Session 2012 - 13
Internet Publications
Other Bills before Parliament

Finance Bill


Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 3 — Corporation tax: general

19

 

(c)   

a company’s “existing” equalisation or equivalent reserve means the

equalisation or equivalent reserve as it stood immediately before the

first accounting period of the company (“the relevant accounting

period”) in relation to which the amendments made by this section

have effect (but see subsection (8)), and

5

(d)   

references in this section to the company’s business are to the business

in respect of which the equalisation or equivalent reserve was

maintained.

(8)   

If—

(a)   

an insurance company has made an election under section 444BA(4) of

10

ICTA in relation to an accounting period ending before the specified

day, and

(b)   

an amount would, but for this section, have been carried forward to the

relevant accounting period of the company as a deductible amount,

   

that amount is not to be carried forward to that period as a deductible amount

15

but is instead to be deducted from the amount of the equalisation or equivalent

reserve as it stood immediately before that period.

(9)   

References in this section to section 444BA of ICTA include that section as

modified by regulations made under section 444BB or 444BC of that Act.

27      

Election to accelerate receipts under s.26(4)

20

(1)   

An insurance company may make an election in relation to a calendar year

(“the relevant year”) for all of the amounts that would, as a result of section

26(4), otherwise be treated as arising in later calendar years as receipts of a

business carried on by the company to be treated instead as receipts of the

business arising in the relevant year.

25

(2)   

An election under this section—

(a)   

must be made by notice to an officer of Revenue and Customs within 2

years from the end of the relevant year, and

(b)   

is irrevocable.

(3)   

A company which makes an election under section 29 as the transferor or the

30

transferee may make an election under this section but not in relation to the

calendar year in which the transfer takes place.

28      

Deemed receipts under s.26(4): double taxation relief

(1)   

This section applies if—

(a)   

a receipt is treated as arising to an insurance company’s business in an

35

accounting period as a result of section 26(4),

(b)   

the company carries on business through a permanent establishment

outside the United Kingdom by reference to which double taxation

relief is afforded in respect of any income or gains, and

(c)   

the permanent establishment is one in relation to which regulation

40

10(2) of the Insurance Companies (Reserves) (Tax) Regulations 1996

previously applied.

(2)   

For the purpose of calculating the profits or losses by reference to which double

taxation relief is afforded for the accounting period, only the appropriate

proportion (if any) of the receipt is to be taken into account.

45

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 3 — Corporation tax: general

20

 

(3)   

The appropriate proportion of the receipt is—

(a)   

equal to the mean of each proportion found for each relevant period (if

any), or

(b)   

equal to such other proportion as the company may determine on a just

and reasonable basis.

5

(4)   

For the purposes of subsection (3)(a) a proportion for a relevant period is the

proportion which the PE’s premium income for the period bears to the

company’s premium income for the period.

(5)   

For the purposes of subsections (3)(a) and (4)—

“the company’s premium income”, in relation to a relevant period, means

10

the amount of net premiums written by reference to which the

calculation under section 444BA(2)(a) or (b) of ICTA was made for the

period,

“the PE’s premium income”, in relation to a relevant period, means so

much of the company’s premium income for the period as is

15

attributable to the permanent establishment, and

a “relevant period” means an accounting period of the company in

relation to which each of the following conditions is met—

(a)   

section 444BA of ICTA has applied in relation to the accounting

period,

20

(b)   

the business mentioned in subsection (1)(a) has been carried on

through the permanent establishment in the accounting period,

and

(c)   

the accounting period is the company’s last accounting period

in relation to which section 444BA of ICTA applied or is one that

25

falls wholly or partly in the period of six years ending with the

day on which that last accounting period ended.

(6)   

In subsection (5)—

(a)   

“net premiums written” means gross premiums written net of

reinsurance premiums payable under reinsurance ceded, and

30

(b)   

references to section 444BA of ICTA include that section as modified by

regulations made under that Act.

29      

Transfer of whole or part of the business

(1)   

If—

(a)   

an insurance company carries on a business,

35

(b)   

amounts fall to be treated as receipts of the business as a result of

section 26(4) (“deemed receipts”), and

(c)   

under an insurance business transfer scheme there is a transfer of the

whole or part of the business to another insurance company within the

charge to corporation tax,

40

   

the transferor and the transferee may jointly make an election for those deemed

receipts to be allocated between them in accordance with the following

provisions.

(2)   

If the transfer is a transfer of the whole of the business or substantially the

whole of the business—

45

(a)   

section 26(6) does not apply in relation to the transferor (if it would

otherwise have applied),

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 3 — Corporation tax: general

21

 

(b)   

the deemed receipt which, on the assumption that there had been no

transfer, would have arisen in the transfer year is apportioned between

the transferor and the transferee in accordance with subsection (5), and

(c)   

the remaining deemed receipts (if any) which, on that assumption,

would have arisen in subsequent calendar years are treated as receipts

5

of the transferee (and not as receipts of the transferor).

(3)   

If the transfer is a transfer of a part of the business and subsection (2) does not

apply—

(a)   

the appropriate portion of the deemed receipt arising in the transfer

year is apportioned between the transferor and the transferee in

10

accordance with subsection (5), and

(b)   

the appropriate portions of the remaining deemed receipts (if any) are

treated as receipts of the transferee (and the receipts of the transferor

are reduced accordingly).

(4)   

The appropriate portion of a deemed receipt is to be determined on a just and

15

reasonable basis.

(5)   

An apportionment under subsection (2)(b) or (3)(a) is to be made in proportion

to the number of days of the calendar year falling before the day of the transfer

and the number of days of the calendar year falling on or after the day of

transfer.

20

(6)   

A deemed receipt which is treated as a receipt of the transferee as a result of

this section is treated as a receipt of the business of the transferee which

consists of or includes the transferred business, and, accordingly, section 26(4)

and (6) have effect in relation to the transferee—

(a)   

as if references to the company were references to the transferee, and

25

(b)   

as if references to the business were references to the business of the

transferee which consists of or includes the transferred business.

(7)   

An election under this section—

(a)   

must be made by notice to an officer of Revenue and Customs within

28 days from the end of the day on which the transfer takes place,

30

(b)   

must be accompanied by an explanation as to the way in which the

transferor and the transferee have determined any issue falling to be

determined for the purposes of this section, and

(c)   

is irrevocable.

(8)   

In this section—

35

“the transferred business” means so much of the business as is transferred

to the transferee, and

“the transfer year” means the calendar year in which the transfer takes

place.

(9)   

If a company makes an election under this section as the transferee, this section

40

has effect for the purposes of any subsequent elections made by the company

under this section as the transferor as if references to the business were

references to the activities in respect of which deemed receipts are treated as

arising to it.

30      

Abolition of relief for equalisation reserves: Lloyd’s corporate members etc

45

(1)   

Regulations made by the Treasury under section 47 of FA 2009 (equalisation

reserves for Lloyd’s corporate and partnership members) that revoke previous

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 3 — Corporation tax: general

22

 

regulations made under that section may include provision corresponding to

the provision made by sections 26(4) to (8) and 27, subject to such modifications

as may be made in the regulations.

(2)   

Section 47 of FA 2009 is repealed.

(3)   

That repeal has effect in relation to accounting periods ending on or after such

5

day (“the specified day”) as is specified in an order made by the Treasury (and

different days may be specified for different cases).

(4)   

Subsections (2) and (3) are not to affect the operation of any transitional or

saving provision included (whether as a result of this section or otherwise) in

regulations made under section 47 of FA 2009 that revoke previous regulations

10

made under that section so far as the provision remains capable of having

effect in relation to times falling on or after the specified day.

Miscellaneous

31      

Tax treatment of financing costs and income

Schedule 5 contains provision about the tax treatment of financing costs and

15

income.

32      

Group relief: meaning of “normal commercial loan”

(1)   

CTA 2010 is amended as follows.

(2)   

In section 162(2)(c) (meaning of “normal commercial loan”), after “securities

in” insert “a quoted unconnected company (see section 164(2A)) or in”.

20

(3)   

In section 164 (sections 160 and 162: supplementary), in subsection (2)(c), after

“securities in” insert “a quoted unconnected company (see subsection (2A)) or

in”.

(4)   

After subsection (2) of that section insert—

“(2A)   

For the purposes of this section and section 162 a company is a quoted

25

unconnected company if (and only if)—

(a)   

its ordinary shares are listed on a recognised stock exchange,

and

(b)   

it is not connected with the relevant company.”

(5)   

In subsection (4) of that section—

30

(a)   

for “If the candidate company’s” substitute “In the case of a company

whose”, and

(b)   

for “subsection (3)(c) is” substitute “subsections (2A)(a) and (3)(c) are”.

(6)   

In subsection (5) of that section, for “subsections (3) and (4)” substitute “this

section”.

35

(7)   

The amendments made by this section have effect in relation to loans made on

or after 21 March 2012.

33      

Company distributions

(1)   

Part 23 of CTA 2010 (company distributions) is amended as follows.

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 4 — Capital gains

23

 

(2)   

Section 1002 (exceptions for certain transfers of assets or liabilities between a

company and its members) is repealed.

(3)   

In section 1020 (transfers of assets or liabilities treated as distributions)—

(a)   

in subsection (2), omit from “But” to the end, and

(b)   

after that subsection insert—

5

“(2A)   

But the company is not treated as making a distribution under

subsection (2) if the transfer of assets or liabilities—

(a)   

is a distribution by virtue of paragraph B in section

1000(1), or

(b)   

would be such a distribution in the absence of sub-

10

paragraph (a) of that paragraph (distribution

representing repayment of capital on the shares).”

(4)   

Section 1021 (transfers of assets or liabilities treated as distributions:

exceptions) is repealed.

(5)   

In consequence of the repeal made by subsection (2)—

15

(a)   

omit section 194(2) of CTA 2010,

(b)   

in section 998(3) of that Act, for “1002” substitute “1003”,

(c)   

in section 1001 of that Act, in the third column of the table, omit

“Section 1002 (exception for certain transfers of assets and liabilities)”,

and

20

(d)   

omit paragraph 1(2) of Schedule 3 to F(No.3)A 2010.

(6)   

The amendments made by this section have effect in relation to distributions

made on or after the day on which this Act is passed.

Chapter 4

Capital gains

25

34      

Annual exempt amount

(1)   

TCGA 1992 is amended as follows.

(2)   

In section 3 (annual exempt amount), for the figure specified in subsection (2)

substitute “£10,600”.

(3)   

In that section—

30

(a)   

in each of subsections (3), (3A), (3B) and (4), for “RPI” substitute “CPI”,

and

(b)   

in subsection (3A), for “retail prices index” substitute “consumer prices

index”.

(4)   

In section 288 (interpretation), after subsection (2) insert—

35

“(2A)   

In this Act “consumer prices index” means the all items consumer

prices index published by the Statistics Board.”

(5)   

The amendment made by subsection (2) has effect for the tax year 2012-13 and

subsequent tax years.

(6)   

Section 3(3) of TCGA 1992 (indexation) does not apply in relation to the tax

40

year 2012-13.

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 4 — Capital gains

24

 

(7)   

The amendments made by subsections (3) and (4) have effect for the tax year

2013-14 and subsequent tax years.

35      

Foreign currency bank accounts

(1)   

TCGA 1992 is amended as follows.

(2)   

In section 13 (attribution of gains to members of non-resident companies), in

5

subsection (5), omit paragraph (c).

(3)   

In section 251 (debts: general provisions), after subsection (5) insert—

“(5A)   

References in this section to the disposal of a debt include the disposal

of an interest in a debt (and, in the case of an interest in a debt, the

reference in subsection (3) to the amount of the debt is to the amount of

10

the person’s interest in the debt).”

(4)   

For section 252 substitute—

“252    

Foreign currency bank accounts

(1)   

Section 251(1) does not apply in relation to a gain accruing to a person

on a disposal of a foreign currency debt (or an interest in such a debt)

15

unless that person is—

(a)   

an individual,

(b)   

the trustees of a settlement, or

(c)   

the personal representatives of a deceased person.

(2)   

A “foreign currency debt” is a debt—

20

(a)   

owed by a bank in a currency other than sterling, and

(b)   

represented by a sum standing to the credit of an account-

holder in an account in that bank.”

(5)   

Omit section 252A and Schedule 8A (foreign currency bank accounts).

(6)   

The amendments made by this section have effect in relation to disposals

25

occurring on or after 6 April 2012.

36      

Collective investment schemes: chargeable gains

(1)   

TCGA 1992 is amended as follows.

(2)   

In section 99A(2) (treatment of umbrella schemes), after “subsection (1)” insert

“and section 103C”.

30

(3)   

After section 103B insert—

“103C   

Power to make regulations about collective investment schemes

(1)   

The Treasury may by regulations make provision about the treatment

of participants in collective investment schemes for the purposes of this

Act.

35

(2)   

The regulations may, in particular, specify descriptions of collective

investment scheme in relation to which they are to apply.

(3)   

Regulations under this section may make different provision for

different cases or different purposes.

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 4 — Capital gains

25

 

(4)   

Regulations under this section—

(a)   

may modify this Act or any other enactment or instrument

(whenever passed or made), and

(b)   

may include incidental, consequential, supplementary or

transitional provision.

5

(5)   

A statutory instrument containing regulations under this section must

be laid before the House of Commons after being made.

(6)   

The regulations cease to have effect at the end of the period of 40 days

beginning with the day on which the instrument is made unless before

the end of that period the instrument is approved by a resolution of the

10

House of Commons.

(7)   

After an instrument containing regulations under this section has been

approved under subsection (6), subsections (5) and (6) do not apply to

any subsequent such instrument (and accordingly section 287(3)

applies to any such instrument).

15

(8)   

If regulations cease to have effect as a result of subsection (6), that does

not—

(a)   

affect anything previously done under the regulations, or

(b)   

prevent the making of new regulations to the same or similar

effect.

20

(9)   

In calculating the period of 40 days for the purposes of subsection (6),

no account is to be taken of any time during which Parliament is

dissolved or prorogued or during which the House of Commons is

adjourned for more than 4 days.

(10)   

In this section—

25

“modify” includes amend, repeal or revoke, and

“participant”, in relation to a collective investment scheme, is to be

read in accordance with section 235 of the Financial Services

and Markets Act 2000.”

37      

Roll-over relief

30

(1)   

In section 155 of TCGA 1992 (roll-over relief: relevant classes of assets), in the

entry for Class 7A, for “Council Regulation (EC) No. 1782/2003” substitute

“Council Regulation (EC) No 73/2009”.

(2)   

In section 86 of FA 1993, for subsection (2) (power to add to classes specified in

section 155 of TCGA 1992) substitute—

35

“(2)   

The Treasury may by order made by statutory instrument amend

section 155 of the Taxation of Chargeable Gains Act 1992 (roll-over

relief: relevant classes of assets) so as to add to or amend the classes of

assets specified in that section.

(2A)   

But an order under subsection (2) may not restrict the assets which fall

40

within a class listed in that section (whether by virtue of subsection (2)

or otherwise).

(2B)   

An order under subsection (2) may make such consequential

amendments of section 156ZB of, or Schedule 7AB to, the Taxation of

 
 

 
previous section contents continue
 

© Parliamentary copyright
Revised 9 May 2012