Session 2012 - 13
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Finance (No. 2) Bill


Finance (No. 2) Bill
Schedule 34 — Treatment of liabilities for inheritance tax purposes

421

 

(i)   

to finance (directly or indirectly) the acquisition of

excluded property or the maintenance, or an

enhancement, of the value of such property, or

(ii)   

to discharge (directly or indirectly) any other liability

that, by virtue of this section, would not be taken into

5

account.

(3)   

The liability may be taken into account to the extent that it is greater

than the value of such of the excluded property as has not been

disposed of, but only so far as the liability is not greater than that

value by virtue of—

10

(a)   

arrangements the main purpose, or one of the main purposes,

of which is to secure a tax advantage,

(b)   

an increase in the amount of the liability (whether due to the

accrual of interest or otherwise), or

(c)   

a disposal, in whole or in part, of the excluded property.

15

(4)   

In subsection (3)(a)—

“arrangements” includes any scheme, transaction or series of

transactions, agreement or understanding, whether or not

legally enforceable, and any associated operations;

“tax advantage” means—

20

(a)   

the avoidance or reduction of a charge to tax, or

(b)   

the avoidance of a possible determination in respect

of tax.

162B    

Liabilities attributable to financing certain relievable property

(1)   

Subsection (2) applies if—

25

(a)   

the whole or part of any value transferred by a transfer of

value is to be treated as reduced, under section 104, by virtue

of it being attributable to the value of relevant business

property, and

(b)   

the transferor has a liability which is attributable, in whole or

30

in part, to financing (directly or indirectly)—

(i)   

the acquisition of that property, or

(ii)   

the maintenance, or an enhancement, of its value.

(2)   

The liability is, so far as possible, to be taken to reduce the value

attributable to the value of the relevant business property, before it is

35

treated as reduced under section 104, but only to the extent that the

liability—

(a)   

is attributable as mentioned in subsection (1)(b), and

(b)   

does not reduce the value of the relevant business property

by virtue of section 110(b).

40

(3)   

Subsection (4) applies if—

(a)   

the whole or part of any value transferred by a transfer of

value is to be treated as reduced, under section 116, by virtue

of it being attributable to the agricultural value of agricultural

property, and

45

(b)   

the transferor has a liability which is attributable, in whole or

in part, to financing (directly or indirectly)—

(i)   

the acquisition of that property, or

 
 

Finance (No. 2) Bill
Schedule 34 — Treatment of liabilities for inheritance tax purposes

422

 

(ii)   

the maintenance, or an enhancement, of its

agricultural value.

(4)   

To the extent that the liability is attributable as mentioned in

subsection (3)(b), it is, so far as possible, to be taken to reduce the

value attributable to the agricultural value of the agricultural

5

property, before it is treated as reduced under section 116.

(5)   

For the purposes of subsections (1) to (4) references to a transfer of

value include references to an occasion on which tax is chargeable

under Chapter 3 of Part 3 (apart from section 79) and—

(a)   

references to the value transferred by a transfer of value

10

include references to the amount on which tax is then

chargeable, and

(b)   

references to the transferor include references to the trustees

of the settlement concerned.

(6)   

Subsection (7) applies if—

15

(a)   

part of the value of a person’s estate immediately before

death is attributable to the value of land on which trees or

underwood are growing,

(b)   

the value of the trees or underwood is to be left out of

account, under section 125(2)(a), in determining the value

20

transferred by the chargeable transfer made on the person’s

death, and

(c)   

the person has a liability which is attributable, in whole or in

part, to financing (directly or indirectly)—

(i)   

the acquisition of the land or trees or underwood,

25

(ii)   

planting the trees or underwood, or

(iii)   

the maintenance, or an enhancement, of the value of

the trees or underwood.

(7)   

To the extent that the liability is attributable as mentioned in

subsection (6)(c), it is, so far as possible, to be taken to reduce the

30

value of the trees or underwood, before their value is left out of

account.

(8)   

In this section—

“agricultural property” and “agricultural value” have the same

meaning as in Chapter 2 of Part 5;

35

“relevant business property” has the same meaning as in

Chapter 1 of Part 5.

162C    

Sections 162A and 162B: supplementary provision

(1)   

This section applies for the purposes of determining the extent to

which a liability is attributable as mentioned in section 162A(1) or

40

162B(1)(b), (3)(b) or (6)(c).

(2)   

Where a liability was discharged in part before the time in relation to

which the question as to whether or how to take it into account

arises—

(a)   

any part of the liability that, at the time of discharge, was not

45

attributable as mentioned in subsection (1) is, so far as

possible, to be taken to have been discharged first,

 
 

Finance (No. 2) Bill
Schedule 34 — Treatment of liabilities for inheritance tax purposes

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(b)   

any part of the liability that, at the time of discharge, was

attributable as mentioned in section 162B(1)(b), (3)(b) or (6)(c)

is, so far as possible, only to be taken to have been discharged

after any part of the liability within paragraph (a) was

discharged, and

5

(c)   

any part of the liability that, at the time of discharge, was

attributable as mentioned in section 162A(1) is, so far as

possible, only to be taken to have been discharged after any

parts of the liability within paragraph (a) or (b) were

discharged.”

10

4          

After section 175 (estate on death: liability to make future payments etc)

insert—

“175A   

Discharge of liabilities after death

(1)   

In determining the value of a person’s estate immediately before

death, a liability may be taken into account to the extent that—

15

(a)   

it is discharged on or after death, out of the estate, in money

or money’s worth, and

(b)   

it is not otherwise prevented, under any provision of this Act,

from being taken into account.

(2)   

Where the whole or any part of a liability is not discharged in

20

accordance with paragraph (a) of subsection (1), the liability or (as

the case may be) the part may only be taken into account for the

purpose mentioned in that subsection to the extent that—

(a)   

there is a real commercial reason for the liability or the part

not being discharged,

25

(b)   

the liability or the part is not being left undischarged as part

of arrangements the main purpose, or one of the main

purposes, of which is to secure a tax advantage, and

(c)   

the liability or the part is not otherwise prevented, under any

provision of this Act, from being taken into account.

30

(3)   

For the purposes of subsection (2)(a) there is a real commercial

reason for a liability, or part of a liability, not being discharged where

it is shown that—

(a)   

the liability is to a person dealing at arm’s length, or

(b)   

if the liability were to a person dealing at arm’s length, that

35

person would not require the liability to be discharged.

(4)   

In subsection (2)(b)—

“arrangements” includes any scheme, transaction or series of

transactions, agreement or understanding, whether or not

legally enforceable, and any associated operations;

40

“tax advantage” means—

(a)   

a relief from tax or increased relief from tax,

(b)   

a repayment of tax or increased repayment of tax,

(c)   

the avoidance, reduction or delay of a charge to tax or

an assessment to tax, or

45

(d)   

the avoidance of a possible assessment to tax or

determination in respect of tax.

(5)   

In subsection (4) “tax” includes income tax and capital gains tax.

 
 

Finance (No. 2) Bill
Schedule 35 — Vehicle licences for disabled people

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(6)   

Where the liability is discharged as mentioned in subsection (1)(a)

only in part—

(a)   

any part of the liability that is attributable as mentioned in

section 162A(1) is, so far possible, taken to be discharged first,

(b)   

any part of the liability that is attributable as mentioned in

5

section 162B(1)(b), (3)(b) or (6)(c) is, so far as possible, taken

to be discharged only after any part of the liability within

paragraph (a) is discharged, and

(c)   

the liability so far as it is not attributable as mentioned in

paragraph (a) or (b) is, so far as possible, taken to be

10

discharged only after any parts of the liability within either of

those paragraphs are discharged.”

Commencement

5          

The amendments made by this Schedule have effect in relation to transfers

of value made, or treated as made, on or after the day on which this Act is

15

passed.

Schedule 35

Section 188

 

Vehicle licences for disabled people

1          

VERA 1994 is amended as follows.

2     (1)  

Section 19 (rebates) is amended as follows.

20

      (2)  

In subsection (3), after paragraph (c) insert—

“(ca)   

a qualifying application for a vehicle licence for the vehicle is

made,”.

      (3)  

After that subsection insert—

“(3ZA)   

An application for a vehicle licence is a qualifying application for the

25

purposes of subsection (3)(ca) if—

(a)   

paragraph 1ZA of Schedule 1 applies to the vehicle when the

application is made, but

(b)   

that paragraph did not apply to the vehicle when the licence

which is unexpired when the application is made was taken

30

out.”

3     (1)  

Section 22ZA (nil licences for vehicles for disabled persons: information) is

amended as follows.

      (2)  

In subsection (1)(b), at the beginning insert “falls within subsection (1A) or”.

      (3)  

After subsection (1) insert—

35

“(1A)   

Information falls within this subsection if it is—

(a)   

the name, date of birth or national insurance number of a

person who is in receipt of a relevant payment, or would be

in receipt of such a payment but for—

 
 

Finance (No. 2) Bill
Schedule 35 — Vehicle licences for disabled people

425

 

(i)   

regulations under section 86(1) of the Welfare Reform

Act 2012 (treatment as in-patient in hospital or similar

institution), or

(ii)   

corresponding provision having effect in relation to

personal independence payment in Northern Ireland;

5

(b)   

in the case of a person who is or would be in receipt of

personal independence payment attributable to entitlement

to the mobility component, the rate of the payment to which

the person is or would be entitled;

(c)   

in the case of a person who has ceased or will cease to receive

10

a relevant payment, the date on which the person ceased or

will cease to receive it and the reason for the person ceasing

to receive it.

(1B)   

In subsection (1A) “relevant payment” means—

(a)   

personal independence payment attributable to entitlement

15

to the mobility component, and

(b)   

armed forces independence payment.”

      (4)  

In subsections (2) and (4), and in the heading, omit “nil”.

      (5)  

For subsection (5) substitute—

“(5)   

In this section “relevant licence functions” means functions relating

20

to applications for, and the issue of—

(a)   

vehicle licences in respect of vehicles to which paragraph

1ZA of Schedule 1 applies, and

(b)   

nil licences in respect of vehicles that are exempt vehicles

under paragraph 19 of Schedule 2 or paragraph 7 of Schedule

25

4.”

4          

In section 62(1) (definitions), at the appropriate places insert—

““armed forces independence payment” means armed forces

independence payment under a scheme established under

section 1 of the Armed Forces (Pensions and Compensation)

30

Act 2004,”, and

““personal independence payment” means personal

independence payment under—

(a)   

the Welfare Reform Act 2012, or

(b)   

the corresponding provision having effect in

35

Northern Ireland,”.

5          

In Schedule 1 (annual rates of duty), in Part 1 after paragraph 1 insert—

“1ZA  (1)  

The annual rate of vehicle excise duty applicable to a vehicle to

which this paragraph applies is 50 per cent of the rate which (but

for this paragraph) would be applicable.

40

      (2)  

This paragraph applies to a vehicle when it is being used, or kept

for use, by or for the purposes of a disabled person who is in

receipt of personal independence payment by virtue of

entitlement to the mobility component at the standard rate if—

(a)   

the vehicle is registered under this Act in the name of the

45

disabled person, and

(b)   

no other vehicle registered in his or her name under this

Act is—

 
 

Finance (No. 2) Bill
Schedule 35 — Vehicle licences for disabled people

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(i)   

a vehicle for which a vehicle licence taken out at a

rate of duty reduced in accordance with sub-

paragraph (1) is in force, or

(ii)   

an exempt vehicle under paragraph 19 of Schedule

2 or paragraph 7 of Schedule 4.

5

      (3)  

This paragraph has effect as if a person were in receipt of personal

independence payment by virtue of entitlement to the mobility

component at the standard rate in any case where the person

would be in receipt of that payment by virtue of that entitlement

but for—

10

(a)   

regulations under section 86(1) of the Welfare Reform Act

2012 (treatment as in-patient in hospital or similar

institution), or

(b)   

corresponding provision having effect in Northern

Ireland.

15

      (4)  

For the purposes of sub-paragraph (2), a vehicle is to be treated as

registered under this Act in the name of a person in receipt of

personal independence payment by virtue of entitlement to the

mobility component at the standard rate if it is so registered in the

name of—

20

(a)   

an appointee, or

(b)   

a person nominated for the purposes of this paragraph by

the person or an appointee.

      (5)  

In sub-paragraph (4) “appointee” means a person appointed

pursuant to regulations made under (or having effect as if made

25

under) the Social Security Administration Act 1992 or the Social

Security Administration (Northern Ireland) Act 1992 to exercise

any of the rights and powers of a person in receipt of personal

independence payment.”

6     (1)  

In Schedule 2 (exempt vehicles), paragraph 19 is amended as follows.

30

      (2)  

In sub-paragraph (1), for paragraph (b) substitute—

“(b)   

no other vehicle registered in his or her name under this Act

is—

(i)   

a vehicle for which a vehicle licence taken out at a rate

of vehicle excise duty reduced in accordance with

35

paragraph 1ZA(1) of Schedule 1 is in force, or

(ii)   

an exempt vehicle under this paragraph or paragraph

7 of Schedule 4.”

      (3)  

In sub-paragraph (2), after paragraph (a) insert—

“(aa)   

he or she is in receipt of personal independence payment

40

by virtue of entitlement to the mobility component at the

enhanced rate,

(ab)   

he or she is in receipt of armed forces independence

payment,”.

      (4)  

After sub-paragraph (2A) insert—

45

   “(2B)  

This paragraph has effect as if a person were in receipt of personal

independence payment by virtue of entitlement to the mobility

component at the enhanced rate in any case where the person

 
 

Finance (No. 2) Bill
Schedule 36 — Valuation of certain supplies of fuel

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would be in receipt of that payment by virtue of that entitlement

but for—

(a)   

regulations under section 86(1) of the Welfare Reform Act

2012 (treatment as in-patient in hospital or similar

institution), or

5

(b)   

corresponding provision having effect in Northern

Ireland.”

      (5)  

In sub-paragraph (3), for “person in receipt of a disability living allowance

by virtue of entitlement to the mobility component at the higher rate, or of a

mobility supplement,” substitute “disabled person who satisfies sub-

10

paragraph (2) by virtue of paragraph (a), (aa), (ab) or (b) of that sub-

paragraph”.

      (6)  

In sub-paragraph (4)(a), after “disability living allowance,” insert “personal

independence payment or armed forces independence payment,”.

7          

The amendments made by this Schedule are treated as having come into

15

force on 8 April 2013.

Schedule 36

Section 190

 

Valuation of certain supplies of fuel

Introductory

1          

VATA 1994 is amended as follows.

20

Valuation of supplies for private use

2          

In Schedule 6 (valuation: special cases), before paragraph 1 insert—

“Part 1

Valuation of supplies of fuel for private use

Option for valuation on flat-rate basis

25

A1    (1)  

This paragraph applies if, in a prescribed accounting period,

supplies of goods by a taxable person (“P”) arise by virtue of

paragraph 5(1) of Schedule 4 (but otherwise than for a

consideration) where road fuel which is or has previously been

supplied to or imported or manufactured by P in the course of P’s

30

business is provided for, or appropriated to, private use.

      (2)  

For this purpose “road fuel is provided for, or appropriated to,

private use” if—

(a)   

it is provided or to be provided by P—

(i)   

to an individual for private use in the individual’s

35

own car or a car allocated to the individual, and

(ii)   

by reason of the individual’s employment,

(b)   

where P is an individual, it is appropriated or to be

appropriated by P for private use in P’s own car, or

 
 

 
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Revised 28 March 2013