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
5omitted.

(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.

10Commencement

(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) 15In paragraph 9(1)(c) of Schedule 20 to FA 2011 the reference to paragraph
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
20applies as if for “23 March 2011” there were substituted “21 March 2012”.

Part 2 Carbon price support rates from 1 April 2014

(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) 25for “£0.00091 per kilowatt hour” substitute “£0.00175 per kilowatt
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
30treated as taking place on or after 1 April 2014.

Part 3 Electricity produced in combined heat and power stations

(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
35amended as follows.

(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
402018.”

(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”.

(1) 5The following repeals are made in consequence of paragraph 21.

(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) 10omit “or 20A,”

(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) 15Omit section 193(3) and (5) of FA 2003.

(5) The repeals made by this paragraph come into force on the day appointed
by the Treasury by order made by statutory instrument.

Section 207

SCHEDULE 32 Inheritance tax: gifts to charities etc

20Reduced rate of inheritance tax

1 After Schedule 1 to IHTA 1984 insert—

“Schedule 1A Gifts to charities etc: tax charged at lower rate

Application of this Schedule

(1) This Schedule applies if—

(a) 25a 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
30other than nil per cent is referred to in this Schedule as “TP”.

The relief

(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,
35and

(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) 5For the purposes of this paragraph, the charitable giving condition
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) 10Paragraphs 4 and 5 explain how to calculate the donated amount
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) 15The lower rate of tax is 36%.

The components of the estate

(1) For the purposes of paragraph 2, the components of the estate
are—

(a) the survivorship component,

(b) 20the settled property component, and

(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) 25by survivorship (in England and Wales or Northern
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
30outside the United Kingdom.

(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) 35The general component is made up of all the property comprised
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
40102(3) of the Finance Act 1986 (gifts with reservation).

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—

(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
5calculated in accordance with the following steps—

Step 1

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

Step 2

10Deduct 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
proportion that the amount determined under Step 1 bears to the
value transferred by the chargeable transfer as a whole.

15“The available nil-rate band” is the amount (if any) by which—

(a) the nil-rate band maximum (increased, where applicable,
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
20the date of the relevant transfer.

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) 25forms part of that component, and

(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

(1) For the purpose of calculating the donated amount and the
30baseline 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
does not apply to a specific gift of property in relation to which
35section 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

baseline amount as for the purpose of calculating the tax to be
charged on the value transferred by the chargeable transfer.

Election to merge parts of the estate

(1) An election may be made under this paragraph if, for a component
5of the estate, the donated amount is at least 10% of the baseline
amount.

(2) That component is referred to as “the qualifying component”.

(3) The effect of the election is that the qualifying component and one
or more eligible parts of the estate (as specified in the election) are
10to be treated for the purposes of this Schedule as if they were a
single component.

(4) Accordingly, if the donated amount for that deemed single
component is at least 10% of the baseline amount for it, the
property in that component is to be included in the part of TP that
15qualifies for the lower rate of tax.

(5) In relation to the qualifying component—

(a) each one of the other two components of the estate is an
“eligible part” of the estate, and

(b) all the property that forms part of the estate by virtue of
20section 102(3) of the Finance Act 1986 (gifts with
reservation) is also an “eligible part” of the estate.

(6) The election must be made by all those who are appropriate
persons with respect to the qualifying component and each of the
eligible parts to be treated as a single component.

(7) 25“Appropriate persons” means—

(a) with respect to the survivorship component, all those to
whom the property in that component passes on D’s death
(or, if they have subsequently died, their personal
representatives),

(b) 30with respect to the settled property component, the
trustees of all the settled property in that component,

(c) with respect to the general component, all the personal
representatives of D or, if there are none, all those who are
liable for the tax attributable to the property in that
35component, and

(d) with respect to property within paragraph (b) of sub-
paragraph (5), all those in whom the property within that
paragraph is vested when the election is to be made.

Opting out

(1) 40If an election is made under this paragraph in relation to a
component of the estate, this Schedule is to apply as if the donated
amount for that component were less than 10% of the baseline
amount for it (whether or not it actually is).

(2) The election must be made by all those who are appropriate
persons (as defined in paragraph 7(7)) with respect to the
component.

Elections: procedure

(1) 5An election under this Schedule must be made by notice in writing
to HMRC within two years after D’s death.

(2) An election under this Schedule may be withdrawn by notice in
writing to HMRC given—

(a) by all those who would be entitled to make such an
10election, and

(b) no later than the end of the period of two years and one
month after D’s death.

(3) An officer of Revenue and Customs may agree in a particular case
to extend the time limit in sub-paragraph (1) or (2)(b) by such
15period as the officer may allow.

General interpretation

10 In this Schedule, in relation to D—

• “the chargeable transfer” means the chargeable transfer
  mentioned in paragraph 1(1);

• 20“the estate” means D’s estate immediately before death;

• “the relevant transfer” means the transfer of value that D is
  treated (under section 4) as having made immediately
  before death.”

Consequential amendments

2 25IHTA 1984 is amended as follows in consequence of paragraph 1.

3 In section 7 (rates), in subsection (1), after “(4) and (5) below” insert “and to
Schedule 1A”.

4 In section 33 (amount of charge under section 32), after subsection (2)
insert—

“(2ZA) 30In determining for the purposes of subsection (1)(b)(ii) the rate or
rates that would have applied in accordance with subsection (1) of
section 7, the effect of Schedule 1A (if it would have applied) is to be
disregarded.”

5 In section 78 (conditionally exempt occasion), in subsection (3), for “33(3)”
35substitute “33(2ZA)”.

6 In section 128 (rate of charge: woodlands)—

(a) the existing provisions become subsection (1) of that section, and

(b) after that subsection insert—

“(2) In determining for the purposes of subsection (1) the rate or
40rates at which tax would have been charged on the amount
determined under section 127, the effect of Schedule 1A (if it
would have applied) is to be disregarded.”

7 After section 141 insert—

“141A Apportionment of relief under section 141

(1) This section applies if any part of the value transferred by the later
transfer qualifies for the lower rate of tax in accordance with
5Schedule 1A.

(2) The amount of the reduction made under section 141(1) is to be
apportioned in accordance with this section.

(3) For each qualifying component, the tax chargeable on so much of the
value transferred by the later transfer as is attributable to property in
10that component (“the relevant part of the tax”) is to be reduced by the
appropriate proportion of the amount calculated in accordance with
section 141(3).

(4) “The appropriate proportion” is a proportion equal to the proportion
that—

(a) 15the relevant part of the tax, bears to

(b) the tax chargeable on the value transferred by the later
transfer as a whole.

(5) If parts of an estate are treated under Schedule 1A as a single
component, subsection (3) applies to the single component (and not
20to individual components forming part of the deemed single
component).

(6) If, after making the reductions required by subsection (3), there
remains any part of the tax chargeable on the value transferred by the
later transfer that has not been reduced, the remaining part of the tax
25is to be reduced by so much of the amount calculated in accordance
with section 141(3) as has not been used up for the purposes of
making the reductions required by subsection (3).

(7) In this section—

• “component” means a component of the estate, as defined in
  30paragraph 3 of Schedule 1A;

• “the later transfer” has the meaning given in section 141(1);

• “qualifying component” means a component (or deemed single
  component) for which the donated amount is at least 10% of
  the baseline amount, as determined in accordance with
  35Schedule 1A.”

8 In Schedule 4 (maintenance funds for historic buildings etc), in paragraph
14, after sub-paragraph (2) insert—

“(2A) In determining for the purposes of sub-paragraph (2) the effective
rate or rates at which tax would have been charged on the amount
40in accordance with section 7(1), the effect of Schedule 1A (if it
would have applied) is to be disregarded.”

Instruments of variation to be notified to charities etc

9 In section 142 of IHTA 1984 (alteration of dispositions taking effect on

death), after subsection (3) insert—

“(3A) Subsection (1) does not apply to a variation by virtue of which any
property comprised in the estate immediately before the person’s
death becomes property in relation to which section 23(1) applies
5unless it is shown that the appropriate person has been notified of
the existence of the instrument of variation.

(3B) For the purposes of subsection (3A) “the appropriate person” is—

(a) the charity or registered club to which the property is given,
or

(b) 10if the property is to be held on trust for charitable purposes or
for the purposes of registered clubs, the trustees in question.”

Commencement

(1) The Schedule inserted by paragraph 1 has effect in cases where D’s death
occurs on or after 6 April 2012 (and the amendments made by paragraphs 3
15to 8 are to be read accordingly).

(2) The amendment made by paragraph 9 has effect in cases where the person’s
death occurs on or after 6 April 2012.

Section 209

SCHEDULE 33 Bank levy

20Introductory

1 Schedule 19 to FA 2011 (bank levy) is amended as follows.

Rates 2012

2 In paragraph 6 (steps for determining the amount of the bank levy), in sub-
paragraph (2)—

(a) 25for “0.039%” substitute “0.044%”, and

(b) for “0.078%” substitute “0.088%”.

3 In paragraph 7 (special provision for chargeable periods falling wholly or
partly before 1 January 2012), in sub-paragraph (2)—

(a) for “0.039%” substitute “0.044%”, and

(b) 30for “0.078%” substitute “0.088%”.

4 The amendments made by paragraphs 2 and 3 are treated as having come
into force on 1 January 2012.

Rates from 2013

5 In paragraph 6 (steps for determining the amount of the bank levy), in sub-
35paragraph (2)—

(a) for “0.044%” substitute “0.0525%”, and

(b) for “0.088%” substitute “0.105%”.

(1) In paragraph 7 (special provision for chargeable periods falling wholly or

partly before 1 January 2012) for sub-paragraphs (1) and (2) substitute—

“(1) Paragraph 6(2) applies subject to this paragraph if some or all of
the chargeable period falls before 1 January 2013.

(2) For Step 7 there is substituted—

5“Step 7

Determine the proportion (“P%”) (if any) of the chargeable period
which falls within each of the periods (“rate periods”) specified in
column 1 of the following table.

In relation to each rate period—

• 10charge P% of the amount of the long term chargeable
  equity and liabilities at the rate specified, in relation to the
  rate period concerned, in the second column of the table,
  and

• charge P% of the amount of the short term chargeable
  15liabilities at the rate specified, in relation to the rate period
  concerned, in the third column of the table.

Add together the results for each rate period in which some or all
of the chargeable period falls to give the amount of the bank levy.

(2) Accordingly, in the italic heading immediately before that paragraph for
40“2012” substitute “2013”.

7 The amendments made by paragraphs 5 and 6 come into force on 1 January
2013.

Joint ventures

(1) Paragraph 43 (calculation of chargeable equity and liabilities where relevant
group has an interest in a joint venture) is amended as follows.

(2) In sub-paragraph (1), for paragraphs (d) and (e) substitute “, and

(d) 5in the absence of this paragraph, none of the liabilities
taken into account in determining the amount of the
chargeable equity and liabilities of the relevant group
would include the JV liabilities.”

(3) For sub-paragraph (2) substitute—

“(2) 10For the purposes of determining the chargeable equity and
liabilities of the relevant group under paragraph 17 or 19 (as the
case may be) the joint venture is to be treated as if—

(a) it were a member of the group in relation to—

(i) the liabilities of the joint venture which consist of
15the JV liabilities, and

(ii) the assets of the joint venture so far as determined
by the relevant interest, and

(b) it were not a member of the group in relation to the
remaining liabilities and assets of the joint venture.”

9 20In paragraph 44 (chargeable equity and liabilities of joint venture:
prevention of double charge), in sub-paragraph (7)(b), for the words from
“liabilities for” to “27(2)(a)” substitute “taken into account in calculating the
chargeable equity and liabilities of V (or where sub-paragraph (6) applies,
A)”.”

10 25The amendments made by paragraphs 8 and 9 have effect in relation to
chargeable periods ending on or after 1 January 2012.

Double taxation relief

(1) In paragraph 66 (double taxation arrangements), after sub-paragraph (9)
insert—

“(9A) 30If 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.”

(2) 35After paragraph 67 insert—

“Disclosure of information to foreign tax authorities etc

(1) If the Treasury by order declares that—

(a) international tax enforcement arrangements which are
specified in the order have been made in relation to any
40territory or territories outside the United Kingdom in
association with double taxation arrangements specified
under paragraph 66 in the same or a previous order, and

(b) it is expedient that those international tax enforcement
arrangements have effect,