Finance Bill

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 2 — Income tax: general
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Abolition of tax relief for patent royalties
(1)
Chapter 4 of Part 8 of ITA 2007 (reliefs: annual payments and patent royalties)
is amended in accordance with subsections (2) and (3).
(2)
In section 448 (relief for individuals), in subsection (1)(b) omit “or 903(5)” and
“and patent royalties”.
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(3)
In section 449 (relief for other persons), in subsection (1)(b) omit “or 903(6)” and
“and patent royalties”.
(4)
Accordingly, that Act is amended as follows—
(a)
in section 2 (overview of Act), in subsection (8)(c) omit “and patent
royalties”,
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(b)
in section 24 (reliefs deductible at Step 2), in subsection (1)(b) omit “and
patent royalties”, and
(c)
in the heading for Chapter 4 of Part 8 of that Act omit “AND PATENT
ROYALTIES”.
(5)
The amendments made by this section have effect in relation to payments
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made on or after 5 December 2012.
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Limit on income tax reliefs
Schedule 3 contains provision limiting the deductions which may be made at
Step 2 of the calculation in section 23 of ITA 2007 (calculation of income tax
liability).
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Trade profits
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Cash basis for small businesses

Schedule 4 contains provision enabling the profits of a trade, profession or
vocation to be calculated on the cash basis.
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Deductions allowable at a fixed rate
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Schedule 5 contains provision enabling persons carrying on a trade, profession
or vocation to claim deductions for certain expenses at a fixed rate.
Other provisions
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Employment income: duties performed in the UK and overseas
Schedule 6 contains provision about employment income in cases where duties
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are performed in the UK and overseas.
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Remittance basis: exempt property
Schedule 7 contains provision about the application of the remittance basis in
relation to exempt property.

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 2 — Income tax: general
8

21
Payments on account
(1)
ITA 2007 is amended as follows.
(2)
In section 809K (sections 809L to 809Z6: introduction), in subsection (2)(e), for
“809V” substitute “809UA”.
(3)
Before section 809V (but after the italic heading) insert—
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“809UA
Money used for payments on account
(1)
Subsection (2) applies to income or chargeable gains of an individual
if—
(a)
the income or gains would (but for subsection (2)) be regarded
as remitted to the United Kingdom by virtue of the bringing of
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money to the United Kingdom,
(b)
the money is brought to the United Kingdom by way of direct
payments to the Commissioners on account of income tax,
(c)
the tax year (“tax year 2”) in respect of which the payments on
account are made is a tax year for which section 809H
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(remittance basis charge for long-term UK resident) does not
apply as respects the individual, and
(d)
that section applied as respects the individual for the previous
tax year (“tax year 1”).
(2)
The relevant amount of income or chargeable gains is to be treated as
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not remitted to the United Kingdom if money equal to the relevant
amount is taken offshore by—
(a)
the 15 March following the end of tax year 2, or
(b)
such later date as the Commissioners may allow on a claim
made by the individual.
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(3)
A claim under subsection (2)(b)—
(a)
may be made only if the individual has made and delivered a
return under section 8 of TMA 1970 for tax year 2 and
reasonably expects to receive from the Commissioners a
repayment of tax paid in respect of that tax year, and
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(b)
may be made no later than the 5 April following the end of tax
year 2.
(4)
Money that is taken offshore in accordance with subsection (2) is to be
treated as having the same composition of kinds of income and capital
as the money used to make the payments on account.
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(5)
In this section “the relevant amount” means the lower of the
following—
(a)
the amount brought to the United Kingdom as mentioned in
subsection (1)(b), and
(b)
the applicable amount (as defined in section 809H) for tax year
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1.”
(4)
In section 809Z9(11) (taking proceeds etc offshore or investing them:
modification of general provisions)—
(a)
for “section 809VB(2) but in that case” substitute “sections 809UA(2)
and 809VB(2), but in those cases”, and
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Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 2 — Income tax: general
9

(b)
at the beginning of paragraph (b) insert “in the case of section
809VB(2),”.
(5)
The amendments made by this section have effect in relation to payments on
account made in respect of the tax year 2012-13 and subsequent tax years.
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Arrangements made by intermediaries
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(1)
In Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers
under arrangements made by intermediaries), in section 49 (engagements to
which Chapter applies), for subsection (1)(c) substitute—
“(c)
the circumstances are such that—
(i)
if the services were provided under a contract directly
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between the client and the worker, the worker would be
regarded for income tax purposes as an employee of the
client or the holder of an office under the client, or
(ii)
the worker is an office-holder who holds that office
under the client and the services relate to the office.”
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(2)
This section has effect for the tax year 2013-14 and subsequent tax years.
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Taxable benefit of cars: the appropriate percentage
(1)
Section 139 of ITEPA 2003 (car with CO2 figure: the appropriate percentage) is
amended in accordance with subsections (2) to (6).
(2)
In subsection (2), after “the relevant threshold” omit “for the year”.
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(3)
For subsection (2)(a) substitute—
“(a)
if the car’s CO2 emissions figure does not exceed 50 grams per
kilometre driven, 5%,
(aa)
if the car’s CO2 emissions figure exceeds 50 grams per kilometre
driven but does not exceed 75 grams per kilometre driven, 9%,
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and”.
(4)
In subsection (2)(b), for “11%” substitute “13%”.
(5)
In subsection (3)—
(a)
after “the relevant threshold” omit “for the year”, and
(b)
for “12%” substitute “14%”.
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(6)
In subsection (4)—
(a)
after “the relevant threshold” (in both places) omit “for the year”, and
(b)
in paragraph (b), for “35%” substitute “37%”.
(7)
Section 140 of that Act (car without CO2 figure: the appropriate percentage) is
amended in accordance with subsections (8) to (11).
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(8)
In the Table in subsection (2), for “35%” substitute “37%”.
(9)
For subsection (3)(a) substitute—
“(a)
5% if the car cannot in any circumstances emit CO2 by being
driven, and”.
(10)
In subsection (3)(b), for “35%” substitute “37%”.
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(11)
Omit subsection (3A).

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 3 — Corporation tax: general
10

(12)
The amendments made by this section have effect for the tax year 2015-16 and
subsequent tax years.
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Gains from contracts for life insurance etc
Schedule 8 amends Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts
for life insurance etc).
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Qualifying insurance policies
Schedule 9 amends Schedule 15 to ICTA (qualifying insurance policies) and
makes other provision relating to qualifying policies under Schedule 15 to
ICTA.
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Transfer of assets abroad
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Schedule 10 amends Chapter 2 of Part 13 of ITA 2007 (tax avoidance: transfer
of assets abroad).
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Payments of interest
Schedule 11 contains provision in connection with the payment of interest for
the purposes of income tax.
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Disguised interest
Schedule 12 contains provision about returns which are economically
equivalent to interest.
Chapter 3
Corporation tax: general
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Losses
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Restriction on surrender of losses: controlled foreign company cases
(1)
Section 105 of CTA 2010 (restriction on surrender of losses etc within section
99(1)(d) to (g)) is amended as follows.
(2)
In subsection (2), for “the surrendering company’s gross profits of the
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surrender period” substitute “the profit-related threshold”.
(3)
In subsection (3), for “those gross profits” substitute “the profit-related
threshold”.
(4)
After subsection (3) insert—
“(3A)
“The profit-related threshold” is the sum of—
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(a)
the surrendering company’s gross profits of the surrender
period, and
(b)
where chargeable profits of a CFC for an accounting period
ending in the surrender period are apportioned to the
surrendering company in accordance with step 3 in subsection
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Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 3 — Corporation tax: general
11

(1) of 371BC of TIOPA 2010 and the surrendering company is in
relation to that accounting period of the CFC a chargeable
company for the purposes of step 4 in that subsection, the total
of the chargeable profits so apportioned.
(3B)
Where—
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(a)
an accounting period of a CFC ending in the surrender period
is one to which (because of paragraph 50 of Schedule 20 of FA
2012) the repeal of Chapter 4 of Part 17 of ICTA does not apply,
(b)
chargeable profits of the CFC for that accounting period are
apportioned to the surrendering company in accordance with
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sections 747(3) and 752 of ICTA, and
(c)
the surrendering company is not prevented by section 747(5) of
ICTA from being chargeable to tax in respect of the CFC for that
accounting period,

the profit-related threshold also includes the total of the chargeable
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profits so apportioned.”
(5)
After subsection (5) insert—
   “(5A)
For the purposes of this section—
“CFC” has the same meaning as in Part 9A of TIOPA 2010,
except that in subsection (3B) it means a controlled foreign
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company as defined by section 747(2) of ICTA;
“chargeable profits”, in relation to a CFC, is to be read in
accordance with section 371BA(3) of TIOPA 2010, except that
in subsection (3B) it is to be read in accordance with section
747(6) of ICTA.”
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(6)
The amendments made by this section have effect where the surrender period
of the surrendering company ends on or after 20 March 2013, but subject to the
following.
(7)
For the purposes of section 105(3A)(b) and (3B)(b) of CTA 2010, chargeable
profits do not include—
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(a)
chargeable profits for an accounting period within the meaning of Part
9A of TIOPA 2010 ending before 20 March 2013, or
(b)
chargeable profits for an accounting period within the meaning of
Chapter 4 of Part 17 of ICTA ending before that date.
(8)
Subsection (9) applies where—
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(a)
an accounting period within the meaning of Part 9A of TIOPA 2010, or
(b)
an accounting period within the meaning of Chapter 4 of Part 17 of
ICTA,

falls partly before and partly on or after 20 March 2013.
(9)
For the purposes of section 105 of CTA 2010, the chargeable profits of the CFC
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for that period, so far as apportioned to the surrendering company as
mentioned in subsection (3A)(b) or (3B)(b) of that section (as the case requires),
are to be further apportioned on a just and reasonable basis between the two
parts of the period, and the chargeable profits referred to in subsection (3A)(b)
or (3B)(b) are not to include the chargeable profits apportioned to the part
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ending before 20 March 2013.