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Employment income: duties performed in the UK and overseas |
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Apportionment of earnings |
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1 | Part 2 of ITEPA 2003 (employment income: charge to tax) is amended as |
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2 | In section 15 (earnings for year when employee UK resident), as amended |
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by Schedule 43 to this Act, in subsection (5)— |
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(a) | after paragraph (a) omit “and”, and |
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(b) | after paragraph (b) insert “, and |
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(c) | section 41ZA (which is about determining the extent |
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to which general earnings are in respect of United |
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3 | In Chapter 5 (taxable earnings: remittance basis rules and rules for non-UK |
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resident employees), after section 41 insert— |
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“Apportionment of earnings |
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41ZA | Basis of apportionment |
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The extent to which general earnings are in respect of duties |
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performed in the United Kingdom is to be determined under this |
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Chapter on a just and reasonable basis.” |
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Remittance basis of taxation: special mixed fund rules |
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4 | Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows. |
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5 | In section 809Q (sections 809L and 809P: transfers from mixed funds), after |
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“(1A) | But this section must be read subject to section 809RA.” |
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6 | After section 809R insert— |
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“809RA | Special mixed fund rules for certain employment cases |
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(1) | This section applies if— |
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(a) | an individual has general earnings from an employment for |
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(b) | those earnings include both general earnings within section |
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15(1) of ITEPA 2003 (“section 15(1) earnings”) and general |
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earnings within section 26(1) of that Act (“section 26(1) |
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(c) | at least some of the section 15(1) earnings, or sums deriving |
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(wholly or in part, and directly or indirectly) from at least |
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some of the section 15(1) earnings, are paid into an account in |
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that tax year at a time (a “relevant time”) when the account is |
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a qualifying account of the individual, and |
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(d) | at least some of the section 26(1) earnings, or sums deriving |
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(wholly or in part, and directly or indirectly) from at least |
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some of the section 26(1) earnings, are also paid into the |
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account in that tax year at a relevant time. |
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(2) | If this section applies, the composition of each transfer made from |
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the account in that tax year at a relevant time is to be determined as |
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| Step 1 Suppose that all the condition A transfers made from the |
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account in the tax year at a relevant time had been a single transfer |
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made from the account at the end of the tax year. |
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| Step 2 Suppose that all the other transfers made from the account in |
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the tax year at a relevant time had been a single offshore transfer |
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made at the end of the tax year immediately after the single transfer |
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| Step 3 Applying those suppositions— |
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(a) | find under section 809Q(3) the extent to which the single |
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transfer mentioned in step 1 is of the individual’s income or |
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(b) | find under section 809R(4) the content of the single offshore |
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transfer mentioned in step 2. |
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| Step 4 Each transfer made from the account in the tax year at a |
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relevant time is to be treated as containing the specified proportion |
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of each kind of income or capital contained in the relevant deemed |
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| “The specified proportion” is the amount of the transfer divided by |
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the amount of the relevant deemed transfer. |
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| “The relevant deemed transfer” is— |
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(a) | if the transfer is a condition A transfer, the single transfer |
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(b) | otherwise, the single offshore transfer mentioned in step 2. |
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(3) | Subsection (2) applies in determining the composition of a transfer |
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for the purposes of sections 809Q and 809R but it does not otherwise |
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affect the date on which a transfer is considered to occur for the |
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purposes of this Chapter. |
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(4) | If the tax year is the tax year in which the account becomes a |
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qualifying account, for the purpose of applying section 809Q(3) in |
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relation to the single transfer mentioned in step 1 of subsection (2), |
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treat the part of the tax year falling before the qualifying date for the |
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account as a separate tax year. |
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(5) | If the account ceases to be a qualifying account of the individual |
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during the tax year other than as a result of a breach of the deposit |
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(a) | subsection (2) has effect as if references to the end of the tax |
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year were to the end of the day on which the account ceases |
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to be a qualifying account, and |
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(b) | for the purpose of applying section 809Q(3) in relation to the |
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single transfer mentioned in step 1 of subsection (2), treat the |
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part of the tax year falling after the day mentioned in |
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paragraph (a) as a separate tax year. |
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(6) | A transfer from the account is a “condition A transfer” if and to the |
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(a) | condition A in section 809L is met, and |
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(i) | the property or consideration for the service is |
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(wholly or in part), or derives (wholly or in part, and |
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directly or indirectly) from, the transfer, or |
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(ii) | the transfer, or anything deriving (wholly or in part, |
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and directly or indirectly) from the transfer, is used as |
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mentioned in section 809L(3)(c). |
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(7) | A transfer from the account is an “other transfer” if and to the extent |
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that it is not a condition A transfer. |
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(8) | Treat a transfer as an “other transfer” if and to the extent that, at the |
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(a) | it is not a condition A transfer, and |
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(b) | on the basis of the best estimate that can reasonably be made |
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at that time, it will not become a condition A transfer. |
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(9) | If the account ceases to be a qualifying account of the individual |
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during the tax year other than as a result of a breach of the deposit |
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rule, subsection (8) has effect as if the reference to the end of the tax |
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year were to the end of the day on which the account ceases to be a |
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(10) | “Qualifying account” and “the qualifying date” for an account are |
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defined in section 809RB. |
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(11) | For the purposes of this section and sections 809RB to 809RD— |
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(a) | “employment” is to be read in accordance with section 4(1) of |
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ITEPA 2003, and includes an office (as read in accordance |
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with section 5(3) of that Act), |
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(b) | whether general earnings are “for” a tax year is to be |
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determined as for the purposes of the employment income |
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Parts of ITEPA 2003 (see section 3(2) of that Act), |
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(c) | a reference to anything “paid into” an account includes |
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anything credited to the account by whatever means, and |
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(d) | references to a breach of the deposit rule are to be read in |
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accordance with section 809RC. |
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809RB | Qualifying accounts |
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(1) | An individual may by notice to the Commissioners nominate an |
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account to be a qualifying account of the individual for the purposes |
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(2) | The notice must specify the qualifying date for the account. |
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(3) | “The qualifying date” for the account is the first date on which there |
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is paid into the account sums falling within subsection (4) which (in |
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total) are more than £10. |
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(4) | A sum falls within this subsection if it is, or derives wholly (whether |
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directly or indirectly) from, general earnings of the individual from |
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an employment for a tax year which is a relevant tax year in relation |
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(5) | A tax year is a “relevant” tax year in relation to an employment if the |
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general earnings which the individual has for the tax year from the |
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employment include both general earnings within section 15(1) of |
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ITEPA 2003 and general earnings within section 26(1) of that Act. |
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(6) | The individual may withdraw the nomination by giving a further |
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notice to the Commissioners, specifying the date with effect from |
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which the nomination is withdrawn. |
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(7) | A notice under subsection (1) or (6) must be in writing and include |
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such information as the Commissioners may reasonably require. |
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(8) | A notice under subsection (1) or (6) must be given no later than— |
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(a) | 31 January in the tax year following the tax year in which |
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falls, as the case may be— |
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(i) | the qualifying date for the account, or |
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(ii) | the date with effect from which the nomination is |
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(b) | such later date as the Commissioners may allow. |
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(9) | If an individual nominates an account under this section, the account |
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is a “qualifying account” of the individual throughout the period— |
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(a) | beginning with the qualifying date, and |
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(b) | ending with the date before the earliest of the following |
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(i) | the date on which the account is closed or ceases to be |
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an ordinary bank account held by and for the benefit |
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of the individual (alone or jointly with others); |
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(ii) | the date with effect from which the nomination is |
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withdrawn under this section; |
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(iii) | the qualifying date for another qualifying account of |
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(iv) | 6 April in a tax year in which there is a breach of the |
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deposit rule which is not remedied or cannot be |
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(v) | 6 April in a tax year for which the individual has no |
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general earnings within section 26(1) of ITEPA 2003. |
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(10) | The account is not to be a qualifying account at all if— |
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(a) | at any time on the qualifying date, the account is not an |
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ordinary bank account held by and for the benefit of the |
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individual (alone or jointly with others), or |
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(b) | immediately before the qualifying date, the account has a |
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credit balance of more than £10. |
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(11) | The account is not to be a qualifying account at all if the qualifying |
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date falls in a tax year— |
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(a) | for which the individual has no general earnings within |
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section 26(1) of ITEPA 2003, or |
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(b) | in which there is a breach of the deposit rule which is not |
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remedied or cannot be remedied. |
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(12) | Subsection (9)(b)(iv) or (11)(b) (as relevant) is to be ignored if the |
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breach occurs on or after a date falling within subsection (9)(b)(i) to |
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(13) | If, apart from this subsection, an individual might have nominated |
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two or more accounts for which the qualifying date would be the |
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same, the individual may nominate only one of those accounts. |
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(14) | If, apart from this subsection, an account would be a qualifying |
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account of two or more individuals at any time, it is not to be a |
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qualifying account of either or any of them at that time or any other |
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(15) | For the purposes of this section an account is an “ordinary bank |
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account” if it is a cash account in a bank (whether a current or savings |
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account) where sums standing to the credit of the account from time |
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to time represent a debt owed by the bank to the account-holder. |
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809RC | Breaches of the deposit rule |
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(1) | There is a breach of the deposit rule if a prohibited sum is paid into |
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the account on or after the qualifying date. |
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(2) | A breach of the deposit rule is remedied if, within 30 days beginning |
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with the day on which the individual became or ought reasonably to |
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have become aware of the payment of the prohibited sum, the |
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required amount is transferred out of the account by way of a single |
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(3) | “The required amount” is an amount equal to— |
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(a) | the prohibited sum, plus |
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(b) | all the other prohibited sums (if any) that have been paid into |
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the account since that sum was paid in. |
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(4) | If there are 3 breaches of the deposit rule in any 12 month period, |
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subsection (2) does not apply to the third breach and, accordingly, |
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the third breach cannot be remedied. |
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(5) | The payment of a prohibited sum (“the later prohibited sum”) into |
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the account does not result in a breach of the deposit rule if— |
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(a) | a breach resulting from an earlier payment of a prohibited |
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sum into the account is remedied, and |
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(b) | the later prohibited sum is represented by the required |
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amount in relation to that breach. |
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(6) | A “prohibited sum” is anything other than a sum that is, or derives |
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wholly (whether directly or indirectly) from, any of the following |
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kinds of income or capital— |
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(a) | general earnings of the individual from an employment for a |
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tax year which is a relevant tax year in relation to the |
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(b) | general earnings of the individual from an employment |
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which consist of money and are paid in a tax year which is a |
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relevant tax year in relation to the employment, |
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(c) | an amount of specific employment income which, by virtue |
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of Part 6, 7 or 7A of ITEPA 2003 or any other enactment, |
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counts as employment income of the individual in respect of |
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an employment for a tax year which is a relevant tax year in |
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relation to the employment, |
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(d) | interest on the account, or |
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(e) | consideration for the disposal of employment-related |
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securities or employment-related securities options in the |
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circumstances described in subsection (7). |
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(7) | The circumstances are— |
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(a) | the securities or options were acquired pursuant to a right or |
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opportunity available by reason of an employment of the |
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(b) | the disposal is or occurs in conjunction with, or as soon as |
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reasonably practicable after, a relevant event involving those |
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securities or options, and |
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(c) | the tax year in which the relevant event occurs is a relevant |
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tax year in relation to the employment. |
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(8) | For the purposes of subsection (7) each of the following is a “relevant |
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(a) | the acquisition mentioned in subsection (7)(a), and |
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(b) | any event on the occurrence of which an amount (if positive) |
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counts as employment income by virtue of Part 7 of ITEPA |
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2003 or would do so but for— |
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(i) | section 421E or 474 of that Act (exclusions: residence |
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(ii) | an election under section 430 or 431 of that Act. |
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(9) | For the purposes of this section a tax year is a “relevant” tax year in |
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relation to an employment if— |
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(a) | the individual has general earnings from the employment for |
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(b) | those earnings include both general earnings within section |
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15(1) of ITEPA 2003 (“section 15(1) earnings”) and general |
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earnings within section 26(1) of that Act (“section 26(1) |
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(c) | at least some of the section 15(1) earnings, or sums deriving |
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(wholly or in part, and directly or indirectly) from at least |
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some of the section 15(1) earnings, are paid into the account |
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(d) | at least some of the section 26(1) earnings, or sums deriving |
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(wholly or in part, and directly or indirectly) from at least |
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some of the section 26(1) earnings, are also paid into the |
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(10) | For the purposes of this section— |
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(a) | “employment-related securities” has the meaning given in |
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section 421B(8) of ITEPA 2003, and |
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(b) | “employment-related securities options” has the meaning |
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given in section 471(5) of that Act. |
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809RD | Effect where 30-day deadline is met |
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(1) | This section applies if the required amount in relation to a breach of |
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the deposit rule was transferred out of the account in accordance |
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(2) | Sections 809Q and 809R have effect as if— |
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(a) | the intervening transactions had never taken place, and |
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(b) | each prohibited sum represented by the required amount |
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had instead been transferred directly (at the time that sum |
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was paid into the qualifying account) into the account or |
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other property into which the required amount was |
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transferred by virtue of the single one-off transfer. |
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(3) | Each of the following is an “intervening transaction”— |
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(a) | each payment into the qualifying account of a prohibited sum |
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represented by the required amount, and |
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(b) | the single one-off transfer out of the qualifying account. |
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(4) | If it is supposed under step 1 or 2 of section 809RA(2) that a single |
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transfer had been made in the intervening period, re-apply section |
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809Q or 809R in relation to that transfer taking account of subsection |
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(5) | “The intervening period” is the period— |
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(a) | beginning with the day on which the breach occurred, and |
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(b) | ending with the day on which the single one-off transfer was |
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made in accordance with section 809RC(2). |
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(6) | If more than one transfer of a sum equal to the required amount was |
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transferred out of the qualifying account within the 30-day grace |
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period, the first of those transfers is assumed to be the single one-off |
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(7) | “The 30-day grace period” is the period of 30 days mentioned in |
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7 | The amendments made by Part 1 of this Schedule have effect in relation to |
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earnings for the tax year 2013-14 and subsequent tax years. |
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8 | The amendments made by Part 2 of this Schedule have effect in relation to |
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transfers from a mixed fund that are made in the tax year 2013-14 or any |
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Remittance basis: exempt property |
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1 | Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows. |
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2 | In section 809X(3) (exempt property: public access rule), for “sections 809Z |
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and 809Z1)” substitute “section 809Z)”. |
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3 (1) | Section 809Y (property that ceases to be exempt property treated as |
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remitted) is amended as follows. |
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(2) | In subsection (2), for “either” substitute “any”. |
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