Finance (No. 2) Bill (HC Bill 154)

substitute—

“(4) Condition C is that—

(a) the officer or employee is a permanent employee of that state,
or

(b) 5the officer or employee was non-UK resident for each of the
2 tax years preceding the tax year in which the officer or
employee became a consular officer or employee in the
United Kingdom of that state.”

(2) The amendment made by this paragraph does not apply to a person who
10became a consular officer or employee in the United Kingdom before 6 April
2013.

40 (1) In Schedule 2 (approved share incentive plans), in paragraph 8(2), omit
paragraph (b) and the “and” immediately before it.

(2) The amendments made by this paragraph do not apply to plans that have
15been approved before the day on which this Act is passed.

41 (1) In Schedule 3 (approved SAYE option schemes), in paragraph 6(2)—

(a) insert “and” at the end of paragraph (c), and

(b) omit paragraph (ca), including the “and” at the end of it.

(2) The amendments made by this paragraph do not apply to schemes that have
20been approved before the day on which this Act is passed.

42 In Schedule 5 (enterprise management incentives), in paragraph 27(3)(b),
omit “and ordinarily resident”.

ITTOIA 2005

43 ITTOIA 2005 is amended as follows.

44 25In section 154A (certain non-UK residents with interest on 3½% War Loan
1952 Or After), in subsection (1)(a), omit “ordinarily”.

45 In section 459 (transfer of assets abroad), in subsection (2), for “an individual
ordinarily UK resident” substitute “a UK resident individual”.

46 In section 468 (non-UK resident trustees and foreign institutions), for
30subsection (2) substitute—

“(2) Chapter 2 of Part 13 of ITA 2007 (which prevents avoidance of tax
where a UK resident individual benefits from a transfer of assets)
applies with the modifications specified in subsection (3) or (4).”

47 In section 569 (anti-avoidance: transfer of assets abroad), in subsection (2),
35for “an individual ordinarily UK resident” substitute “a UK resident
individual”.

48 (1) In section 636 (calculation of undistributed income), in subsection (2)(b), for
“, resident and ordinarily resident” substitute “and resident”.

(2) The amendment made by this paragraph does not apply in calculating
40income arising under a settlement in tax years ending before 6 April 2013.

49 In section 648 (income arising under a settlement), in subsection (1)(b), for “,
resident and ordinarily resident” substitute “and resident”.

50 In section 651 (meaning of “UK estate” and “foreign estate”), in subsection
(3), omit “or not ordinarily UK resident”.

51 In section 664 (the aggregate income of the estate), in subsection (2)(b)(i),
omit “who was ordinarily UK resident”.

52 (1) 5Section 715 (interest from FOTRA securities held on trust) is amended as
follows.

(2) In subsection (1)(b), for “person not ordinarily UK resident” substitute “non-
UK resident person”.

(3) In subsection (2)—

(a) 10for “person not ordinarily UK resident” substitute “non-UK resident
person”, and

(b) for “is ordinarily UK resident at the time when” substitute “is UK
resident for the tax year in which”.

(4) In relation to a FOTRA security issued before 6 April 2013, the amendments
15made by this paragraph apply only if the security was acquired by the trust
on or after that date.

53 (1) In section 771 (relevant foreign income of consular officers and employees),
for subsection (4) substitute—

“(4) Condition C is that—

(a) 20the officer or employee is a permanent employee of that state,
or

(b) the officer or employee was non-UK resident for each of the
2 tax years preceding the tax year in which the officer or
employee became a consular officer or employee in the
25United Kingdom of that state.”

(2) The amendment made by this paragraph does not apply to a person who
became a consular officer or employee in the United Kingdom before 6 April
2013.

ITA 2007

54 30ITA 2007 is amended as follows.

55 In section 465 (overview of Chapter 2 and interpretation), in subsection (4),
omit “and ordinary residence”.

56 (1) Section 475 (residence of trustees) is amended as follows.

(2) For subsection (1) substitute—

“(1) 35This section applies for income tax purposes and explains how to
work out, in relation to the trustees of a settlement, whether or not
the single person mentioned in section 474(1) is UK resident.”

(3) In subsection (2), for “both UK resident and ordinarily UK resident”
substitute “UK resident”.

(4) 40In subsection (3), for “both non-UK resident and not ordinarily UK resident”
substitute “non-UK resident”.

57 (1) Section 476 (how to work out whether settlor meets condition C) is amended
as follows.

(2) In subsection (2)(b), omit “, ordinarily UK resident”.

(3) In subsection (3)(b), omit “, ordinarily UK resident”.

(4) 5The amendment made by sub-paragraph (2) does not apply if the person
died before 6 April 2013.

(5) The amendment made by sub-paragraph (3) does not apply if the settlement
was made before 6 April 2013.

58 In section 643 (non-residents), in subsection (1), omit “and is not ordinarily
10UK resident during that year”.

59 In section 718 (meaning of “person abroad” etc), in subsection (2)(b), for
“neither UK resident nor ordinarily UK resident” substitute “non-UK
resident”.

60 In section 720 (charge to tax on income treated as arising under section 721),
15in subsection (1), omit “ordinarily”.

61 (1) Section 721 (individuals with power to enjoy income as a result of relevant
transactions) is amended as follows.

(2) In subsection (1), for “conditions A and B” substitute “conditions A to C”.

(3) After subsection (3) insert—

“(3A) 20Condition C is that the individual is UK resident for the tax year.”

(4) In subsection (5), for paragraph (b) substitute—

“(b) whether the individual is UK resident for the tax year in
which the relevant transfer is made (if different from the tax
year mentioned in subsection (1)), or”.

62 25In section 727 (charge to tax on income treated as arising under section 728),
in subsection (1), omit “ordinarily”.

63 (1) Section 728 (individuals receiving capital sums as a result of relevant
transactions) is amended as follows.

(2) In subsection (1)—

(a) 30in paragraph (a), omit the “and” at the end of sub-paragraph (iii), and

(b) at the end of paragraph (b) insert “, and

(c) the individual is UK resident for the tax year.”

(3) In subsection (3), for paragraph (b) substitute—

“(b) whether the individual is UK resident for the tax year in
35which the relevant transfer abroad is made (if different from
the tax year mentioned in subsection (1)), or”.

64 In section 732 (non-transferors receiving benefit as a result of relevant
transactions), in subsection (1)(b), for “ordinarily UK resident receives a
benefit” substitute “UK resident for a tax year receives a benefit in that tax
40year”.

65 (1) In section 749 (restrictions on particulars to be provided by relevant
lawyers), in subsection (2), omit “ordinarily”.

(2) The amendment made by this paragraph applies only if the transfer is made
or, in the case of an associated operation, the transfer is made and the
associated operation is effected on or after 6 April 2013.

66 In section 812 (case where limit on liability of non-UK residents is not to
5apply), in subsection (1)(a), omit “ordinarily”.

67 (1) In section 834 (residence of personal representatives), in subsection (3), omit
“, ordinarily UK resident”.

(2) The amendment made by this paragraph does not apply if D died before 6
April 2013.

68 (1) 10In section 858 (declarations of non-UK residence: individuals)—

(a) in subsection (3)(a) and (b), for “not ordinarily UK resident”
substitute “non-UK resident”, and

(b) in subsection (4), omit “ordinarily”.

(2) The amendments made by this paragraph apply to the making of
15declarations on or after 6 April 2014, and any declarations made before that
date continue to have effect in respect of interest paid on or after that date as
if those amendments had not been made.

69 (1) In section 859 (declarations of non-UK residence: Scottish partnerships)—

(a) in subsection (3), for “not ordinarily UK resident” substitute “non-
20UK resident”, and

(b) in subsection (4), omit “ordinarily”.

(2) The amendments made by this paragraph apply to the making of
declarations on or after 6 April 2014, and any declarations made before that
date continue to have effect in respect of interest paid on or after that date as
25if those amendments had not been made.

70 (1) In section 860 (declarations of non-UK residence: personal representatives),
in subsection (3), for “not ordinarily UK resident” substitute “non-UK
resident”.

(2) The amendment made by this paragraph applies only if the deceased died
30on or after 6 April 2014.

71 (1) Section 861 (declarations of non-UK residence: settlements) is amended as
follows.

(2) In subsection (3)(b)(i) and (iii), omit “ordinarily”.

(3) In subsection (4)—

(a) 35in paragraphs (b) and (d), omit “ordinarily”, and

(b) in paragraph (f), for “an ordinarily” substitute “a”.

(4) The amendments made by this paragraph apply to the making of
declarations on or after 6 April 2014, and any declarations made before that
date continue to have effect in respect of interest paid on or after that date as
40if those amendments had not been made.

Commencement

72 (1) The amendments made by this Part of this Schedule have effect for the
purposes of a person’s liability to income tax for the tax year 2013-14 or any
subsequent tax year.

(2) 5Sub-paragraph (1) is without prejudice to any provision in this Part of the
Schedule about the application of a particular amendment.

Savings

73 (1) This paragraph applies to an individual who—

(a) was not resident in the United Kingdom for the tax year 2009-10,

(b) 10is resident there for the tax year 2012-13, but

(c) is not ordinarily resident there at the end of the tax year 2012-13.

(2) The provisions listed in sub-paragraph (3) have effect, in relation to such an
individual and a qualifying tax year, as if the amendments made to or with
respect to those provisions by this Part of this Schedule had not been made.

(3) 15The provisions are—

(a) section 413 of ITEPA 2003 (exception for payments and benefits on
termination of employment etc in certain cases involving foreign
service),

(b) section 414 of that Act (reduction in other cases of foreign service),
20and

(c) Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad).

(4) But, in the case of provisions within paragraph (a) or (b) of sub-paragraph
(3), this paragraph applies only if service in the employment in question
began before the start of the tax year 2013-14.

(5) 25The meaning of “qualifying tax year” depends on the individual’s residence
status—

(a) if the individual was resident in the United Kingdom for the tax year
2010-11 and the tax year 2011-12, “qualifying tax year” means the tax
year 2013-14,

(b) 30if the individual was not resident in the United Kingdom for the tax
year 2010-11 but was resident in the United Kingdom for the tax year
2011-12, “qualifying tax year” means each of the tax year 2013-14 and
the tax year 2014-15, and

(c) if the individual was not resident in the United Kingdom for the tax
35year 2011-12, “qualifying tax year” means each of the tax year 2013-
14, the tax year 2014-15 and the tax year 2015-16.

(6) Where, by virtue of this paragraph, it is necessary to determine whether an
individual is (or is not) ordinarily resident in the United Kingdom at a time
on or after 6 April 2013, the question is to be determined as it would have
40been in the absence of this Schedule.

Part 3 Capital gains tax: accruals basis of taxation

TCGA 1992

74 TCGA 1992 is amended as follows.

75 (1) 5Section 2 (persons and gains chargeable to capital gains tax, and allowable
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) 10The residence condition is—

(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
1562(3) is resident in the United Kingdom,

(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
20Kingdom when the gain accrues.”

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) 25Section 13 (attribution of gains to members of non-resident companies) is
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) 30In subsection (13)(b), omit “or ordinarily resident”.

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
35residence,”.

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
40has applied), in subsection (6)(a), in paragraph (b) of the substituted
subsection (1), for “becomes neither resident nor ordinarily resident”
substitute “ceases to be resident”.

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
5substitute “in the United Kingdom, then for the purposes of this Act it is
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
10“neither resident nor ordinarily resident” substitute “not resident”.

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) 15In subsection (5)(a), omit “and ordinarily resident”.

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) 20Section 83A (trustees both resident and non-resident in a year of assessment)
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”
25substitute “not resident”, and

(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
30(1), for “neither resident nor ordinarily resident” substitute “not resident”.

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) 35For subsection (2) substitute—

“(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
40the United Kingdom during the year, they fall to be regarded

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
5beneficiaries) is amended as follows.

(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 10In section 88(1) (gains of dual resident settlements)—

(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) 15In subsection (4), in each of paragraphs (a) and (b), omit “or ordinarily
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 20In section 99 (application of Act to unit trust schemes), in subsection (1)(c),
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) 25in paragraph (b), omit “or ordinarily resident”.

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) 30Section 166 (gifts to non-residents) is amended as follows.

(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) 35In subsection (2)(a), for “neither resident nor ordinarily resident” substitute
“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) 40Section 168 (emigration of donee) is amended as follows.

(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) 5In subsection (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
10ordinarily resident”.

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) 15Section 261 (section 260 relief: gifts to non-residents) is amended as follows.

(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
20involving settled property), in paragraph 2(7)(a), omit “and ordinarily
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) 25In paragraph 6(1)—

(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
30Schedule 4A ends before 6 April 2013, the test in that paragraph is to be
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) 35In paragraph 1A(3), for the words from “the beneficiary” to the end
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) 40in sub-paragraph (2), omit “and ordinarily resident”.

(4) In paragraph 5(1)—

(a) in paragraph (a), omit “and ordinarily resident”, and

(b) in paragraph (b), omit “and ordinary residence”.

(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) 5In paragraph 2A(4)—

(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) 10In paragraph 9(4)—

(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) 15The amendments made by this paragraph apply to changes in the residence
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) 20in paragraph (c), for “neither resident nor ordinarily resident”
substitute “not resident”, and

(b) in paragraph (d), omit “and ordinarily resident”.

(3) In paragraph 3—

(a) in sub-paragraph (1)—

(i) 25in 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”
substitute “resident”.

(4) 30In paragraph 4—

(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) 35in sub-paragraph (3), for “either resident or ordinarily resident”
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
40the commencement day to be resident”, and

(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,