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Finance Bill
Schedule 44 — Ordinary residence
Part 2 — Income tax: arising basis of taxation

574

 

      (2)  

In subsection (1), for “relevant taxable earnings or EEA-resident earnings”

substitute “relevant general earnings”.

      (3)  

For subsection (5) substitute—

“(5)   

“Relevant general earnings” means—

(a)   

taxable earnings under section 15, 22 or 26, or

5

(b)   

general earnings—

(i)   

to which section 27 applies, and

(ii)   

which are for a period in which the employee is liable

under the law of an EEA State (other than the United

Kingdom) to tax in that State by reason of domicile or

10

residence.”

      (4)  

Omit subsection (6).

38    (1)  

Section 413 (exception in certain cases of foreign service) is amended as

follows.

      (2)  

In subsection (2), after “subsection” (in the second place it occurs) insert

15

“(2A),”.

      (3)  

After that subsection insert—

“(2A)   

This subsection applies to service in or after the tax year 2013-14—

(a)   

to the extent that it consists of duties performed outside the

United Kingdom in respect of which earnings would not be

20

relevant earnings, or

(b)   

if a deduction equal to the whole amount of the earnings

from the employment was or would have been allowable

under Chapter 6 of Part 5 (deductions from seafarers’

earnings).”

25

      (4)  

In subsection (3), after “2003-04” insert “but before the tax year 2013-14”.

      (5)  

After that subsection insert—

“(3ZA)   

In subsection (2A)(a) “relevant earnings” means earnings for a tax

year that are earnings to which section 15 applies and to which that

section would apply even if the employee made a claim under

30

section 809B of ITA 2007 (claim for remittance basis) for that year.”

39    (1)  

In section 681A (foreign benefits of consular employees), for subsection (4)

substitute—

“(4)   

Condition C is that—

(a)   

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

35

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

United Kingdom of that state.”

40

      (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.

 
 

Finance Bill
Schedule 44 — Ordinary residence
Part 2 — Income tax: arising basis of taxation

575

 

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

been approved before the day on which this Act is passed.

41    (1)  

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

5

(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

been approved before the day on which this Act is passed.

42         

In Schedule 5 (enterprise management incentives), in paragraph 27(3)(b),

10

omit “and ordinarily resident”.

ITTOIA 2005

43         

ITTOIA 2005 is amended as follows.

44         

In section 154A (certain non-UK residents with interest on 3½% War Loan

1952 Or After), in subsection (1)(a), omit “ordinarily”.

15

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

subsection (2) substitute—

“(2)   

Chapter 2 of Part 13 of ITA 2007 (which prevents avoidance of tax

20

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),

for “an individual ordinarily UK resident” substitute “a UK resident

individual”.

25

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

income 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 “,

30

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”.

35

52    (1)  

Section 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)—

40

 
 

Finance Bill
Schedule 44 — Ordinary residence
Part 2 — Income tax: arising basis of taxation

576

 

(a)   

for “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

5

made 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—

10

(a)   

the 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

15

United 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

20

54         

ITA 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—

25

“(1)   

This 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”.

30

      (4)  

In 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”.

35

      (3)  

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

      (4)  

The 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.

40

58         

In section 643 (non-residents), in subsection (1), omit “and is not ordinarily

UK resident during that year”.

 
 

Finance Bill
Schedule 44 — Ordinary residence
Part 2 — Income tax: arising basis of taxation

577

 

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),

in subsection (1), omit “ordinarily”.

5

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)   

Condition C is that the individual is UK resident for the tax year.”

10

      (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         

In section 727 (charge to tax on income treated as arising under section 728),

15

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)   

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

20

(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

which the relevant transfer abroad is made (if different from

25

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

year”.

30

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.

35

66         

In section 812 (case where limit on liability of non-UK residents is not to

apply), 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

40

April 2013.

68    (1)  

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

 
 

Finance Bill
Schedule 44 — Ordinary residence
Part 2 — Income tax: arising basis of taxation

578

 

(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

declarations on or after 6 April 2014, and any declarations made before that

5

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-

UK resident”, and

10

(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

if those amendments had not been made.

15

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

on or after 6 April 2014.

20

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)   

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

25

(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

if those amendments had not been made.

30

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)  

Sub-paragraph (1) is without prejudice to any provision in this Part of the

35

Schedule about the application of a particular amendment.

Savings

73    (1)  

This paragraph applies to an individual who—

(a)   

was resident in the United Kingdom for the tax year 2012-13, but

(b)   

was not ordinarily resident there at the end of the tax year 2012-13.

40

      (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.

 
 

Finance Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation

579

 

      (3)  

The 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),

5

and

(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.

10

      (5)  

The 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,

15

(b)   

if 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

20

year 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

25

been in the absence of this Schedule.

Part 3

Capital gains tax: accruals basis of taxation

TCGA 1992

74         

TCGA 1992 is amended as follows.

30

75    (1)  

Section 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—

35

“(1A)   

The 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

40

62(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

 
 

Finance Bill
Schedule 44 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation

580

 

(d)   

in any other case, that the person is resident in the United

Kingdom 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

5

(see section 2(1A)) but the person”.

77    (1)  

Section 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

10

“not resident”.

      (4)  

In 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))”.

15

79         

In section 62 (death: general provisions), in subsection (3), omit “, ordinary

residence,”.

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”.

20

81         

In section 67 (provisions applicable where section 79 of the Finance Act 1980

has 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.

25

      (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

substitute “in the United Kingdom, then for the purposes of this Act it is

treated as being not resident in the United Kingdom”.

30

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

“neither resident nor ordinarily resident” substitute “not resident”.

85    (1)  

Section 81 (death of trustee: special rules) is amended as follows.

35

      (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)  

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

86         

In section 82 (past trustees: liability for tax), in subsection (3)(b), for “become

40

neither resident nor ordinarily resident” substitute “cease to be resident”.

 
 

 
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