Finance (No. 2) Bill (HL Bill 156)

7 In section 237 (imposition of charge), after subsection (2) insert—

“(2A) Where tax is charged by virtue of Schedule A1 on the value
transferred by a chargeable transfer, the reference in subsection (1)(a)
to property to the value of which the value transferred is wholly or
40partly attributable includes the UK residential property interest
(within the meaning of that Schedule) which gives rise to the charge
to tax.””

8 In section 272 (general interpretation), in the definition of “excluded
property”, after “above” insert “and Schedule A1”.

Commencement

9 (1) The amendments made by this Schedule have effect in relation to times on
5or after 6 April 2017.

(2) But for the purposes of paragraph 5(1) of Schedule A1 to IHTA 1984 as
inserted by this Schedule—

(a) paragraph (a) of that paragraph does not apply in relation to a
disposal of property occurring before 6 April 2017, and

(b) 10paragraph (b) of that paragraph does not apply in relation to a
payment of money or money’s worth occurring before 6 April 2017.

Section 48

SCHEDULE 16 Employment income provided through third parties

Introductory

1 15Part 7A of ITEPA 2003 (employment income provided through third parties)
is amended in accordance with paragraphs 2 to 11.

Meaning of “relevant step”

2 In section 554A(2) (meaning of “relevant step”), after “FA 2017” (inserted by
paragraph 44(2) of Schedule 17) insert “(including such a step where the
20taking of the step, or some aspect of the taking of the step, constitutes a
breach of trust or is a constituent part of a breach of trust, and even if the step
or aspect is void as a result of breach of trust).”

Loans: transferring, releasing or writing off

3 (1) Section 554C (relevant steps: payment of sum, transfer of asset etc.) is
25amended as follows.

(2) In subsection (1), after paragraph (a) insert—

“(aa) acquires a right to a payment of a sum of money, or to a
transfer of assets, where there is a connection (direct or
indirect) between the acquisition of the right and—

(i) 30a payment made, by way of a loan or otherwise, to a
relevant person, or

(ii) a transfer of assets to a relevant person,

(ab) releases or writes off the whole or a part of—

(i) a loan made to a relevant person, or

(ii) 35an acquired right of the kind mentioned in paragraph
(aa),”.”

(3) After subsection (3) insert—

“(3A) For the purposes of subsection (1) “loan” includes—

(a) any form of credit, and

(b) a payment that is purported to be made by way of a loan.

(3B) Subsection (3C) applies where a person (“T”) acquires from another
person (“L”) (whether or not for consideration)—

(a) a right to payment of the whole or part of a loan where T is
5the person liable (at the time of the acquisition of the right) to
repay the loan, or

(b) a right to payment of a sum of money, or to a transfer of
assets, where T is the person liable (at the time of the
acquisition of the right) to pay the sum, or transfer the assets.

(3C) 10L is to be treated for the purposes of subsection (1)(ab) as releasing—

(a) in a case within subsection (3B)(a), the loan or the relevant
part of it;

(b) in a case within subsection (3B)(b), the right or the relevant
part of it.””

4 15In section 554A(4) (non-application of Chapter 2 where relevant step taken
on or after A’s death)—

(a) omit “within section 554B”, and

(b) at the end insert “if—

(a) the relevant step is within section 554B, or

(b) 20the relevant step is within section 554C by virtue of
subsection (1)(ab) of that section.””

5 After section 554O insert—

“554OA Exclusions: transfer of employment-related loans

(1) Chapter 2 does not apply by reason of a relevant step taken by a
25person (“P”) if—

(a) the step is acquiring a right to payment of an amount equal to
the whole or part of a payment made by way of a loan to a
relevant person (the “borrower”),

(b) the loan, at the time it was made, was an employment-related
30loan,

(c) at the time the relevant step is taken, the section 180 threshold
is not exceeded in relation to the loan,

(d) at the time the relevant step is taken, the borrower is an
employee, or a prospective employee, of P, and

(e) 35there is no connection (direct or indirect) between the
relevant step and a tax avoidance arrangement.

(2) For the purposes of this section, the section 180 threshold is not
exceeded in relation to a loan if, at all times in the relevant tax year—

(a) the amount outstanding on the loan, or

(b) 40if two or more employment-related loans are made by the
same employer, the aggregate of the amount outstanding on
them,

does not exceed the amount specified at the end of section 180(2)
(normal threshold for benefit of a loan to be treated as earnings).

(3) 45Subsection (4) applies if—

(a) two or more employment-related loans are made by the same
employer, and

(b) during the relevant tax year, a person acquires a right to
payment of an amount (the “transfer amount”) equal to the
whole or part of the payment made by way of any of the
loans.

(4) 5The transfer amount is to be treated as an “amount outstanding” on
that loan for the purposes of subsection (2)(b).

(5) In this section—

(a) “employment-related loan” has the same meaning as it has
for the purposes of Chapter 7 of Part 3;

(b) 10“relevant tax year” means the tax year in which the relevant
step is taken.””

6 In section 554Z(10)(b) (interpretation: relevant step which involves a sum of
money), after “section 554C(1)(a)” insert “to (ab)”.

7 In section 554Z12(1) (relevant step taken after A’s death etc.), after “554C”
15insert “, by virtue of subsection (1)(a) or (b) to (e) of that section,”.

Exclusions: relevant repayments

8 After section 554R insert—

“554RA Exclusions: relevant repayments

(1) This section applies (subject to subsection (5)) if—

(a) 20a right to repayment of principal under a relevant loan (the
“repayment right”) is held by or on behalf of a person (“P”),
and

(b) on or after 9 December 2010, a sum of money (the “repayment
sum”) is acquired by or on behalf of P by way of repayment
25of principal under the relevant loan.

(2) In this section “relevant loan” means a loan made on or after 6 April
1999.

(3) Subsection (4) applies if—

(a) on its acquisition, the repayment sum is the subject of a
30relevant step within section 554B taken by P, or

(b) for the sole purpose of the acquisition, the making of the
payment of the repayment sum is a relevant step within
section 554C(1)(a).

(4) Chapter 2 does not apply by reason of the relevant step if, on its
35acquisition, the repayment sum is held by or on behalf of P on the
same basis as that on which the repayment right was held by or on
behalf of P immediately before the acquisition.

(5) This section does not apply where there is any connection (direct or
indirect) between the acquisition by or on behalf of P of the
40repayment sum and a tax avoidance arrangement (other than the
arrangement under which the relevant loan was made).””