Session 2012 - 13
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Other Bills before Parliament

Finance Bill


Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 2 — Income tax: general

5

 

Anti-avoidance

9       

Post-cessation trade or property relief: tax-generated payments or events

(1)   

Part 4 of ITA 2007 (loss relief) is amended as follows.

(2)   

In section 96(7) (post-cessation trade relief), after paragraph (b) insert—

“(ba)   

section 98A (denial of relief for tax-generated payments or

5

events),”.

(3)   

After section 98 insert—

“98A    

Denial of relief for tax-generated payments or events

(1)   

Post-cessation trade relief is not available to a person in respect of a

payment or an event which is made or occurs directly or indirectly in

10

consequence of, or otherwise in connection with, relevant tax

avoidance arrangements (and, accordingly, no section 261D claim may

be made in respect of the payment or event).

(2)   

For this purpose “relevant tax avoidance arrangements” means

arrangements—

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(a)   

to which the person is a party, and

(b)   

the main purpose, or one of the main purposes, of which is the

obtaining of a reduction in tax liability as a result of the

availability of post-cessation trade relief (whether by making a

claim for that relief or a section 261D claim).

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(3)   

In this section—

(a)   

“arrangements” includes any agreement, understanding,

scheme, transaction or series of transactions (whether or not

legally enforceable), and

(b)   

“section 261D claim” means a claim under section 261D of

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TCGA 1992.”

(4)   

In section 125(6) (post-cessation property relief), after paragraph (b) insert—

“(ba)   

section 98A (denial of relief for tax-generated payments or

events),”.

(5)   

The amendments made by subsections (2) and (3) have effect in relation to—

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(a)   

payments which are made on or after 12 January 2012 except where

they are made pursuant to an unconditional obligation in a contract

made before that date, or

(b)   

events which occur on or after that date.

(6)   

The amendment made by subsection (4) has effect in relation to—

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(a)   

payments which are made on or after 13 March 2012 except where they

are made pursuant to an unconditional obligation in a contract made

before that date, or

(b)   

events which occur on or after that date.

(7)   

In subsections (5)(a) and (6)(a) “an unconditional obligation” means an

40

obligation which may not be varied or extinguished by the exercise of a right

(whether under the contract or otherwise).

(8)   

For the purposes of subsections (5)(b) and (6)(b) section 98 of ITA 2007 applies

for determining when an event occurs.

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 2 — Income tax: general

6

 

10      

Property loss relief against general income: tax-generated agricultural

expenses

(1)   

Chapter 4 of Part 4 of ITA 2007 (losses from property businesses) is amended

as follows.

(2)   

In section 117(3) (overview of Chapter), for “section 127A” substitute “sections

5

127A and 127B”.

(3)   

In section 120(7) (deduction of property losses from general income), at the end

insert “and section 127B (no relief for tax-generated agricultural expenses)”.

(4)   

After section 127A insert—

“127B   

 No relief for tax-generated agricultural expenses

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(1)   

This section applies if—

(a)   

in a tax year a person makes a loss in a UK property business or

overseas property business (whether carried on alone or in

partnership),

(b)   

the business has a relevant agricultural connection for the

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purposes of section 120 (see section 123(3) to (7)), and

(c)   

any allowable agricultural expenses deducted in calculating the

loss arise directly or indirectly in consequence of, or otherwise

in connection with, relevant tax avoidance arrangements.

(2)   

No property loss relief against general income may be given to the

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person for so much of the applicable amount of the loss as is

attributable to expenses falling within subsection (1)(c).

(3)   

For the purposes of subsection (2), the applicable amount of the loss is

to be treated as attributable to expenses falling within subsection (1)(c)

before anything else.

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(4)   

In subsection (1) “relevant tax avoidance arrangements” means

arrangements—

(a)   

to which the person is a party, and

(b)   

the main purpose, or one of the main purposes, of which is the

obtaining of a reduction in tax liability by means of property

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loss relief against general income.

(5)   

In subsection (4) “arrangements” includes any agreement,

understanding, scheme, transaction or series of transactions (whether

or not legally enforceable).

(6)   

In this section “the applicable amount of the loss” has the meaning

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given by section 122 and “allowable agricultural expenses” has the

meaning given by section 123.”

(5)   

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

arising directly or indirectly in consequence of, or otherwise in connection

with—

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(a)   

arrangements which are entered into on or after 13 March 2012, or

(b)   

any transaction forming part of arrangements which is entered into on

or after that date.

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 2 — Income tax: general

7

 

(6)   

But those amendments do not have effect where the arrangements are, or any

such transaction is, entered into pursuant to an unconditional obligation in a

contract made before that date.

(7)   

“An unconditional obligation” means an obligation which may not be varied

or extinguished by the exercise of a right (whether under the contract or

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otherwise).

11      

Gains from contracts for life insurance etc

(1)   

In Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance

etc), after section 473 insert—

“473A   

  Connected policies or contracts treated as single policy or contract

10

(1)   

Policies or contracts which are connected with each other are treated as

a single policy or contract for the purposes of this Chapter.

(2)   

A policy or contract is “connected” with another policy or contract if—

(a)   

they meet the condition in subsection (3) in relation to each

other, and

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(b)   

the terms on which either of them is issued are significantly

more or less favourable than would reasonably be expected if

the other were ignored or any policy or contract meeting the

condition in that subsection in relation to either of them were

ignored.

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(3)   

A policy or contract meets the condition in this subsection in relation to

another policy or contract if—

(a)   

they are at any time simultaneously in force, and

(b)   

either of them is issued with reference to the other or with a

view to enabling the other to be issued on particular terms or

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facilitating its being issued on those terms.

(4)   

If—

(a)   

there is a policy or contract (“A”) with which two or more other

policies or contracts are connected as a result of subsection (2),

but

30

(b)   

the other policies or contracts are not connected with each other

as a result of that subsection,

   

A and the other policies or contracts are (as a result of this subsection)

to be regarded as “connected” with each other.”

(2)   

In section 491(2) of that Act (calculating gains from contracts for life insurance

35

etc: general rules), in the definition of “PG”, at the end insert “but only in so far

as those gains have been, or fall to be, taken into account in calculating the total

income of a person as a result of this Chapter or Chapter 2 of Part 13 of ITA

2007”.

(3)   

In section 552 of ICTA (information: duty of insurers), for subsection (13)

40

substitute—

“(13)   

For the purposes of this section—

(a)   

section 491(2) of ITTOIA 2005 is taken to have effect as if, in the

definition of “PG”, the words from “but” to the end were

omitted, and

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Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 2 — Income tax: general

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(b)   

no account is to be taken of the effect of section 541A of that

Act.”

(4)   

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

(a)   

any policy issued in respect of an insurance made on or after 21 March

2012, or

5

(b)   

any contract made on or after that date.

(5)   

The amendments made by this section also have effect in the case of any

insurance or contract made before 21 March 2012 if on or after that date—

(a)   

the policy or contract is varied with the result that there is an increase

in the benefits secured,

10

(b)   

there is an assignment of rights, or a share of the rights, conferred by

the policy or contract (whether or not for money’s worth), or

(c)   

some or all of the rights conferred by the policy or contract become held

as security for a debt.

(6)   

For the purposes of subsection (5)(a)—

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(a)   

an exercise of rights conferred by a policy or contract is to count as a

variation of the policy or contract, and

(b)   

the reference to an increase in the benefits secured by a policy or

contract includes an increase in the benefits secured by another policy

or contract with which the policy or contract is connected (within the

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meaning given by section 473A of ITTOIA 2005, as inserted by

subsection (1)).

12      

Settlements: income originating from settlors other than individuals

(1)   

ITTOIA 2005 is amended as follows.

(2)   

In section 627 (income where settlor retains an interest: exceptions), at the end

25

insert—

“(4)   

The rule in section 624(1) does not apply in relation to income which—

(a)   

arises under a settlement, and

(b)   

originates from any settlor who was not an individual.”

(3)   

In section 645 (property or income originating from settlor), in subsection (2),

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for “section 644” substitute “sections 627 and 644”.

(4)   

The amendments made by this section have effect in relation to income arising

on or after 21 March 2012.

Reliefs

13      

Champions League final 2013

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(1)   

No liability to income tax arises in respect of any income from the 2013

Champions League final that arises to a person who is—

(a)   

an employee or contractor of an overseas team that competes in the

final, and

(b)   

non-UK resident at the time of the final.

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Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 2 — Income tax: general

9

 

(2)   

The reference in subsection (1) to income from the 2013 Champions League

final is to income related to duties or services performed by the person in the

United Kingdom in connection with the final.

(3)   

The exemption under subsection (1) does not apply to—

(a)   

income that arises as a result of a contract entered into after the final, or

5

of any amendment, after the final, of a contract entered into before the

end of the final, or

(b)   

income that is the subject of tax avoidance arrangements.

(4)   

Income is the subject of tax avoidance arrangements if—

(a)   

arrangements have been made which, but for subsection (3)(b), would

10

result in a person obtaining an exemption under subsection (1) for the

income, and

(b)   

those arrangements, or other arrangements of which they form part,

have as their main purpose, or one of their main purposes, the

obtaining of that exemption.

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(5)   

Section 966 of ITA 2007 (deduction of sums representing income tax) does not

apply to any payment or transfer which gives rise to income benefiting from

the exemption under subsection (1).

(6)   

In this section—

“the 2013 Champions League final” means the final of the UEFA

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Champions League 2012/2013 competition held in England in 2013;

“contractor”, in relation to an overseas team, means an individual who is

not an employee of the team but who performs services for the team—

(a)   

under the terms of a contract with the team, or

(b)   

under the terms of a contract, or that individual’s employment,

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with a company which is a member of the same group of

companies as the team (within the meaning given by section 152

of CTA 2010);

“employee” and “employment” are to be read in accordance with section

4 of ITEPA 2003;

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“income” means employment income or profits of a trade, profession or

vocation (including profits treated as arising as a result of section 13 or

14 of ITTOIA 2005);

“overseas team” means a football club which is not a member of the

Football Association, the Scottish Football Association, the Football

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Association of Wales or the Irish Football Association.

14      

Cars: security features not to be regarded as accessories

(1)   

ITEPA 2003 is amended as follows.

(2)   

In section 125 (meaning of “accessory” and related terms) after subsection (3)

insert—

40

“(3A)   

Subsection (2) needs to be read with section 125A (security features not

to be regarded as accessories).”

 
 

Finance Bill
Part 1 — Income tax, corporation tax and capital gains tax
Chapter 2 — Income tax: general

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(3)   

After that section insert—

“125A   

Security features not to be regarded as accessories

(1)   

This section applies where a car made available to an employee has a

relevant security feature.

(2)   

The relevant security feature is not an accessory for the purposes of this

5

Chapter if it is provided in order to meet a threat to the employee’s

personal physical security which arises wholly or mainly because of the

nature of the employee’s employment.

(3)   

In this section “relevant security feature” means—

(a)   

armour designed to protect the car’s occupants from explosions

10

or gunfire,

(b)   

bullet-resistant glass,

(c)   

any modification to the car’s fuel tank designed to protect the

tank’s contents from explosions or gunfire (including by

making the tank self-sealing), and

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(d)   

any modification made to the car in consequence of anything

which is a relevant security feature by virtue of paragraph (a),

(b) or (c).

(4)   

The Treasury may by regulations amend the definition of “relevant

security feature” in subsection (3).”

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(4)   

In Part 2 of Schedule 1 (index of defined expressions), in the entry for

“accessory”, in the second column for “section 125(2)” substitute “sections

125(2) and 125A(2)”.

(5)   

The amendments made by this section have effect for the tax year 2011-12 and

subsequent tax years.

25

15      

Termination payments to MPs ceasing to hold office

(1)   

In section 291 of ITEPA 2003 (exemptions: termination payments to MPs and

others ceasing to hold office), for subsection (2)(a) substitute—

“(a)   

made under section 5(1) of the Parliamentary Standards Act

2009 in connection with a person’s ceasing to be a member of

30

the House of Commons,”.

(2)   

The amendment made by this section has effect in relation to grants and

payments made on or after 1 April 2012.

16      

Employment income exemptions: armed forces

(1)   

Chapter 8 of Part 4 of ITEPA 2003 (exemptions: special kinds of employees) is

35

amended as follows.

(2)   

In section 297A (exemption for Operational Allowance), in subsection (2), for

“by the Secretary of State” substitute “under a Royal Warrant made under

section 333 of the Armed Forces Act 2006”.

(3)   

In section 297B (exemption for Council Tax Relief), in subsection (2), for “by the

40

Secretary of State” substitute “under a Royal Warrant made under section 333

of the Armed Forces Act 2006”.

 
 

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

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(4)   

After that section insert—

“297C   

 Armed forces: Continuity of Education Allowance

(1)   

No liability to income tax arises in respect of payments of the

Continuity of Education Allowance to or in respect of members of the

armed forces of the Crown during their employment under the Crown

5

or after their deaths.

(2)   

The Continuity of Education Allowance is an allowance designated as

such under a Royal Warrant made under section 333 of the Armed

Forces Act 2006.”

(5)   

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

10

made on or after 6 April 2012.

Other provisions

17      

Taxable benefits: “the appropriate percentage” for cars for 2014-15

(1)   

In section 139 of ITEPA 2003 (car with a CO2 emissions figure: the appropriate

percentage), for subsections (2) and (3) substitute—

15

“(2)   

If the car’s CO2 emissions figure is less than the relevant threshold for

the year, the appropriate percentage for the year is—

(a)   

if the car’s CO2 emissions figure for the year does not exceed 75

grams per kilometre driven, 5%, and

(b)   

otherwise, 11%.

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(3)   

If the car’s CO2 emissions figure is equal to the relevant threshold for

the year, the appropriate percentage for the year is 12% (“the threshold

percentage”).”

(2)   

The amendment made by this section has effect for the tax year 2014-15 and

subsequent tax years.

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18      

Qualifying time deposits

(1)   

In section 866 of ITA 2007 (qualifying time deposits), in subsection (1), after

“deposit” insert “made before 6 April 2012”.

(2)   

The amendment made by this section is treated as having come into force on 6

April 2012.

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Chapter 3

Corporation tax: general

Support for business

19      

Profits arising from the exploitation of patents etc

Schedule 2 contains provision about the treatment for corporation tax purposes

35

of profits arising from the exploitation of patents etc.

 
 

 
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Revised 9 May 2012