loan relates has made an election under section 25A of ITTOIA 2005
(cash basis for small businesses) for the tax year.

(2) A loan is a “relevant loan” if—

(a) it is a loan to which section 388 applies (loan to buy plant or
5machinery for partnership use), or

(b) it is a loan to which section 398 applies (loan to invest in
partnership) and which is not used for purchasing a share in
a partnership.”

Part 3 10Commencement and transitional provision

56 Subject to paragraph 57, the amendments made by this Schedule have effect
for the tax year 2013-14 and subsequent tax years.

57 (1) In a case where—

(a) the profits of a barrister or advocate in independent practice for a
15period of account ending in the tax year 2012-13 have been calculated
in accordance with section 160 of ITTOIA 2005 (barristers and
advocates: alternative basis of calculation in early years of practice),
and

(b) if that section had not been repealed by this Schedule, the profits of
20the barrister or advocate for any subsequent period of account could
have been calculated in accordance with that section,

the profits of the barrister or advocate for that subsequent period of account
may be calculated in accordance with that section.

(2) The repeal of sections 238 and 239 of ITTOIA 2005 (spreading of adjustment
25income: barristers and advocates) does not have effect in relation to any
individual whose profits for a period of account ending in or before the tax
year 2012-13 have been calculated in accordance with section 160 of ITTOIA
2005.

Section 18

SCHEDULE 5 30Deductions allowable at a fixed rate

1 Part 2 of ITTOIA 2005 (trading income) is amended as follows.

2 After Chapter 5 insert—

“CHAPTER 5A Trade profits: deductions allowable at a fixed rate

Introduction

94B 35Professions and vocations

The provisions of this Chapter apply to professions and vocations as
they apply to trades.

94C Provisions not applicable to certain firms

The provisions of this Chapter do not apply in calculating the profits
of a trade carried on by a firm for a period if one or more of the
persons who have been partners in the firm at any time during the
5period was not an individual at that time.

Expenditure on vehicles

94D Expenditure on vehicles

(1) This section applies if, in calculating the profits of a trade of a person
for a period—

(a) 10a deduction would otherwise be allowable for the period in
respect of qualifying expenditure incurred in relation to a
relevant vehicle (see subsection (2)), or

(b) a deduction would be so allowable in respect of such
expenditure but for the fact it is capital expenditure.

(2) 15In this section “relevant vehicle” means a car, motor cycle or goods
vehicle that—

(a) is used for the purposes of the trade, and

(b) is not an excluded vehicle (see section 94E).

(3) The person may make a deduction under this section for the period
20in respect of the qualifying expenditure.

(4) If a deduction for a period is made under this section—

(a) no other deduction is allowed (for that or any other period)
in respect of the qualifying expenditure, and

(b) this section applies in relation to the relevant vehicle for
25every subsequent period for which the vehicle is used for the
purposes of the trade.

(5) The amount of the deduction is the appropriate mileage amount in
relation to the relevant vehicle for the period (see section 94F).

(6) In this section “qualifying expenditure”, in relation to a vehicle,
30means any expenditure incurred in respect of the acquisition,
ownership, hire, leasing or use of the vehicle, other than incidental
expenses incurred in connection with a particular journey.

(7) For provision preventing capital allowances from being claimed in
respect of qualifying expenditure incurred in relation to a relevant
35vehicle, see section 38ZA of CAA 2001.

94E Excluded vehicles

(1) A car, motor cycle or goods vehicle that is used for the purposes of a
trade is an “excluded vehicle” for the purposes of section 94D if
condition A or B is met in relation to the vehicle.

(2) 40Condition A is that the person who is or has been carrying on the
trade has at any time claimed any capital allowances under Part 2 of
CAA 2001 in respect of any expenditure incurred on the provision of
the vehicle.

(3) Condition B is that—

(a) the vehicle is a goods vehicle or a motor cycle, and

(b) any of the expenditure incurred on acquiring the vehicle has
been deducted in calculating the profits of the trade for a
period on the cash basis (see section 25A).

94F 5The appropriate mileage amount

(1) In calculating the profits of a trade for a period, the appropriate
mileage amount in relation to a relevant vehicle for the period is—

(2) The rates applicable are as follows—

(3) In a case where the total number of miles of relevant business
20journeys made in the period is greater than 10,000, the rate of 45p per
mile is available only in relation to 10,000 of those miles.

(4) “Relevant business journey” means any business journey made in
the period by a car or goods vehicle—

(a) that is used for the purposes of the trade, and

(b) 25in relation to which section 94D applies for the period.

(5) In this section—

• “business journey”, in relation to a vehicle used for the purposes
  of a trade, means any journey, or any identifiable part or
  proportion of a journey, that is made wholly and exclusively
  30for the purposes of the trade, and

• “relevant vehicle” has the same meaning as in section 94D.

(6) The Treasury may by regulations amend subsection (2) so as to alter
the rates or rate bands.

Regulations under this subsection may also make consequential
35amendments to subsection (3).

Regulations under this subsection may also make consequential
amendments to subsection (3).

94G Definitions of types of vehicle

(1) This section applies for the purposes of sections 94D to 94F (and this
40section).

(2) “Car” means a mechanically propelled road vehicle which is not—

(a) a goods vehicle,

(b) a motor cycle,

(c) an invalid carriage, or

(d) a vehicle of a type not commonly used as a private vehicle
5and unsuitable to be so used.

(3) “Goods vehicle” means a mechanically propelled road vehicle
which—

(a) is of a construction primarily suited for the conveyance of
goods or burden of any description, and

(b) 10is not a motor cycle.

(4) “Motor cycle” has the meaning given by section 185(1) of the Road
Traffic Act 1988.

(5) For the purposes of this section “invalid carriage” has the meaning
given by section 185(1) of the Road Traffic Act 1988.

15Use of home for business purposes

94H Use of home for business purposes

(1) This section applies if, in calculating the profits of a trade of a person
for a period, a deduction (“the standard deduction”) would
otherwise be allowable for the period in respect of the use of the
20person’s home for the purposes of the trade.

(2) The person may, instead of making the standard deduction, make a
deduction for the period under this section.

(3) The amount of the deduction allowable for the period is the sum of
the applicable amounts for each month, or part of a month, falling
25within the period.

(4) The applicable amount for a month, or part of a month, is given by
the following Table—

where the “number of hours worked” in a month (or part of a month)
is the number of hours spent wholly and exclusively on work done
by the person, or any employee of the person, in the person’s home
35wholly and exclusively for the purposes of the trade.

(5) If the person has more than one home, this section has effect as if
those homes were a single home.

(6) The Treasury may by regulations amend subsection (4) so as to alter
the rates or rate bands.

Premises used both as home and business premises

94I Premises used both as a home and as business premises

(1) 5This section applies if—

(a) a person carries on a trade at any premises,

(b) the premises are used mainly for the purposes of carrying on
the trade, but are also used by the person as a home,

(c) the person incurs expenses in relation to the premises,

(d) 10the expenses are incurred mainly (but not wholly and
exclusively) for the purposes of the trade, and

(e) in calculating the profits of the trade for a period, a deduction
(“the standard deduction”) would otherwise be allowable for
the period in respect of a part or proportion of the expenses
15in accordance with section 34(2).

(2) The person may, instead of making the standard deduction, make a
deduction for the period under this section.

(3) The amount of the deduction allowable for the period is the amount
of the expenses less the non-business use amount.

(4) 20The non-business use amount is the sum of the applicable amounts
for each month, or part of a month, falling within the period.

(5) The applicable amount for a month, or part of a month, is given by
the following Table—

(6) For the purposes of subsection (5) “relevant occupant”, in relation to
a month (or part of a month), means an individual who, at any time
30during that month (or that part of a month)—

(a) occupies the premises as a home, or

(b) stays at the premises otherwise than in the course of the
trade.

(7) The Treasury may by regulations amend subsection (5) so as to alter
35the rates or rate bands.”

3 In section 31 (relationship between rules prohibiting and allowing
deductions), in subsection (2), after paragraph (a) insert—

“(aa) Chapter 5A,”.

4 In Chapter 18 (post-cessation receipts), in section 254 (allowable
deductions), after subsection (2A) (inserted by paragraph 39 of Schedule 4)
insert—

“(2B) If—

(a) 5the loss or expense is incurred, or the debit arises, in relation
to a vehicle, and

(b) immediately before the person permanently ceases to carry
on the trade, section 94D (deduction allowable at fixed rate
for expenditure on vehicles) applies in relation to the vehicle,

10assume for the purposes of subsection (2) that that section applies in
relation to the vehicle.”

5 (1) Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

(2) In Chapter 3 (qualifying expenditure), after section 38 insert—

“38ZA Vehicles for which deductions allowed at fixed rate under Part 2 of
15ITTOIA 2005

Expenditure is not qualifying expenditure if—

(a) it is incurred in respect of a vehicle in a period, and

(b) a deduction is made for the period in respect of the
expenditure under section 94D of ITTOIA 2005 (deduction
20allowable at fixed rate for expenditure on vehicles).”

(3) In Chapter 5 (allowances and charges), in section 59 (unrelieved qualifying
expenditure), at the end insert—

“(8) Subsection (9) applies if—

(a) a person carrying on a trade, profession or vocation incurs
25expenditure in relation to a vehicle,

(b) at the end of the basis period for a tax year, the person has
unrelieved qualifying expenditure incurred in relation to the
vehicle to carry forward from the chargeable period ending
with that basis period (“the relevant chargeable period”),

(c) 30in calculating the profits of a trade, profession or vocation of
a person for the following tax year, a deduction is made
under section 94D of ITTOIA 2005 in respect of expenditure
incurred in relation to the vehicle, and

(d) the person does not enter the cash basis for that tax year.

(9) 35None of the unrelieved qualifying expenditure incurred in relation
to the vehicle may be carried forward as unrelieved qualifying
expenditure from the relevant chargeable period.

(10) Where a person has unrelieved qualifying expenditure to carry
forward from a chargeable period that is not expenditure allocated to
40a single asset pool, the amount of the unrelieved qualifying
expenditure incurred in relation to the vehicle is to be determined on
such basis as is just and reasonable in all the circumstances.”

6 The amendments made by this Schedule have effect for the tax year 2013-14
and subsequent tax years.

Section 19

SCHEDULE 6 Employment income: duties performed in the UK and overseas

Part 1 Apportionment of earnings

1 5Part 2 of ITEPA 2003 (employment income: charge to tax) is amended as
follows.

2 In section 15 (earnings for year when employee UK resident), as amended
by Schedule 43 to this Act, in subsection (5)—

(a) after paragraph (a) omit “and”, and

(b) 10after paragraph (b) insert “, and

(c) section 41ZA (which is about determining the extent
to which general earnings are in respect of United
Kingdom duties).”

3 In Chapter 5 (taxable earnings: remittance basis rules and rules for non-UK
15resident employees), after section 41 insert—

“Apportionment of earnings

41ZA Basis of apportionment

The extent to which general earnings are in respect of duties
performed in the United Kingdom is to be determined under this
20Chapter on a just and reasonable basis.”

Part 2 Remittance basis of taxation: special mixed fund rules

4 Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.

5 In section 809Q (sections 809L and 809P: transfers from mixed funds), after
25subsection (1) insert—

“(1A) But this section must be read subject to section 809RA.”

6 After section 809R insert—

“809RA Special mixed fund rules for certain employment cases

(1) This section applies if—

(a) 30an individual has general earnings from an employment for
a tax year,

(b) those earnings include both general earnings within section
15(1) of ITEPA 2003 (“section 15(1) earnings”) and general
earnings within section 26(1) of that Act (“section 26(1)
35earnings”),

(c) at least some of the section 15(1) earnings, or sums deriving
(wholly or in part, and directly or indirectly) from at least
some of the section 15(1) earnings, are paid into an account in
that tax year at a time (a “relevant time”) when the account is
40a qualifying account of the individual, and

(d) at least some of the section 26(1) earnings, or sums deriving
(wholly or in part, and directly or indirectly) from at least
some of the section 26(1) earnings, are also paid into the
account in that tax year at a relevant time.

(2) 5If this section applies, the composition of each transfer made from
the account in that tax year at a relevant time is to be determined as
follows—

Step 1 Suppose that all the condition A transfers made from the
account in the tax year at a relevant time had been a single transfer
10made from the account at the end of the tax year.

Step 2 Suppose that all the other transfers made from the account in
the tax year at a relevant time had been a single offshore transfer
made at the end of the tax year immediately after the single transfer
mentioned in step 1.

15Step 3 Applying those suppositions—

• find under section 809Q(3) the extent to which the single
  transfer mentioned in step 1 is of the individual’s income or
  chargeable gains, and

• find under section 809R(4) the content of the single offshore
  20transfer mentioned in step 2.

Step 4 Each transfer made from the account in the tax year at a
relevant time is to be treated as containing the specified proportion
of each kind of income or capital contained in the relevant deemed
transfer.

25“The specified proportion” is the amount of the transfer divided by
the amount of the relevant deemed transfer.

“The relevant deemed transfer” is—

• if the transfer is a condition A transfer, the single transfer
  mentioned in step 1, and

• 30otherwise, the single offshore transfer mentioned in step 2.

“The relevant deemed transfer” is—

• if the transfer is a condition A transfer, the single transfer
  mentioned in step 1, and

• otherwise, the single offshore transfer mentioned in step 2.

(3) 35Subsection (2) applies in determining the composition of a transfer
for the purposes of sections 809Q and 809R but it does not otherwise
affect the date on which a transfer is considered to occur for the
purposes of this Chapter.

(4) If the tax year is the tax year in which the account becomes a
40qualifying account, for the purpose of applying section 809Q(3) in
relation to the single transfer mentioned in step 1 of subsection (2),
treat the part of the tax year falling before the qualifying date for the
account as a separate tax year.

(5) If the account ceases to be a qualifying account of the individual
45during the tax year other than as a result of a breach of the deposit
rule—

(a) subsection (2) has effect as if references to the end of the tax
year were to the end of the day on which the account ceases
to be a qualifying account, and

(b) 50for the purpose of applying section 809Q(3) in relation to the
single transfer mentioned in step 1 of subsection (2), treat the
part of the tax year falling after the day mentioned in
paragraph (a) as a separate tax year.

(6) A transfer from the account is a “condition A transfer” if and to the
extent that—

(a) condition A in section 809L is met, and

(b) either—

(i) 5the property or consideration for the service is
(wholly or in part), or derives (wholly or in part, and
directly or indirectly) from, the transfer, or

(ii) the transfer, or anything deriving (wholly or in part,
and directly or indirectly) from the transfer, is used as
10mentioned in section 809L(3)(c).

(7) A transfer from the account is an “other transfer” if and to the extent
that it is not a condition A transfer.

(8) Treat a transfer as an “other transfer” if and to the extent that, at the
end of the tax year—

(a) 15it is not a condition A transfer, and

(b) on the basis of the best estimate that can reasonably be made
at that time, it will not become a condition A transfer.

(9) If the account ceases to be a qualifying account of the individual
during the tax year other than as a result of a breach of the deposit
20rule, subsection (8) has effect as if the reference to the end of the tax
year were to the end of the day on which the account ceases to be a
qualifying account.

(10) “Qualifying account” and “the qualifying date” for an account are
defined in section 809RB.

(11) 25For the purposes of this section and sections 809RB to 809RD—

(a) “employment” is to be read in accordance with section 4(1) of
ITEPA 2003, and includes an office (as read in accordance
with section 5(3) of that Act),

(b) whether general earnings are “for” a tax year is to be
30determined as for the purposes of the employment income
Parts of ITEPA 2003 (see section 3(2) of that Act),

(c) a reference to anything “paid into” an account includes
anything credited to the account by whatever means, and

(d) references to a breach of the deposit rule are to be read in
35accordance with section 809RC.

809RB Qualifying accounts

(1) An individual may by notice to the Commissioners nominate an
account to be a qualifying account of the individual for the purposes
of section 809RA.

(2) 40The notice must specify the qualifying date for the account.

(3) “The qualifying date” for the account is the first date on which there
is paid into the account sums falling within subsection (4) which (in
total) are more than £10.

(4) A sum falls within this subsection if it is, or derives wholly (whether
45directly or indirectly) from, general earnings of the individual from
an employment for a tax year which is a relevant tax year in relation
to the employment.

(5) A tax year is a “relevant” tax year in relation to an employment if the
general earnings which the individual has for the tax year from the
employment include both general earnings within section 15(1) of
ITEPA 2003 and general earnings within section 26(1) of that Act.

(6) 5The individual may withdraw the nomination by giving a further
notice to the Commissioners, specifying the date with effect from
which the nomination is withdrawn.

(7) A notice under subsection (1) or (6) must be in writing and include
such information as the Commissioners may reasonably require.

(8) 10A notice under subsection (1) or (6) must be given no later than—

(a) 31 January in the tax year following the tax year in which
falls, as the case may be—

(i) the qualifying date for the account, or

(ii) the date with effect from which the nomination is
15withdrawn, or

(b) such later date as the Commissioners may allow.

(9) If an individual nominates an account under this section, the account
is a “qualifying account” of the individual throughout the period—

(a) beginning with the qualifying date, and

(b) 20ending with the date before the earliest of the following
dates—

(i) the date on which the account is closed or ceases to be
an ordinary bank account held by and for the benefit
of the individual (alone or jointly with others);

(ii) 25the date with effect from which the nomination is
withdrawn under this section;

(iii) the qualifying date for another qualifying account of
the individual;

(iv) 6 April in a tax year in which there is a breach of the
30deposit rule which is not remedied or cannot be
remedied;

(v) 6 April in a tax year for which the individual has no
general earnings within section 26(1) of ITEPA 2003.

(10) The account is not to be a qualifying account at all if—

(a) 35at any time on the qualifying date, the account is not an
ordinary bank account held by and for the benefit of the
individual (alone or jointly with others), or

(b) immediately before the qualifying date, the account has a
credit balance of more than £10.

(11) 40The account is not to be a qualifying account at all if the qualifying
date falls in a tax year—

(a) for which the individual has no general earnings within
section 26(1) of ITEPA 2003, or

(b) in which there is a breach of the deposit rule which is not
45remedied or cannot be remedied.

(12) Subsection (9)(b)(iv) or (11)(b) (as relevant) is to be ignored if the
breach occurs on or after a date falling within subsection (9)(b)(i) to
(iii).