Finance Bill

House of Commons

Session 2013 - 14
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
33


commensurate with the size and nature of those activities.
(5)
In subsection (4) “staff” means employees, agents or contractors of the
company.”
(5)
The amendments made by this section have effect in relation to disposals made
on or after 6 April 2012.
5
(6)
But, in the case of a disposal made on or after that date but before 6 April 2013,
a person to whom a part of a chargeable gain or allowable loss would (but for
the amendments made by this section) have accrued on the disposal may make
an election in writing for section 13 of TCGA 1992 to apply in relation to the
disposal without those amendments.
10
(7)
An election under subsection (6) in respect of a disposal must be made—
(a)
in the case of a person within the charge to capital gains tax, within 4
years from the end of the tax year in which the disposal was made, and
(b)
in the case of a person within the charge to corporation tax, within 4
years from the end of the accounting period in which the disposal was
15
made.
62
Heritage maintenance settlements
(1)
In section 169D of TCGA 1992 (gifts to settlor-interested settlements etc:
exceptions to sections 169B and 169C), in subsection (1), after “elected” insert “,
or could have elected,”.
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(2)
The amendment made by this section has effect for the tax year 2012-13 and
subsequent tax years.
63
EMI options and entrepreneurs’ relief etc
Schedule 23 makes provision for capital gains tax purposes in connection with
shares acquired under options which are qualifying options under the EMI
25
code.
64
Charge on certain high value disposals by companies etc
Schedule 24 contains provision for a new capital gains tax charge on gains
accruing to companies etc on certain high value disposals.
65
Currency used in tax calculations: chargeable gains and losses
30
(1)
Chapter 4 of Part 2 of CTA 2010 (currency) is amended as follows.
(2)
In section 5 (basic rule: sterling to be used), after subsection (2) insert—
“(3)
See section 9C for provision about the application of subsection (1) so
far as it relates to calculating chargeable gains.”
(3)
After section 9B insert—
35
“9C
Chargeable gains and losses of companies
(1)
This section applies if—
(a)
a company disposes of an asset which is a ship, an aircraft,
shares or an interest in shares, and

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
34

(b)
at any time beginning with the company’s acquisition of the
asset (or, if earlier, the time allowable expenditure was first
incurred in respect of the asset) and ending with the disposal,
the company’s relevant currency is not sterling.
(2)
A company’s relevant currency at any time is its functional currency at
5
that time, subject to subsection (3).
(3)
If, at any time—
(a)
a company is a UK resident investment company, and
(b)
the company has a designated currency (see sections 9A and 9B)
which is different from its functional currency,
10

the company’s relevant currency at that time is that designated
currency.
(4)
If the relevant currency of the company at the time of the disposal is not
sterling, the chargeable gain or loss accruing to the company on the
disposal must be calculated as follows—
15

Step 1

Calculate the chargeable gain or loss in the relevant currency of
the company at the time of the disposal.

Step 2

Translate the amount of the chargeable gain or loss into sterling
20
by reference to the spot rate of exchange on the day of the
disposal.
(5)
In any case, subsections (6) to (10) apply for the purposes of calculating
the chargeable gain or loss.
(6)
Where any allowable expenditure is incurred in a currency which is not
25
the company’s relevant currency at the time it is incurred, that
expenditure is to be translated into that relevant currency by reference
to the spot rate of exchange for the day on which it is incurred.
(7)
Where, at any time after any allowable expenditure is incurred but
before the asset is disposed of, there is a change in the company’s
30
relevant currency, that expenditure is to be translated (or, if it has
previously been translated under this section, further translated) into
the relevant currency of the company immediately following the
change, by reference to the spot rate of exchange for the day of the
change.
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(8)
Any amount of consideration for the disposal which is given in a
currency other than the company’s relevant currency is to be translated
into that relevant currency by reference to the spot rate of exchange on
the day of disposal.
(9)
For the purposes of subsections (6) and (7)—
40
(a)
any translation of expenditure under subsection (6) is to be
done before any translation of the expenditure under
subsection (7), and
(b)
if subsection (7) applies as a result of more than one change in
the company’s relevant currency, it is to be applied in relation
45
to each change in the order the changes were made (with the
earliest first).

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
35

(10)
Where, by virtue of any enactment, the company was at any time
treated for the purposes of corporation tax on chargeable gains as
acquiring the asset—
(a)
for a consideration of such amount as would secure that neither
a gain nor a loss would accrue to the person disposing of the
5
asset, or
(b)
for a consideration equal to the market value of the asset,

for the purposes of this section that allowable expenditure is treated as
incurred by the company at that time.
(11)
For the purposes of this section, a reference to a ship or aircraft includes
10
a reference to the benefit of a contract—
(a)
to which section 67 of CAA 2001 applies, and
(b)
which relates to plant or machinery which is a ship or aircraft.
(12)
In this section—
“allowable expenditure” means expenditure which, immediately
15
before the disposal, was attributable to the asset under section
38(1)(a) to (c) of TCGA 1992;
“interest in shares” has the same meaning as in Schedule 7AC to
TCGA 1992 (see paragraph 29 of that Schedule);
“shares” includes stock.”
20
(4)
The amendments made by this section come into force in accordance with
provision made by the Treasury by order.
Capital allowances
66
Allowances for energy-saving plant and machinery: Northern Ireland
(1)
Section 45AA of CAA 2001 (section 45A exclusion: payments under Energy Act
25
2008 schemes) is amended as follows.
(2)
In subsection (1)—
(a)
in paragraph (a), after “(feed-in tariffs)” insert “, or under a
corresponding scheme having effect in Northern Ireland,”, and
(b)
in paragraph (b), after “of that Act” insert “or section 113 of the Energy
30
Act 2011”.
(3)
In subsection (5), for “subsection (6)” substitute “subsections (5A) and (6)”.
(4)
After that subsection insert—
“(5A)
Except as provided by subsection (6), in the case of expenditure
incurred on plant or machinery used or for use in Northern Ireland, the
35
relevant date is—
(a)
for corporation tax purposes, 1 April 2013, and
(b)
for income tax purposes, 6 April 2013.”
(5)
In the heading, for “payments under Energy Act 2008 schemes” substitute
“feed-in tariffs and renewable heat incentives”.
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Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
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67
Cars with low carbon dioxide emissions
(1)
In section 45D of CAA 2001 (first year qualifying expenditure on cars with low
carbon dioxide emissions)—
(a)
in subsection (1)(a), for “2013” substitute “2015”, and
(b)
in subsection (4), for “110” substitute “95”.
5
(2)
In section 46 of that Act (general exclusions), in subsection (5) omit “section
45D,”.
(3)
In section 104AA of that Act (special rate expenditure: meaning of “main rate
car”), in subsection (4) for “160” substitute “130”.
(4)
Accordingly, in section 77 of FA 2008 omit—
10
(a)
subsection (2), and
(b)
subsection (3).
(5)
The amendments made by subsections (1)(b), (2) and (4)(b) have effect in
relation to expenditure incurred on or after 1 April 2013.
(6)
The amendment made by subsection (3) has effect in relation to expenditure
15
incurred on or after the relevant date.
(7)
But in relation to expenditure incurred on the hiring of a car—
(a)
for a period of hire which begins before the relevant date, and
(b)
under a contract entered into before that date,

section 49(1A) of ITTOIA 2005 and section 57(1A) of CTA 2009 apply on or after
20
the relevant date as if the amendment made by subsection (3) did not have
effect.
(8)
“The relevant date” means—
(a)
in the case of income tax, 6 April 2013, and
(b)
in the case of corporation tax, 1 April 2013.
25
68
Gas refuelling stations: extension of time limit for capital allowance
In section 45E(1)(a) of CAA 2001 (time limit for incurring of expenditure
qualifying for first-year allowance), for “2013” substitute “2015”.
69
First-year allowance to be available for ships and railway assets
(1)
In section 46(2) of CAA 2001 (general exclusions from first-year allowance),
30
omit—
(a)
general exclusion 3 (ships), and
(b)
general exclusion 4 (railway assets),

and the italicised headings preceding them.
(2)
The amendments made by this section have effect for expenditure incurred on
35
or after 1 April 2013.
70
Hire cars for disabled persons
(1)
In section 268D of CAA 2001 (hire cars for disabled persons), in subsection (2),

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
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after paragraph (a) insert—
“(aa)
personal independence payment under the Welfare Reform Act
2012, or the corresponding provision having effect in Northern
Ireland, because of entitlement to the mobility component,
(ab)
armed forces independence payment under a scheme
5
established under section 1 of the Armed Forces (Pensions and
Compensation) Act 2004,”.
(2)
The amendment made by this section has effect in relation to expenditure
incurred on or after 1 April 2013.
71
Contribution allowances: plant and machinery
10
(1)
Section 538 of CAA 2001 (contribution allowances: plant and machinery) is
amended as follows.
(2)
In subsection (1), omit the “and” at the end of paragraph (a) and after that
paragraph insert—
“(aa)
C’s contribution is to expenditure on the provision of plant or
15
machinery, and”.
(3)
In subsection (2)—
(a)
in paragraph (a), for “asset provided by means of C’s contribution”
substitute “plant or machinery”,
(b)
in paragraph (b), for “asset” substitute “plant or machinery”, and
20
(c)
in paragraph (c)—
(i)
for “asset” substitute “plant or machinery”, and
(ii)
after “times” insert “plant or machinery”.
(4)
The amendments made by this section have effect in relation to expenditure
pooled, and to claims made, on or after 29 May 2013 (“the commencement
25
date”).
(5)
In relation to such expenditure and claims, when determining for the purposes
of section 536(3)(a) of CAA 2001 whether an allowance can be made under
Chapter 2 of Part 11 of that Act, the amendments made by this section are to be
treated as always having had effect.
30
(6)
Nothing in this section applies to a claim by a person for a contribution
allowance under Part 2 of CAA 2001 in respect of a contribution made before
the commencement date.
(7)
Subsection (8) applies if—
(a)
expenditure which a person has been regarded as having incurred
35
(despite section 532(1) of CAA 2001) by virtue of section 536(1) has been
pooled by virtue of section 53—
(i)
on or after 1 January 2013 but before the commencement date,
or
(ii)
before 1 January 2013 in circumstances where no claim was
40
made in respect of the expenditure before that date, and
(b)
had the amendments made by this section had effect at the time the
expenditure was incurred, that person would not have been regarded
as having incurred that expenditure (“the relevant expenditure”).
(8)
Part 2 of CAA 2001 has effect as if an event had occurred as a result of which
45
the person is required to bring into account as a disposal receipt under that

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
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Part, for the chargeable period in which the commencement date falls, a
disposal value of an amount equal to E-A.
(9)
For the purposes of subsection (8)—
E is the amount of the relevant expenditure, and
A is the total amount of writing-down allowances made in respect of the
5
relevant expenditure.
(10)
For the purpose of calculating A, the total amount of writing-down allowances
made in respect of expenditure on an item of plant or machinery is to be
determined as if that item were the only item of plant or machinery in relation
to which Chapter 5 of Part 2 of CAA 2001 had effect.
10
(11)
The event mentioned in subsection (8) is not to be regarded as a disposal event
for the purposes of section 60(3) of CAA 2001.
Miscellaneous
72
Community investment tax relief
Schedule 25 makes provision about community investment tax relief.
15
73
Lease premium relief
Schedule 26 makes provision in relation to relief for lease premiums.
74
Manufactured payments: stock lending arrangements
(1)
Section 596 of ITA 2007 (deemed manufactured payments: stock lending
arrangements) is amended in accordance with subsections (2) and (3).
20
(2)
For subsection (1) substitute—
“(1)
This section applies if conditions A to C are met.
(1A)
Condition A is that there is a stock lending arrangement in respect of
securities.
(1B)
Condition B is that a dividend or interest on the securities is paid, as a
25
result of the arrangement, to a person other than the person who is the
lender under the arrangement.
(1C)
Condition C is that—
(a)
no provision is made for securing that the lender receives
payments representative of the dividend or interest, or
30
(b)
provision is made for securing that the lender receives—
(i)
payments representative of the dividend or interest, and
(ii)
another benefit in respect of the dividend or interest
(including the release of the whole or part of any liability
to pay an amount).”
35
(3)
In subsection (2), for paragraph (a) substitute—
“(a)
were required, under the arrangement—
(i)
in a case falling within paragraph (a) of subsection (1C),
to pay the lender an amount representative of the
dividend or interest, or
40

Finance Bill
Part 1 — Income Tax, Corporation Tax and Capital Gains Tax
Chapter 5 — Other provisions
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(ii)
in a case falling within paragraph (b) of that subsection,
to pay the lender an amount representative of the
dividend or interest but deducting from that amount
any payment mentioned in sub-paragraph (i) of that
paragraph on which tax has been, or is to be, charged,
5
and”.
(4)
Section 812 of CTA 2010 (deemed manufactured payments: stock lending
arrangements) is amended in accordance with subsections (5) to (7).
(5)
For subsection (1) substitute—
“(1)
This section applies if conditions A to C are met.
10
(1A)
Condition A is that there is a stock lending arrangement in respect of
securities.
(1B)
Condition B is that a dividend or interest on the securities is paid, as a
result of the arrangement, to a person other than the person who is the
lender under the arrangement.
15
(1C)
Condition C is that—
(a)
no provision is made for securing that the lender receives
payments representative of the dividend or interest, or
(b)
provision is made for securing that the lender receives—
(i)
payments representative of the dividend or interest, and
20
(ii)
another benefit in respect of the dividend or interest
(including the release of the whole or part of any liability
to pay an amount).”
(6)
In subsection (2), for paragraph (a) substitute—
“(a)
were required, under the arrangement—
25
(i)
in a case falling within paragraph (a) of subsection (1C),
to pay the lender an amount representative of the
dividend or interest, or
(ii)
in a case falling within paragraph (b) of that subsection,
to pay the lender an amount representative of the
30
dividend or interest but deducting from that amount
any payment mentioned in sub-paragraph (i) of that
paragraph on which tax has been, or is to be, charged,
and”.
(7)
After subsection (6) insert—
35
“(7)
This section has effect regardless of section 358 of CTA 2009 (exclusion
of credits on release of connected companies debts) or any other
provision of Part 5 of that Act (loan relationships) which prevents a
credit from being brought into account.”
(8)
The amendments made by this section have effect in relation to cases in which
40
a dividend or interest is paid, or is treated as paid, on or after 5 December 2012.
75
Manufactured payments: general
Schedule 27 contains provision for, and in connection with, the application of
the Tax Acts to manufactured payment relationships and payments
representative of dividends and interest.
45