Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Part 10 — Final provisions
130

“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
5
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)
10
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.
15
(2)
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.
227
Short title
20
This Act may be cited as the Finance Act 2012.

Finance (No. 4) Bill
Schedule 1 — High income child benefit charge
131

Schedules
Schedule 1
Section 8

High income child benefit charge
The high income child benefit charge
1
In Part 10 of ITEPA 2003 (social security benefits), after Chapter 7 insert—
5
“Chapter 8
High income child benefit charge
681B
High income child benefit charge
(1)
A person (“P”) is liable to a charge to income tax for a tax year if—
(a)
P’s adjusted net income for the year exceeds £50,000, and
10
(b)
one or both of conditions A and B are met.
(2)
The charge is to be known as a “high income child benefit charge”.
(3)
Condition A is that—
(a)
P is entitled to an amount in respect of child benefit for a
week in the tax year, and
15
(b)
there is no other person who is a partner of P throughout the
week and has an adjusted net income for the year which
exceeds that of P.
(4)
Condition B is that—
(a)
a person (“Q”) other than P is entitled to an amount in respect
20
of child benefit for a week in the tax year,
(b)
Q is a partner of P throughout the week, and
(c)
P has an adjusted net income for the year which exceeds that
of Q.
681C
The amount of the charge
25
(1)
The amount of the high income child benefit charge to which a
person (“P”) is liable for a tax year is the appropriate percentage of
the total of—
(a)
any amounts in relation to which condition A is met, and
(b)
any amounts in relation to which condition B is met.
30

For conditions A and B, see section 681B.
(2)
“The appropriate percentage” is—
(a)
100%, or

Finance (No. 4) Bill
Schedule 1 — High income child benefit charge
132

(b)
if less, the percentage determined by the formula—

Where—

ANI is P’s adjusted net income for the tax year;

L is £50,000;

X is £100.
5
(3)
If—
(a)
the total of the amounts mentioned in paragraphs (a) and (b)
of subsection (1), or the amount of the charge determined
under that subsection, is not a whole number of pounds, or
(b)
the percentage determined under subsection (2)(b) is not a
10
whole number,

it is to be rounded down to the nearest whole number.
681D
Extension of charge in cases where child not living with claimant
(1)
This section applies where—
15
(a)
a person (“R”) is entitled to an amount in respect of child
benefit for a child for a week in a tax year by virtue of section
143(1)(b) of SSCBA 1992 or section 139(1)(b) of SSCB(NI)A
1992 (persons contributing to the cost of providing for a
child),
20
(b)
neither R, nor any person who is a partner of R throughout
that week, is liable for a charge to income tax in respect of that
amount under section 681B, and
(c)
there is another person (“S”) who, for the purposes of section
143(1)(a) of SSCBA 1992 or section 139(1)(a) of SSCB(NI)A
25
1992 (persons with whom child is living), is a person who has
the child living with him or her in that week.
(2)
Section 681B applies as if S were entitled to the amount of child
benefit mentioned in subsection (1)(a).
(3)
Where there is more than one person to whom subsection (1)(c)
30
applies in relation to an amount of child benefit for a week,
subsection (2) applies only to the one with the highest adjusted net
income for the tax year.
(4)
For the purposes of subsection (1)(a), an amount of child benefit to
which R is entitled for a week is to be ignored if—
35
(a)
the period (which includes that week) for which R is entitled
to child benefit by virtue of section 143(1)(b) of SSCBA 1992
or section 139(1)(b) of SSCB(NI)A 1992 in respect of the same
child does not exceed 52 weeks, and
(b)
R is entitled to child benefit in respect of the child for the
40
week immediately before and the week immediately after
that period by virtue of section 143(1)(a) of SSCBA 1992 or
section 139(1)(a) of SSCB(NI)A 1992.
(5)
In this section “child” means—
(a)
a child within the meaning of section 142 of SSCBA 1992 or
45
section 138 of SSCB(NI)A 1992, or

Finance (No. 4) Bill
Schedule 1 — High income child benefit charge
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(b)
a qualifying young person within the meaning of either of
those sections.
681E
Special cases
(1)
The following amounts are to be disregarded for the purposes of this
Chapter—
5
(a)
amounts to which a person is entitled but in respect of which
an election under section 13A of the Social Security
Administration Act 1992 or section 11A of the Social Security
Administration (Northern Ireland) Act 1992 (election for
payment of child benefit not to be made if high income child
10
benefit charge would be triggered) has effect;
(b)
amounts to which a person is entitled by virtue of section
145A of SSCBA 1992 or section 141A of SSCB(NI)A 1992
(entitlement to child benefit after death of child or qualifying
young person).
15
(2)
Subsection (3) applies if—
(a)
a person (“T”) is entitled to an amount in respect of child
benefit for a week in a tax year or is treated as so entitled by
virtue of section 681D(2),
(b)
two or more other persons are partners of T throughout the
20
week, and
(c)
two or more of those persons would, apart from subsection
(3), each be liable to a charge under section 681B(1) in relation
to that amount.
(3)
Only one of those persons is liable, namely the person with the
25
highest adjusted net income for the tax year.
681F
Alteration of income limit etc by Treasury order
(1)
The Treasury may by order—
(a)
substitute another amount for the amount for the time being
specified in section 681B(1)(a) and (4)(b) and defined as “L” in
30
section 681C(2), or
(b)
substitute another amount for the amount defined as “X” in
section 681C(2).
(2)
An order under this section has effect for tax years beginning after
the order is made.
35
(3)
A statutory instrument containing an order under this section which
increases any person’s liability to income tax may not be made unless
a draft of it has been laid before and approved by a resolution of the
House of Commons.
681G
Meaning of “partner”
40
(1)
For the purposes of this Chapter a person is a “partner” of another
person at any time if any of conditions A to D is met at that time.
(2)
Condition A is that the persons are a man and a woman who are
married to each other and are neither—
(a)
separated under a court order, nor
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Finance (No. 4) Bill
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(b)
separated in circumstances in which the separation is likely
to be permanent.
(3)
Condition B is that the persons are a man and a woman who are not
married to each other but are living together as husband and wife.
(4)
Condition C is that the persons are two men, or two women, who are
5
civil partners of each other and are neither—
(a)
separated under a court order, nor
(b)
separated in circumstances in which the separation is likely
to be permanent.
(5)
Condition D is that the persons are two men, or two women, who are
10
not civil partners of each other but are living together as if they were
civil partners.
681H
Other interpretation provisions
(1)
This section applies for the purposes of this Chapter.
(2)
“Adjusted net income” of a person for a tax year means the person’s
15
adjusted net income for that tax year as determined under section 58
of ITA 2007.
(3)
“Week” means a period of 7 days beginning with a Monday; and a
week is in a tax year if (and only if) the Monday with which it begins
is in the tax year.”
20
Consequential amendments
2
In section 7 of TMA 1970 (notice of liability to income tax and capital gains
tax), in subsection (3), for the words from “his total income” to the end
substitute “—
(a)
the person’s total income consists of income from sources
25
falling within subsections (4) to (7) below,
(b)
the person has no chargeable gains, and
(c)
the person is not liable to a high income child benefit charge.”
3
After section 13 of the Social Security Administration Act 1992 insert—
“13A
Election not to receive child benefit
30
(1)
A person (“P”) who is entitled to child benefit in respect of one or
more children may elect for all payments of the benefit to which P is
entitled not to be made.
(2)
An election may be made only if P reasonably expects that, in the
absence of the election, P or another person would be liable to a high
35
income child benefit charge in respect of the payments to which the
election relates made for weeks in the first tax year.
(3)
An election has effect in relation to payments made for weeks
beginning after the election is made.
(4)
But where entitlement to child benefit is backdated, an election may
40
have effect in relation to payments for weeks beginning in the period
of three months ending immediately before the claim for the benefit
was made.

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Schedule 1 — High income child benefit charge
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(5)
An election may be revoked.
(6)
A revocation has effect in relation to payments made for weeks
beginning after the revocation is made.
(7)
But if—
(a)
P makes an election which results in all payments, in respect
5
of child benefit, to which P is entitled for one or more weeks
in a tax year not being paid, and
(b)
had no election been made, neither P nor any other person
would have been liable to a high income child benefit charge
in relation to the payments,
10

P may, no later than two years after the end of the tax year, revoke
the election so far as it relates to the payments.
(8)
Subsections (2) to (7) are subject to directions under subsection (9).
(9)
The Commissioners for Her Majesty’s Revenue and Customs may
give directions as to—
15
(a)
the form of elections and revocations under this section, the
manner in which they are to be made and the time at which
they are to be treated as made, and
(b)
the circumstances in which, if child benefit is not being paid
to a person at the full rate or the Commissioners are satisfied
20
that there are doubts as to a person’s entitlement to child
benefit for a child, an election or revocation is not to have
effect or its effect is to be postponed.
(10)
For the purposes of this section—
“child” includes a qualifying young person;
25
“first tax year”, in relation to an election, means the tax year in
which the first week beginning after the election is made falls;
“week” means a period of 7 days beginning with a Monday; and
a week is in a tax year if (and only if) the Monday with which
it begins is in the tax year.”
30
4
After section 11 of the Social Security Administration (Northern Ireland) Act
1992 insert—
“11A
Election not to receive child benefit
(1)
A person (“P”) who is entitled to child benefit in respect of one or
more children may elect for all payments of the benefit to which P is
35
entitled not to be made.
(2)
An election may be made only if P reasonably expects that, in the
absence of the election, P or another person would be liable to a high
income child benefit charge in respect of the payments to which the
election relates made for weeks in the first tax year.
40
(3)
An election has effect in relation to payments made for weeks
beginning after the election is made.
(4)
But where entitlement to child benefit is backdated, an election may
have effect in relation to payments for weeks beginning in the period
of three months ending immediately before the claim for the benefit
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was made.

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Schedule 1 — High income child benefit charge
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(5)
An election may be revoked.
(6)
A revocation has effect in relation to payments made for weeks
beginning after the revocation is made.
(7)
But if—
(a)
P makes an election which results in all payments, in respect
5
of child benefit, to which P is entitled for one or more weeks
in a tax year not being paid, and
(b)
had no election been made, neither P nor any other person
would have been liable to a high income child benefit charge
in relation to the payments,
10

P may, no later than two years after the end of the tax year, revoke
the election so far as it relates to the payments.
(8)
Subsections (2) to (7) are subject to directions under subsection (9).
(9)
The Commissioners for Her Majesty’s Revenue and Customs may
give directions as to—
15
(a)
the form of elections and revocations under this section, the
manner in which they are to be made and the time at which
they are to be treated as made, and
(b)
the circumstances in which, if child benefit is not being paid
to a person at the full rate or the Commissioners are satisfied
20
that there are doubts as to a person’s entitlement to child
benefit for a child, an election or revocation is not to have
effect or its effect is to be postponed.
(10)
For the purposes of this section—
“child” includes a qualifying young person;
25
“first tax year”, in relation to an election, means the tax year in
which the first week beginning after the election is made falls;
“week” means a period of 7 days beginning with a Monday; and
a week is in a tax year if (and only if) the Monday with which
it begins is in the tax year.”
30
5     (1)
ITEPA 2003 is amended as follows.
      (2)
In section 1 (overview of contents of Act)—
(a)
in subsection (1)(c), after “see” insert “Chapters 1 to 7 of”, and
(b)
in subsection (3), after paragraph (a) insert—
“(aa)
makes provision for the high income child benefit
35
charge (see Chapter 8 of Part 10),”.
      (3)
In section 655 (structure of Part 10), in subsection (1), at the end insert—

“Chapter 8 makes provision for the high income child benefit
charge.”
      (4)
In section 684 (PAYE regulations), in subsection (2), after Item 2 insert—
40
“2ZA Provision—
(a)
for deductions to be made, if and to the extent that the
payee does not object, with a view to securing that
income tax payable for a tax year by the payee by
virtue of section 681B (high income child benefit
45