Finance (No. 2) Bill (HC Bill 193)

Finance (No. 2) BillPage 250

(3) After subsection (2) insert—

(2A) The reference in subsection (1)(b) to payments on account under
section 59AA does not include any amounts already repaid under
section 59AA(5).

53 5In section 107A (relevant trustees), in subsection (2)(b), after “59A” insert
“, 59AA or”.

54 In section 118 (interpretation), in subsection (1), at the appropriate place
insert—

  • “NRCGT return” has the meaning given by section 12ZB;.

55 (1) 10Schedule 3ZA (date by which payment to be made after amendment or
correction of self-assessment) is amended as follows.

(2) In paragraph 1—

(a) in sub-paragraph (1), at the end insert “or an advance self-
assessment (see section 12ZE(1))”;

(b) 15in sub-paragraph (2), after “section” insert “59AA(2) or”.

(3) In paragraph 2—

(a) in sub-paragraph (1), at the end insert “or an amendment of an
advance self-assessment under section 12ZK (amendment of
NRCGT return by taxpayer)”;

(b) 20in sub-paragraph (3), after “9B(3)” insert “or 12ZN(3)” and after “self-
assessment” insert “or advance self-assessment”.

(4) In paragraph 3(1), after “9ZB” insert “or 12ZL” and after “trustee return”
insert “or NRCGT return”.

(5) In paragraph 5(1)—

(a) 25after “amount of tax” insert “or an amount on account of capital gains
tax”;

(b) after “self-assessment” insert “or advance self-assessment”;

(c) omit “personal or trustee”.

56 (1) In FA 2007, Schedule 24 (penalties for errors) is amended as follows.

(2) 30In paragraph 1, in the table in sub-paragraph (4), after the entry relating to
accounts in connection with a partnership return insert—

Capital gains tax Return under section
12ZB of TMA 1970
(NRCGT return).

(3) 35After paragraph 21B insert—

Treatment of certain payments on account of tax

21C In paragraphs 1(2) and 5 references to “tax” are to be interpreted
as if amounts payable under section 59AA(2) of TMA 1970 (non-
resident CGT disposals: payments on account of capital gains tax)
40were tax.

57 In Schedule 36 to FA 2008 (information and inspection powers), after

Finance (No. 2) BillPage 251

paragraph 21 insert—

Taxpayer notices following NRCGT return

21ZA (1) Where a person has delivered an NRCGT return with respect to a
non-resident CGT disposal, a taxpayer notice may not be given for
5the purpose of checking the person’s capital gains tax position as
regards the matters dealt with in that return.

(2) Sub-paragraph (1) does not apply where, or to the extent that, any
of conditions A to C is met.

(3) Condition A is that notice of enquiry has been given in respect
10of—

(a) the return, or

(b) a claim (or an amendment of a claim) made by the person
in relation to the chargeable period,

and the enquiry has not been completed.

(4) 15In sub-paragraph (3) “notice of enquiry” means a notice under
section 12ZM of TMA 1970.

(5) Condition B is that an officer of Revenue and Customs has reason
to suspect that—

(a) an amount that ought to have been assessed under section
2012ZE of TMA 1970 as payable on account of the person’s
liability to capital gains tax for the tax year to which the
return relates has not been so assessed by the filing date for
the return, or

(b) an assessment under section 12ZE of TMA 1970 of the
25amount payable on account of P’s liability to capital gains
tax for the tax year to which the return relates has become
insufficient.

(6) Condition C is that the notice is given for the purpose of obtaining
any information or document that is also required for the purpose
30of checking that person’s position as regards a tax other than
capital gains tax.

(7) In this paragraph—

  • “NRCGT return” has the meaning given by section 12ZB of
    TMA 1970;

  • 35“non-resident CGT disposal” has the meaning given by
    section 14B of TCGA 1992.

58 In CTA 2009, in section 2 (charge to corporation tax), in subsection (2A), for
the words from “under” to the end substitute under—

(a) section 2B of TCGA 1992 (companies etc chargeable to capital
40gains tax on ATED-related gains on relevant high value
disposals), or

(b) section 14D or 188D of that Act (persons chargeable to capital
gains tax on NRCGT gains on non-resident CGT disposals).

59 (1) In Schedule 55 to FA 2009 (penalty for failure to make returns etc), in the

Finance (No. 2) BillPage 252

Table in paragraph 1, after item 2 insert—

2A Capital gains tax NRCGT return under section
12ZB of TMA 1970.

(2) That Schedule, as amended by sub-paragraph (1), is taken to have come into
5force for the purposes of NRCGT returns on the date on which this Act is
passed.

Part 3 Commencement

60 The amendments made by this Schedule have effect in relation to disposals
10made on or after 6 April 2015.

Section 38

SCHEDULE 8 Relevant high value disposals: gains and losses

Introduction

1 The Taxation of Chargeable Gains Act 1992 is amended as follows.

15“Relevant high value disposal”

2 (1) Section 2C (“relevant high value disposal”) is amended as follows.

(2) In subsection (6), in the definition of “the relevant ownership period” for “6
April 2013” substitute “6 April in the relevant year”.

(3) In that subsection, after that definition insert—

  • 20“the relevant year” means—

    (a)

    in Case 1 in paragraph 2 of Schedule 4ZZA, 2013;

    (b)

    in Case 2 in that paragraph, 2015;

    (c)

    in Case 3 in that paragraph, 2016;.

(4) In subsection (7)(b), for “1 April 2013” substitute “1 April in the relevant
25year”.

Threshold amount for the tax year 2015-16

3 (1) Section 2D (CGT on ATED-related gains: the threshold amount) is amended
as follows.

(2) In subsection (2) for “£2 million” substitute “£1 million”.

(3) 30In subsection (3) for “£2 million” substitute “£1 million”.

(4) In subsection (5) for ““£2 million”” substitute ““£1 million””.

(5) The amendments made by this paragraph have effect in relation to disposals
occurring in the tax year 2015-16.

Finance (No. 2) BillPage 253

Threshold amount from 6 April 2016

4 (1) Section 2D (CGT on ATED-related gains: the threshold amount) is amended
as follows.

(2) In subsection (2) for “£1 million” substitute “£500,000”.

(3) 5In subsection (3) for “£1 million” substitute “£500,000”.

(4) In subsection (5) for ““£1 million”” substitute ““£500,000””.

(5) The amendments made by this paragraph have effect in relation to disposals
occurring on or after 6 April 2016.

Restriction of losses

5 10In section 2E (restriction of losses), in subsection (3)—

(a) after “5 April 2013” insert “etc”, and

(b) for “post-April 2013” substitute “post-commencement”.

Calculation of gains and losses

6 Schedule 4ZZA (relevant high value disposals: gains and losses) is amended
15as follows.

7 For the italic heading before paragraph 2 substitute “Assets held on 5 April
2013, 5 April 2015 or 5 April 2016: no paragraph 5 election”.

8 For paragraph 2 substitute—

2 (1) In Cases 1 to 3 below—

(a) 20paragraph 3 applies for the purposes of computing the
gain or loss accruing to P which is ATED-related, and

(b) paragraph 4 applies for the purposes of computing the
gain or loss accruing to P which is not ATED-related.

(2) Case 1 is that—

(a) 25the interest disposed of was held by P on 5 April 2013, and

(b) neither Case 2 nor Case 3 applies.

(3) Case 2 is that—

(a) the interest disposed of was held by P on 5 April 2015,

(b) Case 3 does not apply, and

(c) 30no relevant single dwelling interest was subject to ATED
on one or more days in the period ending with 31 March
2015 during which P held the interest disposed of.

(4) Case 3 is that—

(a) the interest disposed of was held by P on 5 April 2016, and

(b) 35no relevant single dwelling interest was subject to ATED
on one or more days in the period ending with 31 March
2016 during which P held the interest disposed of.

(5) For the purposes of this paragraph—

(a) “relevant single-dwelling interest” means the single-
40dwelling interest by reference to which Condition B in
section 2C is met in relation to the relevant high value

Finance (No. 2) BillPage 254

disposal, or, if Condition B is met by reference to more than
one such interest, each of them;

(b) a relevant single dwelling interest is “subject to ATED” on
a day if P—

(i) 5was within the charge to annual tax on enveloped
dwellings with respect to that interest on that day,
or

(ii) would have been within that charge but for the day
being “relievable” by virtue of any of the provisions
10mentioned in section 132 of the Finance Act 2013
(ATED: effect of reliefs).

(6) In paragraphs 3 and 4, “the relevant year” means—

(a) in relation to Case 1, 2013;

(b) in relation to Case 2, 2015;

(c) 15in relation to Case 3, 2016.

9 (1) Paragraph 3 is amended as follows.

(2) In sub-paragraph (1) for “post-April 2013” substitute “post-
commencement”.

(3) In sub-paragraph (2)—

(a) 20for “post-April 2013” substitute “post-commencement”, and

(b) for “5 April 2013” substitute “5 April in the relevant year”.

(4) In sub-paragraph (5), for “6 April 2013” substitute “6 April in the relevant
year”.

10 (1) Paragraph 4 is amended as follows.

(2) 25In sub-paragraph (1)—

(a) for “pre-April 2013” substitute “pre-commencement”, and

(b) for “post-April 2013”, in both places, substitute “post-
commencement”.

(3) In sub-paragraph (2)—

(a) 30for “pre-April 2013” substitute “pre-commencement”, and

(b) for “5 April 2013” substitute “5 April in the relevant year”

(4) In sub-paragraph (4) for “post-April 2013” substitute “post-
commencement”.

(5) In sub-paragraph (5) for “pre-April 2013” substitute “pre-commencement”.

11 (1) 35Paragraph 5 is amended as follows.

(2) In sub-paragraph (1) for “5 April 2013” substitute “5 April in the relevant
year”.

(3) In sub-paragraph (3) for “6 April 2013” substitute “6 April in the relevant
year”.

(4) 40For sub-paragraph (6) substitute—

(6) In this paragraph—

    Finance (No. 2) BillPage 255

  • “chargeable interest” has the same meaning as in Part 3 of the
    Finance Act 2013 (annual tax on enveloped dwellings) (see
    section 107 of that Act);

  • “relevant year” has the meaning given by paragraph 2.

12 5In the italic heading before paragraph 6, for “assets acquired after 5 April
2013” substitute “or none of Cases 1 to 3 apply”.

13 In paragraph 6, for sub-paragraph (1)(b) substitute—

(b) none of Cases 1, 2 and 3 in paragraph 2 applies to the
disposal.

Section 39

10SCHEDULE 9 Private residence relief

1 TCGA 1992 is amended in accordance with this Schedule.

2 In section 222 (relief on disposal of private residence)—

(a) after subsection (6) insert—

(6A) 15Where an individual has determined, by giving notice under
subsection (5)(a), that a residence is the individual’s main
residence, that determination does not cease to be effective at
any time by reason only of the fact that, at that time, another
of the individual’s residences is treated by section 222B(1) as
20not being occupied as a residence (or, having been so treated,
is no longer so treated).;

(b) in subsection (7), for “223” substitute “222A”.

3 After section 222 insert—

222A Determination of main residence: non-resident CGT disposals

(1) 25This section applies where—

(a) an individual (“P”) makes a disposal of, or of an interest in—

(i) a dwelling-house, or part of a dwelling-house, which
was at any time in P’s period of ownership occupied
by P as a residence, or

(ii) 30land (as mentioned in section 222(1)(b)) which P had
for P’s own occupation and enjoyment with that
residence as its garden or grounds, and

(b) the disposal is a non-resident CGT disposal (see section 14B).

In the remainder of this section the residence concerned is referred to
35as “the dwelling-house”.

(2) So far as it is necessary for the purposes of section 222, P may
determine, by a notice under this section, which of 2 or more
residences (of which one is the dwelling-house) was P’s main
residence for any period within P’s period of ownership of the
40dwelling-house.

(3) A notice under this section may vary, as respects any period within
P’s period of ownership of the dwelling-house, a notice previously
given under section 222(5)(a).

Finance (No. 2) BillPage 256

See also subsections (4) and (7).

(4) A notice under this section may not vary a notice previously given
under section 222(5)(a) as respects any period for which the previous
5notice had the effect of determining whether or not a disposed of
residence was P’s main residence.

(5) In subsection (4) “disposed of residence” means one of P’s residences
which was disposed of (in whole or in part) before the date of the
disposal mentioned in subsection (1)(a).

(6) 10A notice under this section—

(a) must be given in the NRCGT return in respect of the disposal
mentioned in subsection (1)(a), and

(b) may not subsequently be varied, whether by a notice under
this section or section 222(5)(a).

(7) 15Where a notice under this section affects both P and an individual
(“X”) who was, in the period to which the notice relates (“the relevant
period”), P’s spouse or civil partner living with P—

(a) in a case where each of P and X is required to make an
NRCGT return in respect of the disposal of an interest in the
20dwelling-house, notice given by P under this section is
effective as respects any part of the relevant period when P
and X were living together as spouses or civil partners only if
notice to the same effect is also given under this section by X
in respect of that period;

(b) 25in any other case, notice given by P under this section is
effective as respects any part of the relevant period when P
and X were living together as spouses or civil partners only if
it is accompanied by written notification from X agreeing to
the terms of the notice in respect of that period.

(8) 30Nothing in subsection (2) affects the application of section 222(5) in
relation to P.

222B Non-qualifying tax years

(1) For the purposes of sections 222 to 226 the dwelling-house or part of
a dwelling-house mentioned in section 222(1) is treated as not being
35occupied as a residence by the individual so mentioned (“P”) at any
time in P’s period of ownership which falls within—

(a) a non-qualifying tax year, or

(b) a non-qualifying partial tax year.

In the remainder of this section the dwelling-house or part of a
40dwelling-house is referred to as “the dwelling-house”.

(2) Except where the disposal mentioned in section 222(1) is a non-
resident CGT disposal, subsection (1) does not have effect in respect
of any tax year or partial tax year before the tax year 2015-16.

(3) A tax year the whole of which falls within P’s period of ownership is
45“a non-qualifying tax year” in relation to the dwelling-house if—

(a) neither P nor P’s spouse or civil partner was resident for that
tax year in the territory in which the dwelling-house is
situated, and

Finance (No. 2) BillPage 257

(b) the day count test was not met by P with respect to the
dwelling-house for that tax year (see section 222C).

(4) A partial tax year is “a non-qualifying partial tax year” in relation to
the dwelling-house if—

(a) 5neither P nor P’s spouse or civil partner was resident for the
tax year in question in the territory in which the dwelling-
house is situated, and

(b) the day count test was not met by P with respect to the
dwelling-house for that partial tax year.

(5) 10Where part only of a tax year falls within P’s period of ownership,
that part is a “partial tax year” for the purposes of this section.

(6) For the purposes of this section an individual is resident in a territory
outside the United Kingdom (“the overseas territory”) for a tax year
(“year X”) in relation to which condition A or B is met.

(7) 15Condition A is that the individual is, in respect of a period or periods
making up more than half of year X, liable to tax in the overseas
territory under the law of that territory by reason of the individual’s
domicile or residence.

(8) Condition B is that the individual would be resident in the overseas
20territory for year X in accordance with the statutory residence test in
Part 1 of Schedule 45 to the Finance Act 2013, if in Parts 1 and 2 of that
Schedule—

(a) any reference to the United Kingdom (however expressed)
were read as a reference to the overseas territory,

(b) 25“overseas” meant anywhere outside that territory, and

(c) in paragraph 26 (meaning of “work”), sub-paragraphs (2) to
(4), (6) and (7) were disregarded.

(9) In applying the statutory residence test in accordance with
subsection (8), any determination of whether—

(a) 30the individual was resident in the overseas territory for a tax
year preceding year X, or

(b) another individual is resident in the overseas territory for
year X,

is to be made in accordance with the statutory residence test, as
35modified by subsection (8).

(10) Section 11(1)(a) (visiting forces etc) is to be disregarded in
determining for the purposes of this section whether or not an
individual is resident in the United Kingdom.

(11) Subsection (1) is subject to—

(a) 40section 222(8) (job-related accommodation), and

(b) section 223(3) (absence reliefs).

222C Day count test

(1) This section explains how P meets the day count test (see section
222B) with respect to the dwelling-house or part of a dwelling-house
45mentioned in section 222(1) for a full or partial tax year.

In the remainder of this section the dwelling-house or part of a
dwelling-house is referred to as “the dwelling-house”.

Finance (No. 2) BillPage 258

(2) P meets that test for a tax year with respect to the dwelling-house if,
during that year, P spends at least 90 days in one or more qualifying
houses.

(3) P meets that test for a partial tax year with respect to the dwelling-
5house if, during that partial tax year, P spends at least the relevant
number of days in one or more qualifying houses.

(4) To find the relevant number of days for the purposes of subsection
(3), multiply 90 days by the relevant fraction and round up the result
to the nearest whole number of days if necessary.

(5) 10The relevant fraction is—


where—

  • “X” is the number of days in the partial tax year;

  • “Y” is the number of days in the tax year.

(6) 15For the purposes of subsections (2) and (3) the days need not be
consecutive, and days spent in different qualifying houses may be
aggregated.

(7) A day spent by P’s spouse or civil partner in a dwelling-house or part
of a dwelling-house which is a qualifying house in relation to P
20counts as a day spent by P in the qualifying house (but no day is to
be counted twice as a result of this subsection).

(8) For the purposes of this section, a day counts as a day spent by an
individual in a qualifying house if—

(a) the individual is present at the house at the end of the day, or

(b) 25the individual—

(i) is present in the house for some period during the
day, and

(ii) the next day, has stayed overnight in the house.

(9) For the purposes of this section—

(a) 30the dwelling-house is a qualifying house in relation to P, and

(b) any other dwelling-house or part of a dwelling-house which
is situated in the same territory as the dwelling-house is a
qualifying house in relation to P at any particular time if at
that time any of the following has an interest in it—

(i) 35P,

(ii) an individual who is P’s spouse or civil partner at that
time, and

(iii) an individual who is P’s spouse or civil partner at the
time of disposal of the dwelling-house.

(10) 40In this section “partial tax year” has the meaning given by section
222B(5).

4 (1) Section 223 (amount of relief) is amended as follows.

(2) In subsection (3)—

(a) after “the purposes of” insert “sections 222(5) and 222A and”;

Finance (No. 2) BillPage 259

(b) for “was the individual’s only or main residence” substitute “were
occupied by the individual as a residence”.

(3) For subsection (7) substitute—

(7) In this section “period of ownership”—

(a) 5does not include any period before 31 March 1982, and

(b) where the whole or part of the gain to which section 222
applies is an NRCGT gain chargeable to capital gains tax by
virtue of section 14D, does not include any period before 6
April 2015 (but see subsection (7A)).

(7A) 10Paragraph (b) of the definition of “period of ownership” does not
apply in a case where paragraph 9 of Schedule 4ZZB applies by
virtue of sub-paragraph (1)(b) of that paragraph (the individual has
made an election for the retrospective basis of computation to apply).

(7B) In this section “period of absence” means a period during which the
15dwelling-house or the part of the dwelling-house was not occupied
by the individual as a residence.

5 After section 223 insert—

223A Amount of relief: non-resident CGT disposals

(1) This section applies where—

(a) 20the individual mentioned in section 223(1) (“P”) acquired the
asset to which the gain mentioned in section 222(1) is
attributable before 6 April 2015, and

(b) P’s period of ownership for the purposes of section 223
begins on that date because of section 223(7)(b).

(2) 25Times before 6 April 2015 are to be ignored in determining whether
or not condition A in section 223 is met in relation to a period of
absence, unless P elects that this subsection is not to apply in relation
to the period.

(3) An election under subsection (2)—

(a) 30must specify which day before 6 April 2015 P relies on in
relation to the period of absence for the purpose of meeting
condition A in section 223, and

(b) must be made in the NRCGT return in respect of the disposal.

(4) Where P has made an election under subsection (2), section 223
35applies as if relevant prior periods of absence counted against the
maximum periods (and maximum aggregate periods) specified in
subsection (3)(a), (c) and (d) of that section.

(5) In relation to a maximum period (or maximum aggregate period)
specified in paragraph (a), (c) or (d) of section 223(3), “relevant prior
40period of absence” means a period of absence which would have
counted against that maximum period (or maximum aggregate
period) if the bridge period were included in the period of
ownership.

(6) In subsection (5) “the bridge period” means the period beginning
45with the day specified in the election and ending with 5 April 2015.