Finance Bill (HC Bill 47)

Finance BillPage 320

41 In section 1103 (regulations about information about non-qualifying
distributions)—

(a) in subsection (2) (purpose for which sections 1101 and 1102 may be
rewritten), for “which are not qualifying distributions” substitute “to
5which section 1100 does not apply”,

(b) in subsection (4) (special arrangements about matters specified in
subsection (5)), for “matters” substitute “matter”, and

(c) in subsection (5)—

(i) for “Those matters are” substitute “That matter is”, and

(ii) 10omit paragraph (b) (tax credits), and the “and” preceding it.

42 (1) Section 1106 (interpretation of sections 1104 and 1105) is amended as
follows.

(2) In subsection (4) (meaning of “tax certificate”)—

(a) after paragraph (a) insert “and”, and

(b) 15omit paragraph (c) (tax credits), and the “and” preceding it.

(3) Omit subsections (5) and (6) (interpretation of subsection (4)(c)).

43 Omit sections 1110 and 1111 (recovery of overpaid tax credits etc).

44 (1) Section 1115 (meaning of “new consideration” in Part 23) is amended as
follows.

(2) 20In subsections (5)(a) and (6)(b) for “qualifying” substitute “non-CD”.

(3) After subsection (6) insert—

(7) In this section “non-CD distribution” means any distribution other
than one which is a distribution for the purposes of the Corporation
Tax Acts only because it falls within paragraph C or D in section
251000(1) (redeemable share capital or security issued as bonus in
respect of shares in, or securities of, the company).”

45 In section 1119 (definitions for the purposes of the Corporation Tax Acts)
omit the entries for “franked investment income”, “qualifying distribution”
and “tax credit”.

46 30Omit section 1126 (meaning of “franked investment income”).

47 Omit section 1136 (meaning of “qualifying distribution”).

48 Omit section 1139(4) (“relief” includes tax credit).

49 In Schedule 2 (transitionals and savings etc) omit paragraph 106(1)
(operation of sections 1026 and 1027 in relation to share capital issued before
357 April 1973).

50 In Schedule 4 (index of defined expressions) omit the entries for “franked
investment income”, “qualifying distribution” and “tax credit”.

Other amendments

51 (1) TMA 1970 is amended as follows.

(2) 40In section 8(1AA)(b) (payable income tax is chargeable amount less tax
deducted at source and tax credits) omit the words after “source”.

Finance BillPage 321

(3) In section 8A(1AA)(b) (payable income tax is chargeable amount less tax
deducted at source and tax credits) omit the words after “source”.

(4) In section 9(1) (self-assessment)—

(a) in paragraph (b) (payable income tax is assessed amount less tax
5deducted at source and tax credits) omit the words after “source”,
and

(b) in the words after paragraph (b) omit “, 400(2), 414(1), 421(1)”.

(5) In section 12AA(1A)(b) (partner’s payable income tax is chargeable amount
less tax deducted at source and tax credits) omit the words after “source”.

(6) 10In section 12AB (partnership statement in partnership return)—

(a) in subsection (1)(a)—

(i) after sub-paragraph (ia) insert “and”, and

(ii) omit sub-paragraph (iii) (tax credits), and the “and”
preceding it,

(b) 15in subsection (1)(b) for “, tax or credit” substitute “or tax”, and

(c) in subsection (5) omit the definition of “tax credit”.

(7) In section 12B(4A)(a)(i) (statements themselves must be preserved if of
amount of qualifying distribution and tax credit), after “amount” insert “of
distribution, formerly amount”.

(8) 20In section 59A(8)(b) (amounts included in annual total of deductions at
source) omit “or are tax credits to which section 397(1) or 397A(1) of ITTOIA
2005 applies,”.

(9) In section 59B (payment of income tax and capital gains tax)—

(a) in subsection (1) omit “, 400(2), 414(1), 421(1)”, and

(b) 25in subsection (2)(b) omit “or is a tax credit to which section 397(1) or
397A(1) of ITTOIA 2005 applies,”.

(10) Omit section 87A(5) (interest on assessments under section 1110 of CTA 2010
on overpaid tax credits etc).

(11) In section 98 (special returns), in the first column of the table omit the entry
30for section 1109 of CTA 2010.

52 (1) ICTA is amended as follows.

(2) Omit section 231B (arrangements to pass on value of tax credit).

(3) Omit section 824(2) (repayment supplements: tax credits).

(4) In section 824(4A) omit paragraph (b) (repayment supplements: tax credit
35treated as income tax deducted at source), and the “and” preceding it.

(5) In section 825(1) (repayment supplements: companies) omit paragraph (c)
(tax credits comprised in franked investment income), and the “or”
preceding it.

(6) In section 826 (interest on tax overpaid by companies)—

(a) 40in subsection (1) omit paragraph (c) (tax credits), including the “or”
at the end, and

(b) in subsection (3)—

(i) omit “or a payment of the whole or part of a tax credit falling
within subsection (1)(c) above”, and

Finance BillPage 322

(ii) omit “or, as the case may be, the franked investment income
referred to in subsection (1)(c) above”.

53 In FA 1988, in Schedule 13 omit paragraph 7(c) (post-consolidation
amendment of section 824(2) of ICTA).

54 5In FA 1989—

(a) omit section 115 (double taxation: tax credits), and

(b) in section 179(1)(b)(i) (amendments of provisions of TMA 1970
including section 87A(1) and (5)) omit “and (5)”.

55 In FA 1993 omit section 171(2B) (which excludes entitlement to tax credits).

56 10In FA 1994 omit section 219(4B) (which excludes entitlement to tax credits).

57 (1) F(No.2)A 1997 is amended as follows.

(2) Omit section 22(1) (which inserted section 171(2B) of FA 1993).

(3) Omit section 28 (which inserted section 231B of ICTA).

(4) Omit section 30(9) and (10) (effect of double taxation arrangements in
15relation to tax credits).

(5) In Schedule 6 (repeal of provisions relating to foreign income dividends), in
paragraph 23 (transitional provision for certain foreign income dividends
paid before 6 April 1999 but received on or after that date) omit—

(a) “qualifying”, and

(b) 20“nine tenths of”.

58 (1) FA 1998 is amended as follows.

(2) Omit section 76(3) (regulations about tax credits where non-UK residents
have invested in individual savings accounts).

(3) In Schedule 18 (company tax returns etc)—

(a) 25omit paragraph 9(3) (certain claims by companies for payment of tax
credits),

(b) in paragraphs 22(3)(a)(i) and 23(3)(a)(i) (which relate to a statement
as to amount of qualifying distribution and tax credit), after
“amount” insert “of distribution, but formerly amount”, and

(c) 30in paragraph 52(2)(a) omit “or payment of a tax credit”.

59 In the Commonwealth Development Corporation Act 1999, in Schedule 3
omit paragraph 6(2)(b) (provisions about tax credits do not apply in relation
to distributions by the Corporation).

60 In the Financial Services and Markets Act 2000 (Consequential
35Amendments) (Taxes) Order 2001 (S.I. 2001/3629S.I. 2001/3629)—

(a) omit article 82(a), and

(b) in article 87(a) omit “and (4B)”.

61 (1) ITEPA 2003 is amended as follows.

(2) Omit sections 58(6) and 61H(6) (tax credits to be reduced in line with
40reductions in distributions).

(3) In Part 2 of Schedule 1 (index of defined expressions) omit the entry for “tax
credit”.

Finance BillPage 323

62 In ITTOIA 2005, in Schedule 1 (minor and consequential amendments) omit
paragraphs 116, 331(2), 359, 360, 361(a), 363, 364, 376, 377(3), 464(3), 496, 503
and 510(2).

63 (1) ITA 2007 is amended as follows.

(2) 5In section 26(1)(b) (list of provisions giving tax reductions), in the entry for
section 401 of ITTOIA 2005, for “qualifying distribution after linked non-
qualifying distribution” substitute “distribution repaying shares or security
issued in earlier distribution”.

(3) In section 31 (calculation of total income)—

(a) 10omit subsection (3) (dividend etc treated as increased by amount of
tax credit), and

(b) in subsection (4), for “Subsections (2) and (3) apply” substitute
“Subsection (2) applies”.

(4) In section 425(5) (deductions in calculating total amount of income tax for
15gift aid purposes)—

(a) in paragraph (a)—

(i) in sub-paragraph (i) omit “or 400(2)”, and

(ii) omit sub-paragraphs (ii) and (iii),

(b) after paragraph (a) insert “and”,

(c) 20in paragraph (b), for “680(3)(b) or (4)” substitute “680(4)”, and

(d) omit paragraph (c), and the “and” before it.

(5) In section 482 (types of amount charged at special rates for trustees), in the
entry for Type 1 amounts, omit “qualifying”.

(6) In section 487(6) (non-UK resident trustees: disregarded income which is not
25included in untaxed income)—

(a) after paragraph (a) insert “or”, and

(b) omit paragraph (c) (income in respect of which there is a tax credit),
and the “or” preceding it.

(7) In section 498 (discretionary payments by trustees: types of tax to be
30included in trustees’ tax pool)—

(a) in subsection (1)—

(i) in Type 1 (tax at special rates for trustees on income not
attracting tax credits), omit “2, 3 or”, and

(ii) omit Types 2 and 3 (tax at dividend trust rate on income
35attracting dividend tax credits), and

(b) omit subsection (2) (interpretation of Types 2 and 3).

(8) In section 502(3) (non-UK resident beneficiaries: disregarded income which
is not included in untaxed income)—

(a) after paragraph (a) insert “or”, and

(b) 40omit paragraph (c) (income in respect of which there is a tax credit),
and the “or” preceding it.

(9) In section 614ZD (treatment of recipient of manufactured payment)—

(a) in subsection (3), for “to (6)” substitute “and (5)”, and

(b) omit subsection (6) (which excludes entitlement to tax credits).

Finance BillPage 324

(10) In section 687 (transactions in securities: meaning of “income tax
advantage”)—

(a) omit “qualifying” in each place, and

(b) in subsection (4), after “In this section” insert

(a) 5“distribution” does not include a distribution which is
a distribution for the purposes of the Corporation Tax
Acts only because it falls within paragraph C or D in
section 1000(1) of CTA 2010 (redeemable share capital
or security issued as bonus in respect of shares in, or
10securities of, the company), and

(b) ”.

(11) In section 713 (interpretation of Chapter 1 (transactions in securities))—

(a) the existing text becomes subsection (1),

(b) in that subsection, in the definition of “dividends”, omit
15“qualifying”, and

(c) after that subsection insert—

(2) In the definition of “dividends” given by subsection (1),
“other distributions” does not include a distribution which is
a distribution for the purposes of the Corporation Tax Acts
20only because it falls within paragraph C or D in section
1000(1) (redeemable share capital or security issued as bonus
in respect of shares in, or securities of, the company).”

(12) In section 745(1) (transfer of assets abroad: same rate of tax not to be charged
twice)—

(a) 25after “at the basic rate,” insert “or”, and

(b) omit “or the dividend ordinary rate”.

(13) In section 809S(4) (meaning of “income tax advantage”) omit the words after
paragraph (d).

(14) In section 811(4) (limit on liability to income tax of non-UK residents)—

(a) 30after paragraph (a) insert “and”, and

(b) omit paragraph (c) (tax credits), and the “and” preceding it.

(15) In section 815(3) (limit on liability to income tax of non-UK resident
companies)—

(a) after paragraph (a) insert “and”, and

(b) 35omit paragraph (c) (tax credits), and the “and” preceding it.

(16) In section 989 (definitions for the purposes of the Income Tax Acts) omit the
entries for “qualifying distribution” and “tax credit”.

(17) In section 1026 (“non-qualifying income” includes income on which tax
treated as paid)—

(a) 40in paragraph (a) (deemed payment under sections 399 and 400 of
ITTOIA 2005)—

(i) omit “or 400(2)”, and

(ii) for “from UK resident companies on which there is no tax
credit” substitute “to non-UK resident persons”, and

(b) 45omit paragraphs (b) and (c) (deemed payment under sections 414
and 421 of ITTOIA 2005).

Finance BillPage 325

(18) In Schedule 1 (minor and consequential amendments) omit paragraphs 26,
245(2)(a) and (3), 446(27), 515(3), 516, 517(2), 520 and 522.

(19) In Schedule 4 (index of defined expressions) omit the entries for “qualifying
distribution” and “tax credit”.

64 5In FA 2008, in Schedule 12 (amendments relating to tax credits) omit
paragraphs 3, 5, 6, 8 to 16, 19, 20, 24(b) and 31.

65 (1) CTA 2009 is amended as follows.

(2) In section 1222 (company with investment business: amount deductible for
management expenses to be reduced by income from sources not charged to
10tax)—

(a) in subsection (1) (UK resident company), for paragraph (c) (franked
investment income does not reduce deductibles) substitute—

(c) the income does not consist of exempt ABGH
distributions.”,

(b) 15in subsection (2) (non-UK resident company), for paragraph (d)
(franked investment income does not reduce deductibles)
substitute—

(d) the income does not consist of exempt ABGH
distributions.”, and

(c) 20after subsection (3) insert—

(4) In this section “exempt ABGH distribution” means a
distribution which—

(a) is a distribution for the purposes of the Corporation
Tax Acts only because it falls within paragraph A, B,
25G or H in section 1000(1) of CTA 2010, and

(b) is exempt for the purposes of Part 9A (company
distributions).”

(3) Omit section 1266(3) (partnerships with foreign element: entitlement to tax
credit).

(4) 30In Schedule 4 (index of defined expressions) omit the entry for “qualifying
distribution”.

66 (1) FA 2009 is amended as follows.

(2) In Schedule 19 (amendments relating to tax credits) omit paragraphs 2(2)
and (3), 3, 5, 6(2)(a), (3) and (4), 7, 9, 10(a), 11, 12 and 13(c).

(3) 35In paragraph 14 of Schedule 19 (amendments made by the Schedule have
effect in relation to distributions etc arising or paid on or after 22 April 2009),
after sub-paragraph (2) insert—

(3) Section 873(4) of ITTOIA 2005 (inserted by paragraph 8), so far as
relating to any order or regulations made after the passing of FA
402016 under any provision of ITTOIA 2005 other than section
397BA of that Act, has effect as if sub-paragraph (1) did not apply
in relation to it.”

(4) In Schedule 53 (late payment interest) omit—

(a) paragraph 6 (late payment interest start date in relation to
45assessments of overpaid tax credits etc under section 1110 of CTA
2010), and

Finance BillPage 326

(b) the italic heading preceding it.

(5) In paragraph 9B of Schedule 54 (repayment interest start date: companies:
income tax and certain tax credits)—

(a) in sub-paragraph (1) omit paragraph (b) (tax credit comprised in
5franked investment income), and the “and” preceding it, and

(b) in sub-paragraph (2)—

(i) omit “or payment”, and

(ii) omit “or the franked investment income mentioned in sub-
paragraph (1)(b)”.

(6) 10In paragraph 14 of Schedule 54 (interpretation) omit paragraph (b) (tax
deducted at source treated as including tax credits), and the “and” preceding
it.

67 In Schedule 1 to CTA 2010 (minor and consequential amendments) omit
paragraphs 19, 153, 156(3), 282, 303(2), 456, 562(7), 704(27) and 722.

68 (1) 15TIOPA 2010 is amended as follows.

(2) In section 6(2) (effect of double taxation arrangements)—

(a) after paragraph (e) insert “or”, and

(b) omit paragraph (g) (tax credits), and the “or” preceding it.

(3) In section 187A (excess interest treated as a qualifying distribution), in
20subsection (2), and the heading, omit “qualifying”.

(4) Omit section 234(2) (“relief” includes tax credit).

(5) In Schedule 8 (minor and consequential amendments) omit paragraphs 38,
51, 52, 66 and 67.

69 In FA 2011—

(a) 25in Part 6 of Schedule 23 (consequential provisions) omit paragraph
64(3), and

(b) in Schedule 26 omit paragraph 1(2)(a)(i) (which amended section
231B of ICTA), including the “and” at the end.

70 In FA 2012, in section 169(2) (payments by certain friendly societies treated
30as qualifying distributions) omit “qualifying”.

71 In FA 2013—

(a) in paragraph 6(2) of Schedule 19 (which amends section 549 of CTA
2010), for “subsections (2) and” substitute “subsection”, and

(b) in Part 3 of Schedule 29 (manufactured dividends: consequential etc
35amendments) omit paragraphs 13, 14(a) and 44(3).

72 In FA 2015, in section 19—

(a) in subsection (1), for “credits etc” substitute “treated as paid”, and

(b) omit subsections (5) and (6) (which insert sections 397(5A) and
399(5A) of ITTOIA 2005).

40Commencement

73 (1) Subject to the following sub-paragraphs of this paragraph, the amendments
made by this Schedule have effect in relation to dividends paid or arising (or

Finance BillPage 327

treated as paid), and other distributions made (or treated as made), in the tax
year 2016-17 or at any later time.

(2) The following have effect for the tax year 2016-17 and subsequent tax
years—

(a) 5the amendments in sections 8 to 9, 12AA and 59B of TMA 1970,

(b) the amendments in section 854(6) of ITTOIA 2005,

(c) the amendments in section 425 except the amendment in section
425(5)(b), and the amendments in sections 498, 745 and 1026, of ITA
2007,

(d) 10the repeals of paragraphs 359, 360, 361(a), 363 and 377(3) of Schedule
1 to ITTOIA 2005,

(e) the repeals of paragraphs 8 to 11 and 14 of Schedule 12 to FA 2008,
and

(f) the repeals of the following provisions of Schedule 19 to FA 2009—

(i) 15paragraph 9(a) and (b),

(ii) paragraph 9(c) so far as relating to section 12AA of TMA
1970, and

(iii) paragraph 9(d) so far as relating to section 59B of TMA 1970.

(3) The amendment in paragraph 23 of Schedule 6 to F(No.2)A 1997 has effect
20in relation to foreign income dividends received on or after 6 April 2016.

(4) The amendments in sections 393 and 406 of ITTOIA 2005, and the repeal of
paragraph 19 of Schedule 12 to FA 2008, have effect in relation to cash
dividends paid over in the tax year 2016-17 or at any later time.

(5) The amendment in section 396A of ITTOIA 2005 has effect in relation to
25things received on or after 6 April 2016 (even if the choice to receive them
was made before that date).

(6) The amendments in section 401 of ITTOIA 2005 have effect where the
subsequent distribution is made in the tax year 2016-17 or at any later time,
even if the prior distribution is made before 6 April 2016.

(7) 30The amendments in sections 411 and 414 of ITTOIA 2005, and the repeal of
paragraph 520 of Schedule 1 to ITA 2007, have effect in relation to stock
dividend income treated as arising in the tax year 2016-17 or at any later
time.

(8) The amendments in sections 651 to 680A of ITTOIA 2005 (but not the repeal
35of section 680(3)(a) of that Act) and the amendment in section 425(5)(b) of
ITA 2007—

(a) so far as they relate to income within section 664(2)(c) of ITTOIA 2005
(stock dividends), have effect in relation to stock dividend income
treated as arising in the tax year 2016-17 or at any later time, and

(b) 40so far as they relate to income within section 664(2)(d) of ITTOIA
2005 (release of loans), have effect in relation to amounts released or
written off in the tax year 2016-17 or at any later time.

(9) The amendments in Chapter 6 of Part 4 of ITTOIA 2005 and in section 463 of
CTA 2010, and the repeal of paragraph 522 of Schedule 1 to ITA 2007, have
45effect in relation to amounts released or written off in the tax year 2016-17 or
at any later time.

Finance BillPage 328

(10) The amendments in section 614ZD of ITA 2007 have effect in relation to
manufactured payments made on or after 6 April 2016.

(11) The amendments in section 687 of ITA 2007 have effect where the relevant
consideration is received in the tax year 2016-17 or at any later time.

(12) 5The amendments in section 1222 of CTA 2009 have effect in relation to
income arising in the tax year 2016-17 or at any later time.

(13) The amendment in section 1026(1) of CTA 2010 has effect where the bonus
share capital is issued on or after 6 April 2016.

(14) Sub-paragraph (1) does not apply in relation to—

(a) 10the amendments in section 401B of ITTOIA 2005;

(b) the amendment in paragraph 14 of Schedule 19 to FA 2009.

SCHEDULE 2 Section 12 Sporting testimonial payments

Income tax: sporting testimonial payments treated as earnings

1 15After section 226D of ITEPA 2003 (shareholder or connected person having
material interest in company) insert—

“Sporting testimonial payments

226E Sporting testimonial payments

(1) This section applies in relation to an individual who is or has been
20employed as a professional sportsperson (“S”).

(2) In this section “sporting testimonial” means—

(a) a series of relevant events or activities which each have the
same controller, or

(b) a single relevant event or activity not forming part of such a
25series.

(3) An event or activity is (subject to subsection (4)(b)) a relevant event
or activity if—

(a) its purpose (or one of its purposes) is to raise money for or for
the benefit of S, and

(b) 30the only or main reason for doing that is to recognise S’s
service as a professional sportsperson who is or has been
employed as such.

(4) An activity that meets the conditions in subsection (3)(a) and (b) and
consists solely of inviting and collecting donations for or for the
35benefit of S—

(a) is a relevant activity if it is one of a series of relevant events
or activities for the purposes of subsection (2)(a), but

(b) is not a relevant activity for the purposes of subsection (2)(b)
so long as both conditions in subsection (5) are met while the
40activity takes place.

Finance BillPage 329

(5) The conditions are—

(a) that any person who is responsible (alone or with others) for
collecting the donations or who is the controller (or a member
of a committee which is the controller) of the activity is not—

(i) 5S,

(ii) a person who is (or has been) the controller of any
other relevant event or activity for or for the benefit of
S,

(iii) a person connected with S or a person mentioned in
10sub-paragraph (ii),

(iv) a person acting for or on behalf of a person mentioned
in sub-paragraphs (i) to (iii), and

(b) that the donations collected do not include any sums paid
(directly or indirectly) out of money raised by any other
15relevant event or activity.

(6) A “sporting testimonial payment” is a payment made by (or on
behalf of) the controller of a sporting testimonial out of money raised
for or for the benefit of S which—

(a) is made to S, to a member of S’s family or household, to a
20prescribed person, to S’s order or otherwise for S’s benefit,
and

(b) does not (apart from this section) constitute earnings from an
employment.

(7) A sporting testimonial payment is to be treated as earnings of S from
25the employment or former employment to which the sporting
testimonial is most closely linked.

(8) For the purposes of this section if at any material time S is dead—

(a) anything done for or for the benefit of S’s estate is to be
regarded as done for or for the benefit of S; and

(b) 30a payment made to S’s personal representatives or to their
order is to be treated as a payment to S or to S’s order.

(9) In this section—

  • “controller”, in relation to an event or activity which meets the
    conditions in subsection (3)(a) and (b), means the person who
    35controls the disbursement of any money raised for or for the
    benefit of S from that event or activity,

  • “money” includes money’s worth and “payment” includes the
    transfer of money’s worth or the provision of any benefit,

  • “prescribed person” means a person prescribed in regulations
    40made by the Treasury.

(10) Section 993 of ITA 2007 (meaning of “connected” persons) has effect
for the purposes of this section.”