Finance Bill

House of Commons

Session 2013 - 14
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Finance Bill

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 3 — Corporation tax: general
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(3)
After section 164 insert—
“164A
Loan forming part of tier two capital
(1)
A loan is a normal commercial loan by virtue of this subsection if it—
(a)
was made to a bank or a parent undertaking of a bank, and
(b)
forms part of the tier two capital resources of the bank or parent
5
undertaking.
(2)
Subsection (1) does not apply in the case of any loan if there are
arrangements the main purpose, or one of the main purposes, of which
is to obtain a tax advantage for any person as a result of the application
of that subsection in respect of that loan.
10
(3)
For the purposes of this section—
(a)
“bank” has the meaning given by section 1120,
(b)
“tax advantage” has the meaning given by section 1139,
(c)
“parent undertaking” is to be read in accordance with section
420 of FISMA 2000, and
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(d)
the reference to tier two capital resources is to be read in
accordance with the PRA Handbook made by the Prudential
Regulation Authority (as that Handbook has effect from time to
time).
(4)
In relation to any time before 1 April 2013, the reference in subsection
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(3)(d) to the PRA Handbook is to be read as a reference to the
Handbook of Rules and Guidance made by the Financial Services
Authority (as that Handbook had effect at the time in question).”
(4)
In section 1029(1) (overview), after paragraph (c) insert—
“(ca)
section 1032A (payment in respect of tier two capital),”.
25
(5)
After section 1032 insert—
“Tier two capital
1032A
Payment in respect of tier two capital
(1)
A payment made in respect of tier two securities is not a distribution for
the purposes of the Corporation Tax Acts.
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(2)
Subsection (1) does not apply in the case of any tier two securities if
there are arrangements the main purpose, or one of the main purposes,
of which is to obtain a tax advantage for any person as a result of the
application of that subsection in respect of those securities.
(3)
For the purposes of this section—
35
(a)
“tier two securities” means securities (other than shares) issued
by a bank or a parent undertaking of a bank that form part of the
tier two capital resources of the bank or parent undertaking,
(b)
“bank” has the meaning given by section 1120,
(c)
“tax advantage” has the meaning given by section 1139,
40
(d)
“parent undertaking” is to be read in accordance with section
420 of FISMA 2000, and
(e)
the reference to tier two capital resources is to be read in
accordance with the PRA Handbook made by the Prudential

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 3 — Corporation tax: general
20

Regulation Authority (as that Handbook has effect from time to
time).
(4)
In relation to any time before 1 April 2013, the reference in subsection
(3)(e) to the PRA Handbook is to be read as a reference to the Handbook
of Rules and Guidance made by the Financial Services Authority (as
5
that Handbook had effect at the time in question).”
(6)
The amendments made by this section are treated as having come into force on
26 October 2012.
43
Financing costs and income: group treasury companies
(1)
In section 316 of TIOPA 2010 (group treasury companies) for subsections (2) to
10
(8) substitute—
“(2)
A company is a group treasury company in the relevant period if—
(a)
it is a member of the worldwide group,
(b)
it undertakes treasury activities for the worldwide group in the
relevant period (whether or not it also undertakes other
15
activities),
(c)
at least 90% of the relevant income of the company for the
relevant period is group treasury revenue, and
(d)
it makes an election in respect of the relevant period for the
purposes of this section.
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(3)
Subsection (4) applies if throughout the relevant period—
(a)
all or substantially all of the activities undertaken by a group
treasury company consist of treasury activities undertaken by it
for the worldwide group, and
(b)
all or substantially all of the assets and liabilities of the company
25
relate to such activities.
(4)
Where this subsection applies, the relevant amount, and all other
amounts that are relevant amounts in respect of the group treasury
company and the relevant period, are treated as not being a financing
expense amount or a financing income amount of the group treasury
30
company.
(5)
If subsection (4) does not apply, those relevant amounts are treated as
not being a financing expense amount or a financing income amount of
the group treasury company only to the extent that they relate to
treasury activities undertaken by the company for the worldwide
35
group.
(6)
For the purposes of subsection (5) the extent to which amounts relate to
the matters mentioned is to be determined on a just and reasonable
basis.
(7)
An election under this section must be made within 3 years after the
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end of the relevant period.”
(2)
The amendment made by this section has effect in relation to periods of
account of the worldwide group beginning on or after 11 December 2012.

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 4 — Pensions
21

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Condition for company to be an “investment trust”
(1)
In section 1158(2) of CTA 2010 (condition A for a company to be an “investment
trust”), for “the business of the company consists of” substitute “all, or
substantially all, of the business of the company is”.
(2)
The amendment made by this section has effect in relation to accounting
5
periods beginning on or after 1 January 2012.
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Community amateur sports clubs
Schedule 20 contains provision about community amateur sports clubs.
Chapter 4
Pensions
10
46
Lifetime allowance charge: power to amend the transitional provision in Part
2 of Schedule 18 to FA 2011 etc
(1)
Part 2 of Schedule 18 to FA 2011 (lifetime allowance charge: commencement
and transitional provision relating to changes made for the tax year 2012-13
and onwards) is amended as follows.
15
(2)
In paragraph 14—
(a)
omit sub-paragraphs (2) and (15) to (17) (which confer power on the
HMRC Commissioners to make provision specifying how notices
under paragraph 14 are to be given),
(b)
in sub-paragraph (7) omit “the annual rate of” where it first appears,
20
and
(c)
in sub-paragraph (11) after “(5)(a)” insert “and (c)(i)”.
(3)
After paragraph 14 insert—
“15   (1)
The Commissioners for Her Majesty’s Revenue and Customs may by
regulations amend paragraph 14.
25
      (2)
Regulations under this paragraph may (for example) add to the cases
in which paragraph 14 is to apply or is to cease to apply.
      (3)
Regulations under this paragraph may include provision having
effect in relation to a time before the regulations are made; but—
(a)
the time must be no earlier than 6 April 2012, and
30
(b)
the provision must not increase any person’s liability to tax.
      (4)
In relation to regulations under this paragraph made during 2013,
sub-paragraph (3) has effect with the omission of paragraph (b) so
long as the time in question is no earlier than 6 April 2013.
16    (1)
The Commissioners for Her Majesty’s Revenue and Customs may by
35
regulations make provision specifying how any notice required to be
given to an officer of Revenue and Customs under paragraph 14 is to
be given.
      (2)
In sub-paragraph (1) the reference to paragraph 14 is to that
paragraph as amended from time to time by regulations under
40
paragraph 15.

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 4 — Pensions
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17    (1)
Regulations under paragraph 15 or 16 may include supplementary
or incidental provision.
      (2)
The powers to make regulations under paragraphs 15 and 16 are
exercisable by statutory instrument.
      (3)
A statutory instrument containing regulations under paragraph 15
5
or 16 is subject to annulment in pursuance of a resolution of the
House of Commons.”
(4)
The amendments made by subsection (2)(b) and (c) are treated as having come
into force on 6 April 2012.
(5)
The Registered Pension Schemes (Lifetime Allowance Transitional Protection)
10
Regulations 2011 (S.I. 2011/1752) are to continue to have effect and, so far as
they were made under paragraph 14(2) and (15) of Schedule 18 to FA 2011, are
to be treated as if they were made under paragraphs 16 and 17(1) of that
Schedule (as inserted by subsection (3) above).
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Lifetime allowance charge: new standard lifetime allowance for the tax year
15
2014-15 and subsequent tax years
(1)
Section 218 of FA 2004 (standard lifetime allowance etc) is amended as follows.
(2)
For subsection (2) substitute—
“(2)
The standard lifetime allowance for the tax year 2014-15 and, subject to
subsection (3), subsequent tax years is £1,250,000.”
20
(3)
In subsection (3) for “the tax year 2012-13” substitute “the tax year 2014-15”.
(4)
The amendments made by subsections (2) and (3) have effect for the tax year
2014-15 and subsequent tax years.
(5)
Schedule 21 contains transitional provision etc.
48
Annual allowance: new annual allowance for the tax year 2014-15 and
25
subsequent tax years
(1)
Section 228 of FA 2004 (annual allowance) is amended as follows.
(2)
For subsection (1) substitute—
“(1)
The annual allowance for the tax year 2014-15 and, subject to subsection
(2), each subsequent tax year is £40,000.”
30
(3)
In subsection (2) for “2011-12” substitute “2014-15”.
(4)
The amendments made by this section have effect for the tax year 2014-15 and
subsequent tax years.
49
Drawdown pensions and dependants’ drawdown pensions
(1)
In section 165 of FA 2004 (pension rules), in subsection (1), in pension rule 5,
35
for “100%” substitute “120%”.
(2)
In section 167 of that Act (pension death benefit rules), in subsection (1), in
pension death benefit rule 4, for “100%” substitute “120%”.
(3)
In Schedule 16 to FA 2011 (benefits under pension schemes)—

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 4 — Pensions
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(a)
in paragraph 90(2)(a), after “year” insert “beginning before 26 March
2013 and”,
(b)
in paragraph 90(3), omit paragraph (b) and the “and” before it,
(c)
in paragraph 98(2)(a), after “year” insert “beginning before 26 March
2013 and”, and
5
(d)
in paragraph 98(3), omit paragraph (b) and the “and” before it.
(4)
The amendments made by subsections (1) and (2) have effect in relation to
drawdown pension years beginning on or after 26 March 2013.
(5)
The amendments made by subsection (3)(a) and (c) are treated as having come
into force on 26 March 2013.
10
(6)
The amendments made by subsection (3)(b) and (d) have effect in relation to
transfers within paragraph 90(5) or 98(5) of Schedule 16 to FA 2011 occurring
during a drawdown pension year ending on or after 25 March 2013.
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Bridging pensions
(1)
FA 2004 is amended as follows.
15
(2)
In paragraph 2 of Schedule 28 (pension rules: meaning of scheme pension)—
(a)
in sub-paragraph (4)(c)—
(i)
for the words from “not earlier” to “65” substitute “during the
permitted period”, and
(ii)
after “which” insert “together with any previous reductions of
20
the kind referred to in this paragraph (c)”, and
(b)
after sub-paragraph (4A) insert—
   “(4B)
In sub-paragraph (4)(c) “the permitted period” means the
period beginning with the day on which the member reaches
the age of 60 and ending with the day on which the member
25
reaches the age of 65 or, if later, reaches pensionable age.”
(3)
In paragraph 1 of Schedule 29 (pension commencement lump sums), in sub-
paragraph (4)(a), omit the words from “at a time” to “65”.
(4)
In consequence of subsection (3), paragraph 21 of Schedule 23 to the FA 2006 is
repealed.
30
(5)
The amendments made by this section have effect for the tax year 2013-14 and
subsequent tax years.
51
Abolition of contracting out of state second pension: consequential
amendments etc
(1)
FA 2004 is amended as follows.
35
(2)
In section 188 (relief for contributions), in subsection (3) (contributions
excluded from relief), omit paragraph (c) and the word “and” immediately
preceding that paragraph.
(3)
In that section, omit subsection (6) (which treats certain amounts recovered by
individual’s employer as contributions paid by individual).
40
(4)
Omit section 190(5) (certain reliefs not to count towards annual limit for relief).

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 4 — Pensions
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(5)
Omit section 196(5) (references to contributions to include references to
minimum payments when determining relief for employers).
(6)
Omit section 202 (minimum contributions under pensions legislation).
(7)
Omit section 233(2) (references to contributions not to include references to
minimum payments when determining pension input amount).
5
(8)
In paragraph 5 of Schedule 29 (short service refund lump sum), after sub-
paragraph (2) insert—
   “(2A)
In sub-paragraph (2) the reference to the member’s contributions
includes—
(a)
any amount paid under section 7 of the Social Security
10
Act 1986 (incentive payments to schemes becoming
contracted-out between 1986 and 1993),
(b)
any amount paid by the Commissioners for Her Majesty’s
Revenue and Customs under section 42A(3) of the Pension
Schemes Act 1993 or section 38A(3) of the Pension Schemes
15
(Northern Ireland) Act 1993 (rebates), and
(c)
any amount recovered by the member’s employer under
regulations falling within sub-paragraph (2B) in respect of
minimum payments made to the scheme in relation to any
period before 6 April 2012.
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     (2B)
Those regulations are regulations which were made under—
(a)
section 8(3) of the Pension Schemes Act 1993 (recovery of
minimum payments), or
(b)
section 4(3) of the Pension Schemes (Northern Ireland) Act
1993 (corresponding provision for Northern Ireland).”
25
(9)
Omit paragraph 14(2) of Schedule 36 (which excludes minimum payments
from being relevant contributions for the purposes of enhanced protection
from lifetime allowance charge).
(10)
Subsections (1), (3) to (5) and (7) to (9) come into force on 6 April 2013.
(11)
Subsection (2) comes into force on 6 April 2015.
30
(12)
Subsection (6) comes into force on 6 April 2016, except that the repeal of section
202(5) of FA 2004 comes into force on such day as the Treasury may appoint by
order made by statutory instrument.
52
Overseas pension schemes: general
(1)
In section 150(8) of FA 2004 (meaning of “recognised overseas pension
35
scheme”), for the words from “which” to the end substitute “which satisfies
any requirements prescribed for the purposes of this subsection by regulations
made by the Commissioners for Her Majesty’s Revenue and Customs.”
(2)
Section 169 of that Act (pension schemes: recognised transfers) is amended as
follows.
40
(3)
In subsection (2)(c), for “any prescribed information requirements imposed on
the scheme manager” substitute “any requirements imposed under subsection
(4)”.

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 4 — Pensions
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(4)
For subsection (4) substitute—
“(4)
Regulations may require the scheme manager of a QROPS or former
QROPS to—
(a)
give the Commissioners information of a prescribed
description,
5
(b)
give the Commissioners such evidence as they may require of a
prescribed matter, and
(c)
give a prescribed authority, in prescribed circumstances,
information of a prescribed description.
(4A)
Regulations under subsection (4) may make provision as to—
10
(a)
the way and form in which information or evidence is to be
given, and
(b)
the times or intervals at which information or evidence is to be
given.
(4B)
The regulations may apply any provision of Part 7 of Schedule 36 to FA
15
2008 (penalties), with or without modifications, in relation to
requirements imposed under the regulations on a former QROPS.”
(5)
In subsection (5)—
(a)
for “the Inland Revenue has” substitute “the Commissioners have”,
(b)
for paragraph (a) (but not the “and” at the end of it) substitute—
20
“(a)
any of the following conditions is met in relation to the
scheme—
(i)
there has been a failure to comply with a relevant
requirement and the failure is significant,
(ii)
any information given pursuant to a relevant
25
requirement is incorrect in a material respect,
(iii)
any declaration given pursuant to a relevant
requirement is false in a material respect,
(iv)
there is no scheme manager,”, and
(c)
in paragraph (b), for “the failure” substitute “that condition being met”.
30
(6)
For subsection (6) substitute—
“(6)
A failure to comply with a requirement is significant if—
(a)
it is a failure to give information or evidence that is (or may be)
of significance, or
(b)
there are reasonable grounds for believing that the failure
35
prejudices (or might prejudice) the assessment or collection of
tax by the Commissioners.”
(7)
After subsection (7) insert—
“(8)
In subsections (4) to (6) and this subsection—
“the Commissioners” means the Commissioners for Her Majesty’s
40
Revenue and Customs;
“prescribed” means prescribed by regulations;
“QROPS” means a qualifying recognised overseas pension
scheme, and “former QROPS” means a scheme that has at any
time been a QROPS;
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“regulations” means regulations made by the Commissioners;