitute “ tonnage tax (main rate) ” and for “10%” substitute “ tonnage tax (special rate) ”.
In paragraph 99 (quantitative restrictions: change of circumstances taking case out of restrictions)—
in sub-paragraph (2), for “20%” substitute “ tonnage tax (main rate) ” and for “10%” substitute “ tonnage tax (special rate) ”,
in sub-paragraph (4), for the words from “the whole of” to the end substitute “ the amount that the tax written down value of the ship would have been, at the time the change of circumstances occurs, had paragraph 94 never applied. ”, and
omit sub-paragraph (5).
In consequence of the amendments made by this section, omit section 80(5) to (7) of FA 2008.
The amendments made by this section have effect in relation to chargeable periods ending on or after 1 January 2011.
But the amendments made by this section are of no effect in relation to expenditure incurred before that date.
In section 164 of TIOPA 2010 (Part to be interpreted in accordance with OECD principles), for subsection (4) substitute—
The amendment made by this section has effect (in relation to provision made or imposed at any time)—
for corporation tax purposes, for accounting periods beginning on or after 1 April 2011, and
for income tax purposes, for the tax year 2011-12 and subsequent tax years.
In Part 8 of TIOPA 2010 (offshore funds), after section 363 insert—
In section 399 of CTA 2009 (index-linked gilt-edged securities: basic rules), for subsection (4) substitute—
In the following provisions of that Act, for “retail” substitute “ relevant ”
section 400(1)(b), (2), (3) and (6);
section 400A(3) and (7)(b).
Accordingly, in Schedule 14 to FA 2010, omit paragraph 4(4).
The amendments made by this section have effect in relation to securities issued on or after the day on which this Act is passed.
Oil
In Schedule 1 to OTA 1975 (determination of oil fields), in paragraph 7(4), for “the relevant area” substitute “ those qualifying assets ”.
The amendment made by this section has effect in relation to chargeable periods that begin after 30 June 2009.
Section 809 of CTA 2009 (oil licences) is amended as follows.
After subsection (1) insert—
In subsection (2), for “subsection (1)” substitute “ this section ”.
In subsection (4), for “subsection (1)” substitute “ this section ”.
The amendments made by this section have effect in relation to accounting periods beginning on or after 23 March 2011 (and, in relation to those accounting periods, are to be treated as always having had effect).
For the purposes of subsection (5), an accounting period beginning before, and ending on or after, 23 March 2011 is to be treated as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.
In section 337 of CTA 2010 (initial licensee to hold a field allowance), in subsection (1), for “authorisation day” substitute “ accounting period in which the authorisation day falls ”.
For section 350 of that Act (meaning of “new oil field”) substitute—
In section 357 of that Act (other definitions), in the definition of “authorisation day”, after “authorised” insert “ as mentioned in section 350(1)(b) ”.
The amendments made by this section have effect in relation to accounting periods ending on or after 1 April 2010.
Corresponding amendments, having effect in relation to accounting periods ending on or after 22 April 2009, are to be treated as having been made in Schedule 44 to FA 2009.
Schedule 15 contains provisions about chargeable gains in relation to oil activities.
Pensions
Schedule 16 contains provision about the benefits available under pension schemes and related matters.
Schedule 17 contains provision about the annual allowance charge.
Schedule 18 contains provision about the lifetime allowance charge.
Section 182 of FA 2004 (unauthorised borrowing) does not cause a section 67 pension scheme to be not authorised to borrow an amount for the purposes of meeting costs of establishing, administering or managing the pension scheme.
Accordingly, in the case of a section 67 pension scheme, references in sections 182 and 183 of FA 2004 to amounts previously borrowed do not include any amount previously borrowed for those purposes.
For the purposes of this section neither—is to be taken to be borrowing the amount for the purposes of meeting costs of establishing, administering or managing the pension scheme.
borrowing an amount for making investments for the purposes of a pension scheme, nor
borrowing an amount for making deposits with a view to deriving income for the purposes of a pension scheme (otherwise than prior to applying the amount for meeting costs of establishing, administering or managing the pension scheme),
Section 163(2) of FA 2004 (meaning of “borrowing”) applies for the interpretation of this section.
This section is treated as having come into force on 6 April 2011.
ITTOIA 2005 is amended as follows.
In section 369(3)(e) (exemptions from income tax charge on income), after “loans,” insert “ unpaid relevant contributions, ”.
After section 753 insert—
The Treasury may by regulations make provision for and in connection with—
the application of the relevant taxes in relation to a pension scheme established under section 67 of the Pensions Act 2008, and
the application of the relevant taxes in relation to any person in connection with such a pension scheme.
The provision that may be made by regulations under this section includes provision imposing any of the relevant taxes (as well as provisions for exemptions or reliefs).
The relevant taxes are—
income tax,
capital gains tax,
corporation tax, and
inheritance tax.
Regulations under this section may include provision having effect in relation to any time before they are made if the provision does not increase any person's liability to tax.
Regulations under this section may include—
provision amending any enactment or instrument, and
consequential, supplementary and transitional provision.
Regulations under this section are to be made 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.
The Treasury may by regulations make provision in relation to any of the relevant taxes in consequence of Part 1 of the Pensions Act 2008 or Part 1 of the Pensions (No.2) Act (Northern Ireland) 2008.
The provision that may be made by regulations under this section includes provision imposing any of the relevant taxes (as well as provisions for exemptions or reliefs).
The relevant taxes are—
income tax,
capital gains tax,
corporation tax,
inheritance tax,
value added tax,
stamp duty land tax,
stamp duty, and
stamp duty reserve tax.
Regulations under this section may include provision having effect in relation to any time before they are made if the provision does not increase any person's liability to tax.
Regulations under this section may make different provision for different cases.
Regulations under this section may include—
provision amending any enactment or instrument, and
consequential, supplementary and transitional provision.
Regulations under this section are to be made 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.
In Part 2 of TIOPA 2010 (double taxation relief), in Chapter 3 (miscellaneous provisions), after section 130 insert—
The amendment made by this section has effect in relation to the tax year 2011-12 and subsequent tax years (and it does not matter whether the tax avoidance scheme was entered into or effected before, or on or after, 6 April 2011).
Bank levy
Schedule 19 contains provision for and in connection with the bank levy.
Other taxes
Value added tax
In Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services), paragraph 5 (transfer or disposal of goods forming part of the assets of a business) is amended as follows.
For sub-paragraph (2)(b) substitute—
Omit sub-paragraph (3).
In Part 2 of Schedule 8 to VATA 1994 (zero-rating: groups), Group 3 (books, etc) is amended as follows.
For “Note: Items 1 to 6—” substitute—.
At the end insert—
The amendments made by this section have effect in relation to supplies made on or after the day on which this Act is passed.
In Part 2 of VATA 1994 (reliefs, exemptions and repayments), after section 33A insert —
In section 79 of that Act (repayment supplement in respect of certain delayed payments or refunds)—
in subsection (1), after paragraph (c) insert,
in subsection (5), after paragraph (c) insert, and
in subsection (6)(b) after “33A” insert “ or 33B ”.
In section 90 of that Act (failure of resolution under the Provisional Collection of Taxes Act 1968), in subsection (3) after “33A,” insert “ 33B, ”.
In Part 2 of Schedule 9 to that Act (exemptions: groups), in Group 14 (supplies of goods where input tax cannot be recovered), in Note (9) after “33A,” insert “ 33B, ”.
The amendments made by this section have effect in relation to supplies made, and acquisitions and importations taking place, on or after 1 April 2011.
In Schedule 2 to the Value Added Tax (Imported Goods) Relief Order 1984 (S.I. 1984/746) (reliefs for goods of certain descriptions), in item 8 of Group 8 (consignments of goods not exceeding a certain value), for “£18” substitute “ £15 ”.
The amendment of that Schedule by this section is without prejudice to any power to amend that Schedule by subordinate legislation.
The amendment made by this section has effect in relation to goods imported on or after 1 November 2011.
Climate change levy
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In Schedule 6 to FA 2000 (climate change levy), omit paragraph 11A (exemption for Northern Ireland gas supplies).
Subsection (3) applies to a supply of gas if—
the supply is made by a gas utility (within the meaning of that Schedule (see paragraph 147)),
the person to whom the supply is made intends to cause the gas to be burned in Northern Ireland, ...
the supply is not a supply for use in scrap metal recycling (within the meaning of that Schedule (see paragraph 147)), and
the supply is treated as taking place on or after 1 April 2011 but before 1 November 2013.
Paragraph 42 of that Schedule (amount payable by way of levy) has effect as if—
for sub-paragraphs (1) and (1A) there were substituted—, and
in sub-paragraph (3) the reference to a reduced-rate supply were a reference to a supply in relation to which this subsection applies.
In FA 2001, omit section 105(2) (which inserted paragraph 11A of that Schedule).
The amendments made by subsections (1) and (4) have effect in relation to a supply of gas to a person if the gas is actually supplied to the person on or after 1 April 2011.
Subsections (2) and (3) are treated as having come into force on 1 April 2011.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aggregates levy
Section 30A of FA 2001 (transitional tax credit in Northern Ireland) is amended as follows.
For subsection (2) substitute—
Omit subsection (3).
In subsection (5), for paragraph (a) substitute—.
Stamp duty land tax
Schedule 21 contains provision preventing avoidance of stamp duty land tax.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stamp duty reserve tax
Section 99 of FA 1986 (stamp duty reserve tax: interpretation) is amended as follows.
In subsection (5B)—
in paragraph (b), for the words after “exempt investment” substitute “ , unless subsection (5C) applies to the scheme; ”, and
omit the sentence after paragraph (d).
After subsection (5B) insert—
This section comes into force on the first Sunday after the day on which this Act is passed.
Administration etc
Section 684 of ITEPA 2003 (PAYE regulations) is amended as follows.
In subsection (2), after item 4A insert—
After subsection (4) insert—
Schedule 23 contains provision for officers of Revenue and Customs to obtain data from data-holders.
Schedule 24 contains amendments of Schedule 36 to FA 2008 (information and inspection powers).
Schedule 25 contains provision for the purpose of giving effect to Council Directive 2010/24/EU (which concerns mutual assistance for the recovery of claims relating to taxes, duties and other measures).
The Treasury may by regulations make provision for the purpose of giving effect to—
any amendments or extensions of Council Directive 2010/24/EU,
any EU instrument that—
wholly or partly replaces that Directive or a replacement of it, or
otherwise makes provision for or in connection with mutual assistance between member States in the recovery of claims relating to taxes, duties and other measures, and
any amendments or extensions of any such EU instrument.
Regulations under subsection (2) may amend, replace or repeal Schedule 25 and any other enactment (whenever passed).
Regulations under subsection (2) are to be made by statutory instrument.
An instrument containing regulations under subsection (2) is subject to annulment in pursuance of a resolution of the House of Commons.
Miscellaneous provisions
Section 1 of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions relating to certain taxes) is amended in accordance with subsections (2) to (7).
In subsection (2) for “(8)” substitute “ (9) ”.
For subsection (3) substitute—
In subsection (5)—
in paragraph (c) omit “or prorogued”, and
after paragraph (c) insert
After subsection (5) insert—
In subsection (6) for “(4) or (5)” substitute “ (4), (5) or (5B) ”.
After subsection (8) insert—
Accordingly, the following provisions are repealed—
section 205(4) of FA 1993;
section 50(1) and (3) of F(No.2)A 1997.
The amendments made by this section come into force on such day as the Treasury may by order made by statutory instrument appoint.
Subject to subsection (11), the amendments do not apply in relation to any resolution passed before the day appointed under subsection (9).
The cases covered by section 1(9) of the Provisional Collection of Taxes Act 1968 (as inserted by subsection (7)) include cases where the earlier resolution (but not the later resolution) is passed before the day appointed under subsection (9).
The amendments made by the second order are to be treated, for all tax purposes, as having come into force on 24 February 2010 immediately after the coming into force of the first order.
A person may elect that subsection (1) is not to have effect in relation to that person.
An election under subsection (2)—
is to be made by notice in writing to an officer of Revenue and Customs,
may not be made after the end of the period of 30 days beginning with the day on which this Act is passed, and
is irrevocable.
In this section—“the first order” means the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010 (S.I. 2010/86);“the second order” means the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2011 (S.I. 2011/133);“tax” means any tax or duty.
Nothing in this section affects the commencement of the second order otherwise than as provided for by this section.
The Commissioners for Her Majesty's Revenue and Customs may incur expenditure in preparing for the introduction of a new duty to be charged in respect of games played on machines.
Schedule 26 contains provision repealing redundant reliefs.
Final provisions
In this Act—“ALDA 1979” means the Alcoholic Liquor Duties Act 1979,“BGDA 1981” means the Betting and Gaming Duties Act 1981,“CAA 2001” means the Capital Allowances Act 2001,“CRCA 2005” means the Commissioners for Revenue and Customs Act 2005,“CTA 2009” means the Corporation Tax Act 2009,“CTA 2010” means the Corporation Tax Act 2010,“FISMA 2000” means the Financial Services and Markets Act 2000,“HODA 1979” means the Hydrocarbon Oil Duties Act 1979,“ICTA” means the Income and Corporation Taxes Act 1988,“IHTA 1984” means the Inheritance Tax Act 1984,“ITA 2007” means the Income Tax Act 2007,“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003,“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005,“OTA 1975” means the Oil Taxation Act 1975,“PRTA 1980” means the Petroleum Revenue Tax Act 1980,“TCGA 1992” means the Taxation of Chargeable Gains Act 1992,“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010,“TMA 1970” means the Taxes Management Act 1970,“TPDA 1979” means the Tobacco Products Duty Act 1979,“VATA 1994” means the Value Added Tax Act 1994, and“VERA 1994” means the Vehicle Excise and Registration Act 1994.
In this Act—“FA”, followed by a year, means the Finance Act of that year;“F(No.2)A”, followed by a year, means the Finance (No. 2) Act of that year.
This Act may be cited as the Finance Act 2011.
New high strength beer duty
High strength beer duty
In Part 3 of ALDA 1979 (beer), after section 36H insert—
Consequential amendments in ALDA 1979
ALDA 1979 is amended as follows.
In section 4 (interpretation), in subsection (1) insert at the appropriate places—, and.
Section 36 (beer: charge of excise duty) is amended as follows.
After subsection (1) insert—
In subsection (1AA), for “the duty” substitute “ general beer duty ”.
In subsection (1A), after “No” insert “ general beer ”.
In subsection (2)(a), for “the duty” substitute “ general beer duty ”.
For the heading substitute “ General beer duty ”.
In section 36B (interpretation of provisions relating to small brewery beer), in subsection (5), after “rate of” insert “ general beer ”.
Section 36D (rate of duty for small brewery beer from singleton breweries) is amended as follows.
In subsection (2), after “rate of” insert “ general beer ”.
In the heading, after “Rate of” insert “ general beer ”.
Section 36F (rate of duty for small brewery beer from co-operated breweries) is amended as follows.
In subsection (2), after “rate of” insert “ general beer ”.
In the heading, after “Rate of” insert “ general beer ”.
Section 36G (assessments where incorrectly low rate of duty applied) is amended as follows.
In subsection (1)(a), for “duty is charged by section 36 above” substitute “ general beer duty is charged ”.
In subsection (2)(a), for “duty is charged by section 36 above” substitute “ general beer duty is charged ”.
In subsection (3)(a), for “duty charged on the beer by section 36 above” (in both places) substitute “ general beer duty charged on the beer ”.
In subsection (4)—
for “duty charged” substitute “ general beer duty charged ”, and
in paragraph (a), for “the duty” substitute “ that duty ”.
In section 36H (power to vary reduced rate provisions), in subsection (1) for “excise duty” substitute “ general beer duty ”.
In section 41 (exemption from duty of beer produced for private consumption), for “The duty on beer produced in the United Kingdom shall not be” substitute “ Neither general beer duty on beer produced in the United Kingdom, nor high strength beer duty on beer so produced, is ”.
In section 49 (beer regulations), in subsection (1)—
for “the duty” (in the first place it occurs) substitute “ general beer duty or high strength beer duty ”, and
for “the duty” (in the second place it occurs) substitute “ any duty ”.
In section 49A (drawback allowable to registered brewer), in subsection (2) for “the excise” substitute “ any excise ”.
Employment income provided through third parties
Main provision
After Part 7 of ITEPA 2003 insert—
Other amendments to ITEPA 2003
ITEPA 2003 is amended as follows.
In section 1(1)(a) (overview of contents of Act) for “7” substitute “ 7A ”.
Amend section 3 (structure of employment income Parts) as follows.
At the end of subsection (1) insert—
In subsection (2) for “7” substitute “ 7A ”.
For the “or” after section 7(6)(b) (meaning of “specific employment income”) substitute—.
Amend section 10 (provision relating to “taxable specific income”) as follows.
In subsection (3) for “or 7” substitute “ , 7 or 7A ”.
After subsection (4) insert—
Amend section 13 (person liable for tax) as follows.
In subsection (3) for “or 7” substitute “ , 7 or 7A ”.
After subsection (4A) insert—
In subsection (5) for “or (4A)” substitute “ , (4A) or (4B) or section 554Z12(3) ”.
After section 63(4) (the benefits code) insert—
Under Step 1 in section 218(1) (exclusion of lower-paid employments from benefits code: calculation of earnings rate for tax year)—
omit the “and” after paragraphs (c) and (d), and
after paragraph (e) insert
In section 222(1)(a) and (3) (payments treated as earnings: payments by employer on account of tax where deduction not possible) after “687,” insert “ 687A, ”.
After section 227(4) (scope of exemptions to income tax under Part 4) insert—
Amend section 271 (income tax exemptions: removal benefits and expenses) as follows.
In subsection (1) after “earnings” insert “ or by virtue of Part 7A ”.
In subsection (2) for “Subsection” substitute “ In relation to earnings, subsection ”.
After subsection (2) insert—
Amend section 287 (income tax exemptions: limit on exemption for removal benefits and expenses) as follows.
In subsection (2)—
omit the “and” after paragraph (a), and
after paragraph (b) insert.
After subsection (5) insert—
Amend section 394 (employer-financed retirement benefits: charge on benefit received) as follows.
After subsection (4) insert—
After subsection (5) insert—
After section 428(6) (restricted employment-related securities: amount of charge) insert—
In section 431(3) (restricted employment-related securities: election for disapplication of Chapter 2 of Part 7)—
omit the “and” after paragraph (c), and
after paragraph (d) insert.
In section 437(1)(a) (convertible employment-related securities: market value) after “option)” insert “ or Chapter 2 of Part 7A (employment income provided through third parties) ”.
After section 441(9) (convertible employment-related securities: amount of gain realised) insert—
In section 446B(4) (employment-related securities with artificially depressed market value: charge on acquisition)—
omit the “or” after paragraph (d), and
after paragraph (e) insert.
After section 446C(4) (employment-related securities with artificially depressed market value: amount of charge) insert—
After section 446S(3) (employment-related securities acquired for less than market value: notional loan) insert—
In section 446T(3) (employment-related securities acquired for less than market value: amount of notional loan)—
omit the “and” after paragraph (d), and
after paragraph (e) insert
In section 446V (employment-related securities acquired for less than market value: charges under Chapter 3C of Part 4 to be additional to other charges)—
omit the “or” after paragraph (d), and
after paragraph (e) insert.
In section 452(2) (shares in research institution spin-out companies: market value on acquisition)—
omit the “and” after paragraph (c), and
after paragraph (d) insert.
In section 480(5) (employment-related securities options: deductible amounts)—
omit the “and” after paragraph (b), and
after paragraph (c) insert
In section 567(5) (pension income: amount charged to tax) before “section 617” insert—.
After section 567 insert—
After section 687(4) (PAYE: payments by intermediary) insert—
After section 687 insert—
Amend section 689 (PAYE: employee of non-UK employer) as follows.
After subsection (1) insert—
In subsection (4) after “sections” insert “ 687A and ”.
Before section 696 insert—
After section 696(2) (PAYE: readily convertible assets) insert—
In section 710(2)(a) (PAYE: accounting for tax on notional payments) after “687,” insert “ 687A, ”.
Amend section 716A (priority rule in relation to certain dividend income) as follows.
Make the existing text subsection (1).
After subsection (1) insert—
Amendments to ITTOIA 2005
ITTOIA 2005 is amended as follows.
Amend section 39 (employee benefit contributions: meaning of “employee benefit scheme” etc) as follows.
In subsection (2) after “employer” insert “ or persons linked with present or former employees of the employer ”.
After subsection (2) insert—
Amend section 40 (employee benefit contributions: provision of qualifying benefits) as follows.
In subsection (5) after “scheme” insert
After subsection (6) insert—
Amend section 41 (employee benefit contributions: timing of qualifying benefits etc) as follows.
For subsection (1) substitute—
After subsection (1) insert—
In subsection (2)—
after “an asset” insert “ which meets condition A, B, C or D in section 40 ”,
omit the “and” after paragraph (a), and
after paragraph (b) insert.
After subsection (3) insert—
In section 44(1) (employee benefit contributions: interpretation)—
in the definition of “employee benefit scheme” for “39(2)” substitute “ 39(2) to (4) ”, and
in the definition of “employer-financed retirement benefits scheme” after “Act)” insert “ but ignoring section 393B(2)(a) and (c) of that Act ”.
Amendments to ITA 2007
ITA 2007 is amended as follows.
After section 809F(5) (remittance basis: effect) insert—
After section 809K(1)(c) (remittance basis: application of sections 809L to 809Z6) insert—.
For section 809Z7(4) (remittance basis: meaning of “foreign specific employment income”) substitute—
Amendments to CTA 2009
CTA 2009 is amended as follows.
Amend section 1291 (employee benefit contributions: meaning of “employee benefit scheme” etc) as follows.
In subsection (2) after “employer” insert “ or persons linked with present or former employees of the employer ”.
After subsection (2) insert—
Amend section 1292 (employee benefit contributions: provision of qualifying benefits) as follows.
In subsection (5) after “scheme” insert
After subsection (6) insert—
Amend section 1293 (employee benefit contributions: timing of qualifying benefits etc) as follows.
For subsection (1) substitute—
After subsection (1) insert—
In subsection (2)—
after “an asset” insert “ which meets condition A, B, C or D in section 1292 ”,
omit the “and” after paragraph (a), and
after paragraph (b) insert.
After subsection (3) insert—
In section 1296(1) (employee benefit contributions: interpretation)—
in the definition of “employee benefit scheme” for “1291(2)” substitute “ 1291(2) to (4) ”, and
in the definition of “employer-financed retirement benefits scheme” after “Act)” insert “ but ignoring section 393B(2)(a) and (c) of that Act ”.
Other amendments
TCGA 1992 is amended as follows.
In section 119A (increase in expenditure by reference to tax charged in relation to employment-related securities)—
in subsection (5)(a) for “or (b)” substitute “ , (b) or (d) ”, and
at the end of subsection (5A) insert “ and section 119C (unremitted Part 7A income) ”.
After section 119B insert—
In the following provisions, in the definition of “the employment income Parts of ITEPA 2003”, for “7” substitute “ 7A ”
section 122(1) of the Social Security Contributions and Benefits Act 1992, and
section 121(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.
In Schedule 34 to FA 2004 (non-UK pension schemes) after paragraph 3(6) insert—
Commencement and transitional provision relating to Part 7A of ITEPA 2003
Part 7A of ITEPA 2003 (as inserted by paragraph 1 of this Schedule) has effect in relation to relevant steps taken on or after 6 April 2011; and the other amendments made by this Schedule have effect accordingly.
Sub-paragraph (1) is subject to the following paragraphs.
This paragraph applies if—
on or after 9 December 2010 but before 6 April 2011 a relevant step (“the early step”) within section 554C(1)(a) of ITEPA 2003 is taken,
Chapter 2 of Part 7A of ITEPA 2003 would have applied by reason of the early step had the reference in paragraph 52(1) of this Schedule to 6 April 2011 been a reference to 9 December 2010, and
the early step is not chargeable to income tax by virtue of Schedule 34 to FA 2004 in whole or in part.
Subject to what follows, Chapter 2 of Part 7A of ITEPA 2003 is to apply by reason of the early step; and the amendments made by this Schedule have effect accordingly.
In determining the tax year for which the employment income of A counts for the purposes of section 554Z2(1) of ITEPA 2003, the early step is treated as having been taken on 6 April 2012; but otherwise Chapter 2 of Part 7A of that Act applies by reference to when the early step was actually taken.
The amount which (apart from this sub-paragraph) would count as employment income of A is to be reduced by an amount to reflect so much of the sum paid as has been repaid to P before 6 April 2012 by the person to whom the payment was made; and the Tax Acts are to apply in relation to the sum paid so far as repaid to P before that date by that person as if Chapter 2 of Part 7A of ITEPA 2003 had never applied by reason of the early step, with any adjustments that need to be made to any assessment to tax being made accordingly.
The amount of the reduction (if any) under sub-paragraph (4)—
is to be determined on a just and reasonable basis, and
may be the full amount of the employment income or nil or an amount in between (depending on the circumstances).
Section 554Z5 of ITEPA 2003 does not apply in relation to the early step and, in the application of that section in relation to any other relevant step (whenever taken), the early step is to be ignored.
Section 554Z12 of ITEPA 2003 does not apply in relation to the early step.
For the purposes of section 687A(3)(a) of ITEPA 2003 (as inserted by paragraph 29 of this Schedule), the early step is treated as having been taken on 6 April 2012.
For the purposes of section 41(1A) of ITTOIA 2005 (as inserted by paragraph 38(3) of this Schedule), the early step is treated as having been taken on 6 April 2012; and for the purpose of determining whether section 41(1A) of that Act applies, section 41(1) is to be read as substituted by paragraph 38(2) of this Schedule.
For the purposes of section 1293(1A) of CTA 2009 (as inserted by paragraph 47(3) of this Schedule), the early step is treated as having been taken on 6 April 2012; and for the purpose of determining whether section 1293(1A) of that Act applies, section 1293(1) is to be read as substituted by paragraph 47(2) of this Schedule.
This paragraph applies if—
on or after 9 December 2010 but before 6 April 2011 a relevant step (“the early step”) within section 554C(1)(d) of ITEPA 2003 is taken,
the relevant step does not involve a sum of money within the meaning of section 554Z(10) of ITEPA 2003,
the asset which is the subject of the early step is a readily convertible asset which P makes available to secure the payment of a sum of money,
Chapter 2 of Part 7A of ITEPA 2003 would have applied by reason of the early step had the reference in paragraph 52(1) of this Schedule to 6 April 2011 been a reference to 9 December 2010, and
the early step is not chargeable to income tax by virtue of Schedule 34 to FA 2004 in whole or in part.
For the purposes of sub-paragraph (1)(a) section 554C(1)(d) of ITEPA 2003 is to be read as if the words “or makes it available under an arrangement which permits its use” were omitted.
In this paragraph “readily convertible asset” means anything mentioned in section 702(1)(a) to (c) of ITEPA 2003 (ignoring section 702(3)).
Subject to what follows, Chapter 2 of Part 7A of ITEPA 2003 is to apply by reason of the early step; and the amendments made by this Schedule have effect accordingly.
In determining the tax year for which the employment income of A counts for the purposes of section 554Z2(1) of ITEPA 2003, the early step is treated as having been taken on 6 April 2012; but otherwise Chapter 2 of Part 7A of that Act applies by reference to when the early step was actually taken.
The amount which (apart from this sub-paragraph) would count as employment income of A is to be reduced to nil if—and the Tax Acts are to apply in relation to the early step as if Chapter 2 of Part 7A of ITEPA 2003 had never applied by reason of it, with any adjustments that need to be made to any assessment to tax being made accordingly.
before 6 April 2012 the readily convertible asset has been returned to P, and
as at that date the asset is not being used to secure the payment of the sum of money (or any part of it),
Section 554Z5 of ITEPA 2003 does not apply in relation to the early step and, in the application of that section in relation to any other relevant step (whenever taken), the early step is to be ignored.
Section 554Z8 of ITEPA 2003 applies in relation to the early step as if subsection (6)(b) were omitted.
Section 554Z12 of ITEPA 2003 does not apply in relation to the early step.
For the purposes of section 695A(3)(a) of ITEPA 2003 (as inserted by paragraph 31 of this Schedule), the early step is treated as having been taken on 6 April 2012.
For the purposes of section 41(1A) of ITTOIA 2005 (as inserted by paragraph 38(3) of this Schedule), the early step is treated as having been taken on 6 April 2012; and for the purpose of determining whether section 41(1A) of that Act applies, section 41(1) is to be read as substituted by paragraph 38(2) of this Schedule.
For the purposes of section 1293(1A) of CTA 2009 (as inserted by paragraph 47(3) of this Schedule), the early step is treated as having been taken on 6 April 2012; and for the purpose of determining whether section 1293(1A) of that Act applies, section 1293(1) is to be read as substituted by paragraph 47(2) of this Schedule.
For the purpose of determining whether Chapter 2 of Part 7A of ITEPA 2003 would have applied by reason of the early step as mentioned in paragraph 53(1)(b) or 54(1)(d), section 554G of ITEPA 2003 is to be read—
as if subsection (1)(a) were omitted, and
as if the definition contained in sub-paragraph (2) applied for the purposes of the reference to a group of companies in subsection (4)(d) instead of section 554Z(5) of ITEPA 2003.
The definition referred to in sub-paragraph (1)(b) is—.
For the purpose of determining whether Chapter 2 of Part 7A of ITEPA 2003 would have applied by reason of the early step, Chapter 1 of that Part is to be read as if section 554N(13) to (16) were omitted.
If, by virtue of section 554O of ITEPA 2003, Chapter 2 of Part 7A of that Act would not have applied by reason of the early step, section 554O(3) and (4) have effect in relation to the car loan.
But, for this purpose, if the repayment date is before 6 April 2012, in section section 554O(3) and (4) references to the repayment date are to be read as references to 6 April 2012.
This paragraph applies for the purposes of section 554Q of ITEPA 2003 in a case in which—
the relevant step mentioned in subsection (2)(a) of that section was taken before 6 April 2011, and
the requirement of subsection (2)(b) of that section would have been met had Part 7A of ITEPA 2003 had effect in relation to relevant steps within section 554B of that Act taken before that date.
The requirement of subsection (2)(b) of that section is to be treated as met in that case.
This paragraph applies for the purposes of section 554R of ITEPA 2003 in a case in which—
the relevant step mentioned in subsection (6)(a) of that section was taken before 6 April 2011, and
the requirement of subsection (6)(b) of that section would have been met had Part 7A of ITEPA 2003 had effect in relation to relevant steps within section 554B of that Act taken before that date.
The requirement of subsection (6)(b) of that section is to be treated as met in that case.
This paragraph applies if—
B takes a step within section 554Z19 of ITEPA 2003 before 6 April 2011 by providing security (“the early security”) for the performance of an undertaking (“the early undertaking”),
on or after 6 April 2011 at a time when B is continuing to provide the early security, there is a change in the terms of the early undertaking which does not amount to the giving of a new undertaking, and
as a result of the change, the amount to be paid as a contribution (“the early contribution”) under the early undertaking increases, or will increase.
Chapter 3 of Part 7A of ITEPA 2003 has effect—
as if the change in the terms of the early undertaking were a new undertaking to pay a contribution covering the increase in the amount of the early contribution as determined on a just and reasonable basis, and
as if B, in continuing to provide the early security, provides security for the performance of the new undertaking at the time of the change in the terms.
Section 554Z17(7) of ITEPA 2003 applies for the purposes of this paragraph as it applies for the purposes of Chapter 3 of Part 7A of that Act.
This paragraph applies if—
a relevant step within section 554C or 554D of ITEPA 2003 or paragraph 1 of Schedule 11 to F(No. 2)A 2017 (“the chargeable step”) is taken,
Chapter 2 of Part 7A of ITEPA 2003 applies by reason of the chargeable step,
in a tax year before 6 April 2011 (“the pre-6 April 2011 tax year”) a relevant step (“the pre-6 April 2011 step”) within section 554B of ITEPA 2003 was taken,
before the chargeable step is taken—
an agreement was made between Her Majesty's Revenue and Customs and either A or B (or both) under which it was agreed that the pre-6 April 2011 step was to be treated as giving rise to earnings of A from A's employment with B within Chapter 1 of Part 3 of ITEPA 2003 for the pre-6 April 2011 tax year, or
the tax payable by A for the pre-6 April 2011 tax year was otherwise decided on the basis that the pre-6 April 2011 step was to be treated as giving rise to earnings of A from A's employment with B within Chapter 1 of Part 3 of ITEPA 2003 for that tax year,
before the chargeable step is taken, A or B has paid, or otherwise accounted for, any tax which A or B is required to pay or otherwise account for as a consequence of—
the agreement mentioned in paragraph (d)(i), or
the tax payable by A for the pre-6 April 2011 tax year having otherwise been decided on the basis mentioned in paragraph (d)(ii), and
after any reductions under sections 554Z4 and 554Z6 to 554Z8 of ITEPA 2003, it is determined on a just and reasonable basis that the value of the chargeable step represents (or still represents after any such reductions) to any extent—
the earnings treated as arising from the pre-6 April 2011 step as mentioned in paragraph (d)(i) or (ii), or
any return on those earnings since the taking of the pre-6 April 2011 step (whether income or capital, direct or indirect or realised or unrealised).
After any reductions under sections 554Z4 and 554Z6 to 554Z8 of ITEPA 2003, the value of the chargeable step is to be reduced (but not below nil) by an amount reflecting the extent to which, as determined under sub-paragraph (1)(f), that value represents (or still represents)
where sub-paragraph (2A) or (2B) applies, the earnings mentioned in sub-paragraph (1)(f)(i) or any return on those earnings mentioned in sub-paragraph (1)(f)(ii), and
in any other case, the earnings mentioned in sub-paragraph (1)(f)(i).
This sub-paragraph applies where—
the agreement mentioned in sub-paragraph (1)(d)(i) is made before 1 April 2017, and
A or B pays, or otherwise accounts for, any tax as mentioned in sub-paragraph (1)(e) in accordance with that agreement.
This sub-paragraph applies where—
the decision mentioned in sub-paragraph (1)(d)(ii) is made before 1 April 2017, and
A or B pays, or otherwise accounts for, any tax as mentioned in sub-paragraph (1)(e) before 1 April 2017.
In sub-paragraph (1)(f)(ii) “return” does not include any return so far as, it is reasonable to suppose, the return exceeds the return which might have been expected applying the assumption that all relevant connected persons are acting at arm's length of each other.
In sub-paragraph (3) “relevant connected person” means a person with a connection (direct or indirect) to an arrangement (within the meaning of Part 7A of ITEPA 2003) by virtue of which the return arises.
For the purposes of sub-paragraph (1)(e), a person is not to be regarded as having paid, or otherwise accounted for, any tax by reason only of making—
a payment on account of income tax,
a payment that is treated as a payment on account under section 223(3) of FA 2014(accelerated payments), or
a payment pending determination of an appeal made in accordance with section 55 of TMA 1970.
Other commencement provision
The amendments made by paragraph 14 of this Schedule, so far as relating to general earnings, have effect in relation to benefits to which Chapter 2 of Part 6 of ITEPA 2003 applies received on or after 6 April 2011.
The amendments made by paragraphs 36, 39(a), 45 and 48(a) of this Schedule have effect in relation to acts or omissions occurring on or after 6 April 2011.
The amendments made by paragraphs 37(2), 39(b), 46(2) and 48(b) of this Schedule have effect in relation to payments or transfers made on or after 6 April 2011.
The amendments made by paragraphs 38(2) and 47(2) of this Schedule have effect in relation to money treated as received on or after 6 April 2011 (subject to paragraphs 53(9) and (10) and 54(11) and (12) of this Schedule).
Power to make provision dealing with interactions etc
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tainted charity donations
Income tax
In Part 13 of ITA 2007 (tax avoidance), after Chapter 7 insert—
Corporation tax
After Part 21B of CTA 2010 (inserted by Schedule 5 to this Act) insert—
Capital gains tax
After section 257 of TCGA 1992 insert—
Consequential amendments
Capital Allowances Act 2001
In section 63 of CAA 2001 (cases in which disposal value is nil), in subsection (4)—
after “Subsection (2)” insert, and
at the end insert
Income Tax (Employment and Pensions) Act 2003
In section 713 of ITEPA 2003 (donations to charity: payroll deduction scheme), after subsection (5) insert—
Income Tax (Trading and Other Income) Act 2005
In section 108 of ITTOIA 2005 (gifts of trading stock to charities etc), in subsection (5)—
after “This section” insert, and
at the end insert
Income Tax Act 2007
ITA 2007 is amended as follows.
In section 30 (calculation of income tax liability: additional tax)—
in subsection (1) before the entry for section 205 of FA 2004 insert—, and
for subsection (2) substitute—
In section 58 (meaning of “adjusted net income), at the end insert—
In section 413 (gift aid: overview of Chapter), after subsection (4) insert—
In section 431 (gifts of shares, securities and real property to charities etc), after subsection (6) insert—
In section 543 (meaning of “non-charitable expenditure”), omit subsection (1)(g) and (h).
Sections 549 to 557 (substantial donor transactions) are repealed.
In Schedule 2 (transitionals and savings), omit paragraphs 105 and 106.
In Schedule 4 (index of defined expressions), at the appropriate places insert—.
Housing and Regeneration Act 2008
In Schedule 9 (amendment of enactments: Part 1), omit paragraph 34.
Corporation Tax Act 2009
In section 105 of CTA 2009 (gifts of trading stock to charities etc), in subsection (6) after “charity)” insert “ and section 939F of that Act (removal of corporation tax relief in respect of tainted charity donations etc) ”.
In Schedule 1 (minor and consequential amendments), omit paragraphs 703 and 704.
Corporation Tax Act 2010
CTA 2010 is amended as follows.
In section 1 (overview of Act), in subsection (4)—
in the opening words for “21” substitute “ 21C ”, and
after paragraph (j) insert
In section 189 (relief for qualifying charitable donations), in subsection (5) for “any” substitute “ section 939F and to any other ”.
In section 496 (meaning of “non-charitable expenditure”), omit subsection (1)(e) and (f).
Sections 502 to 510 (substantial donor transactions) are repealed.
In Schedule 1 (minor and consequential amendments), omit paragraphs 532 to 535.
In Schedule 2 (transitionals and savings etc), omit paragraphs 73 to 76.
In Schedule 4 (index of defined expressions), at the appropriate places insert—.
Commencement and transitional provision
Commencement
Subject to sub-paragraph (2), the amendments made by this Schedule have effect in relation to relievable charity donations made on or after 1 April 2011.
The repeals made by paragraphs 12 to 14, 16, 18 and 22 to 25 have effect in relation to any transaction, other than an excluded transaction, occurring on or after 1 April 2013.
A transaction is “excluded” if it is entered into in pursuance of a contract made before 1 April 2013, other than in pursuance of a variation of the contract made on or after that date.
Treatment of existing arrangements
In the amendments made by Parts 1 and 2 of this Schedule, references to arrangements include arrangements made, or made and implemented, before 1 April 2011.
Treatment of substantial donor transactions
For the purposes of section 549(2) of ITA 2007 (meaning of substantial donor), relievable gifts (within the meaning of section 550 of that Act) received by a charitable trust on or after 1 April 2011 are to be disregarded.
Sub-paragraphs (3) and (4) apply where—
a substantial donor transaction is entered into before, or on or after 1 April 2011, and
that transaction is not tainted.
Where a payment made on or after 1 April 2011 by a charitable trust to a substantial donor in the course of, or for the purposes of, the substantial donor transaction would (in the absence of this sub-paragraph) be treated under section 551(1) or (5) of ITA 2007 as non-charitable expenditure, that payment is not to be so treated.
Where, as a result of the substantial donor transaction, non-charitable expenditure would (in the absence of this sub-paragraph) be treated as incurred under section 551(2) of that Act on or after 1 April 2011, that expenditure is not to be treated as so incurred.
A substantial donor transaction is “tainted” if (and only if) it is reasonable to assume from—that the relevant relievable gifts (or one or more of them) would not have been made and the transaction would not have been entered into independently of one another.
the likely effects of the relevant relievable gifts and the substantial donor transaction, and
the circumstances in which the relevant relievable gifts were made and the circumstances in which the substantial donor transaction was entered into,
In this section—“relevant relievable gifts”, in relation to the substantial donor transaction, means the relievable gifts by reason of which a person is a substantial donor and the transaction is a substantial donor transaction;“relievable gift” has the meaning given by section 550 of ITA 2007;“substantial donor” and “substantial donor transaction” have the meaning given by section 549 of that Act.
For the purposes of section 502(2) of CTA 2010 (meaning of substantial donor), relievable gifts (within the meaning of section 503 of that Act) received by a charitable company on or after 1 April 2011 are to be disregarded.
Sub-paragraphs (3) and (4) apply where—
a substantial donor transaction is entered into before, or on or after, 1 April 2011, and
that transaction is not tainted.
Where a payment made on or after 1 April 2011 by a charitable company to a substantial donor in the course of, or for the purposes of, the substantial donor transaction would (in the absence of this sub-paragraph) be treated under section 504(1) or (5) of CTA 2010 as non-charitable expenditure, that payment is not to be so treated.
Where, as a result of the substantial donor transaction, non-charitable expenditure would (in the absence of this sub-paragraph) be treated as incurred under section 504(2) of that Act on or after 1 April 2011, that expenditure is not to be treated as so incurred.
The substantial donor transaction is “tainted” if (and only if) it is reasonable to assume from—that the relevant relievable gifts (or one or more of them) would not have been made and the transaction would not have been entered into independently of one another.
the likely effects of the relevant relievable gifts and the substantial donor transaction, and
the circumstances in which the relevant relievable gifts were made and the circumstances in which the substantial donor transaction was entered into,
In this section—“relevant relievable gifts”, in relation to the substantial donor transaction, means the relievable gifts by reason of which a person is a substantial donor and the transaction is a substantial donor transaction;“relievable gift” has the meaning given by section 503 of CTA 2010;“substantial donor” and “substantial donor transaction” have the meaning given by section 502 of that Act.
Housing (Scotland) Act 2010 (asp 17)
Until such time as section 20 of the Housing (Scotland) Act 2010 is brought into force, the references to that section in the following provisions are to be read as references to section 57 of the Housing (Scotland) Act 2001 (asp 10)—
the definition of “relevant housing provider” in section 809ZJ(8) of ITA 2007;
the definition of “relevant housing provider” in section 939C(8) of CTA 2010.
Amounts not fully recognised for accounting purposes
Loan relationships
Part 5 of CTA 2009 (loan relationships) is amended as follows.
Section 311 (amounts not fully recognised for accounting purposes) is amended as follows.
In subsection (2)—
at the end of paragraph (a) insert “ and ”, and
for paragraphs (b) and (c) substitute—
Omit subsections (3) to (5A).
In subsection (6)—
in the opening words—
after “section” insert “ and section 312 ”, and
omit “, a contribution to it or securities issued by it”, and
in paragraphs (a) and (b), omit “, contribution or securities”.
After subsection (6) insert—
Section 312 (determination of credits and debits where amounts not fully recognised) is amended as follows.
For subsection (1A) substitute—
In subsection (1B) omit “by reference to which that condition is met”.
In subsection (3) for “But” substitute.
In section 440 (overview of Chapter 15), in subsection (2), omit the “and” at the end of paragraph (e), and after paragraph (f) insert
After section 455 insert—
In section 464 (priority of Part for corporation tax purposes), in subsection (4), omit the “and” at the end of paragraph (a) and after paragraph (b) insert
Derivative contracts
Part 7 of CTA 2009 (derivative contracts) is amended as follows.
Section 599A (amounts not fully recognised for accounting purposes) is amended as follows.
In subsection (2)—
at the end of paragraph (a) insert “ and ”, and
for paragraphs (b) and (c) substitute—
Omit subsections (3) to (5B).
In subsection (6)—
in the opening words, omit “, a contribution to it or securities issued by it”, and
in paragraphs (a) and (b), omit “, contribution or securities”.
After subsection (6) insert—
Section 599B (determination of credits and debits where amounts not fully recognised) is amended as follows.
After subsection (2) insert—
After subsection (3) insert—
In section 689 (overview of Chapter 11), in subsection (2), omit the “and” at the end of paragraph (c), and after paragraph (d) insert
After section 698 insert—
Consequential repeals
In consequence of the amendments made by this Schedule, omit—
in Schedule 30 to FA 2009, paragraph 2(1) to (6), and
in Schedule 5 to F(No.2)A 2010, paragraphs 1 and 3.
Commencement
The amendments made by this Schedule have effect in relation to periods of account beginning on or after 6 December 2010.
But, for the purposes of sub-paragraph (1), a period of account beginning before, and ending on or after, 6 December 2010 is to be treated as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate periods of account.
The following provisions of CTA 2009 do not have effect where they apply by reason of tax avoidance arrangements to which the company became a party before 23 March 2011—
section 312(3)(a) (as inserted by paragraph 3(4) of this Schedule);
section 599B(2A) (as inserted by paragraph 9(2) of this Schedule);
section 599B(4) (as inserted by paragraph 9(3) of this Schedule).
Group mismatch schemes
Insertion of new Part 21B of CTA 2010 and consequential amendments
In section 1(4) of CTA 2010 (overview of Act), omit the “and” at the end of paragraph (h), and after paragraph (i) insert—
After Part 21A of that Act insert—
Sections 938 to 940 of that Act are renumbered as follows—
section 938 becomes section 940A,
section 939 becomes section 940B, and
section 940 becomes section 940C.
In section 940A (as so renumbered)—
in subsection (2), for “939” substitute “ 940B ”,
in subsection (3), for “940” substitute “ 940C ”.
Schedule 4 to that Act (index of defined expressions) is amended as follows.
In the entry for “the predecessor (in Chapter 1 of Part 24)”—
for “24” substitute “ 22 ”, and
for “939(4)” substitute “ 940B(4) ”.
In the entry for “the successor (in Chapter 1 of Part 22)”, for “939(4)” substitute “ 940B(4) ”.
In the entry for “trade (in Chapter 1 of Part 22)”, for “939(5)” substitute “ 940B(5) ”.
In the entry for “transfer of a trade (in Chapter 1 of Part 24)”—
for “24” substitute “ 22 ”, and
for “939(2)” substitute “ 940B(2) ”.
In the entry for “the transferred trade (in Chapter 1 of Part 24)”—
for “24” substitute “ 22 ”, and
for “939(3)” substitute “ 940B(3) ”.
At the appropriate places insert—
In section 147(6) of TIOPA 2010 (transfer pricing: basic rule), omit the “and” at the end of paragraph (e) and at the end of paragraph (f) insert
In section 231 of that Act (tax arbitrage: overview), after subsection (7) insert—
Commencement of new Part 21B of CTA 2010 and consequential amendments
The amendments made by paragraphs 1, 2 and 5 have effect in relation to schemes entered into at any time (including any time before the commencement date).
But section 938A in Part 21B of CTA 2010 (as inserted by paragraph 2) does not apply to—
scheme losses or profits that relate to a time before the commencement date, or
scheme profits that relate to a time on or after that date but are made in relation to a scheme entered into before that date.
In this Schedule “the commencement date” means the day on which this Act is passed.
Repeal of sections 418 to 419 of CTA 2009
Omit sections 418 to 419 of CTA 2009 (loan relationships treated differently by connected debtor and creditor).
In consequence of the repeals made by sub-paragraph (1), omit—
in section 748ZA of ICTA (as inserted by paragraph 5 of Schedule 12 to this Act), subsection (5)(a),
in Schedule 30 to FA 2009, paragraph 4,
in section 416 of CTA 2009, subsection (4),
in Schedule 1 to CTA 2010, paragraph 615, and
section 29 of this Act.
The repeals made by this paragraph have effect in relation to loan relationships to which a company is a party (or to which it is treated as a party under section 418(6A) of CTA 2009) on or after the commencement date.
But amounts are to continue to be brought into account for the purposes of Part 5 of CTA 2009 disregarding the repeals made by sub-paragraph (1) if the amounts relate to a time before the commencement date; and the repeals made by sub-paragraph (2) have effect accordingly.
Repeal of section 453 of CTA 2009
Omit section 453 of CTA 2009 (connected parties deriving benefit from creditor relationships).
That repeal has effect in relation to loan relationships to which a company is a party on or after the commencement date.
But amounts are to continue to be brought into account for the purposes of Part 5 of CTA 2009 disregarding that repeal if the amounts relate to a time before the commencement date.
Leasing businesses
Businesses carried on by companies alone
Chapter 3 of Part 9 of CTA 2010 (sale of lessors: leasing business carried on by a company alone) is amended as follows.
Section 387 (“business of leasing plant or machinery”) is amended as follows.
In subsection (3), for “qualifying leased plant or machinery” substitute “ plant or machinery falling within subsection (7) ”.
For subsection (5) substitute—
For subsections (7) and (8) substitute—
In section 389 (provision supplementing section 388), in subsection (5)(b), for “market value” substitute “ ascribed value ”.
In section 390 (relevant plant or machinery value where relevant company lessee under long funding lease etc), in subsection (2), for “market value” substitute “ ascribed value ”.
In section 391 (relevant company's income for condition B in section 387), in subsection (5), for “qualifying leased plant or machinery” substitute “ plant or machinery falling within section 387(7) ”.
Section 398G (transfers into and out of A) is amended as follows.
Omit subsection (2).
For subsection (3) substitute—
In section 401 (provisions supplementing section 400), in subsection (5)(b), for “market value” substitute “ ascribed value ”.
In section 402 (“PM” where relevant company lessee under long funding lease etc), in subsection (2), for “market value” substitute “ ascribed value ”.
Section 403 (“TWDV” in section 399) is amended as follows.
In subsection (2), for paragraph (b) substitute—
After that subsection insert—
Businesses carried on by companies in partnership
Chapter 4 of Part 9 of CTA 2010 (sale of lessors: leasing business carried on by a company in partnership) is amended as follows.
Section 410 (“business of leasing plant or machinery”) is amended as follows.
In subsection (2), for “qualifying leased plant or machinery” substitute “ plant or machinery falling within subsection (6) ”.
For subsection (4) substitute—
For subsections (6) and (7) substitute—
In section 412 (provision supplementing section 411), in subsection (5)(b), for “market value” substitute “ ascribed value ”.
In section 413 (relevant plant or machinery value where partnership lessee under long funding lease etc), in subsection (2), for “market value” substitute “ ascribed value ”.
In section 414 (partnership's income for condition B in section 410), in subsection (5), for “qualifying leased plant or machinery” substitute “ plant or machinery falling within section 410(6) ”.
Section 421 (the amount of the income: the basic amount) is amended as follows.
In subsection (6), for paragraph (b) substitute—
After that subsection insert—
Anti-avoidance provisions
Chapter 5 of Part 9 of CTA 2010 (sales of lessors: anti-avoidance provisions) is amended as follows.
Section 434 (introduction to sections 435 and 436) is amended as follows.
In subsection (2), for “question A or B” substitute “ question A, B or C ”.
After subsection (4) insert—
Section 435 (disregard of increases or decreases in balance sheet amounts) is amended as follows.
In subsection (1), for paragraph (a) substitute—.
After that subsection insert—
In subsection (2)—
omit “or” at the end of paragraph (b), and
at the end of paragraph (c) insert
In subsection (3), for “which falls (or would fall) to be shown in the balance sheet in respect of plant or machinery” substitute “ to be ascertained ”.
Accordingly, in the heading of that section, for “in balance sheet amounts” substitute “ in certain amounts ”.
In section 436 (balance sheet amounts determined on assumption company has no liabilities), after subsection (6) insert—
General interpretation of sales of lessors Chapters
Chapter 6 of Part 9 of CTA 2010 (sales of lessors: general interpretation) is amended as follows.
In section 437, omit subsection (9) (definition of “market value”).
After that section insert—
Consequential amendments
In section 267A of CAA 2001 (restriction on effect of election), in subsection (2), for “is qualifying leased plant or machinery” substitute “ falls within section 387(7) of CTA 2010 (if the business is carried on otherwise than in partnership) or within section 410(6) of that Act (if the business is carried on in partnership) ”.
In section 948 of CTA 2010 (modified application of CAA 2001), in subsection (6), before paragraph (a) insert—.
Section 950 of CTA 2010 (transfers of trades involving business of leasing plant or machinery) is amended as follows.
In subsection (5), for the words from “its market value” to the end substitute
In subsection (6)—
before the definition of “business of leasing plant or machinery” insert—, and
omit the definition of “market value”.
In Schedule 4 to CTA 2010 (index of defined expressions), omit the entry for “market value (in relation to plant or machinery) (in Chapters 3 to 6 of Part 9)”.
In that Schedule, insert the following entry at the appropriate place—.
Application of new provisions
The amendments made by paragraphs 2 to 5 and 7 to 15, and the general paragraphs so far as relevant to those amendments, have effect where the relevant day (as defined for the purposes of the amended provision) falls on or after 23 March 2011.
The amendment made by paragraph 6(3), and the general paragraphs so far as relevant to that amendment, have effect in relation to disposal events taking place on or after 23 March 2011 (including in cases where the election was made before that date).
The amendments made by paragraphs 6(2) and 23 to 25, and the general paragraphs so far as relevant to those amendments, have effect in relation to transfers or successions taking place on or after 23 March 2011 (including, in the case of the amendment made by paragraph 6(2), where the election was made before that date).
The general paragraphs are—
paragraph 1,
paragraphs 16 to 22, and
paragraph 26.
Investment companies
Amendments of Chapter 4 of Part 2 of CTA 2010
Section 6 of CTA 2010 (UK resident company operating in sterling and preparing accounts in another currency) is amended as follows.
In subsection (1), after “company” insert “ (other than a UK resident investment company) ”.
After that subsection insert—
Section 7 of that Act (UK resident company operating in currency other than sterling and preparing accounts in another currency) is amended as follows.
In subsection (1), in paragraph (a), after “company” insert “ (other than a UK resident investment company) ”.
After that subsection insert—
In subsection (2), in step 1, for “functional” substitute “ relevant ”.
In subsection (3) for “functional” substitute “ relevant ”.
After that subsection insert—
After section 9 of that Act insert—
In section 17 of that Act (interpretation of Chapter 4 of Part 2), after subsection (3) insert—
Amendments of ICTA
In Schedule 24 to ICTA (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies), in paragraph 4 (reliefs under Corporation Tax Acts dependent upon the making of a claim or election), after sub-paragraph (2) insert—
Amendments of CTA 2009
Section 328 of CTA 2009 (loan relationships: exchange gains and losses) is amended as follows.
In subsection (2), after “subsections” insert “ (2A), ”.
After that subsection insert—
Section 606 of that Act (derivative contracts: exchange gains and losses) is amended as follows.
In subsection (2), after “subsections” insert “ (2A), ”.
After that subsection insert—
Commencement
The amendments made by this Schedule have effect in relation to periods of account beginning on or after 1 April 2011.
An election may be made or revoked for the purposes of section 9A of CTA 2010 (as inserted by paragraph 3) at any time on or after 9 December 2010.
Where an election made by a company before 27 June 2011 does not specify the day on which it takes effect, the election is to be treated as if it specified the first day of the first period of account of the company beginning after the election was made.
An election made before the day on which this Act is passed must be made by notice in writing to an officer of Revenue and Customs.
Schedule 1A to TMA 1970 does not apply to an election made before the day on which this Act is passed.
Reduction in childcare relief for higher earners
Introduction
ITEPA 2003 is amended as follows.
Childcare vouchers
Section 270A (limited exemption for qualifying childcare vouchers) is amended as follows.
In subsection (2), for “C” substitute “ D ”.
After subsection (5B) (inserted by section 36) insert—
In paragraph (a) of subsection (6), for “£55” substitute “ the appropriate amount ”.
After that subsection insert—
In subsection (11)—
for “exempt amount” (in each place) substitute “ amounts ”,
for “(6) above” substitute “ (6ZA) above ”, and
for “318A(6)” substitute “ 318A(6A) ”.
After section 270A insert—
Childcare provided otherwise than at employer's premises etc
Section 318A (limited exemption for childcare provided otherwise than at employer's premises etc) is amended as follows.
In subsection (1), for “C” substitute “ D ”.
After subsection (5B) (inserted by section 36) insert—
In subsection (6), for “£55” substitute “ the appropriate amount ”.
After that subsection insert—
After section 318A insert—
In subsection (1) of section 318D (childcare: power to vary exempt amount)—and, accordingly, in the heading of that section, after “vary” insert “ amounts which are the ”.
for “318A(6)” substitute “ 318A(6A) ”, and
for “exempt amount) so as to substitute a different sum of money for that” substitute “ amounts which are the exempt amount) so as to substitute different sums of money for those ”;
Commencement and transitional provision
The amendments made by this Schedule have effect for the tax year 2011-12 and subsequent tax years.
But the amendments made by paragraphs 2(2) to (5) and 3 to 5 do not apply for a tax week in the case of an employee and employer and a scheme if—
the employee joined the scheme before 6 April 2011,
the employee has not ceased to be employed by the employer during the period beginning with that date and ending with the tax week, and
during that period there has not been a continuous period of 52 weeks throughout which vouchers were not, or care was not, being provided for the employee under the scheme.
For the purposes of sub-paragraph (1) the employee is taken to join the scheme as soon as—
the employer has agreed that vouchers, or care, will be provided under the scheme for the employee, and
there is a child falling within section 270A(3)(a) or (b), or section 318A(3)(a) or (b), of ITEPA 2003 in relation to the employee.
Regulations made under section 270B(3)(b) or (4) of ITEPA 2003 (inserted by paragraph 3) on or before 31 December 2011 may have retrospective effect in relation to the tax year 2011-12.
The amendments made by paragraphs 2(6) and 6 do not prevent the making of provision under section 270A(11)(a) or 318D(1) of ITEPA 2003 in relation to sections 270A(6) and 318A(6) of that Act as, by virtue of paragraph 8, they continue to have effect otherwise than as amended by this Schedule.
Value shifting
Amendments of TCGA 1992
In section 30 of TCGA 1992 (tax-free benefits)—
in subsection (1)(a) omit “or a relevant asset”,
for subsection (2) substitute—, and
omit subsection (8).
In section 176 of TCGA 1992 (depreciatory transactions within a group), in subsection (1), for “on or after 31st March 1982” substitute “ within the period of 6 years ending with the disposal ”.
In section 179 of TCGA 1992 (company ceasing to be member of group), in subsection (9)(b), after “section 30” insert “ or 31 ”.
Consequential repeals
The following provisions are repealed—
in Schedule 20 to FA 1996, paragraph 47(b) and (c),
Schedule 9 to FA 1999,
in Schedule 29 to FA 2000, paragraph 17,
in Schedule 9 to FA 2002, paragraph 5(2) and (3),
in Schedule 30 to that Act, paragraph 6,
in Schedule 1 to CTA 2009, paragraph 361, and
in Schedule 23 to FA 2009, paragraph 8.
Commencement and transitionals
The amendments made by paragraphs 1 to 3 and 5 have effect in relation to disposals of shares or securities by companies made on or after the day on which this Act is passed (“the commencement day”).
But nothing in paragraph 1, 2 or 5 prevents section 31A of TCGA 1992 (asset-holding company leaving group), as it had effect immediately before the commencement day, continuing to have effect on or after that day in relation to cases where the section 30 disposal to which that section refers occurred before that day.
The amendment made by paragraph 4 has effect in relation to disposals of shares or securities treated under section 179 of TCGA 1992 as taking place on or after the commencement day.
In this paragraph “securities” has the same meaning as in section 132 of TCGA 1992.
Company ceasing to be member of group
Degrouping
In section 139 of TCGA 1992 (reconstruction involving transfer of business), after subsection (1A) insert—
In section 171A of TCGA 1992 (election to reallocate gain or loss to another member of the group), omit subsection (7).
Section 179 of TCGA 1992 (company ceasing to be member of group) is amended as follows.
In subsection (1)(a) for “company B is a member of a group” substitute “ company A and company B are members of the same group ”.
In subsection (1A) omit the words from “For this purpose” to the end.
For subsection (2) substitute—
For subsection (2A)(a) substitute—.
After subsection (3) insert—
For subsection (5) substitute—
In subsection (6)—
for “The company” to “but” substitute “ Subsection (3) does not apply to treat company A as selling the asset at that time; but ”, and
for “the company in question” (in each place) substitute “ company A ”.
In subsection (7) for “the company” (in both places) substitute “ company A ”.
After that subsection insert—
In subsection (8) for the words from “the company” to the end substitute “ company A on the sale referred to in subsection (6) is to be treated as accruing immediately before the relevant time. ”
In subsection (10), for paragraph (a) substitute—
After that subsection insert—
After section 179 of TCGA 1992 insert—
In TCGA 1992, the following provisions are repealed—
section 179A (reallocation within group of gain or loss accruing under section 179);
section 179B (roll-over of degrouping charge on business assets);
Schedule 7AB (roll-over of degrouping charge: modification of enactments).
Substantial shareholding exemption
Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholdings) is amended as follows.
After paragraph 15 insert—
In paragraph 19 (requirements relating to the company invested in), after sub-paragraph (2) insert—
Intangible fixed assets: degrouping
Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.
In section 780 (deemed realisation and reacquisition at market value), in subsection (5)(b) before “associated” insert “ certain ”.
In section 783 (associated companies leaving group at same time), for subsection (1) substitute—, and, in the section heading, for “Associated” substitute “ Certain associated ”.
In section 788 (provisions supplementing provisions about degrouping), for subsection (3) substitute—
Consequential repeals
In consequence of the repeals made by paragraph 5, the following are also repealed—
in IHTA 1984, section 97(1)(a)(iii) and the “or” before it,
in F(No.2)A 2005, in Schedule 4, paragraphs 8 and 10(3), and
in FA 2009, in Schedule 12, paragraph 2.
Commencement
The amendments made by paragraphs 1 to 5 and 8 have effect in relation to any disposal of an asset by one company (“company B”) to another company (“company A”) made at a time when company B is a member of a group, if—
company A ceases to be a member of the group on or after the passing of this Act, or
where company A ceased to be such a member before the passing of this Act in circumstances where section 179(6) to (8) of TCGA 1992 applied, company A ceases to satisfy the conditions in section 179(7) of that Act on or after the passing of this Act.
The amendments made by paragraph 6 have effect in relation to disposals of shares made on or after the passing of this Act.
The amendments made by paragraph 7 have effect in relation to any disposal of an asset by one company (“company B”) to another company (“company A”) made at a time when company B is a member of a group, if—
company A ceases to be a member of the group on or after the passing of this Act, or
where company A ceased to be such a member before the passing of this Act in circumstances where section 783 of CTA 2009 applied, company A ceases to be a member of another group on or after the passing of this Act.
But where an early commencement election is made in relation to a group—
sub-paragraphs (1) and (3) apply in relation to that group as if the references in those sub-paragraphs to the passing of this Act were references to 1 April 2011, and
sub-paragraph (2) applies in relation to any disposal of shares by a member of that group as if the reference in that sub-paragraph to the passing of this Act were a reference to 1 April 2011.
An early commencement election in relation to a group means an election made for the purposes of this paragraph by the principal company of the group.
If a company ceases to be a member of a group in the period which begins with 1 April 2011 and ends with the passing of this Act, an early commencement election may be made or revoked in relation to the group only with the consent of that company contained in a notice which accompanies the election or revocation.
Where an early commencement election is revoked, the election is treated as never having had effect.
An early commencement election may not be made or revoked after 31 March 2012 (and paragraph 3(1)(b) of Schedule 1A to the Management Act (amendment of elections etc) does not apply in relation to an early commencement election).
Pre-entry losses
TCGA 1992
In section 177A of TCGA 1992 (restriction on set-off of pre-entry losses), omit “and losses accruing on assets held by any company at such a time”.
Schedule 7A to that Act (restriction on set-off of pre-entry losses) is amended as follows.
Paragraph 1 (application and construction of Schedule) is amended as follows.
In sub-paragraph (1) for “is or has been” substitute “ becomes ”.
For sub-paragraph (2) substitute—
Omit sub-paragraphs (3), (3A), (4) and (5).
In sub-paragraph (6) for “Subject to” to “if” substitute “ If ”.
Omit sub-paragraph (8).
Omit paragraphs 2 to 5 (determination of pre-entry proportion of losses on pre-entry assets).
Paragraph 6 (restrictions on the deduction of pre-entry losses) is amended as follows.
In sub-paragraph (2)—
omit paragraph (a) (and the “and” after it), and
in paragraph (b), omit “in any other case”.
In sub-paragraph (3)—
omit paragraph (a) (and the “and” after it), and
in paragraph (b), omit “in the case of an election under sub-paragraph (2)(b) above,”.
Paragraph 7 (gains from which pre-entry losses are to be deductible) is amended as follows.
In sub-paragraph (1), for paragraph (c) substitute—
After that sub-paragraph insert—
Omit sub-paragraph (2).
In sub-paragraph (3)—
omit “, without prejudice to paragraph 9 below”,
omit paragraph (b), and
in paragraph (c), for “sub-paragraphs (1)(c) and (2)(c)” substitute “ sub-paragraph (1A) ”.
For sub-paragraph (4) substitute—
In sub-paragraph (5) omit “or (2)” (in both places).
In sub-paragraph (6) omit “or (2)”.
Paragraph 8 (change of a company's nature) is amended as follows.
In sub-paragraph (1)—
after “trade” (in each place) insert “ or business ”,
in paragraph (a) for “carried on by that company” substitute “ which was carried on by that company immediately before it became a member of that group ”, and
for “paragraph 7(1)(c) and (2)(c)” substitute “ paragraph 7(1A) ”.
For sub-paragraph (2) substitute—
Omit paragraph 9 (identification of “the relevant group” and application of Schedule to every connected group).
In paragraph 11 (continuity provisions), omit sub-paragraph (3)(b) (and the “and” before it).
Consequential repeals
Omit the following provisions (which relate to the provisions repealed by paragraphs 1 to 9)—
in FA 1994, sections 93(8) to (10) and 94;
in FA 1998, section 138;
in FA 2000, in Schedule 29, paragraph 7(2) to (5);
in F(No.2)A 2005, section 65(2), (3) and (5).
Commencement
The amendments made by this Part of this Schedule have effect on and after commencement in relation to the deduction of any pre-entry loss within paragraph 1(2) of Schedule 7A to TCGA 1992 (as substituted by paragraph 3 of this Schedule) regardless of—
whether the loss accrued before or on or after commencement, and
whether the company which accrued the loss became a member of the relevant group (within the meaning of that Schedule) before or on or after commencement.
In this paragraph “commencement” means the day on which this Act is passed.
Transitional provision
Sub-paragraph (2) applies where, immediately before commencement, Schedule 7A to TCGA 1992 had effect, in the case of a company which is or has been a member of a group of companies (“the relevant group”) in relation to a loss of that company within paragraph 1(2)(b) of that Schedule (pre-entry proportion of an allowable loss that has accrued to a company on the disposal of a pre-entry asset).
On and after commencement that loss is to be treated, for the purposes of Schedule 7A to TCGA 1992, as if it were a pre-entry loss within the meaning of paragraph 1(2) of that Schedule (as substituted by paragraph 3 of this Schedule) which accrued to that company immediately before it became a member of the relevant group.
In this paragraph “commencement” means the day on which this Act is passed.
Controlled foreign companies
Exemptions for companies with limited UK connection
Section 748 of ICTA (cases where apportionment of chargeable profits and creditable tax under section 747(3) does not apply) is amended as follows.
In subsection (1), in paragraph (b) for “that Schedule” substitute “ Schedule 25 ”.
After that paragraph insert—.
After section 751AA of that Act insert—
In Schedule 25 to that Act (cases where section 747(3) does not apply), after Part 2 insert—
Amendment of small chargeable profits exemption
Section 748 of ICTA (cases where apportionment of chargeable profits and creditable tax under section 747(3) does not apply) is amended as follows.
In subsection (1), after paragraph (d) insert—.
After subsection (3) insert—
In subsection (6) for “section” substitute “ sections 748ZA and ”.
After that section insert—
Temporary exemption following reorganisation etc
Section 748 of ICTA (cases where section 747(3) does not apply) is amended as follows.
After subsection (1)(e) insert
In subsection (3) for “(e)” substitute “ (f) ”.
After section 751AB of that Act (inserted by paragraph 2 of this Schedule) insert—
In Schedule 25 to that Act (cases where section 747(3) does not apply), before Part 4 of that Schedule insert—
Holding companies: extension of transitional provision
Part 2 of Schedule 16 to FA 2009 (controlled foreign companies: amendment of exempt activities exemption) is amended as follows.
In paragraph 12 (commencement), in sub-paragraph (2)(b) for “2011” substitute “ 2012 ”.
In paragraph 15 (qualifying holding companies: periods straddling 1 July 2011)—
in sub-paragraph (1)(a) for “2011” substitute “ 2012 ”,
in sub-paragraph (2)(a) for “2011” substitute “ 2012 ”, and
accordingly, in the heading for “2011” substitute “ 2012 ”.
In paragraph 16 (qualifying holding companies: definition of “relevant accounting period”), in paragraph (b) for “2011” substitute “ 2012 ”.
In the italic heading before paragraph 17 for “two years before 1 July 2011” substitute “ three years before 1 July 2012 ”.
Minor and consequential amendments
In the following provisions of ICTA, for “or 751AA” substitute “ , 751AA, 751AB or 751AC ”
section 747(3A) and (5A) (imputation of chargeable profits and creditable tax of controlled foreign companies),
section 749(10) (residence),
section 749A(9) (elections and designations under section 749: supplementary provisions), and
section 750(3)(ab) (territories with a lower level of taxation).
In section 751A of that Act (reduction in chargeable profits for certain activities of EEA business establishments), for subsection (4) substitute—
Section 751B of that Act (sections 751A and 751AA: supplementary) is amended as follows.
For “or 751AA” in subsections (1), (2), (3) (in each place) and (5) substitute “ , 751AA, 751AB or 751AC ”.
In subsection (2), for paragraph (a) substitute—
In subsection (8), omit the “and” before paragraph (b), and after that paragraph insert—
For subsection (10) substitute—
In the heading for “and 751AA” substitute “ to 751AC ”.
Omit the following provisions—
in Schedule 17 to FA 1998, paragraph 3(7), and
in Schedule 16 to FA 2009, paragraphs 22 and 24(3) and (5).
Commencement and transitional provision
The amendments made by paragraph 9 are treated as always having had effect.
The other amendments made by this Schedule have effect in relation to accounting periods of controlled foreign companies beginning on or after 1 January 2011.
Profits of foreign permanent establishments etc
Amendments of CTA 2009
CTA 2009 is amended as follows.
In section 1(1)(c) (overview of Act), for “Chapter 4” substitute “ Chapters 3A and 4 ”.
In section 5(1) (territorial scope), insert at the end “ (but see Chapter 3A for an exemption from charge in respect of profits of foreign permanent establishments) ”.
After section 18 insert—
In section 775(4) (intangible fixed assets: cases where transfers within group provisions do not apply), omit the “or” at the end of paragraph (a) and insert at the end
In section 803(b) (assets held for non-taxable activities excluded from Part 10), insert at the end “ , otherwise than as a result of Chapter 3A of Part 2. ”
In section 845(4) (exceptions to rule that transfer between company and related party treated as being at market value)—
omit the “and” at the end of paragraph (c), and
after that paragraph insert—.
After section 848 insert—
In section 1007(2)(b) (relief if employee etc acquires shares), insert at the end “ or would be but for section 18A. ”
In section 1015(2)(b) (relief if employee etc obtains share option), insert at the end “ or would be but for section 18A. ”
In Schedule 4 to that Act (index of defined expressions), insert at the appropriate places—
Amendments of other Acts
ICTA
In paragraph 4(1) of Schedule 24 to ICTA (assumptions for calculating chargeable profits etc of foreign companies: election or claim to give maximum relief assumed to be made), insert at the end “ , except that the company shall be assumed not to have made an election under section 18A of CTA 2009. ”
TCGA 1992
In TCGA 1992, after section 276 insert—
CAA 2001
CAA 2001 is amended as follows.
In section 15 (plant and machinery allowances: qualifying activities), after subsection (2) insert—
In the Table in section 61 (disposal events and disposal values), after item 6 insert—and in column 1 of item 7, for “6” substitute “ 6A ”.
After section 62 insert—
ITA 2007
ITA 2007 is amended as follows.
In section 879(1) (interest paid on advances from banks), insert at the end “ or is a bank that would be within the charge to corporation tax as respects the interest apart from section 18A of CTA 2009. ”
Section 918 (manufactured dividends on UK shares: REITs) is amended as follows.
After subsection (3) insert—
In subsection (4), for paragraphs (a) and (b) substitute—.
After subsection (5) insert—
In section 919 (manufactured interest on UK securities: payments by UK residents etc), after subsection (1) insert—
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TIOPA 2010
TIOPA 2010 is amended as follows.
In section 18 (entitlement to credit for foreign tax reduces UK tax by amount of credit), after subsection (3) insert—
For section 43 substitute—
Section 78 (meaning of “overseas permanent establishment”) is amended as follows.
In subsection (2)—
in paragraph (a), for “and define the expression” substitute “ which contain a relevant non-discrimination provision ”, and
in paragraph (b)—
for “but do not define the expression” substitute “ which do not contain a relevant non-discrimination provision ”, and
for “is to be read in accordance with Chapter 2 of Part 24 of CTA 2010.” substitute “ has the meaning given by the Model Tax Convention on Income and on Capital published by the Organisation for Economic Co-operation and Development in July 2010 (“the OECD”) or such other document published by the OECD in place of it as is designated from time to time by order made by the Treasury. ”
After that subsection insert—
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Commencement and transitional provision
Commencement
The amendments made by this Schedule come into force on the day on which this Act is passed.
Condition B of motive test
This paragraph applies in relation to a company carrying on business through a permanent establishment in an accounting period which is the first relevant accounting period or an accounting period beginning less than 12 months after the beginning of the first relevant accounting period (an “affected relevant accounting period”) if the company carried on the business through the permanent establishment throughout the period of 12 months ending with the day before that on which this Act is passed (“the pre-commencement year”).
Condition B in section 18H of CTA 2009 (as inserted by this Schedule) is assumed to be met in relation to an affected relevant accounting period if—
the gross income attributable to the permanent establishment for the affected relevant accounting period does not exceed by more than 10% the gross income attributable to the permanent establishment for the period of 12 months ending immediately before the beginning of the first relevant accounting period (or, if the affected relevant accounting period is less than 12 months, such proportion of that gross income as the length of the affected relevant accounting period bears to 12 months),
there has been no major change in the nature or conduct of the business carried on through the permanent establishment in the period (“the relevant period”) beginning with the pre-commencement year and ending with the end of the affected relevant accounting period, and
no asset attributable to the permanent establishment was previously owned, and no part of the business carried on through the permanent establishment in the affected relevant accounting period was previously carried on, by a company whose chargeable profits and creditable tax (if any) for any accounting period ending within the relevant period were (or, but for an agreement made or undertaking given, would have been) apportioned under section 747(3) of ICTA.
For the purposes of sub-paragraph (2) “major change in the nature or conduct of the business” includes—
a major change in the type of property dealt in, or services or facilities provided, in the business, and
a major change in customers, outlets or markets of the business.
A reference in sub-paragraph (3) to a change includes a change which is achieved gradually as a result of a series of transfers.
This paragraph applies in relation to a company (“company A”) carrying on business through a permanent establishment in an accounting period which is the first relevant accounting period or an accounting period beginning less than 12 months after the beginning of the first relevant accounting period (an “affected relevant accounting period”) if a company which—(“company B”) carried on the business throughout the period of 12 months ending with the day before that on which this Act is passed (“the pre-commencement year”).
was a non-UK resident company, and
was controlled by company A,
Condition B in section 18H of CTA 2009 (as inserted by this Schedule) is assumed to be met in relation to an affected relevant accounting period if—
the gross income attributable to the permanent establishment for the affected relevant accounting period does not exceed by more than 10% the gross income of the business for the period of 12 months ending immediately before the beginning of the first relevant accounting period of the company (or, if the affected relevant accounting period is less than 12 months, such proportion of that gross income as the length of the affected relevant accounting period bears to 12 months),
there has been no major change in the nature or conduct of the business carried on through the permanent establishment in the period (“the relevant period”) beginning with the pre-commencement year and ending with the end of the affected relevant accounting period,
company B was not a company whose chargeable profits and creditable tax (if any) for any accounting period ending within the relevant period were (or, but for an agreement made or undertaking given, would have been) apportioned under section 747(3) of ICTA, and
no asset attributable to the permanent establishment was previously owned, and no part of the business carried on through the permanent establishment in the affected relevant accounting period was previously carried on, by such a company.
Sub-paragraphs (3) and (4) of paragraph 32 apply for the purposes of sub-paragraph (2).
Section 1124 of CTA 2010 (meaning of “control”) applies for the purposes of this paragraph.
Large pre-commencement losses
This paragraph applies if—
there is a relevant losses amount exceeding £50 million in the case of a company in relation to any relevant foreign territory for any accounting period beginning within the period of 6 years ending with the day before that on which this Act is passed, and
(apart from this paragraph) the accounting period would not be an affected prior accounting period for the purposes of section 18J(2) of CTA 2009 (as inserted by this Schedule).
The accounting period, and every later accounting period of the company before the first relevant accounting period of the company which would not otherwise be an affected prior accounting period for those purposes, is an affected prior accounting period for those purposes.
This paragraph applies if—
section 18O of CTA 2009 (as inserted by this Schedule) applies in relation to a transfer of business, and
(apart from this paragraph) the effect of subsection (4) of that section would be that a relevant losses amount falling within paragraph 34(1)(a) would be ignored for the purposes of section 18J(2) of that Act.
There is to be added to the adjusted foreign permanent establishments amount in relation to the accounting period of the transferee in which the transfer took place a negative amount equal to that relevant losses amount.
Section 62A of CAA 2001
For the purposes of section 62A of CAA 2001 (as inserted by this Schedule)—
where the qualifying expenditure in respect of the plant or machinery, or of the group of assets of which it forms part, in question does not exceed £50 million, an accounting period ending more than 12 months before the day on which this Act is passed is not a relevant preceding accounting period, and
where it does, any accounting period beginning within the period of 6 years ending with the day before that on which this Act is passed which (apart from this paragraph) would not be a relevant preceding accounting period is such a period.
Section 43(8) of TIOPA 2010: free assets
Until provision made under subsection (8) of section 43 of TIOPA 2010 (as substituted by this Schedule) has effect, “free assets” in subsection (7) of that section has the meaning given by regulation 3 of the Non-resident Insurance Companies Regulations 2003 (S.I. 2003/2714).
Furnished holiday lettings
Income tax
FA 2004
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ITTOIA 2005
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ITA 2007
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Commencement
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Corporation tax
CTA 2009
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CTA 2010
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Commencement
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Capital allowances
CAA 2001
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Commencement
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Chargeable gains
TCGA 1992
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Commencement etc
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Chargeable gains: oil activities
Licence swaps
In section 195A of TCGA 1992 (oil licence swaps), in subsection (1), for “195E” substitute “ 195F ”.
After section 195E of that Act (company that gives mixed consideration) insert—
Section 196 of that Act (interpretation of sections 194 to 195E) is amended as follows.
In the heading, for “195E” substitute “ 195F ”.
In subsection (1B), for “195E” substitute “ 195F ”.
In subsection (5)—
for “195E” substitute “ 195F ”, and
in the definition of “non-licence consideration”, omit “as determined at the time the swap arrangements are entered into”.
For subsection (5B) substitute—
The amendments made by this Part of this Schedule have effect in relation to disposals made on or after 23 March 2011.
Reinvestment of ring fence assets
After section 198H of TCGA 1992 (acquisition by member of same group) insert—
The amendment made by this Part of this Schedule has effect in relation to disposals made on or after 24 March 2010 (whether the deemed acquisition takes place before, on or after that date).
Benefits under pension schemes
Changes to benefits available under pension schemes etc
Unsecured and alternatively secured pension to be replaced by drawdown pension
In Part 4 of FA 2004 (pension schemes etc), section 165 (pension rules) is amended as follows.
In subsection (1)—
in pension rule 4—
for “If the member has not reached the age of 75, no payment of pension” substitute “ No payment of pension ”, and
for paragraph (c) substitute—;
for pension rule 5 substitute— “ Pension rule 5 The total amount of drawdown pension paid in each drawdown pension year in respect of a money purchase arrangement must not exceed 100% of the basis amount for the drawdown pension year. ”;
omit pension rules 6 and 7.
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Meaning of “drawdown pension”
Part 1 of Schedule 28 to FA 2004 (pension rules) is amended as follows.
In paragraph 4 (meaning of “unsecured pension”), for “ “Unsecured pension”” substitute “ “Drawdown pension” ”.
The heading before paragraph 4 becomes “ Drawdown pension ”.
In paragraph 6 (short-term annuity), in sub-paragraph (1)—
in paragraph (a), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”;
in paragraph (d), omit “and ends before the member reaches the age of 75”.
For paragraph 7 (meaning of “income withdrawal”) substitute—
Member's drawdown pension fund
In Part 1 of Schedule 28 to FA 2004, paragraph 8 (member's unsecured pension fund) is amended as follows.
In sub-paragraph (1), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.
In sub-paragraph (1A)(a), for “unsecured pension” substitute “ drawdown pension ”.
Omit sub-paragraphs (2) and (3).
In sub-paragraph (4), for “unsecured pension fund” (in each place) substitute “ drawdown pension fund ”.
The heading before paragraph 8 becomes “ Member's drawdown pension fund ”.
Drawdown pension year and basis amount for drawdown pension year
In Part 1 of Schedule 28 to FA 2004, paragraph 9 (unsecured pension year) is amended as follows.
In sub-paragraph (1)—
for “ “Unsecured pension year”” substitute “ “Drawdown pension year” ”;
in paragraph (a), for “unsecured pension” substitute “ drawdown pension ”;
at the end insert—
For sub-paragraph (2) substitute—
The heading before paragraph 9 becomes “ Drawdown pension year and basis amount for drawdown pension year ”.
Paragraph 10 of that Schedule (basis amount) is amended as follows.
For sub-paragraph (1) substitute—
In sub-paragraph (1B)(b)—
after “subject to” insert “ sub-paragraph (1ZA) and ”;
for “five unsecured pension years” (in both places) substitute “ three drawdown pension years ”.
In sub-paragraphs (2) and (4)—
for “unsecured pension year” substitute “ drawdown pension year ”;
for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.
In sub-paragraph (5)—
for “an unsecured pension year” substitute “ a drawdown pension year ”;
for “that unsecured pension year” substitute “ that drawdown pension year ”.
In sub-paragraph (6)—
for “unsecured pension year” substitute “ drawdown pension year ”;
for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.
After sub-paragraph (6) insert—
In sub-paragraph (7), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.
In sub-paragraph (8), for “unsecured pension” substitute “ drawdown pension ”.
In sub-paragraph (8A), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.
In sub-paragraph (9)(b), for “unsecured pension year” substitute “ drawdown pension year ”.
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After paragraph 10 of that Schedule insert—
Flexible drawdown: minimum income requirement etc
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Dependants' drawdown pension
In Part 4 of FA 2004, section 167 (pension death benefit rules) is amended as follows.
In subsection (1)—
in pension death benefit rule 3—, and
for “If a dependant has not reached the age of 75, no payment of pension death benefit to the dependant” substitute “ No payment of pension death benefit ”,
for paragraph (c) substitute—
for “the dependant” substitute “ a dependant ”;
for pension death benefit rule 4 substitute— “ Pension death benefit rule 4 The total amount of dependants' drawdown pension paid to a dependant in each drawdown pension year in respect of a money purchase arrangement must not exceed 100% of the basis amount for the drawdown pension year. But this limit does not apply in relation to an arrangement to which subsection (2A) applies. ”;
omit pension death benefit rules 5 and 6.
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Meaning of “dependants' drawdown pension”
Part 2 of Schedule 28 to FA 2004 (pension death benefit rules) is amended as follows.
In paragraph 18 (meaning of “dependants' unsecured pension”), for ““Dependants' unsecured pension”” substitute ““Dependants' drawdown pension””.
The heading before paragraph 18 becomes “ Dependants' drawdown pension ”.
In paragraph 20 (dependants' short-term annuity), in sub-paragraph (1)—
in paragraph (a), for “dependant's unsecured pension fund” substitute “ dependant's drawdown pension fund ”;
in paragraph (d), omit the words “reaches the age of 75 or”.
For paragraph 21 (meaning of “dependants' income withdrawal”) substitute—
Dependant's drawdown pension fund
In Part 2 of Schedule 28 to FA 2004, paragraph 22 (dependant's unsecured pension fund) is amended as follows.
In sub-paragraph (1), for “dependant's unsecured pension fund” substitute “ dependant's drawdown pension fund ”.
In sub-paragraph (2)(a), for “dependant's unsecured pension” substitute “dependants' drawdown pension”.
In sub-paragraph (3)—
for “dependant's unsecured pension fund” (in both places) substitute “ dependant's drawdown pension fund ”;
in paragraph (a), for “an unsecured pension fund” substitute “ a drawdown pension fund ”.
The heading before paragraph 22 becomes “ Dependant's drawdown pension fund ”.
Drawdown pension year and basis amount for drawdown pension year
In Part 2 of Schedule 28 to FA 2004, paragraph 23 (unsecured pension year) is amended as follows.
In sub-paragraph (1)—
for “ “Unsecured pension year”” substitute “ “Drawdown pension year” ”;
in paragraph (a), for “dependants' unsecured pension” substitute “dependants' drawdown pension”;
at the end insert—
For sub-paragraph (2) substitute—
The heading before paragraph 23 becomes “ Drawdown pension year and basis amount for drawdown pension year ”.
Paragraph 24 of that Schedule (basis amount) is amended as follows.
For sub-paragraph (1) substitute—
In sub-paragraph (1B)(b)—
after “subject to” insert “ sub-paragraph (1ZA) and ”;
for “five unsecured pension years” (in both places) substitute “ three drawdown pension years ”.
In sub-paragraphs (2) and (4)—
for “unsecured pension year” substitute “ drawdown pension year ”;
for “dependant's unsecured pension fund” substitute “ dependant's drawdown pension fund ”.
In sub-paragraph (5)—
for “an unsecured pension year” substitute “ a drawdown pension year ”;
for “that unsecured pension year” substitute “ that drawdown pension year ”.
In sub-paragraph (6)—
for “unsecured pension year” substitute “ drawdown pension year ”;
for “dependant's unsecured pension fund” substitute “ dependant's drawdown pension fund ”.
After sub-paragraph (6) insert—
In sub-paragraph (7), for “dependant's unsecured pension fund” substitute “ dependant's drawdown pension fund ”.
In sub-paragraph (8)—
for “sums and assets” substitute “ sums or assets ”;
for “unsecured dependants' pension” substitute “dependants' drawdown pension”.
In sub-paragraph (8A), for “dependant's unsecured pension fund” substitute “ dependant's drawdown pension fund ”.
In sub-paragraph (9)(b), for “unsecured pension year” substitute “ drawdown pension year ”.
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After paragraph 24 of that Schedule insert—
Flexible drawdown: minimum income requirement etc
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Foreign pensions: temporary non-residents
In Part 9 of ITEPA 2003 (pension income), Chapter 4 (foreign pensions: general rules) is amended as follows.
In section 574 (“pension”: interpretation)—
for subsection (1) substitute—;
for subsection (4) substitute—
In section 575(1) (taxable pension income), at the end insert “ and section 576A ”.
After section 576 insert—
Pensions under registered pension schemes: temporary non-residents
In Part 9 of ITEPA 2003 (pension income), Chapter 5A (pensions under registered pension schemes) is amended as follows.
In section 579B (taxable pension income), at the end insert—
After section 579C insert—
For section 579D (interpretation) substitute—
Lump sums to be payable to persons aged 75 or over
Part 1 of Schedule 29 to FA 2004 (lump sum rule) is amended as follows.
Paragraph 1 (pension commencement lump sum) is amended as follows.
In sub-paragraph (1)—
omit paragraph (a);
in paragraph (b), after “available” insert “ (but see sub-paragraph (3A)) ”.
After sub-paragraph (3) insert—
In sub-paragraph (6), for the words from “even though” to the end substitute “ even though the condition in sub-paragraph (1)(c) is not met. ”
In paragraph 2 (pension commencement lump sum: calculation of permitted maximum), after sub-paragraph (7) insert—
In paragraph 3 (pension commencement lump sum: calculation of applicable amount), in sub-paragraph (7), for the definition of “AC” substitute—
Paragraph 3A (recycling of pension commencement lump sums) is amended as follows.
In sub-paragraph (2), for “sub-paragraphs (3) and (4)” substitute “ sub-paragraphs (3) to (4A) ”.
After sub-paragraph (4) insert—
For sub-paragraph (5) substitute—
Paragraph 4 (serious ill-health lump sum) is amended as follows.
In sub-paragraph (1)—
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omit paragraph (e) (and the “and” before it).
After sub-paragraph (2) insert—
In paragraph 7 (trivial commutation lump sum), in sub-paragraph (1)(e), omit “but has not reached the age of 75”.
In paragraph 10(1) (winding-up lump sum)—
at the end of paragraph (d) insert “ and ”;
omit paragraph (f) (and the “and” before it).
In paragraph 12 (interpretation of Part 1), after sub-paragraph (1) insert—
Lump sum death benefits to be payable to persons aged 75 or over
Part 2 of Schedule 29 to FA 2004 (lump sum death benefit rule) is amended as follows.
Paragraph 13 (defined benefits lump sum death benefit) is amended as follows.
The existing text becomes sub-paragraph (1).
In that sub-paragraph—
omit paragraph (a);
omit paragraph (c) (but not the “and” after it);
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Paragraph 14 (pension protection lump sum death benefit) is amended as follows.
In sub-paragraph (1), omit paragraph (a).
In sub-paragraph (3), for the definition of “AC” substitute—.
Paragraph 15 (uncrystallised funds lump sum death benefit) is amended as follows.
In sub-paragraph (1)—
omit paragraphs (a) and (c);
at the end of paragraph (d) insert;
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Paragraph 16 (annuity protection lump sum death benefit) is amended as follows.
In sub-paragraph (1), omit paragraph (a).
In sub-paragraph (3), for the definition of “AC” substitute—.
Paragraph 17 (unsecured pension fund lump sum death benefit) is amended as follows.
For sub-paragraph (1) substitute—
In sub-paragraph (2)—
for “an unsecured pension fund lump sum death benefit” substitute “ a drawdown pension fund lump sum death benefit ”;
omit paragraph (b);
at the end of paragraph (c) insert
In sub-paragraph (3), for “an unsecured pension fund lump sum death benefit” substitute “ a drawdown pension fund lump sum death benefit ”.
In sub-paragraph (4), for “unsecured pension fund” substitute “ drawdown pension fund ”.
The heading before paragraph 17 becomes “ Drawdown pension fund lump sum death benefit ”.
Paragraph 18 (charity lump sum death benefit) is amended as follows.
In sub-paragraph (1)—
omit paragraph (a);
in paragraph (c), for the words from “in respect of” to “Schedule 28)” substitute “ in respect of the member's drawdown pension fund ”;
in paragraph (d), omit from “(or, if the member” to the end.
After sub-paragraph (1) insert—
In sub-paragraph (2)—
omit paragraph (b);
in paragraph (d), for “the dependant's alternatively secured pension fund” substitute “ the dependant's drawdown pension fund ”;
in paragraph (e), omit from “(or, if neither the member” to the end.
In sub-paragraph (4), for the words from “representing” to “pension fund” substitute “ representing what is the member's or dependant's drawdown pension fund ”.
In paragraph 20(1) (trivial commutation lump sum death benefit), omit—
paragraph (a), and
paragraph (c) (but not the “and” after it).
Serious ill-health lump sum charge
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Special lump sum death benefits charge
In Part 4 of FA 2004, section 206 (special lump sum death benefits charge) is amended as follows.
In subsection (1), for paragraph (c) substitute—.
After that subsection insert—
In subsection (4), for “35%” substitute “ 55% ”.
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Exemption from income tax of certain lump sums and lump sum death benefits
Section 636A of ITEPA 2003 (exemption for certain lump sums under registered pension schemes) is amended as follows.
In subsection (1)—
in paragraph (b), after “serious ill-health lump sum” insert “ paid to a member who has not reached the age of 75 ”;
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In subsection (7)—
after “ “defined benefits lump sum death benefit”,” insert—;
after “ “pension protection lump sum death benefit”,” insert “ and ”;
omit “ “unsecured pension fund lump sum death benefit”,” (and the “and” before it).
Lifetime allowance charge: benefit crystallisation events
In section 216 of FA 2004 (benefit crystallisation events and amounts crystallised), in the table in subsection (1), after the entry for benefit crystallisation event 5A insert—.
Schedule 32 to FA 2004 (benefit crystallisation events: supplementary) is amended as follows.
After paragraph 14 insert—
After paragraph 15 insert—
Annual allowance charge: persons meeting flexible drawdown conditions
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Removal of certain charges to inheritance tax in respect of pension schemes
IHTA 1984 is amended as follows.
Section 12 (dispositions allowable for income tax or conferring benefits under pension scheme) is amended as follows.
After subsection (2) insert—
Omit subsections (2A) to (2E).
Omit the following provisions—
section 151A(person dying with alternatively secured pension fund);
section 151B(relevant dependant with pension fund inherited from member over 75);
section 151BA(rate or rates of charge under section 151B);
section 151C(dependant dying with other pension fund);
section 151D(unauthorised payment where person dies over 75 with pension or annuity);
section 151E(rate or rates of charge under section 151D).
Consequential amendments
Inheritance Tax Act 1984
IHTA 1984 is amended as follows.
Section 12(dispositions allowable for income tax or conferring benefits under pension scheme) is amended as follows.
In subsection (2F), omit paragraph (b)(and the “and” before it).
In subsection (2G)—
omit the definitions of “lump sum death benefit”, “pension death benefit” and “relevant dependant”;
in the definition of “pension”, for “that Part” substitute “ Part 4 ”.
In section 151 (treatment of pension rights, etc), in subsection (2), for “Subject to sections 151A and 151C below, an interest” substitute “ An interest ”.
In section 200 (transfer on death)—
in subsection (1), omit “(subject to subsection (1A) below)”;
omit subsection (1A).
In section 210 (pension rights, etc), omit subsections (2) and (3).
Section 216 (delivery of accounts) is amended as follows.
In subsection (1), omit paragraph (bca).
In subsection (3)(a), omit “(or would do apart from section 151A(3)(b) or 151C(3)(b) above)”.
In subsection (4), omit “(or would be apart from section 151A(3)(b), 151C(3)(b) or 151B(4) above)”.
In subsection (6), omit paragraph (ac).
In subsection (7), for “, 126 or 151D” substitute “ or 126 ”.
In section 226 (payment: general rules), in subsection (4)—
for “, 126, 151B or 151D” substitute “ or 126 ”;
omit from “, or under section 151A” to “that section,”.
In section 233 (interest on unpaid tax), in subsection (1)(c)—
for “, 126, 151B or 151D” substitute “ or 126 ”;
omit from “, or under section 151A” to “that section,”.
In section 272(general interpretation), omit the definition of “scheme administrator”.
Pension Schemes Act 1993
in paragraph (a)—
for “unsecured pension year” substitute “ drawdown pension year ”,
after “twelve months” insert “ (disregarding the second sentence of pension rule 5) ”, and
for “where the member has not reached the age of 75,” substitute “ or ”;
in paragraph (c)—
for “unsecured pension year” substitute “ drawdown pension year ”,
after “twelve months” insert “ (disregarding the second sentence of pension death benefit rule 4) ”, and
omit “and the member's widow, widower or surviving civil partner has not reached the age of 75, or”;
omit paragraphs (b) and (d).
Pension Schemes (Northern Ireland) Act 1993
Until such time as the repeal of section 24A of the Pension Schemes (Northern Ireland) Act 1993 (requirements for interim arrangements) by paragraph 11 of Schedule 4 to the Pensions Act (Northern Ireland) 2008 has effect for all purposes, subsection (3) of that section has effect with the following amendments—
in paragraph (a)—
for “unsecured pension year” substitute “ drawdown pension year ”,
after “twelve months” insert “ (disregarding the second sentence of pension rule 5) ”, and
for “where the member has not reached the age of 75,” substitute “ or ”;
in paragraph (c)—
for “unsecured pension year” substitute “ drawdown pension year ”,
after “twelve months” insert “ (disregarding the second sentence of pension death benefit rule 4) ”, and
omit “and the member's widow, widower or surviving civil partner has not reached the age of 75, or”;
omit paragraphs (b) and (d).
Income Tax (Earnings and Pensions) Act 2003
Section 683 of ITEPA 2003 (PAYE income) is amended as follows.
In subsection (3), for “subsections (3A) and (4)” substitute “ subsections (3A) and (3B) ”.
After subsection (3A) insert—
In Part 2 of Schedule 1 to ITEPA 2003 (index of defined expressions), at the appropriate place insert—.
Finance Act 2004
Part 4 of FA 2004 (pension schemes etc) is amended as follows.
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In section 165 (pension rules), in subsection (3)(a), for “unsecured pension” substitute “ drawdown pension ”.
In section 168(1) (lump sum death benefit rule), for paragraph (e) substitute—.
In section 169 (recognised transfers), in subsection (1D)—
in paragraph (a), for “person's unsecured pension fund or dependant's unsecured pension fund” substitute “ member's drawdown pension fund or dependant's drawdown pension fund ”;
omit paragraph (b) (and the “or” before it).
Section 172B (increase in rights of connected person on death) is amended as follows.
In subsection (2)(b), for “member's unsecured pension fund or dependant's unsecured pension fund” substitute “ member's drawdown pension fund or dependant's drawdown pension fund ”.
In subsection (7A)—
in paragraph (a), for “dependants' unsecured pension fund or dependants' alternatively secured pension fund” substitute “ dependant's drawdown pension fund ”;
in paragraph (b), for “dependants' unsecured pension fund” substitute “ dependant's drawdown pension fund ”.
Omit subsection (8A).
Omit section 172BA (increase in rights on death arising from alternatively secured pension fund etc).
Omit section 181A (minimum level of payment of alternatively secured pensions).
Section 182 (unauthorised borrowing: money purchase arrangements) is amended as follows.
In subsection (3)—
in paragraph (a), for “member's unsecured pension fund or alternatively secured pension fund” substitute “ member's drawdown pension fund ”;
in paragraph (b), for “dependants' unsecured pension funds or alternatively secured pension funds” substitute “dependants' drawdown pension funds”.
In subsection (5), for “unsecured pension fund or alternatively secured pension fund” substitute “ drawdown pension fund ”.
In section 211 (surchargeable unauthorised member payments: valuation of crystallised rights), in subsection (1)(b), for “member's unsecured pension fund or alternatively secured pension fund” substitute “ member's drawdown pension fund ”.
In section 212 (surchargeable unauthorised member payments: valuation of uncrystallised rights), in subsection (2), for “member's unsecured pension fund or alternatively secured pension fund” substitute “ member's drawdown pension fund ”.
In section 216 (benefit crystallisation events and amounts crystallised), the table in subsection (1) is amended as follows.
In the entry for benefit crystallisation event 1, for “unsecured pension” substitute “ drawdown pension ”.
In the entry for benefit crystallisation event 5A—
for “unsecured pension” substitute “ drawdown pension ”;
for “individual's unsecured pension fund” substitute “ individual's drawdown pension fund ”.
In section 241(1) (scheme chargeable payment), omit paragraph (aa) (and the “and” after it).
In section 268 (unauthorised payments surcharge and scheme sanction charge), in subsection (6), omit—
“172BA,”, and
“or arises under section 181A”.
In section 273A (insurance company liable as scheme administrator), in subsection (1), for paragraph (c) substitute—.
Section 280(2) (general index) is amended as follows.
Omit the entries relating to “dependant's alternatively secured pension fund” and “member's alternatively secured pension fund”.
Omit the entries relating to “dependant's unsecured pension fund” and “member's unsecured pension fund” and at the appropriate place insert—.
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Omit the entry relating to “unsecured pension fund lump sum death benefit” and at the appropriate place insert—.
In Schedule 28 (pension rules), omit the following provisions—
paragraph 5 (meaning of “alternatively secured pension”);
paragraphs 11 to 13 (member's alternatively secured pension fund etc);
paragraph 19 (meaning of “dependants' alternatively secured pension”);
paragraphs 25 to 27 (dependant's alternatively secured pension fund etc).
Schedule 29 (authorised lump sums) is amended as follows.
In paragraph 1 (pension commencement lump sum), in sub-paragraph (3)(b), omit “, otherwise than by virtue of the operation of paragraph 8(2) of Schedule 28,”.
In paragraph 3 (pension commencement lump sum: calculation of applicable amount)—
in sub-paragraph (1)(a), for “unsecured pension” substitute “ drawdown pension ”;
in sub-paragraph (5)(a), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”;
in sub-paragraph (8)(a), for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”.
In paragraph 15 (uncrystallised funds lump sum death benefit), in sub-paragraph (2)(b), for “unsecured pension” substitute “ drawdown pension ”.
Schedule 32 (benefit crystallisation events: supplementary) is amended as follows.
In paragraph 3 (benefit crystallisation events 1 and 2: prevention of overlap)—
in sub-paragraph (1), for “unsecured pension fund” substitute “ drawdown pension fund ”;
in sub-paragraph (2), for “unsecured pension” substitute “ drawdown pension ”.
In paragraph 4 (benefit crystallisation events 1 and 4: prevention of overlap)—
in sub-paragraph (1), for “unsecured pension fund” substitute “ drawdown pension fund ”;
in sub-paragraph (2), for “unsecured pension” substitute “ drawdown pension ”.
In paragraph 5 (benefit crystallisation events 1 and 5: hybrid arrangements), in sub-paragraph (2), omit the words from “(with the effect that” to the end.
In paragraph 17 (benefit crystallisation event 8: prevention of overlap with other events), in sub-paragraph (2)—
for “unsecured pension fund” substitute “ drawdown pension fund ”;
for “unsecured pension” substitute “ drawdown pension ”.
Schedule 34 (non-UK schemes: application of certain charges) is amended as follows.
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In paragraph 5—
for “Sections 205 and 206” substitute “ Sections 205 to 206 ”;
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Omit paragraph 7ZA (unauthorised payment charge: alternatively secured pension etc).
Schedule 36 (transitional provisions and savings) is amended as follows.
In paragraph 20 (amount of lifetime allowance available to person who had right to payment of pension on 5 April 2006), for sub-paragraph (4) substitute—
In paragraph 28 (lump sum rights for members with enhanced protection), in sub-paragraph (3), for “sub-paragraphs (5) to (7)” substitute “ sub-paragraphs (5) to (7A) ”.
In paragraph 29 (lump sum rights for members with enhanced protection)—
in sub-paragraph (2), in the text treated as substituted for sub-paragraphs (1) to (3) of paragraph 3 of Schedule 29, for “ unsecured pension ” (in both places) substitute “ drawdown pension ”;
in sub-paragraph (3), in the text treated as substituted for sub-paragraphs (5) to (7A) of that paragraph—
for “member's unsecured pension fund” substitute “ member's drawdown pension fund ”, and
for the definition of “AC” substitute—
In paragraph 34 (entitlement to lump sums exceeding 25% of uncrystallised rights), in sub-paragraph (2), in the text treated as substituted for sub-paragraphs (5) to (8) of paragraph 2 of Schedule 29, for the definition of “ AC ” substitute—.
In paragraph 36 (right to payment of lump sum death benefit)—
in sub-paragraph (3)—
after paragraph (a) insert “ and ”, and
omit paragraph (c) (and the “and” before it);
omit sub-paragraphs (4) and (8);
in sub-paragraph (9)—
for “, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit” substitute “ or annuity protection lump sum death benefit ”, and
for “sub-paragraphs (3) to (8)” substitute “ sub-paragraphs (3) to (7) ”;
in sub-paragraph (10)(a), for “, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit” substitute “ or annuity protection lump sum death benefit ”;
in sub-paragraph (11), in the definition of “TPLS”, for “, annuity protection lump sum death benefit or unsecured pension fund lump sum death benefit” substitute “ or annuity protection lump sum death benefit ”.
Income Tax Act 2007
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Consequential repeals
In consequence of the amendments made by this Schedule, omit the following provisions—
in Schedule 10 to FA 2005, paragraphs 18(4), 20, 23 and 25(3);
in FA 2006—
in Schedule 22, paragraphs 3 to 9, 10(3) and 12, and
in Schedule 23, paragraph 29;
in FA 2007—
in Schedule 19, paragraphs 2(3), 4, 11, 12(2) and (5), 13 to 15, 16(2) to (4) and (6), 18(4), 20 to 26 and 29(2), (4) and (5), and
in Schedule 20, paragraphs 11(3) and 13;
in FA 2008—
in Schedule 4, paragraphs 4 and 9(2),
in Schedule 28, paragraphs 6 to 14, and
in Schedule 29, paragraph 16;
in F(No.2)A 2010—
section 6, and
Schedule 3.
Commencement and transitional provision
General
Subject to the provisions of this Part, the amendments made by this Schedule have effect for the tax year 2011-12 and subsequent tax years.
Entitlement to unsecured or alternatively secured pension on 5 April 2011
Any person who, immediately before 6 April 2011, was entitled to unsecured pension or alternatively secured pension is to be treated, on and after that date, as entitled to drawdown pension.
Paragraph 6 of Schedule 28 to FA 2004 (short-term annuity) has effect on and after 6 April 2011 as if a reference to an annuity purchased by the application of sums or assets representing the whole or any part of the member's drawdown pension fund in respect of an arrangement included a reference to an annuity purchased before that date by the application of sums or assets representing the whole or any part of the member's unsecured pension fund in respect of the arrangement.
Member's unsecured or alternatively secured pension fund existing on 5 April 2011
Paragraph 8(1A) of Schedule 28 to FA 2004 (member's drawdown pension fund) has effect on and after 6 April 2011 as if any reference to sums or assets having been designated as available for the payment of drawdown pension included a reference to sums or assets having been designated, before that date, as available for the payment of unsecured pension or alternatively secured pension.
Current unsecured pension year to become drawdown pension year
This paragraph applies in the case of a person who, immediately before 6 April 2011, was entitled to unsecured pension.
Where the last unsecured pension year began on or after 7 April 2010, the reference in paragraph 9(1)(a) of Schedule 28 to FA 2004 (drawdown pension year) to the day on which the member first becomes entitled to drawdown pension is to be read as a reference to the day on which that unsecured pension year began.
Accordingly, any unsecured pension year which began on or after 7 April 2010 is to be regarded, on and after 6 April 2011, as a drawdown pension year.
In this paragraph and paragraphs 90 and 91 “the last unsecured pension year” means the unsecured pension year in which 5 April 2011 fell.
Previous limit on amount of pension payable in year to apply for limited period
This paragraph applies in the case of a person who, immediately before 6 April 2011—
was entitled to unsecured pension, and
had not reached the age of 75.
Where, immediately before 6 April 2011, the last reference period to begin before that date has not ended—
pension rule 5 in section 165 of FA 2004 has effect in relation to every drawdown pension year beginning before 26 March 2013 and ending on or before the relevant date as if for “100%” there were substituted “ 120% ”, and
paragraph 10 of Schedule 28 to FA 2004 has effect with the following modifications—
the reference in sub-paragraph (1) to the first drawdown pension year is to be read as a reference to the first drawdown pension year beginning after the relevant date;
any reference in sub-paragraphs (1ZA) to (1C) to a reference period is to be read as including a reference to the current reference period.
The “relevant date” is the earlier of the following—
the day on which the current reference period ends, and
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subject to the operation of paragraph 10(1ZA) and (1B) of Schedule 28 to FA 2004, “the current reference period” is the period of 5 years beginning before 6 April 2011 and comprising—
the drawdown pension year in which that date falls,
any unsecured pension years which—and
began after the end of the last reference period ending before that date, and
ended before that date,
if the sum of the years falling within paragraphs (a) and (b) is less than five, one or more drawdown pension years beginning after that date.
A transfer is within this sub-paragraph if—
it takes place on or after 6 April 2011, and
it is a recognised transfer for the purposes of Part 4 of FA 2004 (see section 169 of that Act).
For the purposes of pension rule 5 in section 165 of FA 2004, the amount which, immediately before 6 April 2011, was by virtue of paragraph 10 of Schedule 28 to FA 2004 the basis amount for the last unsecured pension year continues, on and after that date, to be the basis amount for every drawdown pension year ending on or before the relevant date. This is subject to sub-paragraphs (4)(b) and (5) of that paragraph.
Paragraph 10(4) of Schedule 28 to FA 2004 has effect for drawdown pension years beginning on or after 6 April 2011 and ending on or before the relevant date as it has effect for drawdown pension years falling within any reference period beginning after the relevant date, but as if—
paragraph (a) were omitted,
in paragraph (b), for “otherwise” there were substituted “ if there has been a recent annuity, recent additional fund designation or recent pension sharing event ”, and
in paragraph 10(9) of that Schedule—
the reference to the reference date were a reference to the day on which the last unsecured pension year began, and
the reference to the immediately preceding drawdown pension year included, in the case of a drawdown pension year beginning on 6 April 2011, a reference to the last unsecured pension year.
In paragraph 10(7) to (8A) of that Schedule any reference to drawdown pension or the member's drawdown pension fund is to be read as including, in relation to anything occurring before 6 April 2011, a reference to unsecured pension or the member's unsecured pension fund.
This paragraph applies in the case of a person who—
reached the age of 75 on or after 22 June 2010 and before 6 April 2011, and
immediately before 6 April 2011, was entitled to unsecured pension.
Where the last unsecured pension year began on or after 7 April 2010—
pension rule 5 in section 165 of FA 2004 has effect in relation to that year as if for “100%” there were substituted “ 120% ”, and
for the purposes of that pension rule, the amount which, immediately before 6 April 2011, was the basis amount for that year by virtue of paragraph 10 of Schedule 28 to FA 2004 continues, on and after that date, to be the basis amount for that year.
The amendments made by paragraph 9 of this Schedule have effect in relation to drawdown pension years beginning on or after 6 April 2011.
Drawdown pension year and basis amount where person's whereabouts unknown at age 75
This paragraph applies in the case of a person who—
reached the age of 75 before 22 June 2010, and
immediately before 6 April 2011, had a member's unsecured pension fund by virtue of paragraph 11(6) and (7) of Schedule 28 to FA 2004 (cases where member's whereabouts are unknown at age 75).
In a case where—the reference in paragraph 9(1)(a) of Schedule 28 to FA 2004 (drawdown pension year) to the day on which the member first becomes entitled to drawdown pension is to be read as a reference to the day on which the person's whereabouts are so ascertained.
the scheme administrator was unable to ascertain the person's whereabouts during the relevant period, but
the person's whereabouts are ascertained by the scheme administrator after the end of that period,
The “relevant period” is the period beginning with the person's 75th birthday and ending with 5 April 2011.
In a case where the person's whereabouts have been ascertained by the scheme administrator within the period of 6 months ending on 6 April 2011, the reference in paragraph 9(1)(a) of that Schedule to the day on which the member first becomes entitled to drawdown pension is to be read as a reference to 6 April 2011.
Current alternatively secured pension year to become drawdown pension year
This paragraph applies in the case of a person who, immediately before 6 April 2011, was entitled to alternatively secured pension.
Where the last alternatively secured pension year began on or after 7 April 2010, the reference in paragraph 9(1)(a) of Schedule 28 to FA 2004 (drawdown pension year) to the day on which the member first becomes entitled to drawdown pension is to be read as a reference to the day on which that alternatively secured pension year began.
Accordingly, any alternatively secured pension year which began on or after 7 April 2010 is to be regarded, on and after 6 April 2011, as a drawdown pension year.
For the purposes of pension rule 5 in section 165 of FA 2004, the amount which, immediately before 6 April 2011, was the basis amount for that alternatively secured pension year by virtue of paragraph 13 of Schedule 28 to FA 2004 continues, on and after that date, to be the basis amount for that year.
In this paragraph “the last alternatively secured pension year” means the alternatively secured pension year in which 5 April 2011 fell.
Entitlement to dependants' unsecured or alternatively secured pension on 5 April 2011
Any person who, immediately before 6 April 2011, was entitled to dependants' unsecured pension or dependants' alternatively secured pension is to be treated, on and after that date, as entitled to dependants' drawdown pension.
Paragraph 20 of Schedule 28 to FA 2004 (short-term annuity) has effect on and after 6 April 2011 as if a reference to an annuity purchased by the application of sums or assets representing the whole or any part of the dependant's drawdown pension fund in respect of an arrangement included a reference to an annuity purchased before that date by the application of sums or assets representing the whole or any part of the dependant's unsecured pension fund in respect of the arrangement.
Dependant's unsecured or alternatively secured pension fund existing on 5 April 2011
Paragraph 22(2) of Schedule 28 to FA 2004 (dependant's drawdown pension fund) has effect on and after 6 April 2011 as if any reference to sums or assets having been designated as available for the payment of dependants' drawdown pension included a reference to sums or assets having been designated, before that date, as available for the payment of dependants' unsecured pension or dependants' alternatively secured pension.
Current unsecured pension year to become drawdown pension year
This paragraph applies in the case of a person who, immediately before 6 April 2011, was entitled to dependants' unsecured pension.
Where the last unsecured pension year began on or after 7 April 2010, the reference in paragraph 23(1)(a) of Schedule 28 to FA 2004 (drawdown pension year) to the day on which the dependant first becomes entitled to dependants' drawdown pension is to be read as a reference to the day on which that unsecured pension year began.
Accordingly, any unsecured pension year which began on or after 7 April 2010 is to be regarded, on and after 6 April 2011, as a drawdown pension year.
In this paragraph and paragraphs 98 and 99 “the last unsecured pension year” means the unsecured pension year in which 5 April 2011 fell.
Previous limit on amount of pension payable in year to apply for limited period
This paragraph applies in the case of a person who, immediately before 6 April 2011—
was entitled to dependants' unsecured pension, and
had not reached the age of 75.
Where, immediately before 6 April 2011, the last reference period to begin before that date has not ended—
pension death benefit rule 4 in section 167 of FA 2004 has effect in relation to every drawdown pension year beginning before 26 March 2013 and ending on or before the relevant date as if for “100%” there were substituted “ 120% ”, and
paragraph 24 of Schedule 28 to FA 2004 has effect with the following modifications—
the reference in sub-paragraph (1) to the first drawdown pension year is to be read as a reference to the first drawdown pension year beginning after the relevant date;
any reference in sub-paragraphs (1ZA) to (1C) to a reference period is to be read as including a reference to the current reference period.
The “relevant date” is the earlier of the following—
the day on which the current reference period ends, and
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subject to the operation of paragraph 24(1ZA) and (1B) of Schedule 28 to FA 2004, “the current reference period” is the period of 5 years beginning before 6 April 2011 and comprising—
the drawdown pension year in which that date falls,
any unsecured pension years that—and
began after the end of the last reference period ending before that date, and
ended before that date,
if the sum of the years falling within paragraphs (a) and (b) is less than five, one or more drawdown pension years beginning after that date.
A transfer is within this sub-paragraph if—
it takes place on or after 6 April 2011, and
it is a recognised transfer for the purposes of Part 4 of FA 2004 (see section 169 of that Act).
For the purposes of pension death benefit rule 4 in section 167 of FA 2004, the amount which, immediately before 6 April 2011, was by virtue of paragraph 24 of Schedule 28 to FA 2004 the basis amount for the last unsecured pension year continues, on and after that date, to be the basis amount for every drawdown pension year ending on or before the relevant date. This is subject to sub-paragraphs (4)(b) and (5) of that paragraph.
Paragraph 24(4) of Schedule 28 to FA 2004 has effect for drawdown pension years beginning after 6 April 2011 and ending on or before the relevant date as it has effect for drawdown pension years falling within any reference period beginning after the relevant date, but as if—
paragraph (a) were omitted,
in paragraph (b), for “otherwise” there were substituted “ if there has been a recent annuity, recent additional fund designation or recent pension sharing event ”, and
in paragraph 24(9) of that Schedule—
the reference to the reference date were a reference to the day on which the last unsecured pension year began, and
the reference to the immediately preceding drawdown pension year included, in the case of a drawdown pension year beginning on 6 April 2011, a reference to the last unsecured pension year.
In paragraph 24(7) to (8A) of that Schedule any reference to dependants' drawdown pension or the dependant's drawdown pension fund is to be read as including, in relation to anything occurring before 6 April 2011, a reference to dependants' unsecured pension or the dependant's unsecured pension fund.
This paragraph applies in the case of a person who—
reached the age of 75 on or after 22 June 2010 and before 6 April 2011, and
immediately before 6 April 2011, was entitled to dependants' unsecured pension.
Where the last unsecured pension year began on or after 7 April 2010—
pension death benefit rule 4 in section 167 of FA 2004 has effect in relation to that year as if for “100%” there were substituted “ 120% ”, and
for the purposes of that pension death benefit rule, the amount which, immediately before 6 April 2011, was the basis amount for that year by virtue of paragraph 24 of Schedule 28 to FA 2004 continues, on and after that date, to be the basis amount for that year.
The amendments made by paragraph 19 of this Schedule have effect in relation to drawdown pension years beginning on or after 6 April 2011.
Current alternatively secured pension year to become drawdown pension year
This paragraph applies in the case of a person who, immediately before 6 April 2011, was entitled to dependants' alternatively secured pension.
Where the last alternatively secured pension year began on or after 7 April 2010, the reference in paragraph 23(1)(a) of Schedule 28 to FA 2004 (drawdown pension year) to the day on which the dependant first becomes entitled to drawdown pension is to be read as a reference to the day on which that alternatively secured pension year began.
Accordingly, any alternatively secured pension year which began on or after 7 April 2010 is to be regarded, on and after 6 April 2011, as a drawdown pension year.
For the purposes of pension death benefit rule 4 in section 167 of FA 2004, the amount which, immediately before 6 April 2011, was the basis amount for that alternatively secured pension year by virtue of paragraph 27 of Schedule 28 to FA 2004 continues, on and after that date, to be the basis amount for that year.
In this paragraph “the last alternatively secured pension year” means the alternatively secured pension year in which 5 April 2011 fell.
Lump sums and lump sum death benefits
The amendments made by paragraphs 24 to 26, 31 and 79(2) and (3) have effect in relation to any lump sum to which a person becomes entitled for the purposes of Part 4 of FA 2004 on or after 6 April 2011.
The amendments made by paragraphs 27 to 30, 40, 42(2)(a) and (3), 63, 77(4), 81(2) and (4), 82(3) to (5) and 83 have effect in relation to lump sums paid on or after 6 April 2011.
The amendments made by paragraphs 33 to 39, 41, 42(2)(b) and (c), (4) and (5), 65, 67, 68, 75(a), 76, 77(5), 79(4) and 82(6) have effect in relation to deaths occurring on or after 6 April 2011.
Lifetime allowance charge
The amendments made by paragraphs 43, 44, 73, 80 and 82(2) have effect in relation to benefit crystallisation events occurring on or after 6 April 2011.
Any reference in a provision within sub-paragraph (3) to an amount previously crystallised on the designation of sums or assets as available for the payment of drawdown pension includes a reference to an amount crystallised before 6 April 2011 on the designation of sums or assets as available for the payment of unsecured pension.
The provisions are—
paragraph 3(2) of Schedule 32 to FA 2004 (benefit crystallisation events 1 and 2: prevention of overlap);
paragraph 4(2) of that Schedule (benefit crystallisation events 1 and 4: prevention of overlap);
paragraph 17(2) of that Schedule (benefit crystallisation event 8: prevention of overlap with other events).
Inheritance tax
The amendments made by paragraphs 47 and 50 have effect in relation to dispositions made (or treated as made) on or after 6 April 2011.
The amendments made by paragraphs 48 and 51 to 57 have effect in relation to deaths occurring on or after 6 April 2011.
Consequential repeals
Any repeal in paragraph 84 has effect to the same extent as the provision of this Schedule to which the repeal relates.
Power to make retrospective provision in orders and regulations under Part 4 of FA 2004
This paragraph applies to any order or regulations under Part 4 of FA 2004 which—
are made in the tax year beginning on 6 April 2011, and
are made in consequence of, or for the purposes of, or for giving full effect to, the amendments of that Part made by this Schedule.
Section 282 of that Act (orders and regulations) has effect in relation to any order or regulations to which this paragraph applies as if in subsection (A1) the words “if that provision does not increase any person's liability to tax” were omitted.
Application of rules of pension schemes
The trustees or managers of a registered pension scheme may make any payment under the scheme which, by virtue of the amendments made by this Schedule, is an authorised member payment (within the meaning of section 164 of FA 2004), despite any provision of the rules of the pension scheme (however framed) prohibiting the making of such a payment.
In the case of a personal pension scheme within the meaning of section 1 of the Pension Schemes Act 1993, nothing in subsection (1) of section 28 of that Act (ways of giving effect to protected rights) is to be taken to prevent the trustees or managers of the scheme from giving effect to the protected rights of a member of the scheme in the way provided for by subsection (1A) of that section.
In the case of a personal pension scheme within the meaning of section 1 of the Pension Schemes (Northern Ireland) Act 1993, nothing in subsection (1) of section 24 of that Act (ways of giving effect to protected rights) is to be taken to prevent the trustees or managers of the scheme from giving effect to the protected rights of a member of the scheme in the way provided for by subsection (1A) of that section.
Annual allowance charge
Amendments
Part 4 of FA 2004 (pension schemes etc) is amended as follows.
In section 172D(4)(b) (limit on increase in benefits), for “236” substitute “ 236A ”.
Section 227 (annual allowance charge) is amended as follows.
Omit subsections (2) and (3).
In subsection (4), for “rate of 40%” substitute “ appropriate rate ”.
After that subsection insert—
Omit subsections (5A) and (5B).
In subsection (6), after the entry relating to sections 230 to 237 (before the “and”) insert— “ sections 237A to 237F (persons liable to charge), ”.
For section 228 substitute—
After that section insert—
Section 229 (total pension input amount) is amended as follows.
In subsection (2)(c), for “236” substitute “ 236A ”.
In subsection (3), for paragraph (a) substitute—.
After that subsection insert—
Section 230 (cash balance arrangements) is amended as follows.
In subsection (4), for “beginning of the pension input period” substitute “ end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement) ”.
After subsection (5) insert—
In section 231 (cash balance arrangements: uprating of opening value), for subsection (3) substitute—
Section 232 (cash balance arrangements: adjustments of closing value) is amended as follows.
In subsection (2), for “the debit” substitute “ the reduction ”.
In subsection (3), for “the credit” substitute “ the increase ”.
In subsection (4)—
for “Subsection (5) applies if” substitute “ If ”,
for “virtue of a transfer of any sum or asset” substitute “ reason of a transfer relating to the individual of any sums or assets ”,
omit “other”, and
insert at the end (not as part of paragraph (b)) “ the amount of the reduction is to be added. ”
Omit subsection (5).
In subsection (6)—
for “Subsection (7) applies if” substitute “ If ”,
for “virtue of a transfer” substitute “ reason of a transfer relating to the individual ”, and
insert at the end “ , the amount of the increase is to be subtracted. ”
Omit subsection (7).
For subsection (8) substitute—
Omit subsection (9).
Section 234 (defined benefits arrangements) is amended as follows.
In subsection (4)—
for “10” substitute “ 16 ”,
in the definition of PB, for “beginning of the pension input period” substitute “ end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement) ”, and
in the definition of LSB, for “that time” substitute “ the end of the immediately preceding pension input period (or is nil if the pension input period is the first pension input period of the arrangement) ”.
In subsection (5), for “10” substitute “ 16 ”.
After that subsection insert—
In subsection (6), for “and section 236 (adjustments of closing value)” substitute “ , section 236 (adjustments of closing value) and section 236A (post-entitlement enhancements) ”.
Section 235 (defined benefits arrangements: uprating of opening value) is amended as follows.
In subsection (1), omit “in a case where rights do not accrue to the individual under the arrangement during the pension input period”.
For subsection (3) substitute—
Section 236 (defined benefits arrangements: adjustments of closing value) is amended as follows.
In subsection (1), for “the closing value of the individual's rights as calculated” substitute “ PE and LSE ”.
In subsection (2)—
for “rights of the individual under the arrangement have” substitute “ annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has ”,
for “the debit” substitute “ the reduction ”, and
insert at the end “ to PE or LSE ”.
In subsection (3)—
for “rights of the individual under the arrangement have” substitute “ annual rate of the pension, or the amount of the lump sum, to which the individual would be entitled under the arrangement has ”,
for “the credit” substitute “ the increase ”, and
insert at the end “ from PE or LSE ”.
For subsections (4) to (7) substitute—
For subsection (8) substitute—
Omit subsection (9).
After section 236 insert—
In subsection (5) of section 237 (hybrid arrangements), for “236” substitute “ 236A ”.
After that section insert—
Section 238 (pension input period) is amended as follows.
In subsection (1)(a), for the words after “ending with” substitute
After subsection (4) insert—
In subsection (6)—
omit “the earlier of”,
for “and” substitute “ or ”, and
insert at the beginning of paragraph (b) “ if there is not such a nominated date, ”.
In subsection (7), for “to be treated as having ended when” substitute “ that in which ”.
After that section insert—
In section 254 (accounting for tax by scheme administrators), after subsection (7) insert—
In section 255(1) (assessments), after paragraph (c) insert—.
In section 269(1)(a) (appeal against discharge of liability), after “under” insert “ section 237D (discharge of scheme administrator's liability to annual allowance charge), ”.
In section 279(1) (other definitions), insert at the appropriate places—, and.
In section 280(2) (general index), insert at the appropriate places—
In section 282(1A) (orders and regulations subject to Commons-only draft affirmative procedure)—
for “227(5A),” substitute “ 237B(11), ”, and
after “242(5)” insert “ , no order may be made under section 228(2) which specifies an amount for any tax year less than the annual allowance for the immediately preceding tax year and no order may be made under section 238A which increases any person's liability to tax ”.
Schedule 34 (currently-relieved non-UK pension schemes etc) is amended as follows.
In paragraph 8(1), after “a currently-relieved non-UK pension scheme” insert “ and its scheme manager ”.
After paragraph 9 insert—
In paragraph 12(1), after “a currently-relieved non-UK pension scheme” insert “ and its scheme manager ”.
In Schedule 36 (transitional provision etc), omit paragraph 49 (disapplication of annual allowance charge for individuals with enhanced protection) and the heading before it.
In FA 2009—
in Schedule 2, omit paragraph 15, and
in Schedule 35, omit paragraph 22.
In the Registered Pension Schemes (Standard Lifetime and Annual Allowances) Order 2010 (S.I. 2010/922), omit article 3.
Commencement and transitional provision
The amendments made by Part 1 have effect for the tax year 2011-12 and subsequent tax years.
Apart from the amendments made by paragraph 16(2) and (4), such of the amendments as apply in relation to pension input periods have effect in relation to pension input periods ending in the tax year 2011-12 but beginning earlier (as well as those beginning in that tax year).
This paragraph applies where—
the pension input period in respect of any arrangement relating to the individual which ends in the tax year 2011-12 begins before 14 October 2010 (a “straddling pension input period”), and
the total pension input amount in the case of the individual for that tax year exceeds £50,000.
The following provisions apply for arriving at the amount in respect of which the annual allowance charge is charged for that tax year (instead of the charge being in respect of the amount by which the total pension input amount exceeds the amount of the annual allowance).
Treat each straddling pension input period as if it were 2 separate pension input periods—And treat any pension input period in respect of any arrangement relating to the individual which ends in the tax year 2011-12 which is not a straddling pension input period as if it were a post-announcement period.
one beginning when the straddling pension input period begins and ending with 13 October 2010 (a “pre-announcement period”), and
the other beginning with 14 October 2010 and ending when the straddling pension input period ends (a “post-announcement period”).
Arrive at the pension input amount in respect of each post-announcement period (as if it were a pension input period ending in the tax year 2011-12) and aggregate those amounts.
Deduct £50,000 from that aggregate. The result (or, if a negative amount, nil) is the post-announcement periods total.
Arrive at the pension input amount in respect of each pre-announcement period (as if it were a pension input period ending in the tax year 2011-12) and aggregate those amounts. In the case of a defined benefits arrangement, subsections (4) and (5) of section 234 of FA 2004 are to apply for the purposes of this calculation as if the references to “16” were to “10”.
Deduct from that aggregate the difference between £255,000 and the lesser of—The result (or, if a negative amount, nil) is the pre-announcement periods total.
£50,000, and
the aggregate arrived at under sub-paragraph (4).
Aggregate the post-announcement periods total and the pre-announcement periods total.
Deduct any amount by which (apart from this paragraph) the annual allowance in the case of the individual for the tax year would have been increased by virtue of section 228A of FA 2004 or, if less, by so much of any such amount as equals that aggregate.
Any result is the amount in respect of which the annual allowance charge is charged for the tax year 2011-12.
Where paragraph 28 applies in the case of the individual, section 228A of FA 2004 has effect in the case of the individual for tax years subsequent to the tax year 2011-12—
as if the references in subsections (3)(a) and (b) of that section to the amount of the annual allowance for that tax year were to £50,000, and
as if any amount deducted under sub-paragraph (9) of that paragraph had been “used-up” within the meaning of that section.
This paragraph has effect in relation to the application of section 228A of FA 2004 for the tax years 2011-12, 2012-13 and 2013-14.
The assumptions in sub-paragraph (3) are to be made in determining—
whether the amount of the annual allowance for the tax years 2008-09, 2009-10 and 2010-11 exceeded the total pension input amount in the case of the individual for the tax year, and
whether any excess of the annual allowance over the total pension input amount in the case of the individual for any of those tax years has been used up.
The assumptions are—
that the annual allowance for each of the tax years 2008-09, 2009-10 and 2010-11 was £50,000, and
that the provisions of Part 4 of FA 2004 apply in relation to pension input periods in respect of arrangements relating to the individual that end in any of those tax years subject to the amendments made by this Schedule (including that inserting section 228A).
In determining under section 233 of FA 2004 the pension input amount in respect of an arrangement relating to an individual for a pension input period of the arrangement that ends in the tax year 2009-10, 2010-11 or 2011-12, there is to be deducted from what would otherwise be the pension input amount so much of any contributions refund lump sum (within the meaning of paragraph 15 of Schedule 35 to FA 2009) paid to the individual (or the personal representatives of the individual) as is attributable to contributions paid under the arrangement in the pension input period.
Section 237B has effect in relation to the tax year 2011-12 as if the reference in subsection (5)(a) of that section to 31 July in the year following that in which the tax year ends were to 31 December 2013.
Section 254(7A) has effect in relation to the tax year 2011-12 as if the reference in that provision to 31 December in the year following that in which the tax year ends were to 31 March 2014.
Expressions used in this Part of this Schedule and Part 4 of FA 2004 have the same meaning in this Part of this Schedule as in that Part of that Act.
Lifetime allowance charge
Amendments
Part 4 of FA 2004 (pension schemes etc) is amended as follows.
Section 218 (individual's lifetime allowance and standard lifetime allowance) is amended as follows.
For subsections (2) and (3) substitute—
After subsection (5) insert—
Schedule 29 (authorised lump sums) is amended as follows.
Paragraph 7 (trivial commutation lump sum) is amended as follows.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After that sub-paragraph insert—
Paragraph 10 (winding-up lump sum) is amended as follows.
In sub-paragraph (2), for “1% of the standard lifetime allowance when the lump sum is paid,” substitute “ £18,000, ”.
After that sub-paragraph insert—
Paragraph 20 (trivial commutation lump sum death benefit) is amended as follows.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After that sub-paragraph insert—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule 36 (transitional provision) is amended as follows.
In paragraph 16(3), for “standard lifetime allowance when the first relevant event occurs.” substitute “ underpinned lifetime allowance when the first relevant event occurs; and “the underpinned lifetime allowance” is the greater of the current standard lifetime allowance and £1,800,000 (the standard lifetime allowance for the tax year 2011-12). ”
Paragraph 28(3) is amended as follows.
In the sub-paragraphs (6A) and (7) treated as substituted—
in the formula, for “CSLA” substitute “ ULA ”, and
for the definition of CSLA substitute— “ ULA is the underpinned lifetime allowance, and ”.
After the sub-paragraph (7) treated as substituted insert—
Paragraph 34(2) is amended as follows.
In the sub-paragraph (5) treated as substituted, for “ CSLA ” substitute “ULA”.
In the sub-paragraph (7) treated as substituted, for the definition of CSLA substitute— “ ULA is the underpinned lifetime allowance, ”.
After the sub-paragraph (7A) treated as substituted insert—
In the Registered Pension Schemes (Standard Lifetime and Annual Allowances) Order 2010 (S.I. 2010/922), omit article 2.
Commencement and transitional provision
The amendments made by Part 1 have effect for the tax year 2012-13 and subsequent tax years.
This paragraph applies on and after 6 April 2012 in the case of an individual—if notice of intention to rely on it is given to an officer of Revenue and Customs.
who has one or more arrangements under a registered pension scheme on that date,
in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not apply on that date, and
in relation to whom paragraph 12 of that Schedule (enhanced protection) does not apply on that date,
This paragraph also applies on or after 6 April 2012 in the case of an individual—if notice of intention to rely on it is given to an officer of Revenue and Customs.
who, on that date—
has one or more arrangements under a relieved non-UK pension scheme of which the individual is a relieved member, and
is not a member of a registered pension scheme,
in relation to whom paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not apply on that date, and
in relation to whom paragraph 12 of that Schedule (enhanced protection) does not apply on that date,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—
the amount specified in section 637P of that Act (individual’s lump sum allowance) were £450,000, and
the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were—
if one or more lump sum and death benefit allowance enhancement factors operate in relation to the individual for the purposes of paragraph 20H of Schedule 36 to FA 2004, the individual’s enhanced lump sum and death benefit allowance (as determined under that paragraph of that Schedule), and
otherwise, £1,800,000.
For the purposes of paragraph 20H of Schedule 36 to FA 2004, the individual’s “protected lump sum and death benefit allowance” is £1,800,000.
But this paragraph ceases to apply if the notice under sub-paragraph (1) or (as the case may be) sub-paragraph (1A) is given on or after 15 March 2023 and, on or after 6 April 2012—
there is benefit accrual in relation to the individual under an arrangement under a registered pension scheme,
there is an impermissible transfer into any arrangement under a registered pension scheme relating to the individual,
a transfer of sums or assets held for the purposes of, or representing accrued rights under, any such arrangement is made that is not a permitted transfer, or
an arrangement relating to the individual is made under a registered pension scheme otherwise than in permitted circumstances.
Subject to sub-paragraphs (4B) to (4E), sub-paragraph (4) applies in relation to an individual who is a relieved member of a relieved non-UK pension scheme as if the scheme were a registered pension scheme; and the other sub-paragraphs of this paragraph apply accordingly.
In relation to an arrangement under a relieved non-UK pension scheme, in sub-paragraph (4) the reference to 6 April 2012 is to be read as a reference to 6 April 2013.
Sub-paragraphs (4D) and (4E) apply (instead of sub-paragraph (5)) for the purposes of sub-paragraph (4)(a) in determining if there is benefit accrual in relation to an individual under an arrangement under a relieved non-UK pension scheme of which the individual is a relieved member.
There is benefit accrual in relation to the individual under the arrangement if there is a pension input amount under sections 230 to 237 of FA 2004 (as applied by Schedule 34 to that Act) greater than nil in respect of the arrangement for a tax year; and, in such a case, the benefit accrual is treated as occurring at the end of the tax year.
There is also benefit accrual in relation to the individual under the arrangement if—and, in such a case, the benefit accrual is treated as occurring immediately before the benefit crystallisation event.
in a tax year there occurs a benefit crystallisation event in relation to the individual (whether in relation to the arrangement or to any other arrangement under any pension scheme or otherwise), and
had the tax year ended immediately before the benefit crystallisation event, there would have been a pension input amount under sections 230 to 237 of FA 2004 greater than nil in respect of the arrangement for the tax year,
For the purposes of sub-paragraph (4)(a) there is benefit accrual in relation to the individual under an arrangement—
in the case of a money purchase arrangement that is not a cash balance arrangement, if a relevant contribution is paid under the arrangement on or after 6 April 2012,
in the case of a cash balance arrangement or a defined benefits arrangement, if there is an increase in the value of the individual's rights under the arrangement at any time on or after that date (but subject to sub-paragraph (12)), and
in the case of a hybrid arrangement—
where the benefits that may be provided to or in respect of the individual under the arrangement include money purchase benefits other than cash balance benefits, if a relevant contribution is paid under the arrangement on or after 6 April 2012, and
in any case, if there is an increase in the value of the individual's rights under the arrangement at any time on or after that date (but subject to sub-paragraph (12)).
For the purposes of sub-paragraphs (5)(b) and (c)(ii) and (12) whether there is an increase in the value of the individual's rights under the arrangement (and its amount if there is) is to be determined—
in the case of a cash balance arrangement (or a hybrid arrangement under which cash balance benefits may be provided to or in respect of the individual under the arrangement), by reference to whether there is an increase in the amount that would, on the valuation assumptions, be available for the provision of benefits to or in respect of the member (and, if there is, the amount of the increase), and
in the case of a defined benefits arrangement (or a hybrid arrangement under which defined benefits may be provided to or in respect of the individual under the arrangement), by reference to whether there is an increase in the benefits amount.
For the purposes of sub-paragraph (6)(b) “the benefits amount” is—(P RVF)+LS where—LS is ... the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension); P is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement; RVF is the relevant valuation factor.
Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies for the purposes of sub-paragraph (4)(b) but as if the references to a relevant existing arrangement were to the arrangement and the reference in sub-paragraph (2) to 5 April 2006 were to 5 April 2012.
Sub-paragraphs (7) to (8B) of paragraph 12 of Schedule 36 to FA 2004 (when there is a permitted transfer) apply for the purposes of sub-paragraph (4)(c); and where there is a permitted transfer—
if it is a permitted transfer by virtue of sub-paragraph (8)(a) of paragraph 12, this paragraph applies in relation to the arrangement to which the transfer is made,
if it is a permitted transfer by virtue of sub-paragraph (8)(b) of that paragraph, this paragraph applies in relation to the arrangement to which the transfer is made as if it were the same as that from which it is made, and
if it is a permitted transfer by virtue of sub-paragraph (8)(c) of that paragraph, this paragraph applies in relation to the arrangement to which the transfer is made as if it were the same as that from which it is made and (if the employment is transferred) as if the employment with the transferee were the employment with the transferor.
Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004 (“permitted circumstances”) apply for the purposes of sub-paragraph (4)(d).
Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid under an arrangement) applies for the purposes of sub-paragraph (5)(a) and (c)(i).
Increases in the value of the individual's rights under an arrangement are to be ignored for the purposes of sub-paragraph (5)(b) or (c)(ii) if in no tax year do they exceed the relevant percentage.
The relevant percentage, in relation to a tax year, means—Where both paragraphs (a) and (b) would otherwise apply giving different percentages, the paragraph giving the higher percentage applies.
where the arrangement (or a predecessor arrangement) includes provision for the value of the rights of the individual to increase during the tax year at an annual rate specified in the rules of the pension scheme (or a predecessor registered pension scheme) on 9 December 2010—
the percentage specified (or, where more than one arrangement includes such provision, the higher or highest of the percentages specified), plus
the relevant statutory increase percentage;
where the arrangement (or a predecessor arrangement) includes provision for the value of the rights of the individual to increase during the tax year at an annual rate specified by reference to the retail prices index in the rules of the pension scheme (or a predecessor registered pension scheme) on 6 April 2012 which does not exceed an increase in the retail prices index—
the percentage specified (or, where more than one arrangement includes such provision, the higher or highest of the percentages specified), plus
the relevant statutory increase percentage; or
otherwise—
an increase in the consumer prices index, or
if higher, the relevant statutory increase percentage.
In sub-paragraph (13)—“predecessor arrangement”, in relation to an arrangement, means another arrangement (under the same or another registered pension scheme) from which some or all of the sums or assets held for the purposes of the arrangement directly or indirectly derive;“predecessor registered pension scheme”, in relation to a pension scheme, means another registered pension scheme from which some or all of the sums or assets held for the purposes of the arrangement under the pension scheme directly or indirectly derive;“an increase in the retail prices index” means the percentage by which the retail prices index for a month specified in the rules of the pension scheme (or predecessor pension scheme) is higher than it was for the same month in the year before (or nil per cent if it is not higher);“an increase in the consumer prices index” means the percentage by which the consumer prices index for the month of September in the previous tax year is higher than it was for the same month in the year before (or nil per cent if it is not higher).
In sub-paragraph (13) “the relevant statutory increase percentage”, in relation to a tax year, means the percentage increase in the value of the individual’s rights under the arrangement during the tax year so far as it is attributable solely to one or more of the following—
a revaluation in accordance with Chapter 2 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993 (early leavers: revaluation of accrued benefits);
a revaluation in accordance with Chapter 3 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993 (early leavers: protection of increases in guaranteed minimum pensions);
the application of section 67 of the Equality Act 2010 (sex equality rule for occupational pension schemes).
Sub-paragraph (14C) applies in relation to a tax year if—
the arrangement is a defined benefits arrangement which is under an annuity contract treated as a registered pension scheme under section 153(8) of FA 2004,
the contract provides for the value of the rights of the individual to be increased during the tax year at an annual rate specified in the contract, and
the contract limits the annual rate to the percentage increase in the retail prices index over a 12 month period specified in the contract.
Sub-paragraph (13)(c)(i) applies as if it referred instead to the annual rate of the increase in the value of the rights during the tax year.
For the purposes of sub-paragraph (14B)(c) the 12 month period must end during the 12 month period preceding the month in which the increase in the value of the rights occurs.
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Expressions used in this paragraph and Part 4 of FA 2004 have the same meaning in this paragraph as in that Part.
In particular, references to a relieved non-UK pension scheme or a relieved member of such a scheme are to be read in accordance with paragraphs 13(3) and (4) and 18 of Schedule 34 to FA 2004 (application of lifetime allowance charge provisions to members of overseas pension schemes).
The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 14.
Regulations under this paragraph may (for example) add to the cases in which paragraph 14 is to apply or is to cease to apply.
Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made; but—
the time must be no earlier than 6 April 2012, and
the provision must not increase any person's liability to tax.
In relation to regulations under this paragraph made during 2013, sub-paragraph (3) has effect with the omission of paragraph (b) so long as the time in question is no earlier than 6 April 2013.
The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision specifying how any notice required to be given to an officer of Revenue and Customs under paragraph 14 is to be given.
In sub-paragraph (1) the reference to paragraph 14 is to that paragraph as amended from time to time by regulations under paragraph 15.
Regulations under paragraph 15 or 16 may include supplementary or incidental provision.
The powers to make regulations under paragraphs 15 and 16 are exercisable by statutory instrument.
A statutory instrument containing regulations under paragraph 15 or 16 is subject to annulment in pursuance of a resolution of the House of Commons.
The bank levy
Introduction
There is to be a tax called “the bank levy”.
The bank levy is charged on certain types of equity and liabilities of certain groups of entities and individual entities as set out in Part 2 of this Schedule.
In this Schedule—Part 3 contains provision defining the different types of groups of entities in relation to which the bank levy is charged; Part 4 contains provision defining the equity and liabilities on which the bank levy is charged; Part 5 contains supplementary provision; Part 6 deals with the collection and management of the bank levy; Part 7 deals with double taxation relief and with the deduction of foreign levies for the purposes of corporation tax and income tax; Part 8 contains definitions; Part 9 confers a power to make changes to this Schedule in specified circumstances.
Charging of bank levy
Bank levy to be charged in relation to certain groups of entities
The bank levy is charged if, as at the end of a period of account (“the chargeable period”) of an entity (“the parent entity”)—
the parent entity is a parent and is not a subsidiary of any other entity, and
the group (“the relevant group”) for which the parent entity is the parent is a group within sub-paragraph (2).
The groups within this sub-paragraph are—See Part 3 of this Schedule for the definitions of these groups.
a UK banking group,
a building society group,
a foreign banking group, or
a relevant non-banking group.
“Group”, “parent” and “subsidiary” have the meaning given by those provisions of international accounting standards relating to the preparation of consolidated financial statements (whether or not the parent entity prepares financial statements under those standards).
Accordingly, for the purposes of this Schedule the members of the relevant group are—
the parent entity, and
any other entity which, as at the end of the chargeable period, is a member of the group for the purposes of the provisions mentioned in sub-paragraph (3).
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This paragraph applies in relation to periods of account ending on or after 1 January 2011.
Bank levy to be charged in relation to certain entities which are not members of groups
The bank levy is charged if, as at the end of a period of account (“the chargeable period”) of an entity (“the relevant entity”), the relevant entity—
is a UK resident bank, a building society or a relevant foreign bank, and
does not fall within sub-paragraph (2) or (3).
An entity falls within this sub-paragraph if it is an entity in relation to which paragraph 4(1) applies as at the end of the chargeable period.
An entity (“A”) falls within this sub-paragraph if—
there is another entity (“B”) in relation to which paragraph 4(1) applies as at the end of the chargeable period (or in relation to which paragraph 4(1) would apply if B had a period of account ending at the same time as the chargeable period), and
A is (or would be) a member of the relevant group.
This paragraph applies in relation to periods of account ending on or after 1 January 2011.
Steps for determining the amount of the bank levy
This paragraph applies where the bank levy is charged as provided for by paragraph 4 or 5.
Here are the steps to be taken to determine the amount of the bank levy. Step 1 In accordance with Part 4 of this Schedule, determine the amount of the chargeable equity and liabilities of the relevant group or the relevant entity (as the case may be). Step 2 If the amount of the chargeable equity and liabilities is not more than £20,000,000,000, the amount of the bank levy is nil and no further steps are taken. If the amount of the chargeable equity and liabilities is more than £20,000,000,000, go to Step 3. Step 3 Determine how much of the chargeable equity and liabilities are long term equity and liabilities and how much are short term liabilities. Step 4 Determine the proportion (“A%”) of the chargeable equity and liabilities which is long term equity and liabilities and the proportion (“B%”) of the chargeable equity and liabilities which is short term liabilities. Step 5 Reduce the amount of the long term chargeable equity and liabilities by an amount equal to A% of £20,000,000,000 and the amount of the short term chargeable liabilities by an amount equal to B% of £20,000,000,000. Step 6 If the chargeable period is 12 months, go straight to Step 7. If not, adjust the amount of the long term chargeable equity and liabilities and the amount of the short term chargeable liabilities as follows. Divide the amount by 365 and then multiply the result by the number of days in the chargeable period. Step 7 Charge the amount of the long term chargeable equity and liabilities at the rate of 0.05%. Charge the amount of the short term chargeable liabilities at the rate of 0.1%.
The bank levy is to be paid as provided for by Part 6 of this Schedule.
Special provision for chargeable periods falling wholly or partly before 1 January 2021
Paragraph 6(2) applies subject to this paragraph if some or all of the chargeable period falls before 1 January 2021.
For Step 7 there is substituted—
If the chargeable period starts before 1 January 2011, for the purposes of Step 6 and Step 7 (as substituted by sub-paragraph (2)) the part of the period falling before 1 January 2011 is ignored and, accordingly, the period is treated as having started on 1 January 2011.
Groups covered by the bank levy
Definitions of “ UK banking group”, “building society group”, “foreign banking group” and “relevant non-banking group”
The relevant group is a “ UK banking group” if—
the group is a banking group (see paragraph 12), and
the parent entity is a UK resident entity.
The relevant group is a “building society group” if the parent entity is a building society.
The relevant group is a “foreign banking group” if—
the group is a banking group (see paragraph 12), and
the parent entity is a non-UK resident entity.
The relevant group is a “relevant non-banking group” if—
the members of the group include at least one UK resident bank or relevant foreign bank, and
the group is neither a banking group nor a building society group.
Definition of “banking group”
The relevant group is a “banking group” if—
condition A, B, C or D is met, and
the exempt activities condition is not met (see paragraph 13).
Condition A is that the parent entity is a UK resident bank (see paragraph 80) or a relevant foreign bank (see paragraph 78).
Condition B is that—
the parent entity is an investment entity, and
the members of the relevant group include at least one UK resident bank to which sub-paragraph (6) applies or relevant foreign bank to which that sub-paragraph applies.
Condition C is that—
the parent entity is a non-UK resident entity to which sub-paragraph (8) applies, and
the members of the relevant group include at least one UK resident bank or relevant foreign bank.
Condition D is that—
the parent entity is an investment entity,
the members of the relevant group include at least one non-UK resident entity to which both sub-paragraphs (6) and (8) apply, and
those members also include at least one UK resident bank or relevant foreign bank.
This sub-paragraph applies to an entity (“E”) if, for the purposes of the applicable accounting provisions, E is not a subsidiary of any other entity apart from investment entities.
“ The applicable accounting provisions ” means—
the provisions mentioned in paragraph 4(3), ...
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This sub-paragraph applies to an entity (“F”) if—
F would be a UK resident bank if—
F were a UK resident entity,
it carried on its activities in the United Kingdom,
where it would be required to be an authorised person for the purposes of FISMA 2000 in order to carry on those activities in the United Kingdom, it were an authorised person with permission to carry on those activities, and
where those activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in paragraph 79(b) to (f), as a result of carrying on those activities and having such permission it would be a BIPRU 730k firm and an FCA investment firm that meets the conditions in paragraph 70(1B), or
F is a member of a partnership which is a non-UK resident entity and F would be a UK resident bank if—
both F and the partnership were UK resident entities,
the partnership carried on its activities in the United Kingdom,
where the partnership would be required to be an authorised person for the purposes of FISMA 2000 in order to carry on those activities in the United Kingdom, the partnership were an authorised person with permission to carry on those activities, and
where those activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in paragraph 79(b) to (f), as a result of carrying on those activities and having such permission the partnership would be an FCA investment firm that meets the conditions in paragraph 70(1B).
“Investment entity”—
means an entity the business of which consists wholly or mainly of, and the principal part of the income of which is derived from, the making of investments, and
also includes any savings bank or other bank for savings.
The exempt activities condition is met for the purposes of paragraph 12(1)(b) if—
at least 90% of the trading income of the relevant group for the chargeable period derives from exempt activities, or
at least 50% of the trading income of the relevant group for the chargeable period derives from non-financial trading activities.
For this purpose, the trading income of the relevant group for the chargeable period—
consists of the items mentioned in sub-paragraph (3), and
is to be determined by reference to—
the amounts recognised in the group's consolidated financial statements for the chargeable period as prepared under international accounting standards, or
if no such financial statements are prepared, the amounts which would have been so recognised had consolidated financial statements for the group been prepared for the chargeable period under international accounting standards.
The items referred to in sub-paragraph (2)(a) are—
the group's gross income for the chargeable period arising from its activities (other than net-basis activities) without taking account of any deductions (whether for expenses or otherwise), and
the group's net income for the chargeable period arising from its net-basis activities.
In this paragraph—“ activities ” includes buying, holding, managing and selling assets;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ."dealing on own account" has the same meaning as in Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (see Article 2.1(5));“deposit” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) but ignoring the exclusions in articles 6 to 9AB;“exempt activities” means—insurance activities, asset management activities and related activities, and non-financial trading activities;“financial trading entity” means an entity which—is an authorised person for the purposes of FISMA 2000 (see section 31 of that Act), is not UK resident, but if it were and it carried on its activities in the United Kingdom, would be required to be an authorised person, or is not within paragraph (a) or (b) but carries on a trade consisting wholly or partly in dealing in securities;“insurance activities” means—the effecting or carrying out of contracts of insurance by a regulated insurer, and investment business that arises directly from activities falling within paragraph (a);“lending activities” means—acceptance of deposits or other repayable funds, lending of money, including consumer credit, mortgage credit, factoring (with or without recourse) and financing of commercial transactions (including forfeiting), finance leasing (as lessor), issuing and administering means of payment, provision of guarantees or commitments to provide money, money transmission services, provision of alternative finance arrangements, and other activities carried on in connection with activities falling within any of paragraphs (a) to (g);“net-basis activities” means activities normally reported on a net basis in consolidated financial statements prepared under international accounting standards;“ non-financial trading activities ” means activities carried on by an entity which is not a financial trading entity, other than—lending activities, and dealing on own account, with the exception of any hedging transactions in relation to activities which (disregarding this exception) are non-financial trading activities;“regulated insurer”, in relation to the relevant group, means a member of the group which—is authorised under the law of any territory to carry on insurance business, or is a member of a body or organisation which is so authorised;“related activities” means—activities which are ancillary to insurance activities or asset management activities of any entity which is a member of the relevant group (whether or not the entity carrying on the insurance activities or asset management activities), and activities which would not be carried on but for such insurance activities or asset management activities being carried on, but does not include dealing on own account;“securities” includes—shares, rights of unit holders in unit trust schemes to which TCGA 1992 applies as a result of section 99 of that Act, and in the case of a company with no share capital, interests in the company possessed by members of the company.
Chargeable equity and liabilities
Definition of “assets”, “equity” and “liabilities”
For the purposes of this Schedule, “ assets ”, “ equity ” and “ liabilities ” have the same meaning as they have for the purposes of international accounting standards.
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Chargeable equity and liabilities: relevant groups
This paragraph applies if the bank levy is charged as provided for by paragraph 4 (groups).
The amount of the chargeable equity and liabilities of the relevant group is the total of—
the UK-based equity and liabilities, as at the end of the chargeable period, of—
each UK sub-group, and
each chargeable UK resident entity, and
if a relevant foreign bank is a member of the relevant group, the UK allocated equity and liabilities of that bank as at the end of the chargeable period (see paragraph 24).
Chargeable equity and liabilities: relevant entities
This paragraph applies if the bank levy is charged as provided for by paragraph 5 (entities which are not members of groups).
The amount of the chargeable equity and liabilities of the relevant entity is—
in the case of a UK resident bank or building society, the amount of the UK-based equity and liabilities of the entity, as at the end of the chargeable period, or
in the case of a relevant foreign bank, the amount of the UK allocated equity and liabilities of that bank as at the end of the chargeable period (see paragraph 24).
Meaning of “UK sub-group”
“UK sub-group” means a group of entities—
which is a group for the purposes of those provisions of international accounting standards which relate to the preparation of consolidated financial statements,
which has as its parent or parent undertaking for the purposes of those provisions an entity which is—
if the relevant group is a relevant non-banking group, a UK resident bank, or
in any other case, a UK resident entity,
the members of which, for the purposes of those provisions, are all members of the relevant group,
in respect of which consolidated financial statements for the chargeable period are prepared under international accounting standards, and
the members of which are not members of any larger group of entities, in respect of which the conditions in paragraphs (a) to (c) are met, for which such financial statements are prepared.
Meaning of “chargeable UK resident entity”
“Chargeable UK resident entity” means a UK resident entity which—
is a member of the relevant group, but is not a member of a UK sub-group, and
if the relevant group is a relevant non-banking group, is a banking entity.
A UK resident entity is a “banking entity” for the purposes of sub-paragraph (1) if it is—
a UK resident bank, or
a subsidiary of a UK resident bank.
In sub-paragraph (2)(b) “subsidiary” has the meaning given by those provisions of international accounting standards which relate to the preparation of consolidated financial statements.
Election to disregard non-UK allocated equity and liabilities
This paragraph applies if—
the bank levy is charged as provided for by paragraph 4 (groups), and
a UK resident entity, which is a member of the relevant group, has a foreign permanent establishment.
For the purposes of this Part of this Schedule, a UK resident entity “has a foreign permanent establishment” if the entity carries on a trade in a territory outside the United Kingdom through a permanent establishment (the “foreign permanent establishment”) in that territory.
The relevant group’s responsible member may, for the purposes of determining the UK-based equity and liabilities of a UK sub-group or a chargeable UK resident entity, elect to disregard the non-UK allocated equity and liabilities attributable to—
any or all of the foreign permanent establishments of any or all of the UK resident entities which are members of the UK sub-group;
any or all of the foreign permanent establishments of the chargeable UK resident entity.
See paragraph 15Z1 for further provision about non-UK allocated equity and liabilities.
This paragraph applies if—
the bank levy is charged as provided for by paragraph 5 (entities which are not members of groups), and
the relevant entity is a UK resident entity which has a foreign permanent establishment.
The relevant entity may, for the purposes of determining its UK-based equity and liabilities, elect to disregard the non-UK allocated equity and liabilities attributable to any or all of its foreign permanent establishments.
An election made under paragraph 15D or 15E in respect of a UK resident entity—
must be made in the form and manner specified by the Commissioners for Her Majesty’s Revenue and Customs,
must contain such information and declarations as the Commissioners may require, and
may be revoked at any time—
in the case of an election under paragraph 15D, by the relevant group’s responsible member;
in the case of an election under paragraph 15E, by the relevant entity.
In this Schedule, “designated FPE entity” means a UK resident entity in respect of which an election is made under paragraph 15D or 15E.
Determining the assets, equity and liabilities of UK resident entities
This paragraph applies, in relation to a UK resident entity, for the purposes of paragraphs 15H(2), 15L(3) and 15Z1.
The assets, equity and liabilities, as at the end of the chargeable period, of the entity are to be determined by reference to—
the amounts recognised in the entity’s financial statements for the chargeable period as prepared under international accounting standards, or
if no such financial statements are prepared, the amounts which would have been so recognised had such financial statements been prepared under international accounting standards.
Determining the UK-based equity and liabilities of UK resident entities
This paragraph applies in relation to a UK resident entity, other than a designated FPE entity, which is—
where the bank levy is charged as provided for by paragraph 4 (groups), a chargeable UK resident entity;
where the bank levy is charged as provided for by paragraph 5 (entities which are not members of groups), the relevant entity.
To determine the UK-based equity and liabilities of the UK resident entity, as at the end of the chargeable period—
determine the amount of the entity’s equity and liabilities, in accordance with paragraph 15G(2), and
adjust that amount in accordance with paragraph 15N.
This paragraph applies in relation to a designated FPE entity which is—
where the bank levy is charged as provided for by paragraph 4 (groups), a chargeable UK resident entity;
where the bank levy is charged as provided for by paragraph 5 (entities which are not members of groups), the relevant entity.
To determine the UK-based equity and liabilities of the entity, as at the end of the chargeable period, take Steps 1 to 5 in paragraph 15Z1.
Determining the UK-based equity and liabilities of UK sub-groups
This paragraph applies in relation to a UK sub-group if—
each member of the UK sub-group is a UK resident entity,
none of those members is a designated FPE entity, and
the relevant group’s responsible member has not made an entity-by-entity election (see paragraph 15L) in relation to the UK sub-group.
The assets, equity and liabilities, as at the end of the chargeable period, of the UK sub-group are to be determined by reference to the amounts recognised in the sub-group’s consolidated financial statements for the chargeable period.
To determine the UK-based equity and liabilities of the UK sub-group, as at the end of the chargeable period—
determine the amount of the UK sub-group’s equity and liabilities in accordance with sub-paragraph (2), and
adjust that amount in accordance with paragraph 15N.
This paragraph applies in relation to a UK sub-group if—
at least one member of the UK sub-group is—
a non-UK resident entity, or
a designated FPE entity, and
the relevant group’s responsible member has not made an entity-by-entity election (see paragraph 15L) in relation to the UK sub-group.
In this Schedule, “residual UK sub-group” means, in relation to a UK sub-group to which this paragraph applies, the group of entities consisting of the members of the UK sub-group which—
are UK resident entities, but
are not designated FPE entities.
The assets, equity and liabilities of the residual UK sub-group are to be determined by reference to the amounts which, if financial statements had been prepared for the residual UK sub-group for the chargeable period under international accounting standards, would have been recognised in those statements.
The amount of the UK-based equity and liabilities of the UK sub-group, as at the end of the chargeable period, is the total amount of—
the equity and liabilities of the residual UK sub-group as at the end of that period, adjusted in accordance with paragraph 15N, and
the adjusted equity and liabilities of each designated FPE entity which is a member of the UK sub-group (see Step 5 in paragraph 15Z1).
If the relevant group’s responsible member makes an election under this paragraph (an “entity-by-entity election”) in relation to a UK sub-group, the UK-based equity and liabilities of the UK sub-group are to be determined in accordance with this paragraph.
The amount of the UK-based equity and liabilities of the UK sub-group as at the end of the chargeable period is the total amount of—
the adjusted equity and liabilities of each UK resident entity, other than a designated FPE entity, which is a member of the UK sub-group, and
the adjusted equity and liabilities of each designated FPE entity which is a member of the UK sub-group (see Step 5 in paragraph 15Z1).
To determine the “adjusted equity and liabilities” of a UK resident entity for the purposes of sub-paragraph (2)(a)—
determine the amount of the entity’s equity and liabilities in accordance with paragraph 15G(2), and
adjust that amount in accordance with paragraph 15N.
An election made under this paragraph has effect in relation to the chargeable period during which the election is made and each subsequent chargeable period (unless it is revoked under sub-paragraph(6)(c)).
But an election under this paragraph has no effect in relation to a UK sub-group for a chargeable period if the purpose, or one of the main purposes, of making the election is to avoid or reduce a charge or assessment to the bank levy.
An election made under this paragraph in respect of the relevant group—
must be made in the form and manner specified by the Commissioners for Her Majesty’s Revenue and Customs,
must contain such information and declarations as the Commissioners may require, and
may be revoked by the relevant group’s responsible member at any time.
Adjustments: general
For the purposes of paragraphs 15N to 15Z, references to a “chargeable UK sub-group or entity” are references to—
in a case to which paragraph 15H or 15L(3) applies, the UK resident entity,
in a case to which paragraph 15J applies, the UK sub-group,
in a case to which paragraph 15K applies, the residual UK sub-group, or
in a case to which paragraph 15Z1 applies, the designated FPE entity.
To adjust the amount of the equity and liabilities of a chargeable UK sub-group or entity for the purposes of paragraph 15H(2)(b), 15J(3)(b), 15K(4)(a), 15L(3)(b) or Step 3 in paragraph 15Z1, take the following steps—Step 1 Take the amount of the equity and liabilities of the chargeable UK sub-group or entity, other than excluded equity and liabilities, as at the end of the chargeable period. Step 2 Adjust that amount in accordance with paragraphs 15O to 15U(so far as applicable). Step 3 If paragraph 15X(loss absorbing instruments issued by overseas subsidiaries) applies in relation to the chargeable UK sub-group or entity, reduce the adjusted amount (but not below nil) by the amount determined under that paragraph (subject to sub-paragraph(2)). Step 4 Subject to sub-paragraph (2), reduce the amount given by Step 3 (but not below nil) by—the amount of the chargeable UK sub-group or entity’s high quality liquid assets as at the end of that period, other than—any asset which, for the purposes of an adjustment at Step 2, is an asset to which paragraph 15U(1) applies; any asset which is taken into account in determining the amount of a reduction under paragraph 15X for the purposes of Step 3; in a case where the bank levy is charged as provided for by paragraph 4 (groups) and a relevant foreign bank is a member of the relevant group, any asset which for the purposes of Step 3 of paragraph 24(1) is an asset to which paragraph 27D(1) applies; and if paragraph 15Z (high quality liquid assets) applies, the amount determined under that paragraph.
Where any amount (“A”) within Step 3, or within paragraph (a) or (b) of Step 4, is used to reduce short term liabilities, the amount of the reduction is determined as if A were an amount equal to half of A.
Step 2 in paragraph 15N: equity and liability adjustments and netting
This paragraph applies if—
the bank levy is charged as provided for by paragraph 4 (groups), and
the members of a UK sub-group which are UK resident entities are also members of at least one larger unconsolidated sub-group.
A group of entities is an “unconsolidated sub-group” if—
the conditions in paragraph 15B(a) to(c) and(e) are met in respect of the group, but
the condition in paragraph 15B(d)(consolidated financial statements) is not met in respect of the group.
Any equity of the UK resident entities which are members of the UK sub-group is to be left out so far as it would have been eliminated under normal consolidation procedures, had consolidated financial statements for the larger or largest unconsolidated sub-group been prepared for the chargeable period under international accounting standards.
This paragraph applies if the bank levy is charged as provided for by paragraph 4 (groups).
Sub-paragraph(3) applies in relation to an entity if—
it is a chargeable UK resident entity (whether or not a designated FPE entity), and
it is a member of at least one unconsolidated sub-group (see paragraph 15O(2)).
Any equity of the entity is to be left out so far as it would have been eliminated under normal consolidation procedures, had consolidated financial statements for the unconsolidated sub-group, or the largest unconsolidated sub-group of which the entity is a member, been prepared for the chargeable period under international accounting standards.
This paragraph applies if the bank levy is charged as provided for by paragraph 4 (groups).
Sub-paragraph(3) applies in relation to a UK resident entity if—
it is a member of a UK sub-group in respect of which an entity-by-entity election has been made under paragraph 15L(whether or not it is a designated FPE entity), or
it is a designated FPE entity and a member of a UK sub-group in respect of which no entity-by-entity election has been made.
Any equity of the entity is to be left out so far as it would have been eliminated under normal consolidation procedures under international accounting standards, but disregarding from the consolidation any non-UK resident entities.
This paragraph applies if the bank levy is charged as provided for by paragraph 4 (groups).
The following liabilities of a chargeable UK sub-group or entity are to be left out—
UK connected liabilities to a chargeable UK resident entity which is a member of the relevant group,
UK connected liabilities to a UK sub-group of the relevant group,
UK connected liabilities to a relevant foreign bank which is a member of the relevant group, and
in the case of an entity to which paragraph 15Q applies, UK connected liabilities of the entity to another UK resident entity which is a member of the same UK sub-group.
For the purposes of sub-paragraph(2)(a) and(d), liabilities to a UK resident entity are “UK connected liabilities” except so far as the entity’s assets corresponding to the liabilities are assets of a foreign permanent establishment in respect of which an election under paragraph 15D has been made (as determined at Step 2 in paragraph 15Z1).
For the purposes of sub-paragraph(2)(b), liabilities to a UK sub-group are “UK connected liabilities” except so far as the sub-group’s assets corresponding to the liabilities are—
assets of a non-UK resident entity, or
assets of a foreign permanent establishment in respect of which an election under paragraph 15D has been made (as determined at Step 2 in paragraph 15Z1).
For the purposes of sub-paragraph(2)(c), liabilities to a relevant foreign bank are “UK connected liabilities” so far as the bank’s assets corresponding to the liabilities are assets of the permanent establishment through which the bank carries on a trade in the United Kingdom as determined at Step 2 in paragraph 24(1).
Paragraph 15U applies if—
the bank levy is charged as provided for by paragraph 4 (groups),
an entity (“M”) within sub-paragraph(5) has liabilities to another entity (“N”) not within that sub-paragraph (“M’s liabilities”),
M, or another member of the relevant group, recognises, as assets, amounts (“N’s liabilities”) that are due to any member of the relevant group from N or another entity not within sub-paragraph(5),
there is in place an agreement which makes net settlement provision, and
that provision is legally effective and enforceable.
In sub-paragraph(1)(d), “net settlement provision” means provision for there to be a single net settlement—
if a netting event occurs, or
at the option of M or N, if a netting event occurs.
The reference in sub-paragraph(2) to a “single net settlement” is a reference to a single net settlement of—
all M’s liabilities, and liabilities of other entities within sub-paragraph(5), to N or another entity which is not within that sub-paragraph (so far as covered by the provision mentioned in sub-paragraph(1)(d)), and
all N’s liabilities (so far as covered by that provision).
But a provision for there to be single net settlement—is not to be treated as a net settlement provision for the purposes of sub-paragraph(1)(d).
at the option of M, but not at the option of N, if a netting event occurs, or
at the option of N, but not at the option of M, if a netting event occurs,
An entity is within this sub-paragraph if it is —
a UK resident entity which is a member of a UK sub-group, or
a chargeable UK resident entity.
For the purposes of sub-paragraph(1)—
“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
if N is a relevant foreign bank which is a member of the relevant group, liabilities of M to N are to be ignored so far as N recognises assets in respect of those liabilities as assets of the permanent establishment through which N carries on a trade in the United Kingdom as determined at Step 2 in paragraph 24(1),
references to amounts due from N or another entity not within sub-paragraph(5) include securities provided by M, or another member of the relevant group, to N or another entity not within sub-paragraph(5) as collateral, but only where M or that other member recognises those securities in its balance sheet or statement of financial position, and
“a netting event occurs”—
in relation to M, if the insolvency or bankruptcy of M, or another entity within sub-paragraph(5) which has a liability covered by the provision mentioned in sub-paragraph(1)(d), gives rise to the termination of any arrangements under which such a liability arises, or
in relation to N, if the insolvency or bankruptcy of N, or another entity not within sub-paragraph(5) which has a liability covered by the provision mentioned in sub-paragraph(1)(d), gives rise to the termination of any arrangements under which such a liability arises.
Section 556 of CTA 2009(meaning of securities and similar securities) applies for the purposes of sub-paragraph(6) and paragraph 15T(5) as it applies for the purposes of Chapter 10 of Part 6 of that Act.
Paragraph 15U also applies if—
the bank levy is charged as provided for by paragraph 5 (entities which are not members of groups),
the relevant entity (“M”) is a UK resident entity,
M has liabilities to another entity (“M’s liabilities”),
M recognises, as assets, amounts due from that other entity (“N”) to M (“N’s liabilities”),
there is in place an agreement between M and N which makes net settlement provision, and
that provision is legally effective and enforceable.
In sub-paragraph(1)(e), “net settlement provision” means provision for there to be a single net settlement—
if a netting event occurs, or
at the option of M or N, if a netting event occurs.
The reference in sub-paragraph(2) to a “single net settlement” is a reference to a single net settlement of—
all M’s liabilities (so far as covered by the provision mentioned in sub-paragraph(1)(e)), and
all N’s liabilities (so far as covered by that provision).
But a provision for there to be single net settlement—is not to be treated as a net settlement provision for the purposes of sub-paragraph(1)(e).
at the option of M, but not at the option of N, if a netting event occurs, or
at the option of N, but not at the option of M, if a netting event occurs,
For the purposes of sub-paragraph(1)—
“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
references to amounts due from N include securities provided by M to N as collateral, but only where M recognises those securities in its balance sheet or statement of financial position, and
“a netting event occurs”—
in relation to M, if the insolvency or bankruptcy of M gives rise to the termination of any arrangements under which any liability covered by the provision mentioned in sub-paragraph(1)(e) arises, or
in relation to N, if the insolvency or bankruptcy of N gives rise to the termination of any arrangements under which such a liability arises.
The amount of M’s net settlement liabilities is to be reduced (but not below nil) by the amount of M’s net settlement assets.
“M’s net settlement liabilities” means M’s liabilities so far as they—
are covered by the provision mentioned in paragraph 15S(1)(d) or 15T(1)(e), and
are not excluded liabilities.
“M’s net settlement assets” means the assets of—so far as corresponding to N’s net settlement liabilities.
M, or
in a case within paragraph 15S, another member of the relevant group,
But, in a case within paragraph 15S—
if N’s net settlement liabilities include liabilities of a relevant foreign bank which is a member of the relevant group, X% (as determined at Step 2 in paragraph 24(1)) of the assets corresponding to the liabilities of the relevant foreign bank are to be disregarded for the purposes of sub-paragraph(3), and
if sub-paragraph(1) applies in relation to more than one entity within paragraph 15S(5), no part of an asset may be included in the net settlement assets of more than one such entity, and
if an asset, or part of an asset, is included for the purposes of paragraph 27D in the net settlement assets of a relevant foreign bank which is a member of the relevant group, the asset (or part) is not to be included in M’s net settlement assets for the purposes of this paragraph.
“N’s net settlement liabilities” means N’s liabilities so far as they are covered by the provision mentioned in paragraph 15S(1)(d) or 15T(1)(e).
If M’s net settlement liabilities exceed M’s net settlement assets, and a proportion (A%) of those liabilities is long term liabilities and a proportion (B%) of those liabilities is short term liabilities, under sub-paragraph(1)—
the long term liabilities are reduced by A% of M’s net settlement assets, and
the short term liabilities are reduced by B% of those assets.
Step 3 in paragraph 15N: loss absorbing instruments issued by overseas subsidiaries
This paragraph applies for the purposes of paragraphs 15W and 15X.
References to “loss absorbing instruments” are references to—which satisfy a loss absorbing capacity or recapitalisation requirement.
tier one capital equity and liabilities, and
other instruments,
In this paragraph and paragraphs 15W and 15X, “tier one capital equity and liabilities” means—
equity and liabilities which are “tier one equity and liabilities” within the meaning of paragraph 30, and
equity and liabilities that are (or are of a description) specified, or meet such conditions as may be specified, in regulations made by the Treasury.
A “loss absorbing capacity or recapitalisation requirement” is a requirement—
that is imposed, in relation to tier one capital equity and liabilities or other instruments issued by an entity, by an authority in the exercise of its regulatory functions under the law of the United Kingdom or of a country or territory outside the United Kingdom, and
that is (or is of a description) specified, or meets such conditions as may be specified, in regulations made by the Treasury.
Paragraph 15X applies in relation to a chargeable UK sub-group or entity if Conditions A to C are met.
Condition A is that the bank levy is charged as provided for by paragraph 4 (groups).
Condition B is that, as at the end of the chargeable period, the assets of a relevant group member include—
qualifying loss absorbing instruments, or
assets representing qualifying loss absorbing instruments.
A loss absorbing instrument is “qualifying” for the purposes of this paragraph and paragraph 15X if—
it is issued by a non-UK resident entity which is a subsidiary of a UK resident entity within sub-paragraph(5), and
such other conditions as may be specified in regulations made by the Treasury are met in respect of the instrument.
A UK resident entity is within this sub-paragraph if—
the entity is a member of the relevant group, and
if the relevant group is a relevant non-banking group, the entity is a UK resident bank or a subsidiary of a UK resident bank.
For the purposes of Condition B, “relevant group member” means—
the chargeable UK sub-group or entity,
another UK sub-group of the relevant group, or
a chargeable UK resident entity which is a member of the relevant group.
Condition C is that, as at the end of the chargeable period, the liabilities of the chargeable UK sub-group or entity include—in respect of which such conditions as may be specified in regulations made by the Treasury are met.
tier one capital equity and liabilities (other than tier one capital equity and liabilities excluded by paragraph 30), or
loss absorbing instruments, other than tier one capital equity and liabilities,
The amount within Step 3 in paragraph 15N(1) is the total of—
the amount of the relevant group member’s assets which are, or represent, qualifying loss absorbing instruments within paragraph 15V(2)(a) as at the end of the chargeable period, so far as that amount does not exceed the liabilities amount within sub-paragraph(3), and
the amount of the relevant group member’s assets which are, or represent, qualifying loss absorbing instruments within paragraph 15V(2)(b) as at the end of the chargeable period, so far as that amount does not exceed the liabilities amount within sub-paragraph(4).
Sub-paragraph(1) is subject to sub-paragraph(5).
The “liabilities amount” within this sub-paragraph is the total amount of the chargeable UK sub-group or entity’s equity and liabilities, adjusted in accordance with Steps 1 and 2 in paragraph 15N(1), that are tier one capital equity and liabilities within paragraph 15W(7)(a).
The “liabilities amount” within this sub-paragraph is the total amount of the chargeable UK sub-group or entity’s equity and liabilities, adjusted in accordance with Steps 1 and 2 in paragraph 15N(1), that are loss absorbing instruments within paragraph 15W(7)(b).
An asset (or part of an asset) of the relevant group member is to be disregarded for the purposes of sub-paragraph(1) if—
for the purposes of an adjustment at Step 2 in paragraph 15N(1), it is an asset (or part of an asset) to which paragraph 15U(1) applies,
in a case where this paragraph applies in relation to more than one chargeable UK sub-group or entity, the asset (or part) is taken into account in determining the amount within Step 3 in paragraph 15N(1) in relation to another chargeable UK sub-group or entity, or
in a case where a relevant foreign bank is a member of the relevant group, it is an asset (or part) to which paragraph 27D(1) applies for the purposes of Step 3 of paragraph 24(1).
This paragraph makes provision about regulations under any provision of paragraph 15V or 15W.
The regulations may include different provision for different purposes.
The regulations are to be made by statutory instrument.
A statutory instrument containing the regulations is subject to annulment in pursuance of a resolution of the House of Commons.
Step 4 in paragraph 15N: high quality liquid assets
This paragraph applies where—
as at the end of the chargeable period, the assets of the chargeable UK sub-group or entity include a financial asset in respect of an advance of cash made—
in the case of a UK sub-group, by a member of that sub-group, or
in any other case, by the entity,
that financial asset is not—
an asset which, for the purposes of an adjustment at Step 2 in paragraph 15N, is an asset to which paragraph 15U(1) applies,
an asset which is taken into account in determining the amount of a reduction under paragraph 15X for the purposes of Step 3 in paragraph 15N in the application of those paragraphs in relation to any member of the relevant group, or
in a case where the bank levy is charged as provided for by paragraph 4 (groups) and a relevant foreign bank is a member of the relevant group, an asset which for the purposes of Step 3 of paragraph 24(1) is an asset to which paragraph 27D(1) applies, and
underlying that asset, as collateral, is an item (“the collateral”) which—
in a case within paragraph(a)(i), is owned by the member and would form part of the sub-group’s high quality liquid assets as at the end of that period were the collateral, rather than the financial asset, an asset of the sub-group;
in a case within paragraph(a)(ii), is owned by the entity and would form part of the entity’s high quality liquid assets as at the end of that period were the collateral, rather than the financial asset, an asset of the entity.
The amount within paragraph (b) of Step 4 in paragraph 15N is—
the amount of the financial asset as at the end of the chargeable period or, if lower, an amount equal to the fair value of the collateral as at that time, or
if this sub-paragraph applies in relation to more than one financial asset, the total of the amounts determined under paragraph(a) in respect of each of those assets.
Designated FPE entities: non-UK allocated equity and liabilities etc
Take Steps 1 to 4 to determine the non-UK allocated equity and liabilities attributable to a foreign permanent establishment of a designated FPE entity as at the end of the chargeable period. Take Step 5 to determine the UK-based equity and liabilities, or (in a case to which paragraph 15K or 15L applies) the adjusted equity and liabilities, of a designated FPE entity as at the end of the chargeable period. Take Steps 6 and 7 to determine how much of the designated FPE entity’s equity and liabilities is to be treated as long term equity and liabilities and how much as short term liabilities for the purposes of the determination at Step 3 in paragraph 6(2). Step 1 In accordance with paragraph 15G(2), determine the amount (“A”) of the assets of the designated FPE entity as at the end of the chargeable period (subject to any adjustment under paragraph 15Z4(1)). Step 2 In accordance with paragraph 15Z2, determine the amount (“B”) of the assets, as at the end of the chargeable period, of the foreign permanent establishment (subject to any adjustment under paragraph 15Z4(2)). The proportion which B is of A is “X%”. Step 3 Determine the amount (“C”) that would, if an election under paragraph 15D or 15E had not been made, be the amount of the UK-based equity and liabilities (or the adjusted equity and liabilities) of the entity, by—determining the amount of the equity and liabilities of the entity, as at the end of the chargeable period, under paragraph 15G(2), and adjusting that amount in accordance with paragraph 15N. Step 4 The amount of the non-UK allocated equity and liabilities attributable to the foreign permanent establishment is X% of C. Step 5 To determine the amount (“Z”) of the UK-based equity and liabilities, or (in a case to which paragraph 15K or 15L applies) the adjusted equity and liabilities, of the designated FPE entity—determine, in accordance with Steps 1 to 4, the amount of the non-UK allocated equity and liabilities attributable to each of the entity’s foreign permanent establishments in respect of which an election has been made under paragraph 15D or 15E, and reduce C by the total of those amounts. Step 6 Determine the proportion (“Y%”) of C which is long term equity and liabilities. Step 7 For the purposes of Step 3 in paragraph 6(2) treat Y% of Z as long term equity and liabilities and the rest as short term liabilities.
This paragraph applies for the purposes of Step 2 in paragraph 15Z1.
The assets of the foreign permanent establishment are those which it would have were it a distinct and separate enterprise which—
engaged in the same or similar activities under the same or similar conditions, and
dealt wholly independently with the designated FPE entity.
For the purposes of paragraph 15Z1 and this paragraph, any relevant provisions of Chapter 3A of Part 2 of CTA 2009(UK resident companies: profits of foreign permanent establishments) are to be applied as they would be applied in determining profits attributable to the foreign permanent establishment for corporation tax purposes.
But in determining the non-UK allocated equity and liabilities attributable to a foreign permanent establishment of a designated FPE entity which is a member of the relevant group, any assets within sub-paragraph(5) are to be left out.
The assets within this sub-paragraph are any assets of the foreign permanent establishment (as otherwise determined under this paragraph) representing an excluded loan relationship.
A loan relationship is “excluded” if—
the designated FPE entity mentioned in sub-paragraph(4) is the creditor,
the debtor (“D”) is a UK resident bank, a building society or a relevant foreign bank—
which is a member of the relevant group, and
whose activities include the relevant regulated activity described in the provision mentioned in paragraph 79(a),
the money which is the subject of the transaction giving rise to D’s debt is money borrowed by the designated FPE entity mentioned in sub-paragraph(4) from another entity, and
in borrowing that money the designated FPE entity was acting as the agent or intermediary of D.
Section 302(1) of CTA 2009(definition of “loan relationship”) applies for the purposes of sub-paragraphs(5) and(6) as it applies for corporation tax purposes.
Netting: non-UK allocated equity and liabilities
Paragraph 15Z4 applies for the purposes of Steps 1 and 2 in paragraph 15Z1 if—
the designated FPE entity mentioned in paragraph 15Z1(“E”) has liabilities to another entity which (in a case where the bank levy is charged as provided for by paragraph 4 (groups)) is not within sub-paragraph(5)(“E’s liabilities”),
E recognises, as assets, amounts due from that other entity (“N”) to E (“N’s liabilities”),
there is in place an agreement between E and N which makes net settlement provision, and
that provision is legally effective and enforceable.
In sub-paragraph(1)(c), “net settlement provision” means provision for there to be a single net settlement—
if a netting event occurs, or
at the option of E or N, if a netting event occurs.
The reference in sub-paragraph(2) to a “single net settlement” is a reference to a single net settlement of—
all E’s liabilities (so far as covered by the provision mentioned in sub-paragraph(1)(c)) and
all N’s liabilities (so far as covered by that provision).
But a provision for there to be single net settlement—is not to be treated as a net settlement provision for the purposes of sub-paragraph(1)(c).
at the option of E, but not at the option of N, if a netting event occurs, or
at the option of N, but not at the option of E, if a netting event occurs,
An entity is within this sub-paragraph if it is—
a UK resident entity which is a member of a UK sub-group,
a chargeable UK resident entity, or
a relevant foreign bank which is a member of the relevant group.
For the purposes of sub-paragraph(1)—
“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
references to amounts due from N include securities provided by E to N as collateral, but only where E recognises those securities in its balance sheet or statement of financial position, and
“a netting event occurs”—
in relation to E, if the insolvency or bankruptcy of E gives rise to the termination of any arrangements under which any liability covered by the provision mentioned in sub-paragraph(1)(c) arises, or
in relation to N, if the insolvency or bankruptcy of N gives rise to the termination of any arrangements under which such a liability arises.
Section 556 of CTA 2009(meaning of securities and similar securities) applies for the purposes of sub-paragraph(6) as it applies for the purposes of Chapter 10 of Part 6 of that Act.
In determining the amount of E’s assets at Step 1 in paragraph 15Z1, the amount of E’s net settlement assets is to be reduced (but not below nil) by the amount of E’s net settlement liabilities.
In determining the amount of the foreign permanent establishment’s assets at Step 2 in paragraph 15Z1—
the reduction in E’s assets under sub-paragraph(1) is to be ignored, but
the amount of the foreign permanent establishment’s net settlement assets is to be reduced by Z%.
For this purpose, “Z%” is the proportion by which E’s net settlement assets are reduced under sub-paragraph(1).
E’s “net settlement liabilities” are E’s liabilities so far as they—
are covered by the provision mentioned in paragraph 15Z3(1)(c), and
are not excluded liabilities.
E’s “net settlement assets” are E’s assets so far as corresponding to N’s net settlement liabilities.
“N’s net settlement liabilities” means N’s liabilities so far as they are covered by the provision mentioned in sub-paragraph 15Z3(1)(c).
The permanent establishment’s “net settlement assets” are its assets so far as they are part of E’s net settlement assets.
Equity and liabilities: threshold amount
If a relevant equity and liabilities amount is less than £50 million, that amount may be ignored for the purposes of determining the chargeable equity and liabilities of the relevant group under paragraph 15.
But the total amount which may be ignored under sub-paragraph(1) may not exceed £200 million.
In sub-paragraph(1), “relevant equity and liabilities amount” means—
in the case of a chargeable UK resident entity, the amount of the equity and liabilities, as at the end of the chargeable period, of the entity,
in the case of a UK sub-group to which paragraph 15J applies, the amount of the equity and liabilities, as at the end of the chargeable period, of the UK sub-group,
in the case of a UK sub-group to which paragraph 15K applies, the total amount of—as at the end of the chargeable period,
the equity and liabilities of the residual UK sub-group, and
the equity and liabilities of each designated FPE entity,
in the case of a UK sub-group to which paragraph 15L applies, the total amount of the equity and liabilities, as at the end of the chargeable period, of each UK resident entity (whether or not a designated FPE entity) which is a member of the UK sub-group, or
in the case of a relevant foreign bank which is a member of the relevant group, the amount of the UK allocated equity and liabilities, as at the end of the chargeable period.
Definition of “UK allocated equity and liabilities”
Take Steps 1 to 4 to determine the amount of the UK allocated equity and liabilities of a relevant foreign bank as at the end of the chargeable period. Take Steps 5 and 6 to determine how much of that amount is to be treated as long term equity and liabilities and how much as short term liabilities for the purposes of Step 3 in paragraph 6(2). Step 1 Determine the amount (“A”) of the bank's assets as at the end of the chargeable period (subject to any adjustment under paragraph 25(5)). Step 2 In accordance with paragraph 26, determine the amount (“B”) of the assets, as at the end of the chargeable period, of the permanent establishment through which the bank carries on a trade in the United Kingdom (subject to any adjustment under paragraph 25(6)). The proportion which B is of A is “X%”. Step 3 In accordance with paragraph 27, determine the amount (“C”) of the bank's adjusted equity and liabilities. Step 4 The amount of the UK allocated equity and liabilities is X% of C. Step 5 Determine the proportion (“Y%”) of C which is long term equity and liabilities. Step 6 For the purposes of Step 3 in paragraph 6(2), treat Y% of the amount of the UK allocated equity and liabilities as long term equity and liabilities and the rest as short term liabilities.
For the purposes of this paragraph and paragraphs 25 to 27, assets, equity and liabilities of a relevant foreign bank or the permanent establishment through which it carries on a trade in the United Kingdom are to be determined by reference to—
the amounts recognised in the bank's financial statements for the chargeable period as prepared under international accounting standards ... , or
if no such financial statements are prepared, the amounts which would have been so recognised had such financial statements been prepared—
under international accounting standards, ...
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
This paragraph applies for the purposes of Steps 1 and 2 in paragraph 24(1) if—
the relevant foreign bank has liabilities to another entity . . . (subject to sub-paragraph (2)) . . . (“the bank's liabilities”),
the bank recognises, as assets, amounts due from that other entity (“N”) to the bank (“N's liabilities”),
there is in place an agreement between the bank and N which makes net settlement provision, and
the provision mentioned in paragraph (c) is legally effective and enforceable.
In sub-paragraph (1)(c), “net settlement provision” means provision for there to be a single net settlement—
if a netting event occurs, or
at the option of the bank or N, if a netting event occurs.
The reference in sub-paragraph (1A) to a “single net settlement” is a reference to a single net settlement of—
all the bank’s liabilities (so far as covered by the provision mentioned in sub-paragraph (1)(c)), and
all N’s liabilities (so far as covered by that provision).
But a provision for there to be single net settlement—is not to be treated as a net settlement provision for the purposes of sub-paragraph (1)(c).
at the option of the bank, but not at the option of N, if a netting event occurs, or
at the option of N, but not at the option of the bank, if a netting event occurs,
If the UK allocated equity and liabilities of the bank are being determined for the purposes of paragraph 15(2)(b), this paragraph does not apply if N is—
a UK resident entity which is a member of a UK sub-group,
a chargeable UK resident entity (see paragraph 15C), or
another relevant foreign bank which is a member of the relevant group.
For the purposes of sub-paragraph (1)—Section 556 of CTA 2009 (meaning of securities and similar securities) applies for the purposes of this sub-paragraph as it applies for the purposes of Chapter 10 of Part 6 of that Act.
“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
references to amounts due from N include securities provided by the relevant foreign bank to N as collateral, but only where the bank recognises those securities in its balance sheet or statement of financial position, and
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“a netting event occurs” if the insolvency or bankruptcy of the relevant foreign bank or N gives rise to the termination of any arrangements under which any liability covered by the provision mentioned in sub-paragraph (1)(c) arises.
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In determining the amount of the bank's assets at Step 1 in paragraph 24(1), the amount of the bank's net settlement assets is to be reduced (but not below nil) by the amount of the bank's net settlement liabilities.
In determining the amount of the permanent establishment's assets at Step 2 in paragraph 24(1)—
the reduction in the bank's assets under sub-paragraph (5) is to be ignored, but
the amount of the permanent establishment's net settlement assets is to be reduced by Z%.
For this purpose, “Z%” is the proportion by which the bank's net settlement assets are reduced under sub-paragraph (5).
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The bank's “net settlement liabilities” are the bank's liabilities so far as they—
are covered by the provision mentioned in sub-paragraph (1)(c), and
are not excluded liabilities.
The bank's “net settlement assets” are its assets so far as corresponding to N's net settlement liabilities.
“ N's net settlement liabilities ” means N's liabilities so far as they are covered by the provision mentioned in sub-paragraph (1)(c).
The permanent establishment's “net settlement assets” are its assets so far as they are part of the bank's net settlement assets.
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This paragraph applies for the purposes of Step 2 in paragraph 24(1).
The assets of the permanent establishment are those which it might be expected to have were it a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions, taking into account the functions performed, assets used and risks assumed by the relevant foreign bank through the permanent establishment and through the other parts of the relevant foreign bank.
But where paragraph 24(1) is being applied in determining the UK allocated equity and liabilities of a relevant foreign bank for the purposes of paragraph 15(2)(b), any assets within sub-paragraph (5) are to be left out.
The assets within this sub-paragraph are any assets of the permanent establishment (as otherwise determined under this paragraph) representing an excluded loan relationship.
A loan relationship is “excluded” if—
the relevant foreign bank is the creditor,
the debtor (“D”) is a UK resident bank or another relevant foreign bank—
which is a member of the relevant group, and
whose activities include the relevant regulated activity described in the provision mentioned in paragraph 79(a),
the money which is the subject of the transaction giving rise to D's debt is money borrowed by the relevant foreign bank from another entity, and
in borrowing that money the relevant foreign bank was acting as the agent or intermediary of D.
Section 302(1) of CTA 2009 (definition of “loan relationship”) applies for the purposes of sub-paragraphs (5) and (6) as it applies for corporation tax purposes.
This paragraph applies for the purposes of Step 3 in paragraph 24(1).
To determine the amount of the relevant foreign bank's adjusted equity and liabilities —
determine the amount of the bank's equity and liabilities (other than excluded equity and liabilities) as at the end of the chargeable period,
adjust that amount in accordance with sub-paragraph (5) and paragraph 27D(1) ... (so far as applicable), and
finally (subject to sub-paragraph (6)) reduce that amount (but not below nil) by—
the amount of the entity’s high quality liquid assets as at the end of that period, other than—
any asset which for the purposes of an adjustment under paragraph (b) is an asset to which paragraph 27D(1) applies;
in a case where the bank levy is charged as provided for by paragraph 4 (groups), any asset to which paragraph 15U(1) applies for the purposes of adjusting the amount of the equity and liabilities of another member of the relevant group (see Step 2 in paragraph 15N(1)), and
where sub-paragraph (4) applies, the amount determined under that sub-paragraph.
Sub-paragraph (4) applies where—
as at the end of the chargeable period, the assets of the relevant foreign bank include a financial asset in respect of an advance of cash made by the bank,
that financial asset is not an asset which—
for the purposes of an adjustment under sub-paragraph (2)(b), is an asset to which paragraph 27D(1) applies, or
in a case where the bank levy is charged as provided for by paragraph 4 (groups), is an asset to which paragraph 15U(1) applies for the purposes of adjusting the amount of the equity and liabilities of another member of the relevant group under Step 2 in paragraph 15N(1), and
underlying that asset, as collateral, is an item (“the collateral”) owned by the bank which would form part of the bank's high quality liquid assets as at the end of that period were the collateral, rather than the financial asset, an asset of the bank.
The amount within sub-paragraph (2)(c)(ii) is—
the amount of the financial asset as at the end of that period or, if lower, an amount equal to the fair value of the collateral as at that time, or
if this sub-paragraph applies in relation to more than one financial asset, the total of the amounts determined under paragraph (a) in respect of each of those assets.
Where paragraph 24(1) is being applied in determining the UK allocated equity and liabilities of a relevant foreign bank for the purposes of paragraph 15(2)(b), the following liabilities are to be left out—
UK connected liabilities to a chargeable UK resident entity which is a member of the relevant group,
UK connected liabilities to a UK sub-group of the relevant group, and
UK connected liabilities to any other relevant foreign bank which is a member of the relevant group.
In sub-paragraph (5), references to “UK connected liabilities” have the same meaning as in paragraph 15R(2) (see paragraph 15R(3) to (5)).
Where an amount (“A”) within sub-paragraph (2)(c) is used to reduce short term liabilities, the amount of the reduction is determined as if A were an amount equal to half of A.
Paragraph 27D applies for the purposes of paragraph 27(2)(b) if—
the bank levy is charged as provided for by paragraph 4 (groups),
the relevant foreign bank (“B”) has liabilities to another entity (“N”) which is not within sub-paragraph (5) (“B’s liabilities”),
B, or another member of the relevant group, recognises, as assets, amounts (“N’s liabilities”) that are due to any member of the relevant group from N,
there is in place an agreement which makes net settlement provision, and
that provision is legally effective and enforceable.
In sub-paragraph (1)(d), “net settlement provision” means provision for there to be a single net settlement—
if a netting event occurs, or
at the option of B or N, if a netting event occurs.
The reference in sub-paragraph (2) to a “single net settlement” is a reference to a single net settlement of—
all B’s liabilities (so far as covered by the provision mentioned in sub-paragraph (1)(d)), and
all N’s liabilities (so far as covered by that provision).
But a provision for there to be single net settlement—is not to be treated as a net settlement provision for the purposes of sub-paragraph (1)(d).
at the option of B, but not at the option of N, if a netting event occurs, or
at the option of N, but not at the option of B, if a netting event occurs,
An entity is within this sub-paragraph if it is —
a UK resident entity which is a member of a UK sub-group,
a chargeable UK resident entity, or
another relevant foreign bank which is a member of the relevant group.
For the purposes of sub-paragraph (1)—
“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
references to amounts due from N include securities provided by B, or another member of the relevant group, to N as collateral, but only where B or that other member recognises those securities in its balance sheet or statement of financial position, and
“a netting event occurs”—
in relation to B, if the insolvency or bankruptcy of B gives rise to the termination of any arrangements under which any liability covered by the provision mentioned in sub-paragraph (1)(d) arises, or
in relation to N, if the insolvency or bankruptcy of N gives rise to the termination of any arrangements under which such a liability arises.
Paragraph 27D also applies for the purposes of paragraph 27(2)(b) if—
the bank levy is charged as provided for by paragraph 5 (entities which are not members of groups),
the relevant foreign bank (“B”) has liabilities to another entity (“B’s liabilities”),
B recognises, as assets, amounts due from that other entity (“N”) to B (“N’s liabilities”),
there is in place an agreement between B and N which makes net settlement provision, and
that provision is legally effective and enforceable.
In sub-paragraph (1)(d), “net settlement provision” means provision for there to be a single net settlement—
if a netting event occurs, or
at the option of B or N, if a netting event occurs.
The reference in sub-paragraph (2) to a “single net settlement” is a reference to a single net settlement of—
all B’s liabilities (so far as covered by the provision mentioned in sub-paragraph (1)(d)), and
all N’s liabilities (so far as covered by that provision).
But a provision for there to be single net settlement—is not to be treated as a net settlement provision for the purposes of sub-paragraph (1)(d).
at the option of B, but not at the option of N, if a netting event occurs, or
at the option of N, but not at the option of B, if a netting event occurs,
For the purposes of sub-paragraph (1)—
“agreement” includes an agreement which forms part of a multi-lateral agreement, arrangement or trading facility,
references to amounts due from N include securities provided by B to N as collateral, but only where B recognises those securities in its balance sheet or statement of financial position, and
“a netting event occurs”—
in relation to B, if the insolvency or bankruptcy of B gives rise to the termination of any arrangements under which any liability covered by the provision mentioned in sub-paragraph (1)(d) arises, or
in relation to N, if the insolvency or bankruptcy of N gives rise to the termination of any arrangements under which such a liability arises.
Section 556 of CTA 2009(meaning of securities and similar securities) applies for the purposes of paragraphs 27A(6) and 27B(5) as it applies for the purposes of Chapter 10 of Part 6 of that Act.
The amount of B’s net settlement liabilities is to be reduced (but not below nil) by the amount of B’s net settlement assets.
“B’s net settlement liabilities” means B’s liabilities so far as they—
are covered by the provision mentioned in paragraph 27A(1)(d) or 27B(1)(d), and
are not excluded liabilities.
“B’s net settlement assets” means the assets of—so far as corresponding to N’s net settlement liabilities.
B, or
in a case within paragraph 27A, another member of the relevant group,
But, in a case within paragraph 27A—
if sub-paragraph (1) of this paragraph applies in relation to more than one relevant foreign bank, no part of an asset may be included in the net settlement assets of more than one of those relevant foreign banks, and
if an asset, or part of an asset, is included for the purposes of paragraph 15U in the net settlement assets of a member of the relevant group, the asset (or part) is not to be included in B’s net settlement assets for the purposes of this paragraph.
“N’s net settlement liabilities” means N’s liabilities so far as they are covered by the provision mentioned in paragraph 27A(1)(d) or 27B(1)(d).
If B’s net settlement liabilities exceed B’s net settlement assets, and a proportion (A%) of those liabilities is long term liabilities and a proportion (C%) of those liabilities is short term liabilities, under sub-paragraph (1)—
the long term liabilities are reduced by A% of B’s net settlement assets, and
the short term liabilities are reduced by C% of those assets.
“Excluded” equity and liabilities
Equity or liabilities are “excluded” so far as they consist of equity or liabilities which are specified to be excluded—
by any of paragraphs 29 to 39, or
by an order made by the Treasury.
The Treasury may also by order add to, repeal or otherwise amend any of paragraphs 29 to 39.
An order under this paragraph may make consequential amendments of paragraph 76 (“long term” liabilities: non-protected deposits).
An order under this paragraph may have retrospective effect in relation to—
any chargeable period in which the order is made, or
in the case of an order made on or before 31 December 2011, any chargeable period ending on or after 1 January 2011.
Orders under this paragraph are to be made by statutory instrument.
A statutory instrument containing an order under this paragraph may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.
Liabilities representing protected deposits are excluded.
A deposit is “protected” so far as it is covered by the Financial Services Compensation Scheme under section 213 of FISMA 2000 (“the FSCS”).
A deposit is “protected” so far as it is covered by a scheme which—
operates outside the United Kingdom, and
is comparable to the FSCS.
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A deposit is “protected” so far as it is covered by a guarantee—
which is given explicitly by a national government (other than the government of the United Kingdom), and
under which the government guarantees to compensate depositors for losses on their deposits.
In sub-paragraph (2)... “ deposit ” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544).
In sub-paragraphs (3) and (7)... “ deposit ” has the meaning given by article 5(2) of that Order but ignoring the exclusions in articles 6 to 9AB.
If two or all of sub-paragraphs (2), (3) and (7) apply to a deposit, the amount of the deposit “protected” is the highest amount which results from any one of those sub-paragraphs.
Equity and liabilities which are “tier one capital equity and liabilities” are excluded.
For the purposes of this paragraph, Tier one capital equity and liabilities” means, in relation to an entity or group of entities, so much of the entity or group's equity and liabilities as is tier one capital within the meaning of Article 25 of the Capital Requirements Regulation (taking account of the transitional provisions in Part Ten of that Regulation).
For the purposes of sub-paragraph (2), the Capital Requirements Regulation is to be treated as applying, in relation to all entities and groups of entities, as if—
to the extent it would not otherwise be the case, the Prudential Regulation Authority were the competent authority in relation to those entities and groups,
the only determinations made, and discretions exercised, by the Prudential Regulation Authority for the purposes of the Capital Requirement Regulation were those published by it in accordance with that Regulation, and
those entities and groups (to the extent that it would not otherwise be the case) were subject to the provisions of the the Handbook made by the Prudential Regulation Authority under FISMA 2000 (as that Handbook had effect from time to time) immediately before 1 January 2014.
“The Capital Requirements Regulation” means Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.
Sovereign repo liabilities are excluded.
“ Sovereign repo liability ” means a liability of a person (“A”) which represents a sum of money or other asset received by A from another person (“B”) under an arrangement where—
under the arrangement A sells high quality securities at any time to B,
the arrangement makes provision conferring a right or imposing an obligation on A to buy those or similar securities at any subsequent time, and
the subsequent buying of those or similar securities would extinguish the liability.
Section 556 of CTA 2009 (meaning of securities and similar securities) applies for the purposes of sub-paragraph (2) as it applies for the purposes of Chapter 10 of Part 6 of that Act.
Securities are “high quality” if—
they are debt securities issued by the Bank of England, Her Majesty’s Government in the United Kingdom, or the government of Gibraltar,
they are debt securities issued by—
the European Central Bank, a member State’s central bank or the central government of a member State,
the central bank of a country (other than a member State) where the exposure to the bank is assigned a credit assessment of at least credit quality step 1, as provided by Article 10(1)(b)(ii) of Commission Regulation 2015/61, or
the central government of a country (other than a member State) where the government is assigned a credit assessment of at least credit quality step 1, as provided by Article 10(1)(c)(ii) of Commission Regulation 2015/61, or
they are securities, including debt securities, issued by the multinational development banks or the international organisations described in Article 10(1)(g) of Commission Regulation 2015/61.
Sovereign stock-lending liabilities are excluded.
“ Sovereign stock-lending liabilities ” means liabilities of the lender to redeliver equivalent cash collateral under a stock lending arrangement in respect of high quality securities.
Section 805 of CTA 2010 (“stock lending arrangement”) applies for the purposes of sub-paragraph (2) as it applies for the purposes of Chapter 5 of Part 17 of that Act, and the reference in sub-paragraph (2) to “ the lender ” is to be construed accordingly.
Paragraph 31(3) and (4) apply for the purposes of this paragraph.
Relevant insurance liabilities are excluded.
“ Relevant insurance liabilities ” means liabilities of a regulated insurer carrying on an insurance business which are—
liabilities to policyholders under contracts of general insurance or contracts of long-term insurance, including such contracts effected or carried out outside the United Kingdom,
liabilities representing unallocated surpluses, or
liabilities representing participants' interests in collective investment schemes.
The liabilities of a regulated insurer within sub-paragraph (2)(c) include a liability which would be a liability of the insurer within that provision if the insurer prepared consolidated financial statements.
In this paragraph—“ collective investment scheme ” has the same meaning as in Part 17 of FISMA 2000 (see sections 235 and 237 of that Act);“ contract of general insurance ” means a contract of a type described in Part 1 of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544);“ contract of long-term insurance ” means a contract of a type described in Part 2 of that Schedule;“ regulated insurer ” means an entity which—is authorised under the law of any territory to carry on insurance business, or is a member of a body or organisation which is so authorised;“ unallocated surplus ” means the fund for future appropriations shown in line 15 of Form 3 of a return deposited with the Prudential Regulation Authority under section 9.6 of the Interim Prudential Sourcebook for Insurers made by that Authority under FISMA 2000.
Relevant property, plant and equipment reserves are excluded.
“ Relevant property, plant and equipment reserves ” means equity amounts representing revaluation reserves relating to the revaluation of property, plant and equipment under International Accounting Standard 16 or Financial Reporting Standard 15.
“ Property, plant and equipment ” has the meaning given, for the time being, by International Accounting Standard 16.
Relevant tax liabilities are excluded.
...“ relevant tax liabilities ” means liabilities representing—
current tax or deferred tax liabilities within the meaning, for the time being, of International Accounting Standard 12, or
an amount of the bank levy.
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Relevant retirement benefit liabilities are excluded.
... “ relevant retirement benefit liabilities ” means liabilities under defined benefit plans within the meaning, for the time being, of International Accounting Standard 19.
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Financial services compensation scheme liabilities are excluded.
“ Financial services compensation scheme liabilities ” means liabilities representing—
levies payable by virtue of section 213(3)(b) of FISMA 2000, or
levies payable for purposes comparable with those mentioned in section 213(3)(b) of that Act in relation to a scheme which—
operates outside the United Kingdom, and
is comparable to the Financial Services Compensation Scheme under section 213 of that Act.
Liabilities representing clients' money held by an authorised person are excluded.
“ Authorised person ” means an entity which—
is an authorised person for the purposes of FISMA 2000 (see section 31 of that Act), or
would be required to be such an authorised person if it were a UK resident entity which carried on its activities in the United Kingdom.
“Clients' money”—but does not include a deposit within the meaning of article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544) ignoring the exclusions in articles 6 to 9AB.
in relation to an authorised person within sub-paragraph (2)(a), has the meaning given by section 137B of FISMA 2000 (FCA general rules: clients’ money, right to rescind etc.) , and
in relation to an authorised person within sub-paragraph (2)(b), means any money held by the person outside the United Kingdom where the holding of that money is subject to rules comparable with rules made under section 137B of that Act,
Liabilities are excluded if they represent cash collateral provided as QCP margin in relation to a trade executed or to be executed under a client clearing agreement.
Cash collateral is provided as “QCP margin” if, and to the extent that—
it exceeds the fair value of the instrument to which the trade relates, and
it corresponds to either—
an asset held in respect of the qualifying central counterparty which represents cash collateral provided to that qualifying central counterparty, or
cash collateral provided to the qualifying central counterparty which has the effect of reducing a liability of the clearing member to the qualifying central counterparty.
In this paragraph—“clearing member”, in relation to a recognised central counterparty, has the meaning given by Article 2(14) of the EMIR Regulation,“client” has the meaning given by Article 2(15) of the EMIR Regulation,“client clearing agreement” means a contract between a clearing member of a qualifying central counterparty and a client, relating to the clearing of transactions with the qualifying central counterparty,“derivative contract” has the meaning given by international accounting standards,“the EMIR Regulation” means Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories,“qualifying central counterparty” means a central counterparty that has been either authorised or recognised under the EMIR Regulation,“trade” means a transaction relating to the sale and purchase of a financial instrument or to the entering into of a derivative contract.
Currency liabilities are excluded.
“ Currency liabilities ” means liabilities of an entity or a group of entities representing notes issued by the entity or a member of the group as currency.
Supplementary provision
Netting agreements
The Treasury may by order add to, repeal or otherwise amend any of paragraphs 15S to 15U, 15Z3, 15Z4, 25 and 27A to 27D.
An order under this paragraph may make consequential amendments of this Schedule.
An order under this paragraph may have retrospective effect in relation to—
any chargeable period in which the order is made, or
in the case of an order made on or before 31 December 2011, any chargeable period ending on or after 1 January 2011.
Orders under this paragraph are to be made by statutory instrument.
A statutory instrument containing an order under this paragraph may not be made unless a draft has been laid before, and approved by a resolution of, the House of Commons.
Chargeable periods: entities which do not prepare financial statements
This paragraph applies where an entity does not prepare financial statements (consolidated or otherwise) for a period (“ the relevant period ”).
If the relevant period is 12 months or less, this Schedule (apart from this paragraph) applies as if that period were a period of account of the entity.
If the relevant period is more than 12 months, this Schedule (apart from this paragraph) applies as if each period to which sub-paragraph (4) applies were a period of account of the entity.
This sub-paragraph applies to a period if—
it is the first period of 12 months falling within the relevant period, or
it begins immediately after the end of the period mentioned in paragraph (a) and ends at the end of the relevant period.
Sub-paragraph (6) applies if, at the end of a period of 36 months beginning with a relevant date, an entity has not prepared financial statements for a period which begins with that date.
The entity is to be treated for the purposes of this paragraph as not having prepared financial statements for that period or, if that period exceeds 24 months, for the first 24 months of that period.
“ Relevant date ” means—
1 January 2011,
the first day after a period, ending on or after that date, for which the entity has prepared financial statements, or
the first day after a period for which the company is treated under sub-paragraph (6) as not having prepared financial statements.
Financial statements etc
This paragraph applies for the purposes of this Schedule.
References to consolidated financial statements for a period include references to a consolidated balance sheet (or consolidated statement of financial position) as at the last day of the period.
References to financial statements for a period include references to a balance sheet (or statement of financial position) as at the last day of the period.
References to amounts recognised in consolidated financial statements or financial statements include references to an amount comprised in an amount so recognised.
Sub-paragraph (6) applies if an amount for the chargeable period, or as at the last day of the chargeable period, is so recognised in a currency other than sterling.
The amount is to be translated into its sterling equivalent by reference to the spot rate of exchange for the last day of the chargeable period.
If consolidated financial statements or financial statements for the chargeable period are not prepared in a way which complies with the relevant accounting framework under which the statements are prepared, the statements are to be adjusted as necessary to ensure that they comply.
In sub-paragraph (7) “ relevant accounting framework ” means—
international accounting standards,
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Joint ventures
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Residence
For the purposes of this Schedule—
the territory in which a company is resident is to be determined as for corporation tax purposes, and
the territory in which a partnership is resident is the territory in which the control and management of the partnership's trade and investment activities take place.
Bank levy to be ignored for other tax purposes
In calculating profits or losses for the purposes of income tax or corporation tax—
no deduction is allowed in respect of the bank levy, and
no account is to be taken of any amount which is paid(directly or indirectly) by a member of the relevant group to another member of the group for the purposes of meeting or reimbursing the cost of the bank levy charged in relation to the group.
Anti-avoidance
This paragraph applies if—
arrangements are entered into by one or more entities, and
the main purpose, or one of the main purposes, of the entity, or any of the entities, in entering into the arrangements or any part of them is to avoid or reduce a charge or assessment to the bank levy.
In this paragraph “the relevant arrangements”—
means the arrangements or the part of them referred to in sub-paragraph (1)(b), and
includes any part of those arrangements or of that part.
Sub-paragraph (4) applies if an effect of the relevant arrangements is that the bank levy is not charged or assessed as it would have been in the absence of the relevant arrangements.
The bank levy is charged or assessed as it would have been ignoring that effect.
The cases covered by sub-paragraph (3) include (in particular) cases in which the bank levy is charged or assessed but an effect of the relevant arrangements is that the amount of the bank levy charged or assessed—
is nil, or
is otherwise less than it would have been in the absence of the relevant arrangements.
In sub-paragraphs (3) and (5) references to the relevant arrangements do not include those arrangements to the extent to which any of the following sub-paragraphs applies to them.
This sub-paragraph applies to the relevant arrangements so far as their effect is to increase, on an ongoing basis, the excluded equity and liabilities of the relevant group or the relevant entity.
This sub-paragraph applies to the relevant arrangements so far as their effect is to increase, on an ongoing basis, the long term equity and liabilities of the relevant group or the relevant entity.
This sub-paragraph applies to the relevant arrangements so far as—
their effect is to reduce, on an ongoing basis, the short term liabilities of the relevant group or the relevant entity, and
there is no corresponding increase, on an ongoing basis or otherwise, in the amount of the funding, or the size of the financial obligations, of the relevant group or the relevant entity which is not, or are not, excluded equity and liabilities or long term equity and liabilities (it being immaterial for this purpose whether or not any such funding or obligation is recognised in the financial statements of the group or entity).
This sub-paragraph applies to the relevant arrangements so far as—
their effect is to reduce, on an ongoing basis, the long term equity and liabilities of the relevant group or the relevant entity, and
there is no corresponding increase, on an ongoing basis or otherwise, in the amount of the funding, or the size of the financial obligations, of the relevant group or the relevant entity which is not, or are not, excluded equity and liabilities (it being immaterial for this purpose whether or not any such funding or obligation is recognised in the financial statements of the group or entity).
This sub-paragraph applies to the relevant arrangements so far as they are an agreement within paragraph 15S(1)(d) and(e), 15T(1)(e) and(f), 15Z3(1)(c) and(d), 25(1)(c) and (d), 27A(1)(d) and(e) or 27B(1)(d) and(e).
This sub-paragraph applies to the relevant arrangements so far as their effect is to increase, on an ongoing basis, the amount of the high quality liquid assets of the relevant group or the relevant entity.
If the relevant group is a foreign banking group or a relevant non-banking group, in the sub-paragraphs above references to the relevant group are to be read as references to the members of the group, collectively, which are relevant members.
In sub-paragraph (13) “relevant member” means—
a chargeable UK resident entity which is a member of the relevant group;
a UK sub-group of the relevant group;
a relevant foreign bank which is a member of the relevant group.
Section 1139 of CTA 2010 (definition of “tax advantage”) is amended as follows.
In subsection (2)—
omit the “or” after paragraph (c), and
after paragraph (d) insert
After subsection (3) insert—
Collection and management
Responsibility for collection and management
The Commissioners for Her Majesty's Revenue and Customs are responsible for the collection and management of the bank levy.
In this Part of this Schedule “ HMRC ” means Her Majesty's Revenue and Customs.
Payment of the bank levy through the corporation tax system
This paragraph applies where the bank levy is charged as provided for by paragraph 4.
The bank levy is to be treated as if it were an amount of corporation tax chargeable on the relevant group's responsible member (see paragraph 54) for the accounting period or periods determined in accordance with the following sub-paragraphs.
Subject to what follows, the accounting period for which the bank levy is to be treated as if it were an amount of corporation tax chargeable is to be—
the responsible member's accounting period which ends at the same time as the chargeable period, or
if it does not have an accounting period which ends at that time, its accounting period during which the chargeable period ends.
If a proportion (“X%”) of the chargeable period falls in any other accounting period of the responsible member, X% of the bank levy is to be treated as if it were an amount of corporation tax chargeable for that other accounting period.
This paragraph applies where the bank levy is charged as provided for by paragraph 5.
The bank levy is to be treated as if it were an amount of corporation tax chargeable on the relevant entity for the accounting period or periods determined in accordance with the following sub-paragraphs.
Subject to what follows, the accounting period for which the bank levy is to be treated as if it were an amount of corporation tax chargeable is to be—
the relevant entity's accounting period which ends at the same time as the chargeable period, or
if it does not have an accounting period which ends at that time, its accounting period during which the chargeable period ends.
If a proportion (“X%”) of the chargeable period falls in any other accounting period of the relevant entity, X% of the bank levy is to be treated as if it were an amount of corporation tax chargeable for that other accounting period.
Paragraphs 50(2) and 51(2) are to be taken as applying all enactments applying generally to corporation tax.
This is subject to—
any provisions of the Taxes Acts (within the meaning of TMA 1970),
any necessary modifications, and
sub-paragraph (5).
The enactments mentioned in sub-paragraph (1) include—
those relating to returns of information and the supply of accounts, statements and reports,
those relating to the assessing, collecting and receiving of corporation tax,
those conferring or regulating a right of appeal, and
those concerning administration, penalties, interest on unpaid tax and priority of tax in cases of insolvency under the law in any part of the United Kingdom.
Accordingly—
TMA 1970 is to have effect as if any reference to corporation tax included the bank levy where it is treated by paragraph 50(2) or 51(2) as an amount of corporation tax chargeable on an entity, and
in particular, where the bank levy is so treated, it is due and payable as an amount of corporation tax in accordance with section 59D of TMA 1970, subject to section 59E of that Act.
Nothing in section 53 of this Act (leases and changes to accounting standards) has effect in relation to the bank levy or any provision of this Schedule.
Joint and several liability
This paragraph applies where the bank levy is charged as provided for by paragraph 4.
The entities within sub-paragraph (3) are jointly and severally liable for the bank levy liability of the relevant group's responsible member (see paragraph 54) for an accounting period; and HMRC may enforce that liability against any of those entities accordingly.
But sub-paragraph (2) is subject to paragraph 53A (ring-fenced bodies).
The entities within this sub-paragraph are—
if the relevant group is a relevant non-banking group, all relevant members of the relevant group within the charge to corporation tax as at the end of the chargeable period, or
otherwise, all members of the relevant group within the charge to corporation tax as at the end of the chargeable period.
In sub-paragraph (3)(a) “ relevant member ” means a member of the relevant group which—
is a member of a UK sub-group,
is a chargeable UK resident entity which is a banking entity (see paragraph 15C(2)),
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
is a relevant foreign bank which is a member of the relevant group.
An entity's liability by virtue of sub-paragraph (2) is not affected if, after the end of the chargeable period, it ceases to be within the charge to corporation tax.
An entity is not within sub-paragraph (3) if, as at the end of the chargeable period, it is—
a securitisation company,
a covered bond vehicle, or
an entity of a kind prescribed by an order made by the Treasury.
In sub-paragraph (6)—“ capital market arrangement ” has the same meaning as in section 72B(1) of the Insolvency Act 1986 (see paragraph 1 of Schedule 2A to that Act);“ covered bond vehicle ” means a limited liability partnership—which is a party to a capital market arrangement, or a transaction in pursuance of a capital market arrangement, whose trade or business (ignoring any incidental activities) consists wholly of one or both of the following—providing guarantees, and acquiring, owning and managing assets directly or indirectly forming the whole or part of the security for the capital market arrangement, and which is within the charge to corporation tax;“ limited liability partnership ” includes an entity established under the law of a territory outside the United Kingdom of a similar character to a limited liability partnership;“ securitisation company ” means a company of the kind mentioned in paragraphs (a) to (e) of section 83(2) of FA 2005 or paragraphs (a) to (e) of regulation 4(2) of the Taxation of Securitisation Companies Regulations 2006 ( S.I. 2006/3296).
The responsible member's “bank levy liability” for an accounting period—
is the member's liability for corporation tax for that period as calculated in accordance with paragraph 8 of Schedule 18 to FA 1998 so far as the tax calculated consists of the bank levy by virtue of paragraph 50(2) of this Schedule, and
includes any interest or penalties payable in relation to that tax so far as it consists of the bank levy.
An order under sub-paragraph (6) may have retrospective effect in relation to—
any chargeable period in which the order is made, or
in the case of an order made on or before 31 December 2011, any chargeable period ending on or after 1 January 2011.
Orders under sub-paragraph (6) are to be made by statutory instrument.
A statutory instrument containing an order under sub-paragraph (6) is subject to annulment in pursuance of a resolution of the House of Commons.
This paragraph applies where—
an entity (the “ring-fenced entity”) which is a member of the relevant group is—or both, and
a ring-fenced body, or
a member of a ring-fenced body sub-group,
the entity is not the relevant group’s responsible member.
The ring-fenced entity is jointly and severally liable for the bank levy liability of the relevant group’s responsible member under paragraph 53(2) only so far as the liability is—
attributable to the ring-fenced body sub-group of which the ring-fenced entity is a member, or
if the ring-fenced entity is not a member of a ring-fenced body sub-group, attributable to that entity.
For the purposes of sub-paragraph(2)—
the bank levy liability that is attributable to a ring-fenced body sub-group is the amount of the bank levy that would be charged for the chargeable period in relation to that sub-group if it were “the relevant group” for the purposes of this Part;
the bank levy liability that is attributable to a ring-fenced entity is the amount of the bank levy that would be charged for the chargeable period in relation to that entity if it were “the relevant entity” for the purposes of this Part.
“Ring-fenced body” has the same meaning as in the Financial Services and Markets Act 2000 (see section 142A of that Act).
A “ring-fenced body sub-group” is a group of entities consisting of—
an RFB parent undertaking and its subsidiaries, or
a ring-fenced body, which is not a subsidiary of an RFB parent undertaking, and the ring-fenced body’s subsidiaries.
“RFB parent undertaking” means a body corporate which is subject to rules made under section 192JA of the Financial Services and Markets Act 2000 (rules applying to parent undertakings of ring-fenced bodies).
Meaning of “the responsible member”
This paragraph applies where the bank levy is charged as provided for by paragraph 4.
In this paragraph and paragraph 55 “ chargeable member ” means a member of the relevant group within paragraph 53(3).
The relevant group's responsible member is the entity (“E”) in relation to which the following requirements are met—See paragraphs 55 and 55A for further provision about nominations and renewals.
E is a chargeable member of the relevant group,
E has an accounting period for corporation tax purposes which is the same as the chargeable period,
either—
during the nomination period the parent entity, or another entity acting on behalf of the parent entity, nominated E to HMRC to be the responsible member, or
the renewal conditions are met in relation to E, and
HMRC did not—
in a case within paragraph (c)(i), reject E’s nomination;
in a case within paragraph (c)(ii), make a determination under paragraph 55A.
The renewal conditions are met in relation to E if—
E was the relevant group’s responsible member at the end of the immediately preceding chargeable period, and
neither the parent entity, nor another entity acting on behalf of the parent entity, nominated an entity other than E during the nomination period.
In sub-paragraphs (3) and (3A), “nomination period” means the first 45 days of the chargeable period.
If—the responsible member is the parent entity.
no entity meets the requirements in sub-paragraph (3) and the relevant group is a UK banking group or a building society group, and
the parent entity is a chargeable member of the relevant group,
If no entity meets the requirements in sub-paragraph (3) and the relevant group is a foreign banking group or a relevant non-banking group, the responsible member is the entity in relation to which the following requirements are met—
it is a chargeable member of the relevant group,
it has an accounting period for corporation tax purposes which is the same as the chargeable period, and
it is—
the relevant member with the largest amount of UK-based equity and liabilities or UK-allocated equity and liabilities, or
if the relevant member with the largest amount of UK-based equity and liabilities or UK-allocated equity and liabilities is a UK sub-group, the entity which is the parent or parent undertaking for that sub-group.
In sub-paragraph (5)(c) “relevant member” means—
a chargeable UK resident entity which is a member of the relevant group;
a UK sub-group of the relevant group;
a relevant foreign bank which is a member of the relevant group.
Sub-paragraph (6B) applies if—
HMRC rejects E’s nomination (see sub-paragraph (3)(d)(i)), and
within the period of 30 days after the day on which HMRC rejects the nomination, HMRC and the parent entity, or another entity acting on behalf of the parent entity, agree that another entity (“A”) which is a chargeable member of the relevant group is to be the relevant group’s responsible member.
Where this sub-paragraph applies—
A is the relevant group’s responsible member, and
sub-paragraphs (4) and (5) do not apply.
If no entity meets the requirements of sub-paragraph (3) or sub-paragraph (4) or (5) (as the case may be), and sub-paragraph (6B) does not apply, the responsible member is the member of the relevant group determined by HMRC within the period of 30 days after the end of the chargeable period.
HMRC must give written notice of a determination under sub-paragraph (7) to the member concerned within that period.
HMRC cannot determine as the responsible member under sub-paragraph (7)—
an entity within paragraph 53(6)(a) or (b), or
an entity of a kind prescribed by an order under paragraph 53(6)(c).
In relation to chargeable periods arising by virtue of paragraph 41 (chargeable periods: entities which do not prepare financial statements), the Treasury may by order modify the time limit applying to determinations under sub-paragraph (7) (including determinations in cases to which paragraph 65(3) applies).
An order under sub-paragraph (10) may amend paragraphs 41 to 44 of Schedule 18 to FA 1998 (discovery assessments and determinations) in relation to any bank levy charged by virtue of paragraph 41 of this Schedule.
Orders under sub-paragraph (10) are to be made by statutory instrument.
A statutory instrument containing an order under sub-paragraph (10) is subject to annulment in pursuance of a resolution of the House of Commons.
An order under sub-paragraph (10) may have retrospective effect in relation to—
any chargeable period in which the order is made, or
in the case of an order made on or before 31 December 2011, any chargeable period ending on or after 1 January 2011.
This paragraph applies for the purposes of paragraph 54(3).
Only one nomination may be made during the chargeable period.
A nominator may nominate itself.
HMRC may from time to time publish requirements as to the information to be included with a nomination.
HMRC may reject a nomination within the period of 30 days starting with the day on which it receives the nomination.
HMRC may reject a nomination only if—
the nomination contravenes sub-paragraph (2),
information required under sub-paragraph (4) is missing from the nomination, or
HMRC has reason to believe that the nominee will turn out—
not to be a chargeable member of the relevant group,
not to have an accounting period for corporation tax purposes which is the same as the chargeable period, or
not to have sufficient resources itself to pay the bank levy.
This paragraph applies for the purposes of paragraph 54(3)(c)(ii) and(d)(ii).
HMRC may from time to time publish requirements as to the information to be provided by, or on behalf of, the relevant group’s responsible member before the end of the nomination period.
In a case within paragraph 54(3)(c)(ii), HMRC may determine that E is not to be the relevant group’s responsible member for the chargeable period.
A determination under sub-paragraph(3) must be made within the period of 30 days from the end of the nomination period.
HMRC may make a determination under this paragraph only if—
information required under sub-paragraph(2) has not been provided to HMRC, or
HMRC has reason to believe that E—
has ceased to be a chargeable member of the relevant group,
no longer has an accounting period for corporation tax purposes which is the same as the chargeable period, or
will turn out not to have sufficient resources to pay the bank levy.
Consequential amendment to section 1 of PCTA 1968
In section 1 of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions affecting certain taxes), in subsection (1) after “corporation tax” insert “ , the bank levy ” .
Consequential amendments to TMA 1970
TMA 1970 is amended as follows.
Section 59E (provision about when corporation tax is due and payable) is amended as follows.
In subsection (11), after paragraph (c) insert—
After that subsection insert—
At the end of section 59F(6) (provision for paying corporation tax on behalf of group members) insert
Consequential amendments to Schedule 18 to FA 1998
Schedule 18 to FA 1998 (company tax returns) is amended as follows.
At the end of paragraph 1 insert
After paragraph 3 insert—
Paragraph 8 is amended as follows.
At the end of the “Third step” in sub-paragraph (1) insert— “ 3. Any amount of the bank levy chargeable by virtue of paragraph 50 or 51 of Schedule 19 to the Finance Act 2011 (the bank levy). ”
After sub-paragraph (1) insert—
Paragraph 11 is amended as follows.
The existing provision becomes sub-paragraph (1).
After that sub-paragraph insert—
Transitional provision
Sub-paragraphs (2) to (6) apply if the chargeable period starts on or before the day on which this Act is passed (whether or not it ends on or before that day).
Paragraph 54(3)(c) has effect as if for the words “during the chargeable period but no later than 45 days after it started” there were substituted “ within the period of 7 days starting with the day on which this Act is passed ” .
Paragraph 54(7) has effect as if for the words “30 days after the end of the chargeable period” there were substituted “ 15 days starting with the day on which this Act is passed ” .
Paragraph 55(5) has effect as if for “30” there were substituted “ 7 ” .
Sub-paragraph (6) applies if, before the passing of this Act—
HMRC published a statement stating that it was ready to receive nominations for responsible members,
an entity made a nomination in accordance with HMRC 's statement, and
the nomination included all information required by HMRC 's statement.
For the purposes of paragraphs 54(3)(c) and 55(5) (as modified above) the nomination is to be treated as if it were made by the entity and received by HMRC immediately after the passing of this Act.
The requirements covered by paragraph 55(4) include any requirements published by HMRC before the passing of this Act which are stated to apply for the purposes of nominations for responsible members.
But such requirements are to apply only to nominations made during 2011.
Regulations under section 59E of TMA 1970, in relation to amounts within subsection (11)(d) of that section (amounts of bank levy), made on or before 31 December 2011 may have effect in relation to amounts of bank levy which—
are payable in respect of chargeable periods ending on or before that day, or
are treated as amounts of corporation tax for accounting periods ending on or before that day.
Double taxation reliefETC
Arrangements affording double taxation relief
If the Treasury by order declares—those arrangements (“double taxation arrangements”) have effect so far as they provide for relief from the bank levy.
that arrangements specified in the order have been made in relation to any foreign territory with a view to affording relief from double taxation in relation to the bank levy and any equivalent foreign levy, and
that it is expedient that those arrangements should have effect,
In this Part of this Schedule—“ equivalent foreign levy ”, in relation to a foreign territory, means any tax imposed by the law of that territory which corresponds to the bank levy;“ foreign territory ” means a territory outside the United Kingdom.
For the purposes of sub-paragraph (2), tax may correspond to the bank levy even though—
the tax is payable under the law of a province, state or other part of a country,
it is levied by or on behalf of a municipality or other local body, or
its proceeds form a fund used for a particular purpose.
Double taxation arrangements have effect under sub-paragraph (1)—
subject to the following provisions of this paragraph, and
despite anything in any other enactment.
This paragraph gives effect to arrangements even if they provide for relief from the bank levy for periods before the making of the arrangements or before the passing of this Act.
Relief under this paragraph requires a claim.
An order under this paragraph revoking an earlier order may contain transitional provisions that appear to the Treasury to be necessary or expedient.
The Treasury may by regulations make provision—
generally for carrying out the provisions of this paragraph or double taxation arrangements;
for removing, or reducing the amount of, relief obtained by virtue of double taxation arrangements in circumstances where a scheme or arrangement of a specified description has been made or in other specified circumstances;
for restricting the amount of relief allowed against an entity's liability for the bank levy for a chargeable period to an amount calculated in a specified manner.
Regulations under sub-paragraph (8)(a) may, in particular, provide that where, under double taxation arrangements, the Commissioners for Her Majesty's Revenue and Customs arrive at a solution to a case, or make a mutual agreement with an authority in another territory for the resolution of a case—
the Commissioners are to give effect to the solution or mutual agreement despite anything in any enactment, and
any adjustment as is appropriate in consequence may be made.
If arrangements specified in an order under this paragraph provide for relief from the bank levy for periods before the order is made, regulations under this paragraph which are made on the same day as the order, and come into force on the same day as the order, may make provision in relation to those periods.
Regulations under this paragraph may—
amend any provision made by or under an Act whenever passed or made (including this Act), and
contain transitional provisions that appear to the Treasury to be necessary or expedient.
Orders or regulations under this paragraph are to be made by statutory instrument.
A statutory instrument containing an order or regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
Power to provide for double taxation relief
The Treasury may by regulations make provision for relief from the bank levy for the purpose of affording relief from double taxation in relation to the bank levy and any equivalent foreign levy imposed by the law of a foreign territory.
Regulations under this paragraph must specify the equivalent foreign levy or levies in respect of which they are made.
Regulations under this paragraph may, in particular—
provide for relief from the bank levy for periods before the making of the regulations or before the passing of this Act;
make provision for removing, or reducing the amount of, relief obtained in circumstances where a scheme or arrangement of a specified description has been made or in other specified circumstances;
make provision for restricting the amount of relief allowed against an entity's liability for the bank levy for a chargeable period to an amount calculated in a specified manner.
Regulations under this paragraph may—
make different provision for different purposes, cases or circumstances,
amend any provision made by or under an Act whenever passed or made (including this Act), and
contain transitional provisions that appear to the Treasury to be necessary or expedient.
Regulations under this paragraph are to be made by statutory instrument.
A statutory instrument containing regulations under this paragraph—
in a case where the reciprocity condition is met, are subject to annulment in pursuance of a resolution of the House of Commons, and
in any other case, may not be made unless a draft has been laid before and approved by a resolution of that House.
The reciprocity condition is met if the Treasury is satisfied that in relation to the foreign territory or each of the foreign territories concerned—
appropriate provision has been made under the law of the territory for relief from double taxation in relation to the bank levy and the equivalent foreign levy under the law of that territory to which the regulations apply, or
such provision will be made as a result of an agreement which has been entered into in relation to the territory.
Disclosure of information to foreign tax authorities etc
If the Treasury by order declares that—those arrangements have effect, and do so in spite of anything in any enactment or instrument.
international tax enforcement arrangements which are specified in the order have been made in relation to any territory or territories outside the United Kingdom in association with double taxation arrangements specified under paragraph 66 in the same or a previous order, and
it is expedient that those international tax enforcement arrangements have effect,
“International tax enforcement arrangements” means arrangements which relate to one or both of the following—
the exchange of information foreseeably relevant to the administration, enforcement or recovery of the bank levy or any equivalent foreign levy to which the double taxation arrangements relate;
the service of documents relating to the bank levy or any such equivalent foreign levy.
An order under this paragraph revoking an earlier order may contain transitional provisions that appear to the Treasury to be necessary or expedient.
Subsections (4) to(5) of section 173 of FA 2006 (international tax enforcement arrangements: disclosure of information) apply to arrangements which have effect under this paragraph as they apply to arrangements which have effect under that section.
Orders under this paragraph are to be made by statutory instrument.
A statutory instrument containing an order under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.
...
Sub-paragraph (2) applies if the law of a foreign territory makes provision allowing, in respect of payments of the bank levy, relief from an equivalent foreign levy payable under that law.
No obligation as to secrecy or other restriction on the disclosure of information prevents the Commissioners for Her Majesty's Revenue and Customs, or an officer of Revenue and Customs, from disclosing to the authorised officer of the authorities of the territory such facts as may be necessary to enable the proper relief to be given under the law of the territory.
Consequential amendment to the Constitutional Reform and Governance Act 2010
Foreign levies to be ignored for purposes of income tax or corporation tax
In calculating profits or losses for the purposes of income tax or corporation tax—
no deduction is allowed in respect of any tax which is imposed by the law of a territory outside the United Kingdom and corresponds to the bank levy, and
no account is to be taken of any amount which is paid (directly or indirectly) by a member of a group to another member for the purposes of meeting or reimbursing the cost of such a tax charged in relation to the group.
Paragraph 66(3) applies for the purposes of sub-paragraph (1) as it applies for the purposes of paragraph 66(2).
Definitions
General
In this Schedule—“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not it is legally enforceable);“asset management activities” is defined in paragraph 71;“assets” is defined in paragraph 14;“banking group” is defined in paragraph 12;“the bank levy” is defined in paragraph 1;“building society” means a building society within the meaning of the Building Societies Act 1986;“building society group” is defined in paragraph 9;“capital resources condition” is defined in paragraph 72;“the chargeable period” is defined in paragraph 4(1) or 5(1) (as the case may be);“Commission Regulation 2015/61” means Commission Delegated Regulation (EU) 2015/61 of 10 October 2014 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for Credit Institutions;“company” has the meaning given by section 1121(1) of CTA 2010;“contract of insurance” has the meaning given by article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544);“designated FPE entity” is defined in paragraph 15F(2);“entity” includes a company, a partnership or a joint venture, but not—the Crown, a Minister of the Crown, a government department, a Northern Ireland department, a foreign sovereign power, or an international organisation;“entity-by-entity election” is defined in paragraph 15L(1);“equity” is defined in paragraph 14;“excluded”, in relation to equity and liabilities, is defined in paragraph 28;“excluded entity” is defined in paragraph 73;“exempt activities condition” is defined in paragraph 13;“fair value”, in relation to an item, means the amount for which the item could be exchanged between knowledgeable, willing parties in an arm's length transaction;“the FCA Handbook” means the Handbook made by the Financial Conduct Authority under FISMA 2000 (as that Handbook has effect from time to time);”;“FCA investment firm” has the meaning given by section 143A of FISMA 2000;“foreign banking group” is defined in paragraph 10;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .“high quality liquid asset”, in relation to an entity or group of entities, means an asset (within the meaning of this Schedule) which—is a liquid asset to which Article 416 of Regulation (EU) No 575/2013 of the European Parliament and the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms applies, and falls within the description of “level 1 assets” given by Article 10(1) of Commission Regulation 2015/61;“international accounting standards” has the meaning given by section 1127(5) of CTA 2010, including any modifications mentioned in section 1127(6);“international organisation” means an organisation of which—two or more sovereign powers are members, or the governments of two or more sovereign powers are members,(see also sub-paragraph (5));“investment bank” has the meaning given by sub-paragraph (1A);“liabilities” is defined in paragraph 14;“long term”, in relation to equity and liabilities, is defined in paragraphs 74 to 77;“non-UK allocated equity and liabilities” is defined in paragraph 15Z1;“the parent entity” is defined in paragraph 4(1);“partnership” includes—a limited liability partnership, and an entity established under the law of a territory outside the United Kingdom of a similar character to a partnership, and “member”, in relation to a partnership, is to be read accordingly;“period of account”, in relation to an entity, means a period for which the entity prepares financial statements (consolidated or otherwise), (see also paragraph 41);“permanent establishment” is to be read in accordance with Chapter 2 of Part 24 of CTA 2010;“the PRA Rulebook” means the Rulebook made by the Prudential Regulation Authority under FISMA 2000 (as that Rulebook has effect from time to time);“the relevant entity” is defined in paragraph 5(1);“relevant foreign bank” is defined in paragraph 78;“the relevant group” is defined in paragraph 4(1);“relevant non-banking group” is defined in paragraph 11;“relevant regulated activity” is defined in paragraph 79;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .“residual UK-sub-group” is defined in paragraph 15K(2);“short term”, in relation to liabilities, means any liabilities which are not long term;“UK allocated equity and liabilities” is defined in paragraph 24;“UK-based equity and liabilities”—in relation to a UK resident entity, other than a designated FPE entity, is defined in paragraph 15H, in relation to a designated FPE entity (other than a member of a UK sub-group) is defined in paragraphs 15I and 15Z1, and in relation to a UK sub-group, is defined in paragraphs 15J, 15K and 15L;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .“UK resident bank” is defined in paragraph 80;“UK resident entity” means an entity which is resident in the United Kingdom (see paragraph 45) and “non-UK resident entity” is to be read accordingly;“UK sub-group” is defined in paragraph 15B;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In this Schedule, “investment bank” means an entity which—
is an FCA investment firm that meets the conditions in sub-paragraph (1B), or
is designated by the Prudential Regulation Authority under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556) (dealing in investments as principal: designation by PRA).
An FCA investment firm meets the conditions in this sub-paragraph if it has a permanent minimum capital requirement of £750,000 and is not—
a limited activity firm,
a limited licence firm,
a local firm, or
a matched principal trading firm.
In sub-paragraph (1B)—“limited activity firm” means an investment firm that—deals on own account only for the purpose of fulfilling or executing a client order or for the purpose of gaining entrance to a clearing and settlement system or a recognised exchange when acting in an agency capacity or executing a client order; or meets all the following conditions—it does not hold client monies or securities; it undertakes only dealing on own account; it has no external customers; and its execution and settlement transactions take place under the responsibility of a clearing institution and are guaranteed by that clearing institution;“limited licence firm” means an investment firm that is not authorised to provide the investment services and activities of—dealing on own account; or underwriting of financial instruments or placing of financial instruments on a firm commitment basis;“local firm” means a firm—dealing on own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets, or dealing for the accounts of other members of those markets and being guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such a firm is assumed by clearing members of the same markets;“matched principal trading firm” means an investment firm that executes investors’ orders for financial instruments (including in the course of operating an organised trading facility) and meets the following conditions—the firm only holds financial instruments for its own account as a result of its failure to match investors’ orders precisely; the total market value of all such positions is no more than 15% of the firm’s initial capital; such positions are incidental and provisional in nature and strictly limited to the time required to carry out the transaction in question.
In determining, for the purposes of sub-paragraph (1B), whether an FCA investment firm has a permanent minimum capital requirement of £750,000, any transitional provision in the FCA Handbook is to be disregarded.
In this Schedule the following terms have the meaning given in the PRA Rulebook —“authorised corporate director”;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .“capital resources requirement”;“contracts for differences”;“discretionary investment manager”;. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .“ILAS BIPRU firm”;“designated multilateral development bank”;“pension scheme”;“principal”;“retail client”.
In this Schedule the following terms have the meaning given in the FCA Handbook—“commodity and emission allowance dealer”;“dealing on own account”;“financial instrument”;“initial capital”;“investment firm”;“market value”;“permanent minimum capital requirement”.
A entity which would be an FCA investment firm that meets the conditions in sub-paragraph (1B) by virtue of activities carried on in the United Kingdom but for the fact that its registered office (or, if it does not have a registered office, its head office) is not in the United Kingdom is to be treated as being one.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
If, in any proceedings, any question arises whether a person is an international organisation for the purposes of the definition of “entity” in sub-paragraph (1), a certificate issued by or under the authority of the Secretary of State stating any fact relevant to that question is conclusive evidence of that fact.
“Asset management activities”
“ Asset management activities ” means activities which consist (or, if they were carried on in the United Kingdom, would consist) of any or all of the following—
acting as the operator of a collective investment scheme (within the meaning of Part 17 of FISMA 2000: see sections 235 and 237 of that Act),
acting as a discretionary investment manager for clients none of which is a linked entity, and
acting as an authorised corporate director.
In sub-paragraph (1), “ linked entity ”, in relation to an entity (“E”), means—
a member of the same group as E,
a company in which a company which is a member of the same group as E has a major interest (within the meaning of Part 5 of CTA 2009: see section 473 of that Act), or
a partnership the members of which include an entity—
which is a member of the same group as E, and
whose share of the profits or losses of a trade carried on by the partnership for an accounting period of the partnership any part of which falls within the chargeable period is at least a 40% share (see Part 17 of CTA 2009 for provisions about shares of partnership profits and losses).
In sub-paragraph (2) “ group ” means a group for the purposes of—
the provisions mentioned in paragraph 4(3), ...
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“Capital resources condition”
have (in aggregate) capital resources requirements of at least £100,000,000.
“The capital resources condition” is that the entity has a capital resources requirement of at least £100,000,000.
But if the entity is a member of a group, “the capital resources condition” is that the entity and—
any other entities which—
are members of the group,
meet either of the conditions in sub-paragraph (3),
are not excluded entities, and
are not members of any partnership within paragraph (b), and
any partnership—
the members of which are or include one or more entities which are members of the group and not excluded entities, and
which meets either of the conditions in sub-paragraph (3),
The conditions referred to in sub-paragraph (2) are that the entity or partnership—
is an investment bank, or
is an entity or partnership which carries on in the United Kingdom activities including the relevant regulated activity described in the provision mentioned in paragraph 79(a).
In determining whether the entity is a UK resident bank or a relevant foreign bank by virtue of paragraph 78(2) or 80(2), the references in sub-paragraph (1) to the entity are to the partnership.
If any entity whose capital resources may be material for the purposes of sub-paragraph (1) or (2) prepares its accounts in a currency other than sterling, the amount of its capital resources at the end of the chargeable period is to be translated into its sterling equivalent by reference to the spot rate of exchange on the last day of the chargeable period.
If any entity whose capital resources may be material for the purposes of sub-paragraph (1) or (2) carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom, its capital resources are to be determined as they would be for corporation tax purposes (see Chapter 4 of Part 2 of CTA 2009).
In sub-paragraph (2) “ group ” means a group for the purposes of—
the provisions mentioned in paragraph 4(3), ...
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“Excluded entity”
“Excluded entity” means an entity which is—
an insurance company or an insurance special purpose vehicle,
an entity which is a member of a group and does not carry on any relevant regulated activities otherwise than on behalf of an insurance company or insurance special purpose vehicle which is a member of the group,
an entity which does not carry on any relevant regulated activities otherwise than as the manager of a pension scheme,
an investment trust (within the meaning given by section 1158 of CTA 2010),
an entity which does not carry on any relevant regulated activities other than asset management activities,
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a commodity and emission allowance dealer,
an entity which does not carry on any relevant regulated activities otherwise than for the purpose of trading in commodities or commodity derivatives,
an entity which does not carry on any relevant regulated activities otherwise than for the purpose of dealing in contracts for differences—
as principal with persons all or all but an insignificant proportion of whom are retail clients, or
with another person to enable the entity or other person to deal in contracts for differences as principal with persons all or all but an insignificant proportion of whom are retail clients,
a society incorporated under the Friendly Societies Act 1992,
a society registered as a credit union under the Co-operative and Community Benefit Societies Act 2014 or the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), ...
a building society, or
an entity falling within sub-paragraph (1A).
An entity falls within this sub-paragraph if—
it would fall within a relevant relieving provision but for one (and only one) line of business which it carries on,
that line of business does not involve the relevant regulated activity described in the provision mentioned in paragraph 79(a), and
the entity’s activities in that line of business would not, on their own, result in it being an FCA investment firm that meets the conditions in paragraph 70(1B).
For the purposes of sub-paragraph (1A) the “relevant relieving provisions” are paragraphs (b), (c), (e), (g) and (h) of sub-paragraph (1).
In sub-paragraph (1)(a) and (b) “insurance company” and “insurance special purpose vehicle” have the meanings given by sections 65 and 139 of FA 2012 respectively.
In sub-paragraph (1)(b) “group” means a group for the purposes of—
the provisions mentioned in paragraph 4(3), ...
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“Long term” equity and liabilities
All equity is “long term”.
Liabilities are “long term” to the extent that—
as at the end of the chargeable period, the liabilities are not required, and cannot be required, to be repaid or otherwise met during the 12 month period starting with the last day of the chargeable period, and
in the case of liabilities of one member of the relevant group to another member of the relevant group, an officer of Revenue and Customs is satisfied that the following condition is also met in relation to the liabilities.
The condition is that, as at the end of the chargeable period, the liabilities are funded by the relevant group through—
equity,
excluded liabilities to persons who are not members of the relevant group, or
liabilities to such persons which are not required, and cannot be required, to be repaid or otherwise met during the 12 month period starting with the last day of the chargeable period.
This paragraph is subject to paragraph 76A.
Liabilities are also “long term” so far as they consist of non-protected deposits.
But sub-paragraph (1) does not apply to a deposit if the depositor is—
an authorised person for the purposes of FISMA 2000 (see section 31 of that Act), or
an entity which if it were a UK resident entity which carried on its activities in the United Kingdom would be required to be an authorised person.
A deposit is “non-protected” so far as it is not a protected deposit for the purposes of paragraph 29.
For the purposes of this paragraph—
“ deposit ” has the meaning given by article 5(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544), and
in relation to a deposit held in a territory outside the United Kingdom, the exclusions in articles 6 to 9AB of that Order apply with whatever modifications are appropriate to achieve the following purpose.
The purpose is that the exclusions are to cover, essentially, the same matters in relation to the territory concerned as they cover in relation to the United Kingdom.
Liabilities under derivative contracts are never “long term” (and are therefore always short term).
In this paragraph “derivative contract” has the meaning given by international accounting standards.
Paragraphs 74 to 76A are subject to Step 7 in paragraph 15Z1 and Step 6 in paragraph 24(1).
“Relevant foreign bank”
“ Relevant foreign bank ” means an entity which—
is a non-UK resident entity,
is an authorised person for the purposes of FISMA 2000 (see section 31 of that Act),
is an entity which carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom and—
whose activities include the relevant regulated activity described in the provision mentioned in paragraph 79(a), or
which is an investment bank, whose activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in paragraph 79(b) to (f),
carries on that relevant regulated activity, or those relevant regulated activities, wholly or mainly in the course of that trade,
meets the capital resources condition, and
is not an excluded entity.
“Relevant foreign bank” also includes an entity which—
meets the conditions in sub-paragraph (1)(a) and (f), and
is a member of a partnership which meets the conditions in paragraph 80(1)(b) to (e).
“Relevant regulated activity”
“ Relevant regulated activity ” means an activity which is a regulated activity for the purposes of FISMA 2000 by virtue of any of the following provisions of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544)—
article 5 (accepting deposits),
article 14 (dealing in investments as principal),
article 21 (dealing in investments as agent),
article 25 (arranging deals in investments),
article 25DA (operating an organised trading facility), but only where dealing on own account in relation to sovereign debt instruments for which there is no liquid market (within the meaning of the FCA Handbook);
article 40 (safeguarding and administering investments), and
article 61 (entering into regulated mortgage contracts).
“ UK resident bank”
“ UK resident bank ” means an entity which—
is a UK resident entity,
is an authorised person for the purposes of FISMA 2000 (see section 31 of that Act),
is an entity—
whose activities include the relevant regulated activity described in the provision mentioned in paragraph 79(a), or
which is an investment bank, whose activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in paragraph 79(b) to (f),
carries on that relevant regulated activity, or those relevant regulated activities, wholly or mainly in the course of trade,
meets the capital resources condition, and
is not an excluded entity.
“ UK resident bank” also includes an entity which—
meets the conditions in sub-paragraph (1)(a) and (f), and
is a member of a partnership which meets the conditions in sub-paragraph (1)(b) to (e).
Powers to amend
The Treasury may, by order made by statutory instrument, make such amendments of this Schedule as they consider appropriate in consequence of—
any change made to or replacement of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ( S.I. 2001/544) (or any replacement),
any change made to the PRA Rulebook, ...
any change in international accounting standards ... , or
any regulatory requirement, or change to any regulatory requirement, imposed by EU legislation, or by or under any Act (whenever adopted, enacted or made).
The Treasury may by regulations made by statutory instrument—
amend Part 8 of this Schedule (definitions);
amend other Parts of this Schedule in consequence of provision made under paragraph (a).
An order under sub-paragraph (1) or regulations under sub-paragraph (1A) may include transitional provision.
An order under sub-paragraph (1) may have retrospective effect in relation to—
any chargeable period in which the order is made, or
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in the case of an order made on or before 30 June 2022, in relation to any chargeable period ending on or after 1 January 2022.
Regulations under sub-paragraph (1A) made on or before 30 June 2022 may have retrospective effect in relation to any chargeable period ending on or after 1 January 2022.
A statutory instrument containing only an order under sub-paragraph (1) is subject to annulment in pursuance of a resolution of the House of Commons.
Any other statutory instrument containing provision made under this paragraph may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
Supplies of commodities to be used in producing electricity
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Prevention of SDLT avoidance
Introduction
Part 4 of FA 2003 (stamp duty land tax) is amended as follows.
Alternative property finance
Omit sections 71A(8), 72(7), 72A(8) and 73(5)(a) (which contain definitions of “financial institution” for the purposes of provisions relating to alternative property finance).
After section 73B insert—
Exchanges
Paragraph 5 of Schedule 4 (chargeable consideration: exchanges) is amended as follows.
In sub-paragraph (3)—
for paragraph (a)(i) and (ii) substitute—, and
for paragraph (b)(i) and (ii) substitute—.
After that sub-paragraph insert—
Commencement
Subject to what follows, the amendments made by paragraphs 2 and 4 have effect in relation to any transaction the effective date of which is on or after 24 March 2011.
The amendments do not have effect in relation to any transaction (other than a notional transaction under section 75A of FA 2003)—
which is effected in pursuance of a contract entered into and substantially performed before 24 March 2011, or
which is effected in pursuance of a contract entered into before 24 March 2011 and which is not excluded by sub-paragraph (4).
The amendments do not have effect in relation to any notional transaction under section 75A of FA 2003 if any scheme transaction—
is completed before 24 March 2011,
is effected in pursuance of a contract entered into and substantially performed before 24 March 2011, or
is effected in pursuance of a contract entered into before 24 March 2011 and is not excluded by sub-paragraph (4).
A transaction effected in pursuance of a contract entered into before 24 March 2011 is excluded by this sub-paragraph if—
there is any variation of the contract, or assignment of rights under the contract, on or after 24 March 2011,
the transaction is effected in consequence of the exercise on or after 24 March 2011 of any option, right of pre-emption or similar right, or
on or after 24 March 2011, there is an assignment, sub-sale 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.
Terms used in this paragraph have the same meaning as in Part 4 of FA 2003.
The amendments made by paragraph 3 are treated as having come into force on 24 March 2011.
But those amendments—
do not have effect for the purposes of any of sections 71A to 73B of FA 2003 (other than those provisions mentioned in paragraph (b) below) if the arrangements referred to in section 71A(1), 72(1), 72A(1) or 73(1) (as the case may be) were entered into before 24 March 2011, and
do not have effect for the purposes of section 71A(2)(b), 72(2)(b), 72A(2)(b) or 73(2)(b) of that Act if the arrangements referred to there were entered into before 24 March 2011.
Transfers involving multiple dwellings
New relief
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Other amendments of Part 4 of FA 2003
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Commencement
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Data-gathering powers
Power to obtain data
Power to give notice
An officer of Revenue and Customs may by notice in writing require a relevant data-holder to provide relevant data.
Part 2 of this Schedule sets out who is a relevant data-holder.
In relation to a relevant data-holder, “relevant data” means data of a kind specified for that type of data-holder in regulations made by the Treasury.
The data that a relevant data-holder may be required to provide—
may be general data or data relating to particular persons or matters, and
may include personal data (such as names and addresses of individuals).
A notice under this paragraph is referred to as a data-holder notice.
Purpose of power
The power in paragraph 1(1) is exercisable to assist with the efficient and effective discharge of HMRC's tax functions—
whether a particular function or more generally, and
whether involving a particular taxpayer or taxpayers generally.
It is additional to and is not limited by other powers that HMRC may have to obtain data (for example, in Schedule 36 to FA 2008).
But it may not be used (in place of the power in paragraph 1 of that Schedule) to obtain data required for the purpose of checking the relevant data-holder's own tax position.
Sub-paragraph (3) does not prevent use of the power in paragraph 1(1) of this Schedule to obtain data about a matter mentioned in paragraph 14(3)(a) (beneficial ownership of certain payments etc).
Nothing in this paragraph limits the use that may be made of data that have been obtained under this Schedule (see section 17(1) of CRCA 2005).
Specifying relevant data
A data-holder notice must specify the relevant data to be provided.
Relevant data may not be specified in a data-holder notice unless an officer of Revenue and Customs has reason to believe that the data could have a bearing on chargeable or other periods ending on or after the applicable day.
The applicable day is the first day of the period of 4 years ending with the day on which the notice is given.
Compliance
Relevant data specified in a data-holder notice must be provided by such means and in such form as is reasonably specified in the notice.
If the notice specifies that the data are to be provided by sending them somewhere, the data must be sent to such address and within such period as is reasonably specified in the notice.
If the notice specifies that the data are to be provided by making documents available for inspection somewhere, the documents must be made available for inspection at such place and time as is—
reasonably specified in the notice, or
agreed between an officer of Revenue and Customs and the data-holder.
A place used solely as a dwelling may not be specified under sub-paragraph (3)(a).
A data-holder notice requiring the provision of specified documents requires the documents to be provided only if they are in the data-holder's possession or power.
A power in this paragraph to specify something in a notice includes power to specify it in a document referred to in the notice.
Approval by tribunal
An officer of Revenue and Customs may ask for the approval of the tribunal before giving a data-holder notice.
This does not require an officer to do so (but see paragraph 28(3) for the effect of obtaining approval).
An application for approval under this paragraph may be made without notice (except as required under sub-paragraph (4)).
The tribunal may not approve the giving of a data-holder notice unless—
the application for approval is made by, or with the agreement of, an authorised officer,
the tribunal is satisfied that, in the circumstances, the officer giving the notice is justified in doing so,
the data-holder has been told that the data are to be required and given a reasonable opportunity to make representations to an officer of Revenue and Customs, and
the tribunal has been given a summary of any representations made by the data-holder.
Paragraphs (c) and (d) of sub-paragraph (4) do not apply to the extent that the tribunal is satisfied that taking the action specified in those paragraphs might prejudice any purpose for which the data are required.
“Authorised officer” means an officer of Revenue and Customs who is, or is a member of a class of officers who are, authorised by the Commissioners for the purposes of this paragraph.
Power to copy documents
An officer of Revenue and Customs may take copies of or make extracts from any document provided pursuant to a data-holder notice.
Power to retain documents
If an officer of Revenue and Customs thinks it reasonable to do so, HMRC may retain documents provided pursuant to a data-holder notice for a reasonable period.
While a document is being retained, the data-holder may, if the document is reasonably required for any purpose, request a copy of it.
The retention of a document under this paragraph is not to be regarded as breaking any lien claimed on the document.
If a document retained under this paragraph is lost or damaged, the Commissioners are liable to compensate the owner of the document for any expenses reasonably incurred in replacing or repairing the document.
Relevant data-holders
Introduction
This Part of this Schedule sets out who is a relevant data-holder for the purposes of this Schedule.
Descriptions of the various types of data-holder are to be read as including anyone who was previously of such a description.
Salaries, fees, commission etc
Each of the following is a relevant data-holder—
an employer,
a person who is concerned in making payments to or in respect of another person's employees with respect to their employment with that other person,
an approved agent within the meaning of section 714 of ITEPA 2003 (which relates to payroll giving), and
a person who carries on a business in connection with which relevant payments are or are likely to be made.
Relevant payments are—
payments for or in connection with services provided by persons who are not employed in the business, or
periodical or lump sum payments in respect of any copyright, public lending right, right in a registered design or design right.
Payments are taken to be made in connection with a business if they are made—
in the course of carrying on the business or a part of it, or
in connection with the formation, acquisition, development or disposal of the business or a part of it.
Sub-paragraph (1)(d) applies to the carrying on of any other kind of activity as it applies to the carrying on of a business, but only if the activity is being carried on by a body of persons (and references in sub-paragraphs (2) and (3) to the business are to be read accordingly).
A reference in this paragraph to the making of payments includes—
the provision of benefits, and
the giving of any other valuable consideration.
This paragraph applies if—
services that an individual provides or is obliged to provide under an agency contract are treated under section 44(2) of ITEPA 2003 as the duties of an employment held by the individual with the agency, or
remuneration receivable under or in consequence of arrangements falling within section 45 of that Act is treated as earnings from an employment held by an individual with the agency.
For the purposes of paragraph 9—
the individual is treated as being employed by the agency, and
payments made to the individual under or in consequence of the agency contract, or treated as earnings under section 45 of ITEPA 2003, do not count as “relevant payments”.
“Agency contract” and “remuneration” have the same meaning as in Chapter 7 of Part 2 of ITEPA 2003.
This paragraph applies if—
a person (“A”) performs in the United Kingdom duties of an employment,
the employment is under or with a person resident outside and not resident in the United Kingdom,
the duties performed in the United Kingdom are performed for a continuous period of not less than 30 days, and
those duties are performed for the benefit of a person (“B”) resident or carrying on a trade, profession or vocation in the United Kingdom.
For the purposes of paragraph 9—
B is treated as if B were an employer, but
only the name and place of residence of A may be specified for a relevant data-holder of B's type in regulations made under paragraph 1(3).
Interest etc
A person by or through whom interest is paid or credited is a relevant data-holder.
For the purposes of this paragraph, the following are to be treated as interest—
a dividend in respect of a share in a building society,
an amount to which a person holding a deeply discounted security is entitled on the redemption of that security,
a foreign dividend, and
an alternative finance return.
In sub-paragraph (2)—“alternative finance return” means—an alternative finance return within the meaning of Part 10A of ITA 2007, and an alternative finance return within the meaning of Part 6 of CTA 2009;“building society” means a building society within the meaning of the Building Societies Act 1986;“deeply discounted security” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005;“foreign dividend” means any annual payment, interest or dividend payable out of, or in respect of the funds or securities of—a body of persons that is not resident in the United Kingdom, or a government or public or local authority in a country outside the United Kingdom.
Income, assets etc belonging to others
A person who (in whatever capacity) is in receipt of money or value of or belonging to another is a relevant data-holder.
Merchant acquirers etc
A person who has a contractual obligation to make payments to retailers in settlement of payment card transactions is a relevant data-holder.
In this paragraph—“payment card” includes a credit card, a charge card and a debit card;“payment card transaction” means any transaction in which a payment card is accepted as payment;“retailer” means a person who accepts a payment card as payment for any transaction.
In this paragraph any reference to a payment card being accepted as payment includes a reference to any account number or other indicators associated with a payment card being accepted as payment.
Providers of electronic stored-value payment services
A person who provides electronic stored-value payment services is a relevant data-holder.
In this paragraph “electronic stored-value payment services” means services by means of which monetary value is stored electronically for the purpose of payments being made in respect of transactions to which the provider of those services is not a party.
Business intermediaries
A person who—is a relevant data-holder.
provides services to enable or facilitate transactions between suppliers and their customers or clients (other than services provided solely to enable payments to be made), and
receives information about such transactions in the course of doing so,
In this paragraph “suppliers” means persons supplying goods or services in the course of business.
For the purposes of this paragraph, information about transactions includes information that is capable of indicating the likely quantity or value of transactions.
A person is a relevant data-holder if the person—
carries on any of the activities in sub-paragraph(2) by way of business,
is a relevant person within the meaning of regulation 8(1) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692), and
is not an excluded credit institution.
The activities referred to in sub-paragraph(1)(a) are—
operating a currency exchange office;
transmitting money (or any representation of monetary value) by any means;
cashing cheques which are made payable to customers.
An excluded credit institution is a credit institution which has permission to carry on the regulated activity of accepting deposits—
under Part 4A of the Financial Services and Markets Act 2000 (permission to carry on regulated activities),...
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In this paragraph “credit institution” has the meaning given by Article 4.1(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms.
Payments derived from securities
Each of the following is a relevant data-holder—
a person who is the registered or inscribed holder of securities,
a person who receives a payment derived from securities or would be entitled to do so if a payment were made,
a person who receives a payment treated by the company that makes it as a payment to which section 1033 of CTA 2010 applies (purchase by unquoted trading company of own shares), and
a person who receives a chargeable payment within the meaning of Chapter 5 of Part 23 of CTA 2010 (company distributions: demergers).
But, for a relevant data-holder of a type described in this paragraph, data may only be specified in regulations under paragraph 1(3) if the data concern a matter mentioned in sub-paragraph (3).
The matters are—
whether the relevant data-holder is the beneficial owner (or sole beneficial owner) of the securities or payment in question,
if not—
details of the beneficial owner (or other beneficial owners), and
if those details are not known or if different, details of the person for whom the securities are held or to whom the payment is or may be paid on, and
if there is more than one beneficial owner or more than one person of the kind mentioned in paragraph (b)(ii), their respective interests in the securities or payment.
“ Payment derived from securities ” includes in particular—
an amount (whether of income or capital) that is payable out of or in respect of securities or rights attaching to securities, and
a payment that is representative of any such amount.
A person who makes a payment derived from securities that has been received from or is paid on behalf of another is a relevant data-holder.
“ Payment derived from securities ” has the same meaning as in paragraph 14.
Grants and subsidies out of public funds
A person by whom a payment out of public funds is made by way of grant or subsidy is a relevant data-holder.
For these purposes, a payment is a payment out of public funds if it is provided directly or indirectly by—
the Crown,
any government, public or local authority whether in the United Kingdom or elsewhere, or
any EU institution.
Licences, approvals etc
A person by whom licences or approvals are issued or a register is maintained is a relevant data-holder.
“ Register ” includes—
any record or list that a local authority maintains, and
any record or list that any other person is required or permitted to maintain by or under an enactment.
Rent and other payments arising from land
Each of the following is a relevant data-holder—
a lessee (or successor in title of a lessee),
an occupier of land,
a person having the use of land, and
a person who, as agent, manages land or is in receipt of rent or other payments arising from land.
The reference to a person who manages land includes a person who markets property to potential tenants, searches for tenants or provides similar services.
Dealing etc in securities
Each of the following is a relevant data-holder—
a person who effects or is a party to securities transactions wholly or partly on behalf of others (whether as agent or principal),
a person who, in the course of business, acts as registrar or administrator in respect of securities transactions (including a person who manages a clearing house or a central securities depository as defined in point (1) of Article 2(1) of Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories for any terminal market in securities),
a person who makes a payment derived from securities to anyone other than the registered or inscribed holder of the securities,
a person who makes a payment derived from bearer securities, and
an accountable person within the meaning of the Stamp Duty Reserve Tax Regulations 1986 ( S.I. 1986/1711).
“ Payment derived from securities ” has the same meaning as in paragraph 14 (and “payment derived from bearer securities” is to be read accordingly).
“ Securities transactions ” means—
transactions in securities,
transactions under which a representative payment has been, is to be or may be made, or
the making or receipt of a representative payment.
In sub-paragraph (3)—“ representative payment ” means a payment that is representative of an amount payable out of or in respect of securities or rights attaching to securities;“ transactions in securities ” means transactions, of whatever description, relating to securities, and includes in particular—the purchase, sale or exchange of securities, issuing or securing the issue of new securities, applying or subscribing for new securities, and altering or securing the alteration of rights attached to securities.
Dealing in other property
Each of the following is a relevant data-holder—
the committee or other person or body of persons responsible for managing a clearing house or a central securities depository (as defined in paragraph 19) for any terminal market in commodities,
an auctioneer,
a person carrying on a business of dealing in any description of tangible movable property, and
a person carrying on a business of acting as an agent or intermediary in dealings in any description of tangible movable property.
Lloyd's
A person who is registered as managing agent at Lloyd's in relation to a syndicate of underwriting members of Lloyd's is a relevant data-holder.
Investment plans etc
Each of the following is a relevant data-holder—
a plan manager (see section 696 of ITTOIA 2005), and
an account provider in relation to a child trust fund (as defined in section 3 of the Child Trust Funds Act 2004).
Petroleum activities
Each of the following is a relevant data-holder—
the holder of a licence granted under Part 1 of the Petroleum Act 1998, and
the responsible person in relation to an oil field (within the meaning of Part 1 of OTA 1975).
Insurance activities
Each of the following is a relevant data-holder—
a person who is involved (in any capacity) in an insurance business (as defined for the purposes of Part 3 of FA 1994),
a person who makes arrangements for persons to enter into contracts of insurance, and
a person who is concerned in a business that is not an insurance business and who has been involved in the entering into of a contract of insurance that provides cover for any matter associated with the business.
Environmental activities
A person who is involved (in any capacity) in any of the following activities is a relevant data-holder—
subjecting aggregate to exploitation in England, Wales or Northern Ireland (as defined for the purposes of Part 2 of FA 2001) or connected activities,
making or receiving supplies of taxable commodities (as defined for the purposes of Schedule 6 to FA 2000) or connected activities, and
disposal of material (as defined for the purposes of Part 3 of FA 1996).
Settlements
Each of the following is a relevant data-holder—
a person who makes a settlement,
the trustees of a settlement,
a beneficiary under a settlement, and
any other person to whom income is payable under a settlement.
Section 620 of ITTOIA 2005 (meaning of “settlement” etc ) applies for the purposes of this paragraph.
Charities
A charity is a relevant data-holder.
Appeals against data-holder notices
Right of appeal
The data-holder may appeal against a data-holder notice, or any requirement in such a notice, on any of the following grounds—
it is unduly onerous to comply with the notice or requirement,
the data-holder is not a relevant data-holder, or
data specified in the notice are not relevant data.
Sub-paragraph (1)(a) does not apply to a requirement to provide data that form part of the data-holder's statutory records.
Sub-paragraph (1) does not apply if the tribunal approved the giving of the notice in accordance with paragraph 5.
Procedure for appeal
Notice of an appeal under paragraph 28 must be given—
in writing,
before the end of the period of 30 days beginning with the date on which the data-holder notice was given, and
to the officer of Revenue and Customs by whom the data-holder notice was given.
It must state the grounds of appeal.
On an appeal that is notified to the tribunal, the tribunal may confirm, vary or set aside the data-holder notice or a requirement in it.
If the tribunal confirms or varies the notice or a requirement in it, the data-holder must comply with the notice or requirement—
within such period as is specified by the tribunal, or
if the tribunal does not specify a period, within such period as is reasonably specified in writing by an officer of Revenue and Customs following the tribunal's decision.
Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under paragraph 28 as they have effect in relation to an appeal against an assessment to income tax.
Penalties
Penalties for failure to comply
If the data-holder fails to comply with a data-holder notice, the data-holder is liable to a penalty of £300.
A reference in this Schedule to failing to comply with a data-holder notice includes—
concealing, destroying or otherwise disposing of a material document, or
arranging for any such concealment, destruction or disposal.
A document is a material document if, at the time when the data-holder acts—
the data-holder has received a data-holder notice requiring the data-holder to provide the document or data contained in the document, or
the data-holder has not received such a notice but has been informed by an officer of Revenue and Customs that the data-holder will do so or is likely to do so.
A document is not a material document by virtue of sub-paragraph (3)(a) if the data-holder notice has already been complied with, unless—
the data-holder has been notified in writing by an officer of Revenue and Customs that the data-holder must continue to preserve the document, and
the notification has not been withdrawn.
A document is not a material document by virtue of sub-paragraph (3)(b) if more than 6 months have elapsed since the data-holder was (or was last) informed.
Daily default penalties for failure to comply
If—the data-holder is liable to a further penalty, for each subsequent day on which the failure continues, of an amount not exceeding £60 for each such day.
a penalty under paragraph 30 is assessed, and
the failure in question continues after the data-holder has been notified of the assessment,
Penalties for inaccurate information or documents
This paragraph applies if—
in complying with a data-holder notice, the data-holder provides inaccurate data, and
condition A, B or C is met.
Condition A is that the inaccuracy is—
due to a failure by the data-holder to take reasonable care, or
deliberate on the data-holder's part.
Condition B is that the data-holder knows of the inaccuracy at the time the data are provided but does not inform HMRC at that time.
Condition C is that the data-holder—
discovers the inaccuracy some time later, and
fails to take reasonable steps to inform HMRC.
If this paragraph applies, the data-holder is liable to a penalty not exceeding £3,000.
Failure to comply with time limit
A failure to do anything required to be done within a limited period of time does not give rise to liability under paragraph 30 or 31 if the thing was done within such further time (if any) as an officer of Revenue and Customs may have allowed.
Reasonable excuse
Liability to a penalty under paragraph 30 or 31 does not arise if the data-holder satisfies HMRC or (on an appeal notified to the tribunal) the tribunal that there is a reasonable excuse for the failure.
For the purposes of this paragraph—
an insufficiency of funds is not a reasonable excuse unless attributable to events outside the data-holder's control,
if the data-holder relies on another person to do anything, that is not a reasonable excuse unless the data-holder took reasonable care to avoid the failure,
if the data-holder had a reasonable excuse for the failure but the excuse has ceased, the data-holder is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Assessment of penalties
If the data-holder becomes liable to a penalty under paragraph 30, 31 or 32, HMRC may assess the penalty.
If they do so, they must notify the data-holder.
An assessment of a penalty under paragraph 30 or 31 must be made within the period of 12 months beginning with the latest of the following—
the date on which the data-holder became liable to the penalty,
the end of the period in which notice of an appeal against the data-holder notice (or a requirement in it) could have been given, and
if notice of such an appeal is given, the date on which the appeal is determined or withdrawn.
An assessment of a penalty under paragraph 32 must be made—
within the period of 12 months beginning with the date on which the inaccuracy first came to the attention of an officer of Revenue and Customs, and
within the period of 6 years beginning with the date on which the data-holder became liable to the penalty.
Right to appeal against penalty
The data-holder may appeal against a decision by an officer of Revenue and Customs—
that a penalty is payable under paragraph 30, 31 or 32, or
as to the amount of such a penalty.
But sub-paragraph (1)(b) does not give a right of appeal against the amount of an increased daily penalty payable by virtue of paragraph 38.
Procedure on appeal against penalty
Notice of an appeal under paragraph 36 must be given—
in writing,
before the end of the period of 30 days beginning with the date on which notification under paragraph 35 was given, and
to HMRC.
It must state the grounds of appeal.
On an appeal under paragraph 36(a) that is notified to the tribunal, the tribunal may confirm or cancel the decision.
On an appeal under paragraph 36(b) that is notified to the tribunal, the tribunal may—
confirm the decision, or
substitute for the decision another decision that the officer of Revenue and Customs had power to make.
Subject to this paragraph and paragraph 40, the provisions of Part 5 of TMA 1970 relating to appeals have effect in relation to appeals under paragraph 36 as they have effect in relation to an appeal against an assessment to income tax.
Increased daily default penalty
This paragraph applies if—
a penalty under paragraph 31 is assessed under paragraph 35,
the failure in respect of which that assessment is made continues for more than 30 days beginning with the date on which notification of that assessment is given, and
the data-holder has been told that an application may be made under this paragraph for an increased daily penalty to be assessable.
If this paragraph applies, an officer of Revenue and Customs may make an application to the tribunal for an increased daily penalty to be assessable on the data-holder.
If the tribunal decides that an increased daily penalty should be assessable—
the tribunal must determine the day from which the increased daily penalty is to apply and the maximum amount of that penalty (“the new maximum amount”);
from that day, paragraph 31 has effect in the data-holder’s case as if “the new maximum amount” were substituted for “£60”.
The new maximum amount may not be more than £1,000.
But subject to that, in determining the new maximum amount the tribunal must have regard to—
the likely cost to the data-holder of complying with the data-holder notice,
any benefits to the data-holder of not complying with it, and
any benefits to anyone else resulting from the data-holder's non-compliance.
If the tribunal makes a determination under paragraph 38, HMRC must notify the data-holder.
The notification must specify the new maximum amount and the day from which it applies.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enforcement of penalties
A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the date mentioned in sub-paragraph (2).
That date is—
the date on which notification under paragraph 35 ... is given in respect of the penalty, or
if (in the case of a penalty under paragraph 30, 31 or 32) a notice of appeal under paragraph 36 is given, the date on which the appeal is finally determined or withdrawn.
A penalty under this Schedule may be enforced as if it were income tax charged in an assessment and due and payable.
Power to change amount of penalties
If it appears to the Treasury that there has been a change in the value of money since the last relevant date, they may by regulations substitute for the sums for the time being specified in paragraphs 30(1), 31, 32(5) and 38(4) such other sums as appear to them to be justified by the change.
“Relevant date”, in relation to a specified sum, means—
the day on which this Act is passed, and
each date on which the power conferred by sub-paragraph (1) has been exercised in relation to that sum.
Regulations under this paragraph do not apply to—
a failure which began before the date on which they come into force, or
an inaccuracy in any data or document provided to HMRC before that date.
Double jeopardy
The data-holder is not liable to a penalty under this Schedule in respect of anything in respect of which the data-holder has been convicted of an offence.
Miscellaneous provision and interpretation
Application of provisions of TMA 1970
Subject to the provisions of this Schedule, the following provisions of TMA 1970 apply for the purposes of this Schedule as they apply for the purposes of the Taxes Acts—
section 108 (responsibility of company officers),
section 114 (want of form), and
section 115 (delivery and service of documents).
Regulations
Regulations under this Schedule are to be made by statutory instrument.
The first regulations to be made under paragraph 1(3) may not be made unless the instrument containing them has been laid in draft before, and approved by a resolution of, the House of Commons.
Subject to sub-paragraph (2), a statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
Tax
In this Schedule “tax” means any or all of the following—
income tax,
capital gains tax,
corporation tax,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VAT,
insurance premium tax,
inheritance tax,
stamp duty land tax,
stamp duty reserve tax,
petroleum revenue tax,
aggregates levy,
climate change levy,
landfill tax, and
relevant foreign tax.
“Corporation tax” includes any amount assessable or chargeable as if it were corporation tax.
“VAT” means—and includes any amount that is recoverable under paragraph 5(2) of Schedule 11 to VATA 1994 (amounts shown on invoices as VAT).
value added tax charged in accordance with VATA 1994, ...
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“Relevant foreign tax” means—
a tax of a member State ... which is covered by the provisions for the exchange of information under the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation (as amended from time to time), and
any tax or duty which is imposed under the law of a territory in relation to which arrangements having effect by virtue of section 173 of FA 2006 (international tax enforcement arrangements) have been made and which is covered by the arrangements.
Statutory records
For the purposes of this Schedule data form part of a data-holder's statutory records if they are data that the data-holder is required to keep and preserve under or by virtue of any enactment relating to tax.
Data cease to form part of a data-holder's statutory records when the period for which the data are required to be preserved under or by virtue of that enactment has expired.
General interpretation
In this Schedule—“address” includes an electronic address;“body of persons” has the same meaning as in TMA 1970;“chargeable period” means a tax year, accounting period or other period for which a tax is charged;“charity” has the meaning given by paragraph 1(1) of Schedule 6 to FA 2010;“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;“company” has the meaning given by section 288(1) of TCGA 1992;“data” includes information held in any form;“the data-holder”, in relation to a data-holder notice, means the person to whom the notice is addressed;“data-holder notice” is defined in paragraph 1;“dividend” includes any kind of distribution;“document” includes a copy of a document (see also section 114 of FA 2008);“employment”, “employee” and “employer” have the same meaning as in Parts 2 to 7 of ITEPA 2003 (see, in particular, sections 4 and 5 of that Act);“HMRC” means Her Majesty's Revenue and Customs;“local authority” has the meaning given in section 999 of ITA 2007;“provide” includes make available for inspection;“specify” includes describe;“securities” includes—shares and stock, debentures, including debenture stock, loan stock, bonds, certificates of deposit and other instruments creating or acknowledging indebtedness, and warrants or other instruments entitling the holder to subscribe for or otherwise acquire anything within paragraph (a) or (b), issued by or on behalf of a person resident in, or a government or public or local authority of, any country (including a country outside the United Kingdom);“shares” is to be construed in accordance with section 99 of TCGA 1992;“tax functions” means functions relating to tax;“the tribunal” means the First-tier Tribunal or, where determined by or under the Tribunal Procedure Rules, the Upper Tribunal.
A reference in this Schedule to providing data includes—
preparing and delivering a return, statement or declaration, and
providing documents.
A reference in this Schedule to the carrying on of a business also includes—
the letting of property,
the activities of a charity, and
the activities of a government department, a local authority, a local authority association or any other public authority.
“Local authority association” has the meaning given in section 1000 of ITA 2007.
Crown application
This Schedule applies to the Crown but not to Her Majesty in Her private capacity (within the meaning of the Crown Proceedings Act 1947).
Consequential provisions
TMA 1970
TMA 1970 is amended as follows.
Omit—
section 13 (persons in receipt of taxable income belonging to others),
section 14 (return of lodgers and inmates),
section 15 (return of employees' earnings etc),
section 15A (non-resident's staff are UK client's employees for section 15 purposes),
section 16 (fees, commissions etc),
section 16A (agency workers),
section 17 (interest paid or credited by banks, building societies etc without deduction of income tax),
section 18 (interest paid without deduction of income tax),
section 18A (other payments and licences etc),
section 19 (information for purposes of charge on profits of UK property businesses or under Schedule A),
section 21 (stock jobbers' transactions),
section 23 (power to obtain copies of registers of securities),
section 24 (power to obtain information as to income from securities),
section 25 (issuing houses, stockbrokers, auctioneers etc),
section 26 (nominee shareholders),
section 27 (settled property),
section 76 (protection for certain trustees, agents and receivers), and
section 77I (information from petroleum licence-holders).
In the Table in section 98 (special returns etc), omit the entries (so far as they continue to have effect) relating to—
section 77I of TMA 1970,
paragraph 2 of Schedule 15 to FA 1973,
sections 42, 217(4), 226(4) and 768(9) of ICTA,
paragraph 3 of Schedule 12 to FA 1989,
sections 302B and 647 of ITTOIA 2005,
section 241 of CTA 2009, and
sections 728, 1046(5) to (7) and 1097(1) and (2) of CTA 2010.
In that Table—
for the entry relating to section 465 of CTA 2010 substitute the following entry— “ Section 465(3) and (4) of CTA 2010. ”, and
for the entry relating to section 1102 of CTA 2010 substitute the following entry— “ Section 1102(4) and (5) of CTA 2010. ”
In section 103ZA (disapplication of sections 100 to 103)—
omit “or” at the end of paragraph (d), and
at the end of paragraph (e) insert
FA 1973
In Schedule 15 to FA 1973 (territorial extension of charge to tax: supplementary provisions), omit paragraph 2 so far as it continues to have effect (see section 381 of TIOPA 2010).
FA 1974
In section 24 of FA 1974 (returns of persons treated as employees), for the words from “section 15” to the end substitute “ any notice given under section 8 of the Taxes Management Act 1970 to the person performing the duties (P) may require a return of P's income to include particulars of any general earnings paid to P. ”
Sub-paragraph (1) applies so far as section 24 of FA 1974 continues to have effect (see section 381 of TIOPA 2010).
FA 1986
In Schedule 18 to FA 1986 (securities: other provisions), omit paragraph 8(4) and (5).
ICTA
Omit the following provisions of ICTA so far as they continue to have effect (see section 1184 of CTA 2010 and section 381 of TIOPA 2010)—
section 42(7) (information required to decide whether to give provisional notice of determination),
section 217(4) (information about person for whom chargeable payment is received),
section 226(4) (information about purchase by unquoted trading company of its own shares),
section 768(9) (information about change in ownership of company: disallowance of trading losses), and
section 816(3) (disapplication of bank exemption).
FA 1989
In Schedule 12 to FA 1989 (close companies), omit paragraph 3 so far as it continues to have effect (see section 1184 of CTA 2010).
ITTOIA 2005
ITTOIA 2005 is amended as follows.
In Chapter 4 of Part 3 (profits of property businesses: lease premiums etc), omit section 302B(3) and (4).
In Chapter 5 of Part 5 (settlements: amounts treated as income of settlor), omit section 647.
FA 2005
In Schedule 2 to FA 2005 (alternative finance arrangements: further provisions), omit paragraph 2 so far as it continues to have effect (see section 1329 of CTA 2009).
CRCA 2005
In Schedule 2 to CRCA 2005 (functions of Commissioners and officers: restrictions etc), omit paragraph 2.
FA 2008
FA 2008 is amended as follows.
In section 39 (dormant bank and building society accounts), in subsection (1), omit paragraph (a).
Schedule 36 (information and inspection powers) is amended as follows.
Omit paragraph 34A.
In paragraph 61A (involved third parties)—
in sub-paragraph (2), omit “ “relevant information”,”,
in each entry in the second column of the Table, for “Information and documents” substitute “ Documents ”, and
accordingly, in the heading of that column, omit “information and relevant”.
CTA 2009
In Chapter 4 of Part 4 of CTA 2009 (profits of property businesses: lease premiums etc), omit section 241(3) and (4).
CTA 2010
CTA 2010 is amended as follows.
Omit—
section 31(1) (companies with small profits: power to obtain information),
section 465(1) (close companies: power to obtain information),
section 728 (provision of information about ownership of shares etc),
section 1046(5) to (7) (information about purchase by unquoted trading company of its own shares),
section 1097 (information about person for whom chargeable payment is received), and
section 1102(2) (non-qualifying distributions etc: additional information).
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Application of this Schedule
This Schedule—
comes into force on 1 April 2012, and
applies from then on to relevant data with a bearing on any period (whether before, on or after that date), subject to paragraph 3(2).
The provisions repealed or otherwise amended by Part 6 of this Schedule continue to have effect in relation to notices given, or requests made, pursuant to any of the repealed provisions before 1 April 2012 as if the repeals and other amendments had not been made.
Amendments of Schedule 36 to FA 2008
Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.
Paragraph 5 (power to obtain information and documents about persons whose identity is not known) is amended as follows.
In sub-paragraph (2), omit “UK”.
In sub-paragraph (4)—
in paragraph (b), for the words from “the Taxes Acts” to the end substitute “ the law (including the law of a territory outside the United Kingdom) relating to tax, ”, and
in paragraph (c), omit “UK”.
Omit sub-paragraph (5).
The amendments made by this paragraph—
come into force on 1 April 2012, and
apply from then on in relation to tax regardless of when the tax became due (whether before, on or after that date).
Paragraph 40A (penalties for inaccurate information and documents) is amended as follows.
In sub-paragraph (1)(b), for “A or B” substitute “ A, B or C ”.
After sub-paragraph (3) insert—
In sub-paragraph (4), for “B” substitute “ C ”.
The amendments made by this paragraph have effect in relation to any inaccuracy in information provided, or in documents produced, on or after 1 April 2012.
After paragraph 49 insert—
The amendment made by this paragraph has effect in relation to failures to comply with a notice under paragraph 5 that begin on or after 1 April 2012.
Paragraph 50 (tax-related penalty) is amended as follows.
In sub-paragraph (1)(d), omit “(within the meaning of paragraph 46)”.
After sub-paragraph (6) insert—
The amendments made by this paragraph have effect where a person becomes liable to a penalty under paragraph 39 of Schedule 36 to FA 2008 on or after the day on which this Act is passed.
In paragraph 61A (involved third parties), in the first column of item 11 of the Table, after “receiving” insert “ supplies of ”.
Mutual assistance for recovery of taxes etc
MARD
In this Schedule “MARD” means Council Directive 2010/24/EU.
HMRC functions
The Commissioners are a competent authority in the United Kingdom for the purposes of all matters under MARD.
HMRC is designated as the central liaison office in the United Kingdom for the purposes of all matters under MARD.
Exchange of information
No obligation of secrecy imposed by statute or otherwise precludes a public authority (or anyone acting on behalf of a public authority) from disclosing information if the disclosure is made for the purpose of giving effect, or enabling effect to be given, to MARD or a MARD-related instrument.
Sub-paragraph (1) applies, in particular, to any disclosure (to persons in the United Kingdom or elsewhere) in connection with a request or proposed request by or on behalf of an applicant authority of the United Kingdom or of any member State for assistance in accordance with MARD.
Sub-paragraph (2) is not to be taken to limit sub-paragraph (1).
Onward disclosure of information received from HMRC
A public authority commits an offence if—
it discloses relevant information, and
the disclosure is not permitted by sub-paragraph (3).
“Relevant information” is information that—
the public authority has received from HMRC by virtue of paragraph 3, and
relates to a person whose identity is specified in the disclosure or can be deduced from it.
A disclosure is permitted by this sub-paragraph if it is made—
in accordance with paragraph 3,
in accordance with another enactment (or an instrument made under an enactment) permitting the disclosure,
in pursuance of an order of a court,
for the purposes of civil proceedings (whether or not within the United Kingdom),
for the purposes of a criminal investigation or criminal proceedings (whether or not within the United Kingdom),
with the consent of each person to whom the information relates, or
with the consent of the Commissioners.
Sub-paragraph (1) applies to each of the following as it applies to a public authority—
an employee or agent of the public authority;
anyone providing services or exercising functions on behalf of the public authority;
anyone authorised by the public authority to receive information on its behalf.
It is a defence for a person charged with an offence under paragraph 4 to prove that the person reasonably believed—
that the disclosure was lawful, or
that the information had already and lawfully been made available to the public.
A person guilty of an offence under paragraph 4 is liable—
on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine, or both;
on summary conviction, to imprisonment for a term not exceeding 12 months the general limit in a magistrates’ court or a fine not exceeding the statutory maximum, or both.
A prosecution for an offence under paragraph 4 may be instituted in England and Wales only by or with the consent of the Director of Public Prosecutions.
A prosecution for an offence under paragraph 4 may be instituted in Northern Ireland only—
by the Commissioners, or
with the consent of the Director of Public Prosecutions for Northern Ireland.
In the application of this paragraph—the reference in sub-paragraph (2)(b) to 12 months the general limit in a magistrates’ court is to be read as a reference to 6 months.
in England and Wales, in relation to an offence committed before 2 May 2022, or
in Northern Ireland,
Enforcement of foreign claims in the UK
This paragraph applies if an applicant authority of a member State makes a request in accordance with MARD for the recovery in the United Kingdom of a claim.
The claim in relation to which such a request is made is referred to as “the foreign claim”.
Such steps may be taken by or on behalf of the relevant UK authority to enforce the foreign claim as might be taken (whether or not by the relevant UK authority) to enforce a corresponding UK claim.
“Steps” includes any legal or administrative steps, whether by way of legal proceedings, distress, diligence or otherwise.
See paragraphs 7 and 8 for the meaning of “the relevant UK authority” and “corresponding UK claim”.
The steps mentioned in sub-paragraph (3) include exercising any powers of set-off that the relevant UK authority would have been entitled to exercise if the foreign claim had been payable to it under an enactment.
Any enactment or rule of law relating to a corresponding UK claim is to apply, with any necessary adaptations, in relation to the foreign claim.
The enactments applied by sub-paragraph (7) include in particular those relating to the recovery of penalties and to the charging and recovery of interest on unpaid amounts.
The relevant UK authority
“The relevant UK authority” is—
if the foreign claim relates to anything other than an agricultural levy, the Commissioners;
if the foreign claim relates to an agricultural levy and the steps are ones to be taken in or in relation to England, the Commissioners concurrently with the Secretary of State;
if the foreign claim relates to an agricultural levy and the steps are ones to be taken in or in relation to Wales, the Commissioners concurrently with the Welsh Ministers;
if the foreign claim relates to an agricultural levy and the steps are ones to be taken in or in relation to Scotland, the Commissioners concurrently with the Scottish Ministers;
if the foreign claim relates to an agricultural levy and the steps are ones to be taken in or in relation to Northern Ireland, the Commissioners concurrently with the Department of Agriculture and Rural Development.
A reference in this paragraph to claims relating to an agricultural levy includes claims for penalties, fees, surcharges, interest or costs arising in connection with an agricultural levy.
Corresponding UK claim
In relation to a foreign claim, “corresponding UK claim” means a claim in the United Kingdom of a kind that appears to the relevant UK authority to correspond most closely to the kind of foreign claim to which the foreign claim belongs.
But if the relevant UK authority concludes that there is nothing in the United Kingdom of a kind that is similar to that kind of foreign claim, “corresponding UK claim” is taken to mean a claim for income tax charged in an assessment and due and payable.
Application of relevant enactments
In relation to any kind of foreign claim, the relevant UK authority may by regulations make provision as to the application, non-application or adaptation of any enactment or rule of law relating to corresponding UK claims.
Paragraph 6(7) is subject to any provision so made.
Power to make further provision
The Treasury may by regulations make provision about procedural or other supplementary matters for the purpose of giving effect to MARD and any MARD-related instrument.
Contested claims
The taking or continuation of steps against a person under paragraph 6(3) must be suspended if the person shows that relevant proceedings are pending, or about to be instituted, before a court, tribunal or other competent body in the member State in question.
“Relevant proceedings” are proceedings relevant to the person's liability on the foreign claim.
Relevant proceedings are “pending” so long as an appeal may be brought against any decision in the proceedings.
Sub-paragraph (1) does not apply to steps that may be taken or continued against the person by the application (by virtue of paragraphs 6(7) and 9) of an enactment or rule of law that permits such steps to be taken or continued in similar circumstances in the case of a corresponding UK claim.
Sub-paragraph (1) ceases to apply if the relevant proceedings are not prosecuted or instituted with reasonable speed.
Claims determined in taxpayer's favour
Steps under paragraph 6(3) must not be taken or continued against a person if a final decision on the foreign claim has been given in the person's favour by a court, tribunal or other competent body in the member State in question.
For this purpose, a final decision is one against which no appeal lies or against which an appeal lies within a period that has expired without an appeal having been brought.
If the person shows that such a decision has been given in respect of part of the foreign claim, steps under paragraph 6(3) must not be taken or continued in relation to that part.
Liability to pay
In relation to any steps against a person under paragraph 6(3), no question may be raised as to the person's liability on the foreign claim except as mentioned in paragraph 12.
Presumption of validity
For the purposes of any steps under paragraph 6(3), a request made by an applicant authority in a member State is taken to be duly made in accordance with MARD unless the contrary is proved.
Regulations
Regulations under this Schedule are to be made by statutory instrument.
A statutory instrument containing regulations under this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.
Interpretation
In this Schedule—“agricultural levy” has the meaning given by section 6 of the European Communities Act 1972;“applicant authority” has the same meaning as in MARD;“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;“enactment” includes—an Act of the Scottish Parliament, a Measure or Act of the National Assembly for Wales, and any Northern Ireland legislation as defined by section 24(5) of the Interpretation Act 1978;“HMRC” means Her Majesty's Revenue and Customs;“MARD-related instrument” means any EU instrument (including one made after the passing of this Act) that lays down detailed rules for implementing MARD;“public authority” means a person with functions of a public nature;“requested authority” has the same meaning as in MARD.
Consequential amendments etc
Section 134 of and Schedule 39 to FA 2002 (which concern Council Directive 2008/55/EC) are repealed with effect from 1 January 2012.
Any outstanding request for assistance made in accordance with Council Directive 2008/55/EC before that date is to be treated on and after that date for the purposes of this Schedule as if it had been made in accordance with MARD.
Section 322 of FA 2004 (mutual assistance: customs union with the Principality of Andorra) is amended as follows.
In subsection (2), in the definition of “the Mutual Assistance Recovery Directive”, after “as” insert “ MARD has ”.
In that subsection, for the definition of “the UK mutual assistance provisions” substitute—
For subsection (3) substitute—
The amendments made by this paragraph have effect from 1 January 2012.
Any regulations made by virtue of subsection (4) of section 322 of FA 2004 and in force immediately before 1 January 2012 are to have effect on and after that date as if made by virtue of that subsection as amended by sub-paragraph (5).
Application
This Schedule has effect in relation to the recovery of sums becoming due at any time, whether before or after this Act is passed.
Redundant reliefs
Income tax and corporation tax
Transitional relief for charities etc on abolition of payment of tax credits on distributions
Accordingly—
in section 231B of ICTA, in subsection (4)—
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
omit paragraph (d) (and the “and” before it), and
the following provisions are repealed—
in ITA 2007, paragraph 379 of Schedule 1;
in FA 2010, paragraph 14 of Schedule 6.
Gifts of money for relief in poor countries (“Millennium Gift Aid”)
Section 48 of FA 1998 (gifts of money for relief in poor countries etc) is repealed.
Accordingly, the following provisions are repealed—
in FA 2000, section 42;
in ITA 2007, paragraph 98 of Schedule 2.
Supplement payable in connection with payroll deduction scheme
Section 38 of FA 2000 (supplement payable in connection with payroll deduction scheme) is repealed.
Accordingly, the following provisions are repealed—
in ITEPA 2003, paragraph 243 of Schedule 6;
in FA 2003, section 146;
in ITA 2007, paragraph 390 of Schedule 1.
National Savings Bank ordinary account interest
Section 691 of ITTOIA 2005 (National Savings Bank ordinary account interest) is repealed.
Stamp duty
Exemptions from stamp duty
Section 45 of FA 1944 (exemption of certain assignments by seamen from stamp duty) is repealed.
Section 31 of FA 1953 (instruments relating to National Savings) is repealed.
In Schedule 13 to FA 1999 (stamp duty: instruments chargeable and rates of duty), paragraph 24(b) is repealed (instruments for sale etc of ship or vessel etc).
Accordingly, in that Act—
in section 123(3), in the entry for paragraph 24 of Schedule 13, omit “, (b)”, and