Finance (No. 4) Bill

Session 2010 - 12
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Finance (No. 4) Bill

Finance (No. 4) Bill
Schedule 31 — Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations
Part 1 — Main provision
601

      (3)
After sub-paragraph (2) insert—
   “(2A)
A supply within sub-paragraph (3) is subject to the carbon price
support rates so far as it is referable to the production of electricity
in the station.”
      (4)
In sub-paragraph (3) after “taxable commodity” insert “mentioned in the
5
Table in sub-paragraph (5)”.
      (5)
In sub-paragraph (5), in the Table—
(a)
in the first column of the final row, for “Any other taxable
commodity (apart from electricity)” substitute “Coal”, and
(b)
in the second column of that row, for “£0.01188 per kilogram”
10
substitute “£0.44264 per gigajoule”.
      (6)
After sub-paragraph (5) insert—
   “(5A)
Sub-paragraph (4) needs to be read with paragraph 42B.
     (5B)
For the purposes of sub-paragraph (2A) the extent to which a
supply is referable to the production of electricity in a station is to
15
be determined in accordance with regulations made by the
Treasury.
     (5C)
Regulations under sub-paragraph (5B) may, in particular,
include—
(a)
provision in respect of the calculations, measurements,
20
data and procedures to be made or used;
(b)
provision that, so far as framed by reference to any
document, is framed by reference to that document as from
time to time in force.”
      (7)
In sub-paragraph (6) after “paragraph” insert “and paragraph 42B”.
25
      (8)
For sub-paragraph (7) substitute—
    “(7)
Regulations under sub-paragraph (6) may, in particular, include
provision—
(a)
for determining whether or not a taxable supply is subject
to the carbon price support rates,
30
(b)
if the supply is subject to those rates, for determining
whether or not paragraph 42B(2) applies in relation to the
supply, and
(c)
if paragraph 42B(2) applies in relation to the supply, for
determining the reduction in the relevant carbon price
35
support rate.”
15
After paragraph 42A insert—
“42B  (1)
Sub-paragraph (2) applies for the purposes of paragraph 42A(4)
if—
(a)
the taxable supply is a supply of a taxable commodity to be
40
used for producing electricity in a generating station, and
(b)
in the calendar year in which the supply is made, carbon
capture and storage technology is operated in relation to
carbon dioxide generated by the generating station in
producing electricity.
45

Finance (No. 4) Bill
Schedule 31 — Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations
Part 1 — Main provision
602

      (2)
In relation to the supply, only C% of the relevant carbon price
support rate is to be applied (instead of the full rate).
      (3)
“C%” is 100% minus the generating station’s carbon capture
percentage for the calendar year.
      (4)
The generating station’s “carbon capture percentage” for the
5
calendar year is the percentage of the station’s generated carbon
dioxide for that year which, through the operation of the carbon
capture and storage technology, is—
(a)
captured, and
(b)
then disposed of by way of permanent storage.
10
      (5)
The generating station’s “generated carbon dioxide” for the
calendar year is the amount of carbon dioxide generated in the
year by the station in producing electricity through the burning of
taxable commodities mentioned in the Table in paragraph 42A(5).
      (6)
In this paragraph “carbon capture and storage technology” and
15
“carbon dioxide” have the meaning given by section 7(3) and (4) of
the Energy Act 2010.
      (7)
Sub-paragraph (8) applies for the purposes of sub-paragraph (4) in
relation to any carbon dioxide if—
(a)
the carbon dioxide is captured but then leaks out and
20
therefore is not disposed of by way of permanent storage,
but
(b)
the leak does not occur—
(i)
on the land on which the generating station is
situated,
25
(ii)
on any other land under the control of the station’s
operator or a person connected with the station’s
operator, or
(iii)
from any pipeline or other facility or installation
which is operated by the station’s operator or a
30
person connected with the station’s operator.

Section 1122 of the Corporation Tax Act 2010 (“connected”
persons) applies for the purposes of paragraph (b).
      (8)
The carbon dioxide is to be treated as if it had been disposed of by
way of permanent storage.
35
      (9)
If the percentage mentioned in sub-paragraph (4) is not a whole
number, it is to be rounded to the nearest whole number (taking
0.5% as nearest to the next whole number).
42C   (1)
This paragraph applies if—
(a)
a taxable supply (“the original supply”) subject to the
40
carbon price support rates has been made to any person
(“the recipient”),
(b)
the original supply was made on the basis that paragraph
42B(2) applied in relation to the original supply, and
(c)
it is later determined—
45
(i)
that paragraph 42B(2) did not apply in relation to
the original supply, or

Finance (No. 4) Bill
Schedule 31 — Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations
Part 1 — Main provision
603

(ii)
that the reduction given, by virtue of paragraph
42B(2), in the amount payable by way of levy on the
original supply was too much.
      (2)
For the purposes of this Schedule—
(a)
the recipient is deemed to make a taxable supply to itself of
5
the taxable commodity in question, and
(b)
the amount payable by way of levy on that deemed supply
is—
(i)
the total amount payable on the original supply on
the basis of the later determination mentioned in
10
sub-paragraph (1)(c), less
(ii)
the amount previously determined to be payable
on the original supply.
42D   (1)
This paragraph applies if—
(a)
a taxable supply (“the original supply”) is made to a
15
person (“the recipient”) on the basis that it is, or is to some
extent, a taxable supply subject to the carbon price support
rates, and
(b)
it is later determined that that basis was incorrect and, in
consequence, the amount previously determined to be
20
payable by way of levy on the original supply was too low.
      (2)
For the purposes of this Schedule—
(a)
the recipient is deemed to make a taxable supply to itself of
the taxable commodity in question, and
(b)
the amount payable by way of levy on that deemed supply
25
is—
(i)
the total amount payable on the original supply on
the basis of the later determination mentioned in
sub-paragraph (1)(b), less
(ii)
the amount previously determined to be payable
30
on the original supply.”
16
After paragraph 62(1)(b) (tax credits) insert—
“(ba)
after a taxable supply subject to the carbon price support
rates (see paragraph 42A) is made on the basis that paragraph
42B(2) does not apply in relation to the supply, it is
35
determined that paragraph 42B(2) does apply;
(bb)
after a taxable supply subject to the carbon price support
rates is made on the basis that paragraph 42B(2) applies in
relation to the supply, it is determined that the reduction
given, by virtue of paragraph 42B(2), in the amount payable
40
by way of levy on the supply was too little;
(bc)
after a taxable supply is made on the basis that it is, or is to
some extent, subject to the carbon price support rates, it is
determined that that basis was incorrect and, in consequence,
the amount previously determined to be payable by way of
45
levy on the supply was too much;”.

Finance (No. 4) Bill
Schedule 31 — Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations
Part 3 — Electricity produced in combined heat and power stations
604

Provision relating to Schedule 20 to FA 2011
17
The amendment of paragraph 101(2) of Schedule 6 to FA 2000 (civil
penalties: incorrect certificates) made by paragraph 7 of Schedule 20 to FA
2011 is not to have effect; and paragraph 7 of Schedule 20 to FA 2011 is
omitted.
5
18    (1)
Paragraph 8 of Schedule 20 to FA 2011 (commencement) is amended as
follows.
      (2)
In sub-paragraphs (1) and (3), for “7” substitute “6”.
      (3)
In sub-paragraph (2), omit paragraph (b) and the “and” before it.
Commencement
10
19    (1)
Paragraph 8 of Schedule 20 to FA 2011 (as amended by paragraph 18 above)
applies in relation to the amendments made by paragraphs 1 to 16 above as
it applies in relation to the amendments made by paragraphs 1 to 6 of that
Schedule.
      (2)
In paragraph 9(1)(c) of Schedule 20 to FA 2011 the reference to paragraph
15
42A of Schedule 6 to FA 2000 is to be read as a reference to paragraph 42A
as amended by paragraph 14 above.
      (3)
In relation to a supply within paragraph 42A(3) of Schedule 6 of FA 2000 (as
amended by paragraph 14 above), paragraph 9(5) of Schedule 20 to FA 2011
applies as if for “23 March 2011” there were substituted “21 March 2012”.
20
Part 2
Carbon price support rates from 1 April 2014
20    (1)
In paragraph 42A(5) of Schedule 6 to FA 2000 (supplies subject to the carbon
price support rates) (as amended by paragraph 14 above)—
(a)
for “£0.00091 per kilowatt hour” substitute “£0.00175 per kilowatt
25
hour”,
(b)
for “£0.01460 per kilogram” substitute “£0.02822 per kilogram”, and
(c)
for “£0.44264 per gigajoule” substitute “£0.85489 per gigajoule”.
      (2)
The amendments made by this paragraph have effect in relation to supplies
treated as taking place on or after 1 April 2014.
30
Part 3
Electricity produced in combined heat and power stations
21    (1)
Paragraph 20A of Schedule 6 to FA 2000 (climate change levy: exemption in
relation to electricity produced in combined heat and power stations) is
amended as follows.
35
      (2)
In sub-paragraph (1)—
(a)
omit the “and” after paragraph (c), and
(b)
after paragraph (d) insert “; and
(e)
the electricity is actually supplied before 1 April
2018.”
40

Finance (No. 4) Bill
Schedule 32 — Inheritance tax: gifts to charities etc
605

      (3)
In sub-paragraph (4)(a)—
(a)
in sub-paragraph (i), after “station” insert “before 1 April 2013”, and
(b)
in sub-paragraph (ii), after “station”, in the first place it occurs, insert
“before 1 April 2013”.
22    (1)
The following repeals are made in consequence of paragraph 21.
5
      (2)
In Schedule 6 to FA 2000—
(a)
in paragraph 5(3), omit “20B(6)(a),”,
(b)
omit paragraphs 20A and 20B,
(c)
in paragraph 24(2)—
(i)
omit “or 20A,”
10
(ii)
omit “or in combined heat and power stations”, and
(iii)
omit “or 20B”, and
(d)
omit paragraph 149A.
      (3)
Omit sections 123 and 124 of FA 2002.
      (4)
Omit section 193(3) and (5) of FA 2003.
15
      (5)
The repeals made by this paragraph come into force on the day appointed
by the Treasury by order made by statutory instrument.
Schedule 32
Section 207

Inheritance tax: gifts to charities etc
Reduced rate of inheritance tax
20
1
After Schedule 1 to IHTA 1984 insert—
“Schedule 1A
Gifts to charities etc: tax charged at lower rate
Application of this Schedule
1     (1)
This Schedule applies if—
25
(a)
a chargeable transfer is made (under section 4) on the
death of a person (“D”), and
(b)
all or part of the value transferred by the chargeable
transfer is chargeable to tax at a rate other than nil per cent.
      (2)
The part of the value transferred that is chargeable to tax at a rate
30
other than nil per cent is referred to in this Schedule as “TP”.
The relief
2     (1)
If the charitable giving condition is met—
(a)
the tax charged on the part of TP that qualifies for the
lower rate of tax is to be charged at the lower rate of tax,
35
and

Finance (No. 4) Bill
Schedule 32 — Inheritance tax: gifts to charities etc
606

(b)
the tax charged on any remaining part of TP is to be
charged at the rate at which it would (but for this Schedule)
have been charged on the whole of TP in accordance with
section 7.
      (2)
For the purposes of this paragraph, the charitable giving condition
5
is met if, for one or more components of the estate (taking each
component separately), the donated amount is at least 10% of the
baseline amount.
      (3)
Paragraph 3 defines the components of the estate.
      (4)
Paragraphs 4 and 5 explain how to calculate the donated amount
10
and the baseline amount for each component.
      (5)
The part of TP that “qualifies for the lower rate of tax” is the part
attributable to all the property in each of the components for
which the donated amount is at least 10% of the baseline amount.
      (6)
The lower rate of tax is 36%.
15
The components of the estate
3     (1)
For the purposes of paragraph 2, the components of the estate
are—
(a)
the survivorship component,
(b)
the settled property component, and
20
(c)
the general component.
      (2)
The survivorship component is made up of all the property
comprised in the estate that, immediately before D’s death, was
joint (or common) property liable to pass on D’s death—
(a)
by survivorship (in England and Wales or Northern
25
Ireland),
(b)
under a special destination (in Scotland), or
(c)
by or under anything corresponding to survivorship or a
special destination under the law of a country or territory
outside the United Kingdom.
30
      (3)
The settled property component is made up of all the settled
property comprised in the estate in which there subsisted,
immediately before D’s death, an interest in possession to which
D was beneficially entitled immediately before death.
      (4)
The general component is made up of all the property comprised
35
in the estate other than—
(a)
property in the survivorship component,
(b)
property in the settled property component, and
(c)
property that forms part of the estate by virtue of section
102(3) of the Finance Act 1986 (gifts with reservation).
40
The donated amount
4
The donated amount, for a component of the estate, is so much of
the value transferred by the relevant transfer as (in total) is
attributable to property that—

Finance (No. 4) Bill
Schedule 32 — Inheritance tax: gifts to charities etc
607

(a)
forms part of that component, and
(b)
is property in relation to which section 23(1) applies.
The baseline amount
5
The baseline amount, for a component of the estate, is the amount
calculated in accordance with the following steps—
5


Step 1

Determine the part of the value transferred by the chargeable
transfer that is attributable to property in that component.

10

Step 2

Deduct from the amount determined under Step 1 the appropriate
proportion of the available nil-rate band.


“The appropriate proportion” is a proportion equal to the
15
proportion that the amount determined under Step 1 bears to the
value transferred by the chargeable transfer as a whole.


“The available nil-rate band” is the amount (if any) by which—
(a)
the nil-rate band maximum (increased, where applicable,
20
in accordance with section 8A), exceeds
(b)
the sum of the values transferred by previous chargeable
transfers made by D in the period of 7 years ending with
the date of the relevant transfer.

25

Step 3

Add to the amount determined under Step 2 an amount equal to
so much of the value transferred by the relevant transfer as (in
total) is attributable to property that—
(a)
forms part of that component, and
30
(b)
is property in relation to which section 23(1) applies.


The result is the baseline amount for that component.

Rules for determining whether charitable giving condition is met
35
6     (1)
For the purpose of calculating the donated amount and the
baseline amount, any amount to be arrived at in accordance with
section 38(3) or (5) is to be arrived at assuming the rate of tax is the
lower rate of tax (see paragraph 2(6)).
      (2)
For the purpose of calculating the donated amount, section 39A
40
does not apply to a specific gift of property in relation to which
section 23(1) applies (but that section does apply to such a gift for
the purpose of calculating the baseline amount).
      (3)
Subject to sub-paragraphs (1) and (2), the provisions of this Act
apply for the purpose of calculating the donated amount and the
45