Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Schedule 15 — Relief in respect of gift aid and other income
369

     (1B)
This paragraph also does not apply to a claim by a company for
repayment of income tax deducted at source from income which
is exempt from tax by virtue of—
(a)
section 486 of the Corporation Tax Act 2010 (investment
income and non-trading profits from loan relationships),
5
(b)
section 487 of that Act (public revenue dividends),
(c)
section 488 of that Act (certain miscellaneous income),
(d)
section 489 of that Act (income from estates in
administration), or
(e)
section 664 of that Act (interest and gift aid income:
10
community amateur sports clubs).
     (1C)
This paragraph also does not apply to a claim by a company for an
amount to be exempt from tax by virtue of—
(a)
section 472 of the Corporation Tax Act 2010 (gifts
qualifying for gift aid relief: charitable companies),
15
(b)
section 475 of that Act (gifts qualifying for gift aid relief:
eligible bodies), or
(c)
any of the provisions mentioned in sub-paragraph (1B).”
16
In consequence of the amendments made by paragraphs 14 and 15, in
Schedule 8 to FA 2010 omit paragraph 6.
20
Application
17    (1)
The amendments made by paragraphs 1 to 4 and 7 are treated as having
come into force on 8 April 2010.
      (2)
The amendments made by paragraphs 6, 8 and 10 are treated as having
effect—
25
(a)
for corporation tax purposes, for accounting periods ending on or
after 1 April 2010, and
(b)
for income tax purposes, for the tax year 2010-11 and subsequent tax
years.
      (3)
The amendment made by paragraph 9 has effect in relation to income tax
30
repaid on gifts made or income received on or after 6 April 2006.

Accordingly, any reference in that amendment to a provision of ITA 2007 is
to be read as including a reference to any corresponding earlier enactment
which was rewritten in that provision.
      (4)
An amendment corresponding to that made by paragraph 10(2) is to be
35
treated as having been made in ICTA and having had effect in relation to—
(a)
gifts made by individuals to charitable companies and eligible
bodies on or after 6 April 2000 which were not covenanted payments,
(b)
covenanted payments falling to be made by individuals to charitable
companies and eligible bodies on or after that date, and
40
(c)
payments made to community amateur sports clubs on or after 6
April 2002.
      (5)
An amendment corresponding to that made by paragraph 10(3) is to be
treated as having been made in ICTA and having had effect in relation to
payments of income made on or after 1 April 2006.
45

Finance (No. 4) Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 1 — Amendments of ICTA
370

      (6)
The amendments made by paragraphs 11 to 16 have effect in relation to
claims whenever made.
Schedule 16
Section 146

Part 2: minor and consequential amendments
Part 1
5
Amendments of ICTA
1
ICTA is amended as follows.
2
Omit section 76 (expenses of insurance companies).
3
Omit section 76ZA (payments for restrictive undertakings).
4
Omit section 76ZB (seconded employees).
10
5
Omit sections 76ZC to 76ZE (counselling and retraining expenses).
6
Omit sections 76ZF to 76ZJ (redundancy payments etc).
7
Omit section 76ZK (contributions to local enterprise organisations or urban
regeneration companies).
8
Omit sections 76ZL and 76ZM (unpaid remuneration).
15
9
Omit section 76ZN (car hire).
10
In section 95ZA(3) (taxation of UK distributions received by insurance
companies), for “life assurance business” substitute “business in relation to
which section 111 of the Finance Act 2012 applies”.
11
Omit section 431 (interpretative provisions relating to insurance
20
companies).
12
Omit section 431ZA (election for assets not be foreign business assets).
13
Omit section 431A (amendment of Chapter etc).
14
Omit section 431B (meaning of “pension business”).
15
Omit section 431BA (meaning of “child trust fund business”).
25
16
Omit section 431BB (meaning of “individual savings account business”).
17
Omit section 431C (meaning of “life reinsurance business”).
18
Omit sections 431D and 431E (meaning of “overseas life assurance business”
etc).
19
Omit section 431EA (meaning of “gross roll-up business”).
30
20
Omit section 431F (meaning of “basic life assurance and general annuity
business”).
21
Omit section 431G (company carrying on life assurance business).

Finance (No. 4) Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 1 — Amendments of ICTA
371

22
Omit section 431H (company carrying on life assurance business and other
insurance business).
23
Omit section 432YA (PHI business — adjustment consequent of change in
Insurance Prudential Sourcebook).
24
Omit section 432ZA (linked assets).
5
25
Omit section 432A (apportionment of income and gains).
26
Omit section 432AA (property businesses).
27
Omit section 432AB (losses from property businesses).
28
Omit sections 432B to 432G (apportionment of receipts brought into
account).
10
29
Omit section 434 (franked investment income etc).
30
Omit section 434A (computation of losses and limitation on relief).
31
Omit sections 434AZA to 434AZC (reduced loss relief for additions to non-
profit funds).
32
Omit section 436A (gross roll-up business: separate charge on profits).
15
33
Omit section 436B (gains referable to gross-roll up business not to be
chargeable gains).
34
Omit sections 437 and 437A (general annuity business).
35
Omit section 438 (pension business: exemption from tax).
36
Omit section 440 (transfers of assets etc).
20
37
Omit section 440A (securities).
38
Omit section 440B (modifications where tax charged under s.35 of CTA
2009).
39
Omit section 440C (modifications for change of tax basis).
40
Omit section 440D (modifications in relation to BLAGAB group reinsurers).
25
41
Omit section 442 (overseas business of UK companies).
42
Omit section 442A (taxation of investment return where risk reinsured).
43
Omit sections 444A to 444AED (transfers of business).
44
Omit sections 444AF to 444AL (surpluses of mutual and former mutual
businesses).
30
45
In Schedule 15 (qualifying policies), in paragraph 24(3)(a), for “section
431(2)” substitute “section 56 of the Finance Act 2012”.
46
Omit Schedule 19ABA (modifications in relation to BLAGAB group
reinsurers).

Finance (No. 4) Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
372

Part 2
Amendments of FA 1989
47
FA 1989 is amended as follows.
48
In section 67(2) (employee share ownership trusts), for paragraph (b) (and
the “or” before that paragraph) substitute—
5
“(b)
if the company is an investment company, shall be treated as
expenses of management, or
(c)
if the company is a company in relation to which the I - E
rules apply and the sum is referable, in accordance with
Chapter 4 of Part 2 of the Finance Act 2012, to the company’s
10
basic life assurance and general annuity business, shall be
treated for the purposes of section 76 of that Act as ordinary
BLAGAB management expenses of the company.”
49
Omit section 82 (calculation of profits: bonuses etc).
50
Omit section 82A (calculation of profits: policy holders’ tax).
15
51
Omit section 82B (unappropriated surplus on valuation).
52
Omit sections 82D to 82F (treatment of profits: life assurance — adjustment
consequent on change in Insurance Prudential Sourcebook).
53
Omit section 83 (receipts to be taken into account).
54
Omit section 83XA (structural assets).
20
55
Omit sections 83YA and 83YB (changes in value of assets brought into
account: non-profit companies).
56
Omit sections 83YC to 83YF (FAFTS).
57
Omit section 83A (meaning of “brought into account”).
58
Omit section 83B (changes in recognised accounts: attribution of amounts
25
carried forward under s.432F of ICTA).
59
Omit section 85 (charge of certain receipts of basic life assurance business).
60
Omit section 85A (excess adjusted life assurance trade profits).
61
Omit section 86 (spreading of relief for acquisition expenses).
62
Omit section 88 (corporation tax: policy holders’ share of profits).
30
63
Omit section 89 (policy holders’ share of profits).
Part 3
Amendments of other Acts
Finance Act 1950
64
FA 1950 is amended as follows.
35
65
In section 39(3)(b)(ii) (treatment for taxation purposes of enemy debts etc
written off during the war), for “an expenses deduction for the purposes of

Finance (No. 4) Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
373

Step 1 of section 76(7) of the Income and Corporation Taxes Act 1988”
substitute “ordinary BLAGAB management expenses for the purposes of
section 76 of the Finance Act 2012”.
Taxes Management Act 1970
66
TMA 1970 is amended as follows.
5
67    (1)
Section 98 (special returns) is amended as follows.
      (2)
In the first column of the Table—
(a)
omit the entry relating to regulations under section 431E(1) of ICTA,
and
(b)
at the end insert—
10
“regulations under section 61(5) of the Finance Act
2012”.
      (3)
In the second column of the Table—
(a)
omit the entry relating to section 76ZE(4) of ICTA,
(b)
omit the entry relating to regulations under section 431E(1) of ICTA,
15
and
(c)
at the end insert—
“regulations under section 61(5) of the Finance Act
2012”.
Inheritance Tax Act 1984
20
68
IHTA 1984 is amended as follows.
69
In section 59(3)(b) (qualifying interest in possession), for “Chapter I of Part
XII of the Taxes Act 1988” substitute “Part 2 of the Finance Act 2012”.
Finance Act 1991
70
FA 1991 is amended as follows.
25
71
In paragraph 16(1) of Schedule 7 (transitional relief for old general annuity
contracts), for the words from “computation” to “1988” substitute
“application of the I - E rules in relation to an accounting period of an
insurance company, an amount equal to the lesser of the following amounts
is to be treated (if it is not nil) for the purposes of section 76 of the Finance
30
Act 2012 as a deemed BLAGAB management expense for the accounting
period”.
Taxation of Chargeable Gains Act 1992
72
TCGA 1992 is amended as follows.
73
In section 10B (non-resident company with United Kingdom permanent
35
establishment), after subsection (3) insert—
“(3A)
This section applies to an overseas life insurance company in the case
of its long-term business with the omission from subsection (1)(b) of
the words “situated in the United Kingdom and”.”
74
In section 100(2B)(a) (exemption for authorised unit trusts etc), for “section
40
431 of the Taxes Act” substitute “section 65 of the Finance Act 2012”.

Finance (No. 4) Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
374

75
In section 140C (transfer or division of non-UK business), omit subsection
(8).
76
In section 151I(1) (meaning of “financial institution”)—
(a)
in paragraph (g), for “section 431(2) of ICTA” substitute “section 65
of the Finance Act 2012”, and
5
(b)
in paragraph (h), for “section 431(2) of ICTA” substitute “section
139(1) of the Finance Act 2012”.
77    (1)
Section 171C (elections under s.171A: insurance companies) is amended as
follows.
      (2)
In subsection (2), for “section 440(3) of the Taxes Act” substitute “section 118
10
of the Finance Act 2012”.
      (3)
In subsection (3)(b), for “part of that company’s long-term insurance fund”
substitute “held for the purposes of the company’s long-term business”.
      (4)
In subsection (4), for the words from “as arising” to the end substitute “for
the purposes of section 210A (ring-fencing of losses) as a non-BLAGAB
15
chargeable gain or (as the case may be) a non-BLAGAB allowable loss”.
      (5)
Omit subsection (5).
78
In section 185 (deemed disposal of assets on company ceasing to be UK
resident), after subsection (4) insert—
“(4A)
Subsection (4) applies to an overseas life insurance company in the
20
case of its long-term business with—
(a)
the omission from paragraph (a) of the words “are situated in
the United Kingdom and”; and
(b)
the omission from paragraph (b) of the words “are so situated
and”.”
25
79
In section 204(10)(a) (policies of insurance and non-deferred annuities), for
“Chapter 1 of Part 12 of the Taxes Act” substitute “section 56(3) of the
Finance Act 2012”.
80    (1)
Section 210A (ring-fencing of losses) is amended as follows.
      (2)
For subsection (2) substitute—
30
“(2)
Non-BLAGAB allowable losses accruing to an insurance company
are allowable as a deduction from the shareholders’ share (if any) of
the BLAGAB chargeable gains accruing to the company (but are not
otherwise allowable as a deduction from the BLAGAB chargeable
gains accruing to the company).”
35
      (3)
For subsections (10) and (10A) substitute—
“(10)
For the purposes of this section the “shareholders’ share” of
BLAGAB chargeable gains or BLAGAB allowable losses accruing to
an insurance company in an accounting period is determined as
follows.
40
(10A)
If the company has an I - E profit for the accounting period—
(a)
find the percentage (including, if applicable, nil) of the I - E
profit that is not represented by the policyholders’ share of

Finance (No. 4) Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
375

that profit as determined in accordance with section 103 of
the Finance Act 2012, and
(b)
then multiply that percentage by the amount of the BLAGAB
chargeable gains or BLAGAB allowable losses.

The result is the shareholder’s share of the BLAGAB chargeable
5
gains or BLAGAB allowable losses.
(10B)
If the company does not have an I - E profit for the accounting period,
the shareholders’ share of the BLAGAB chargeable gains or
BLAGAB allowable losses is nil.
(10C)
In determining for the purposes of subsections (10A) and (10B)
10
whether or not the company has an I - E profit for an accounting
period, assume that non-BLAGAB allowable losses cannot be
deducted to any extent from BLAGAB chargeable gains (and,
accordingly, assume that section 95 is not included in the Finance Act
2012).”
15
      (4)
In subsection (11)—
(a)
for “the policy holders’ share” substitute “the shareholders’ share”,
and
(b)
for “subsection (10)” substitute “subsections (10) to (10C)”.
      (5)
Omit subsection (12).
20
      (6)
In subsection (13)—
(a)
in the definitions of “BLAGAB allowable losses” and “BLAGAB
chargeable gains”, for “(in accordance with section 432A of the Taxes
Act)” substitute “, in accordance with Chapter 4 of Part 2 of the
Finance Act 2012,”, and
25
(b)
omit the definitions of “the relevant profits” and “the policy holders’
share of the relevant profits” (together with the “and” before the
definition of “the relevant profits”).
81    (1)
Section 210B (disposal and acquisition of section 440A securities) is
amended as follows.
30
      (2)
In subsection (1)—
(a)
in the opening words, for “section 440A securities” (in both places)
substitute “section 119 or 120 securities”, and
(b)
in paragraphs (a) and (b), for “chargeable section 440A holding”
substitute “chargeable section 119 or 120 holding”.
35
      (3)
In subsection (7)(a), for “linked assets” substitute “assets wholly matched to
BLAGAB liabilities and the assets are”.
      (4)
For subsection (8) substitute—
“(8)
In this section—
“BLAGAB internal linked fund” means an internal linked fund
40
all the assets appropriated to which are matched wholly to
BLAGAB liabilities,
“chargeable section 119 or 120 holding” means a holding which
is a separate holding as a result of section 119(1)(a), (c) or (d)
or section 120(1)(a), (c) or (d) of the Finance Act 2012 (and
45
section 121(1) and (2) of that Act),