Finance (No. 2) Bill

Session 2012 - 13
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Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
571

Part 3
Capital gains tax: accruals basis of taxation
TCGA 1992
74
TCGA 1992 is amended as follows.
75    (1)
Section 2 (persons and gains chargeable to capital gains tax, and allowable
5
losses) is amended as follows.
      (2)
In subsection (1), for the words from “during any part” to the end substitute
“if the residence condition is met”.
      (3)
After that subsection insert—
“(1A)
The residence condition is—
10
(a)
in the case of an individual, that the individual is resident in
the United Kingdom for the year in question,
(b)
in the case of personal representatives of a deceased person,
that the single and continuing body mentioned in section
62(3) is resident in the United Kingdom,
15
(c)
in the case of the trustees of a settlement, that the single
person mentioned in section 69(1) is resident in the United
Kingdom during any part of the year in question, and
(d)
in any other case, that the person is resident in the United
Kingdom when the gain accrues.”
20
76
In section 10 (non-resident with United Kingdom branch or agency), in
subsection (1), for “in which he is not resident and not ordinarily resident in
the United Kingdom but” substitute “if the residence condition is not met
(see section 2(1A)) but the person”.
77    (1)
Section 13 (attribution of gains to members of non-resident companies) is
25
amended as follows.
      (2)
In subsection (2), omit “or ordinarily resident”.
      (3)
In subsection (10), for “neither resident nor ordinarily resident” substitute
“not resident”.
      (4)
In subsection (13)(b), omit “or ordinarily resident”.
30
78
In section 16 (computation of losses), in subsection (3), for “during no part of
which he is resident or ordinarily resident in the United Kingdom”
substitute “where the residence condition is not met (see section 2(1A))”.
79
In section 62 (death: general provisions), in subsection (3), omit “, ordinary
residence,”.
35
80
In section 65 (liability for tax of trustees or personal representatives), in
subsection (3)(b), for “become neither resident nor ordinarily resident”
substitute “cease to be resident”.
81
In section 67 (provisions applicable where section 79 of the Finance Act 1980
has applied), in subsection (6)(a), in paragraph (b) of the substituted
40
subsection (1), for “becomes neither resident nor ordinarily resident”
substitute “ceases to be resident”.

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
572

82    (1)
Section 69 (trustees of settlements) is amended as follows.
      (2)
In subsection (2), omit “and ordinarily resident”.
      (3)
In subsection (2B)(c), omit “, ordinarily resident”.
      (4)
In subsection (2E), for the words from “and ordinarily resident” to the end
substitute “in the United Kingdom, then for the purposes of this Act it is
5
treated as being not resident in the United Kingdom”.
83
In section 76 (disposal of interests in settled property), in subsection (1B)(a),
for “neither resident nor ordinarily resident” substitute “not resident”.
84
In section 80 (trustees ceasing to be resident in UK), in subsection (1), for
“neither resident nor ordinarily resident” substitute “not resident”.
10
85    (1)
Section 81 (death of trustee: special rules) is amended as follows.
      (2)
In subsection (1)(b), omit “and ordinarily resident”.
      (3)
In subsection (3)(b), omit “and ordinarily resident”.
      (4)
In subsection (4)(b), omit “and ordinarily resident”.
      (5)
In subsection (5)(a), omit “and ordinarily resident”.
15
86
In section 82 (past trustees: liability for tax), in subsection (3)(b), for “become
neither resident nor ordinarily resident” substitute “cease to be resident”.
87
In section 83 (trustees ceasing to be liable to UK tax), in subsection (1), omit
“and ordinarily resident”.
88    (1)
Section 83A (trustees both resident and non-resident in a year of assessment)
20
is amended as follows.
      (2)
In subsection (3)(a), omit “and ordinarily resident”.
      (3)
In subsection (4)—
(a)
in paragraph (a), for “neither resident nor ordinarily resident”
substitute “not resident”, and
25
(b)
in paragraph (b), omit “and ordinarily resident”.
89
In section 84 (acquisition by dual resident trustees), in subsection (1)(b), omit
“and ordinarily resident”.
90
In section 85 (disposal of interests in non-resident settlements), in subsection
(1), for “neither resident nor ordinarily resident” substitute “not resident”.
30
91    (1)
Section 86 (attribution of gains to settlors with interest in non-resident or
dual resident settlements) is amended as follows.
      (2)
In subsection (1)(c), for the words from “either resident” to the end substitute
“resident in the United Kingdom for the year”.
      (3)
For subsection (2) substitute—
35
“(2)
The condition as to residence is that—
(a)
there is no time in the year when the trustees are resident in
the United Kingdom, or
(b)
there is such a time but, whenever the trustees are resident in
the United Kingdom during the year, they fall to be regarded
40

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
573

for the purposes of any double taxation relief arrangements
as resident in a territory outside the United Kingdom.”
      (4)
In subsection (3), omit “and ordinarily resident”.
92    (1)
Section 87 (non-UK resident settlements: attribution of gains to
beneficiaries) is amended as follows.
5
      (2)
In subsection (1), for the words from “the trustees” to the end substitute
“there is no time in that year when the trustees are resident in the United
Kingdom”.
      (3)
In subsection (4)(a), omit “and ordinarily resident”.
93
In section 88(1) (gains of dual resident settlements)—
10
(a)
in paragraph (a), omit “and ordinarily resident”, and
(b)
in paragraph (b), omit “and ordinary residence”.
94    (1)
Section 96 (payments by and to companies) is amended as follows.
      (2)
In subsection (3), omit “or ordinarily resident”.
      (3)
In subsection (4), in each of paragraphs (a) and (b), omit “or ordinarily
15
resident”.
      (4)
In subsection (5)(b), omit “or ordinary residence”.
95
In section 97 (supplementary provisions), in subsection (1)(a), for “neither
resident nor ordinarily resident” substitute “not resident”.
96
In section 99 (application of Act to unit trust schemes), in subsection (1)(c),
20
omit “and ordinarily resident”.
97
In section 106A(5A) (identification of securities: capital gains tax)—
(a)
in paragraph (a), for “neither resident nor ordinarily resident”
substitute “not resident”, and
(b)
in paragraph (b), omit “or ordinarily resident”.
25
98    (1)
Section 159 (non-residents: roll-over relief) is amended as follows.
      (2)
In subsection (2)(b), omit “or ordinarily resident”.
      (3)
In subsection (5), in the definition of “dual resident”, omit “or ordinarily
resident”.
99    (1)
Section 166 (gifts to non-residents) is amended as follows.
30
      (2)
In subsection (1), for “neither resident nor ordinarily resident” substitute
“not resident”.
      (3)
In subsection (2)(a), omit “or ordinarily resident”.
100   (1)
Section 167 (gifts to foreign-controlled companies) is amended as follows.
      (2)
In subsection (2)(a), for “neither resident nor ordinarily resident” substitute
35
“not resident”.
      (3)
In subsection (3), for the words from “or ordinarily resident” to “nor
ordinarily resident” substitute “in the United Kingdom is to be regarded as
not resident”.
101   (1)
Section 168 (emigration of donee) is amended as follows.
40

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
574

      (2)
In subsection (1)(b), for “becomes neither resident nor ordinarily resident”
substitute “ceases to be resident”.
      (3)
In subsection (4), for “becoming neither resident nor ordinarily resident”
substitute “ceasing to be resident”.
      (4)
In subsection (5)—
5
(a)
in paragraph (a), for “becoming neither resident nor ordinarily
resident” substitute “ceasing to be resident”, and
(b)
in paragraph (b), omit “or ordinarily resident”.
102
In section 169 (gifts into dual resident trusts), in subsection (3)(a), omit “and
ordinarily resident”.
10
103
In section 199 (exploration or exploitation assets: deemed disposals), in
subsection (2), for “who is not resident and not ordinarily resident in the
United Kingdom” substitute “in respect of whom the residence condition
(see section 2(1A)) is not met”.
104   (1)
Section 261 (section 260 relief: gifts to non-residents) is amended as follows.
15
      (2)
In subsection (1), for “neither resident nor ordinarily resident” substitute
“not resident”.
      (3)
In subsection (2)(a), omit “or ordinarily resident”.
105
In Schedule 1 (application of exempt amount and reporting limits in cases
involving settled property), in paragraph 2(7)(a), omit “and ordinarily
20
resident”.
106   (1)
Schedule 4A (disposal of interest in settled property: deemed disposal of
underlying assets) is amended as follows.
      (2)
In paragraph 5(1) and (2), omit “and ordinarily resident”.
      (3)
In paragraph 6(1)—
25
(a)
for “in the relevant” substitute “as respects the relevant”, and
(b)
for the words from “either” to the end substitute “met the residence
condition set out in section 2(1A)”.
      (4)
If any of the previous 5 years of assessment mentioned in paragraph 6(1) of
Schedule 4A ends before 6 April 2013, the test in that paragraph is to be
30
applied, as respects any such year ending before that date, as if that
paragraph had not been amended by sub-paragraph (3).
107   (1)
Schedule 4C (transfers of value: attribution of gains to beneficiaries) is
amended as follows.
      (2)
In paragraph 1A(3), for the words from “the beneficiary” to the end
35
substitute “, as respects that year, the beneficiary meets the residence
condition set out in section 2(1A)”.
      (3)
In paragraph 4—
(a)
in sub-paragraph (1), omit “and ordinarily resident”, and
(b)
in sub-paragraph (2), omit “and ordinarily resident”.
40
      (4)
In paragraph 5(1)—
(a)
in paragraph (a), omit “and ordinarily resident”, and
(b)
in paragraph (b), omit “and ordinary residence”.

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
575

      (5)
In paragraph 9(3)(a)(i), omit “and ordinarily resident”.
      (6)
In paragraph 10(1), omit “and ordinarily resident”.
108   (1)
Schedule 5 (attribution of gains to settlors with interest in non-resident or
dual resident settlement) is amended as follows.
      (2)
In paragraph 2A(4)—
5
(a)
in paragraph (a), for “become on or after 17th March 1998 neither
resident nor ordinarily resident” substitute “cease on or after 17
March 1998 to be resident”, and
(b)
in paragraph (b), omit “and ordinarily resident”.
      (3)
In paragraph 9(4)—
10
(a)
in paragraph (a), for “become on or after 19th March 1991 neither
resident nor ordinarily resident” substitute “cease on or after 19
March 1991 to be resident”, and
(b)
in paragraph (b), omit “and ordinarily resident”.
      (4)
The amendments made by this paragraph apply to changes in the residence
15
status of trustees on or after 6 April 2013.
109   (1)
Schedule 5A (settlements with foreign element: information) is amended as
follows.
      (2)
In paragraph 2(1)—
(a)
in paragraph (c), for “neither resident nor ordinarily resident”
20
substitute “not resident”, and
(b)
in paragraph (d), omit “and ordinarily resident”.
      (3)
In paragraph 3—
(a)
in sub-paragraph (1)—
(i)
in paragraph (a), for “neither resident nor ordinarily
25
resident” substitute “not resident”, and
(ii)
in paragraph (b), omit “and ordinarily resident”, and
(b)
in sub-paragraph (3), for “either resident or ordinarily resident”
substitute “resident”.
      (4)
In paragraph 4—
30
(a)
in sub-paragraph (1)—
(i)
in paragraph (a), for “neither resident nor ordinarily
resident” substitute “not resident”, and
(ii)
in paragraph (b), omit “and ordinarily resident”, and
(b)
in sub-paragraph (3), for “either resident or ordinarily resident”
35
substitute “resident”.
      (5)
In paragraph 5(1)—
(a)
in paragraph (a), for the words from “become” to “ordinarily
resident” substitute “cease at any time (the relevant time) on or after
the commencement day to be resident”, and
40
(b)
in paragraph (b), omit “and ordinarily resident”.
      (6)
The amendments made by this paragraph apply as follows—
(a)
the amendments made by sub-paragraph (2) apply in relation to
transfers of property made on or after 6 April 2013,

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 4 — Other amendments
576

(b)
the amendments made by sub-paragraphs (3) and (4) apply in
relation to settlements created on or after that date, and
(c)
the amendments made by sub-paragraph (5) apply to changes in the
residence status of trustees on or after that date.
110   (1)
Schedule 5B (enterprise investment scheme: re-investment) is amended as
5
follows.
      (2)
In paragraph 1—
(a)
in sub-paragraph (1)(d), omit “or ordinarily resident”, and
(b)
in sub-paragraph (4)(a), omit “or ordinarily resident”.
      (3)
In paragraph 3(3)(b), omit “or ordinarily resident”.
10
      (4)
In paragraph 19(1), in the definition of “non-resident”, for “neither resident
nor ordinarily resident” substitute “not resident”.
      (5)
The amendments made by this paragraph apply in cases where the accrual
time is on or after 6 April 2013 (even if the qualifying investment was made
before that date).
15
111
In Schedule 7C (reliefs for transfers to approved share plans), in paragraph
8, for paragraph (a) substitute—
“(a)
the claimant would be chargeable to capital gains tax
under section 2(1) (persons and gains chargeable to capital
gains tax) in respect of the gain, or”.
20
Commencement
112   (1)
The amendments made by this Part of this Schedule have effect in relation
to a person’s liability to capital gains tax for the tax year 2013-14 or any
subsequent tax year.
      (2)
Sub-paragraph (1) is without prejudice to any provision in this Part of this
25
Schedule about the application of a particular amendment.
Part 4
Other amendments
FA 1916
113
In FA 1916, omit section 63 (exemption from taxation of municipal securities
30
issued in America).
F(No.2)A 1931
114   (1)
In section 22 of F(No.2)A 1931 (provisions in cases where Treasury has
power to borrow money), in subsection (1)(a) and (b), omit “ordinarily”.
      (2)
Nothing in sub-paragraph (1) limits the power conferred by section 60(1) of
35
FA 1940.
      (3)
Subject to sub-paragraph (5), the amendment made by sub-paragraph (1)
does not affect a pre-commencement security (nor the availability of the
relevant exemption).

Finance (No. 2) Bill
Schedule 44 — Ordinary residence
Part 4 — Other amendments
577

      (4)
Sub-paragraph (5) applies to a person who becomes the beneficial owner of
a pre-commencement security (or an interest in such a security) on or after 6
April 2013.
      (5)
If obtaining the relevant exemption is conditional on being not ordinarily
resident in the United Kingdom, any enactment conferring the exemption is
5
to have effect (in relation to a person to whom this sub-paragraph applies)
as if obtaining the exemption were conditional instead on being not resident
in the United Kingdom.
      (6)
In this paragraph—
“pre-commencement security” means a FOTRA security (as defined in
10
section 713 of ITTOIA 2005) issued before the day on which this Act
is passed;
“the relevant exemption”, in relation to a pre-commencement security,
means the exemption for which provision is made in the exemption
condition (as defined in that section).
15
TMA 1970
115
TMA 1970 is amended as follows.
116   (1)
In section 98 (special returns etc), in subsection (4E)(d), omit “ordinarily”.
      (2)
The amendment made by this paragraph takes effect on the coming into
force of regulations made under section 17(3) of F(No.2)A 2005 (authorised
20
investment funds) by virtue of the amendment made by paragraph 136.
117
In Schedule 1A (claims etc not included in returns), in paragraph 2(6), omit
“or not ordinarily resident”.
IHTA 1984
118   (1)
Section 157 of IHTA 1984 (non-residents’ bank accounts) is amended as
25
follows.
      (2)
For subsection (2) substitute—
“(2)
This section applies to a person who is not domiciled and not
resident in the United Kingdom immediately before his death.”
      (3)
In subsection (3), for “, resident or ordinarily resident” substitute “or
30
resident”.
      (4)
In subsection (4)—
(a)
in paragraph (a), omit “or ordinarily resident”, and
(b)
in paragraph (b), omit “or ordinarily resident” and “and ordinarily
resident”.
35
      (5)
The amendments made by this paragraph do not apply if the person dies
before 6 April 2013.
FA 2004
119
Part 4 of FA 2004 (pension schemes etc) is amended as follows.
120
In section 185G (disposal by person holding directly), in subsection (3)(a),
40
omit “, ordinarily resident”.