Finance (No. 3) Bill (HC Bill 282)

78 In section 261C (meaning of “the maximum amount” for purposes of section
261B), in subsection (2)(b), for “section 3(1)” substitute “section 1K(1)”.

79 In section 261E (meaning of “the maximum amount” for purposes of section
261D), in subsection (2)—

(a) 5in paragraph (a), for “section 2(2)” substitute “section 1(3)”, and

(b) in paragraph (b), for “section 3(1)” substitute “section 1K(1)”.

80 In section 263ZA (former employees: employment-related liabilities), in
subsection (5)—

(a) in paragraph (b), for “section 2(2)” substitute “section 1(3)”, and

(b) 10in paragraph (c), for “section 3(1)” substitute “section 1K(1)”.

81 In section 271B (branch or agency treated as UK representative), in
subsection (2), for “under section 10” substitute “as a result of section
1A(3)(a)”.

82 In section 279A (deferred unascertainable consideration: election for
15treatment of loss), in subsection (7)(b), for “section 10A” substitute “section
1M”.

83 (1) Section 279B (provisions supplementary to section 279A) is amended as
follows.

(2) In subsection (1)(b)(ii)—

(a) 20for “section 2(2)” substitute “section 1(3)”, and

(b) for “section 3” substitute “section 1K”.

(3) In subsection (7), for “section 10A(2)” substitute “section 1M”.

(4) In subsection (8)(a) and (b), for “section 10A(2)” substitute “section 1M”.

84 (1) Section 279C (effect of election under section 279A) is amended as follows.

(2) 25In subsection (3), for “section 2(2)(a)” substitute “section 1(3)(a)”.

(3) In subsection (4)—

(a) for “section 2(2)” substitute “section 1(3)”, and

(b) omit “(read, where appropriate, with section 2(4)(a))”.

(4) In subsection (5), for “section 2(2)(b)” substitute “section 1(3)(b)”.

(5) 30In subsection (6)—

(a) in the opening words, for “section 2(2)(b)” substitute “section
1(3)(b)”, and

(b) in paragraph (c), for “section 10A” substitute “section 1M”.

85 (1) Section 279D (elections under section 279A) is amended as follows.

(2) 35In subsection (6)(c), for “section 2(2)(a)” substitute “section 1(3)(a)”.

(3) In subsection (7), for “section 2(2)(b)” (in both places) substitute “section
1(3)(b)”.

86 In section 287 (orders and regulations etc), in subsection (4), for “3(4)”
substitute “1L(2)”.

87 (1) 40Section 288 (interpretation) is amended as follows.

(2) In subsection (1) omit—

(a) the definition of “ATED-related”,

(b) the definition of “non-resident CGT disposal”,

(c) the definition of “NRCGT gain”,

(d) the definition of “NRCGT group”,

(e) 5the definition of “NRCGT loss”, and

(f) the definition of “relevant high value disposal”.

(3) In subsection (8), in the Table, in the entry relating to “branch or agency”, for
“s 10(6)” substitute “s 1B(5)”.

88 In Schedule 4A (disposal of interest in settled property etc), in paragraph
106(1), for “met the residence condition set out in section 2(1A)” substitute
“was UK resident for the tax year (as determined in accordance with Chapter
1 of Part 1 of this Act)”.

89 (1) Schedule 4C (transfers of value: attribution of gains to beneficiaries) is
amended as follows.

(2) 15For “the section 2(2) amount” or “the section 2(2) amounts”, in each place,
substitute “the section 1(3) amount” or “the section 1(3) amounts”
respectively.

(3) In paragraph 1A(3), for “meets the residence condition set out in section
2(1A)” substitute “is UK resident for the tax year (as determined in
20accordance with Chapter 1 of Part 1 of this Act)”.

(4) In paragraph 4—

(a) in sub-paragraph (2), for “section 2(2)” substitute “section 1(3)”, and

(b) for sub-paragraph (3) substitute—

“(3) Where (apart from this sub-paragraph) the chargeable
25amount mentioned in sub-paragraph (2) would include a
chargeable gain or allowable loss to which section 1A(3)(b)
or (c) applies (disposals by non-UK residents within the
charge to capital gains tax), so much of the gain or loss as
would be so included is to be disregarded for the purposes
30of determining the chargeable amount.”

(5) In paragraph 6(1)(b), for “section 10A” substitute “section 1M”.

(6) In paragraph 12(1)(a) and (5), and in the italic heading before paragraph 12,
for “section 10A” substitute “section 1M”.

(7) In paragraph 12A(1) and (5), and in the italic heading before paragraph 12,
35for “section 10A” substitute “section 1M”.

90 (1) Schedule 5 (attribution of gains to settlors with interest in non-resident or
dual resident settlements) is amended as follows.

(2) In paragraph 1(1), for “section 3” substitute “section 1K”.

(3) In paragraph 1(2)(a), for “section 2(2)” substitute “section 1(3)”.

(4) 40In paragraph 1(3)—

(a) in paragraph (b), for “section 13” substitute “section 3”, and

(b) in the second sentence—

(i) for “Subsections (12) and (13) of section 13” substitute
“Section 3B(1) to (3)”, and

(ii) for “that section” substitute “section 3”.

91 In Schedule 7A (restriction on set-off of pre-entry losses), in paragraph
6(1)(c) and (d), for “section 8(1)” substitute “section 2A(1)”.

92 In Schedule 7AC (exemptions for disposals by companies with substantial
5shareholdings), in paragraph 3(2)(c)(ii), for the words from “would” to
“purposes” substitute “would be chargeable to corporation tax as a result of
section 2B(3) or (4)”.

93 In Schedule 7C (relief for transfers to Schedule 2 share plans), in paragraph
8—

(a) 10in paragraph (a), for “under section 2(1)” substitute “as a result of
section 1A(1)”, and

(b) in paragraph (b), for “under section 10(1)” substitute “as a result of
section 1A(3)(a)”.

IHTA 1984

94 15IHTA 1984 is amended as follows.

95 In Schedule A1 (non-excluded overseas property), in paragraph 8(3)—

(a) in the definition of “interest in UK land”, for the words from “the
meaning” to the end substitute “the same meaning as it has for the
purposes of section 1A(3)(b) of the 1992 Act (see section 1C of that
20Act);”,

(b) in the definition of “dwelling”, for the words from “the meaning” to
the end substitute “the same meaning as it has for the purposes of
Schedule 1B to the 1992 Act;”, and

(c) in the definition of “contract for an off-plan purchase”, for the words
25from “has the meaning” to the end substitute “means a contract for
the acquisition of land consisting of, or including, a building, or part
of a building, that is to be constructed or adapted for use as a
dwelling.”

FA 2005

96 30FA 2005 is amended as follows.

97 (1) Section 32 (non-UK resident vulnerable persons: amount of relief) is
amended as follows.

(2) In subsection (3), in the definitions of “TLVB” and “TLVA”, omit “for the
purposes of section 3 of TCGA 1992”.

(3) 35After that subsection insert—

“(3A) For the purposes of this section “the vulnerable person’s taxable
amount for the tax year” means the amount on which that person
would be chargeable to capital gains tax for the tax year if no account
were taken of section 1K of TCGA 1992.”

98 (1) 40Schedule 1 (non-UK resident vulnerable persons: interpretation) is amended
as follows.

(2) In paragraph 3—

(a) in sub-paragraph (1)(a), for “for the purposes of section 3 of TCGA
1992” substitute “(as defined by section 32(3A))”,

(b) in sub-paragraph (1)(b), for “for the purposes of that section”
substitute “(as defined by section 32(3A))”,

(c) 5in sub-paragraph (2)—

(i) in paragraph (a), for “section 2(2)(b)” substitute “section
1(3)(b)”, and

(ii) omit paragraph (b) (together with the “and” before it).

(3) In paragraph 7—

(a) 10in sub-paragraph (1)(b), for “subsection (3) of that section” substitute
“section 1E(2) of that Act”, and

(b) in sub-paragraph (2), for “section 10A” substitute “section 1M”.

ITA 2007

99 ITA 2007 is amended as follows.

100 15In section 641 (accrued income profits and losses: trustees of a disabled
person’s trusts), in subsection (4), in the definition of “disabled person’s
trusts”, for “paragraph 1(1) of Schedule 1” substitute “paragraph 3 of
Schedule 1C”.

101 In section 643 (accrued income profits and losses: non-residents), in
20subsection (5), for “section 10(6)” substitute “section 1B(5)”.

102 In section 809F (remittance basis: effect on what is chargeable), in subsection
(4), for “section 12 of TCGA 1992” substitute “paragraph 1 of Schedule 1 to
TCGA 1992”.

103 In section 809G (claim for remittance basis: effect on allowances etc), in
25subsection (3), for “section 3(1A)” substitute “section 1K(6)”.

104 In section 809K (introduction to rules on remittance of income and gains), in
subsection (1), for paragraph (e) substitute—

“(e) Schedule 1 to TCGA 1992 (UK resident individuals not
domiciled in UK).”

105 30In section 809VK (retention of funds to meet CGT liabilities), for subsection
(5) substitute—

“(5) The highest potential CGT rate is the highest rate specified in section
1H of TCGA 1992 (regardless of the type of the chargeable gain or, if
P is an individual, the rate of income tax at which P’s income is
35chargeable).”

106 (1) Section 809YD (chargeable gains accruing on sales of exempt property) is
amended as follows.

(2) In subsection (1)(c)(ii), for “section 13” substitute “section 3”.

(3) In subsection (3), for “section 12 of TCGA 1992” substitute “paragraph 1 of
40Schedule 1 to TCGA 1992”.

(4) In subsection (5)(a)—

(a) for “section 10A” substitute “section 1M”, and

(b) for “the year of return” substitute “the tax year that consists of or
includes the period of return”.

(5) In subsection (7)—

(a) in the opening words, for “fell within the definition of foreign
chargeable gains in section 12(4) of that Act” substitute “accrued on
the disposal of a foreign asset (within the meaning of Schedule 1 to
5TCGA 1992)”, and

(b) for paragraphs (a) to (d) substitute—

“(a) section 1M,

(b) section 3D, and

(c) Schedule 1.”

(6) 10In subsection (8), for “section 14A(2)” substitute “section 3D(2)”.

107 In section 809Z7 (meaning of “foreign income and gains” etc), in subsection
(5), for the words from “are the foreign” to the end substitute “are the
chargeable gains accruing to the individual in that year on the disposal of
foreign assets (within the meaning of Schedule 1 to TCGA 1992)”.

15CTA 2009

108 CTA 2009 is amended as follows.

109 (1) Section 5 of CTA 2009 (territorial scope of charge to corporation tax) is
amended as follows.

(2) In subsections (1), (2A) and (3), for “chargeable to corporation tax” substitute
20“chargeable to corporation tax on income”.

(3) In subsection (2), for “within the charge to corporation tax” substitute
“within the charge to corporation tax on income”.

(4) After subsection (4) insert—

“(5) The territorial scope of the charge to corporation tax on chargeable
25gains is given by section 2B of TCGA 1992.”

110 In section 18A (exemption for profits or losses of foreign permanent
establishments), after subsection (2A) insert—

“(2B) Profits and losses are not to be left out of account as mentioned in
subsection (2) so far as, if the company were non-UK resident, they
30would be gains or losses accruing on disposals of assets within
section 2B(4)(a) or (b) of TCGA 1992 (interests in UK land or other
assets deriving at least 75% of their value from UK land).”

111 (1) Section 19 (chargeable profits) is amended as follows.

(2) In subsection (1), after “applies” insert “for the purposes of the charge to
35corporation tax on income”.

(3) In subsection (3)—

(a) at the end of paragraph (a), insert “and”, and

(b) omit paragraph (c).

(4) After subsection (3) insert—

“(4) 40For the purposes of the charge to corporation tax on chargeable gains
accruing to the company, see section 2B(3) of TCGA 1992.

(5) That subsection provides (among other things) that the gains are
chargeable to corporation tax only so far as they are attributable to
the permanent establishment in accordance with sections 20 to 32 of
this Act.”

5CTA 2010

112 CTA 2010 is amended as follows.

113 In section 533 (financial statements: supplementary), after subsection (1)
insert—

“(1A) The profits and gains of the UK property rental business of a non-UK
10member of the group are to be treated as if they were profits and
gains of a UK resident member of the group for the purposes of a
financial statement under section 532(2)(a).”

114 After section 535 insert—

“535A Gains: disposals of rights or interests in UK property rich companies

(1) 15This section applies if—

(a) a company (“A”) which is, or is a member of, a UK REIT
disposes of an asset, and

(b) the asset consists of a right or an interest in a company (“B”)
which is UK property rich.

(2) 20The appropriate proportion of a gain accruing to A on the disposal is
not a chargeable gain.

(3) The asset disposed of is regarded for the purposes of section 550 as
used for the purposes of A’s property rental business to an extent
equal to the appropriate proportion.

(4) 25In the case of a non-UK member of a group UK REIT, this section has
effect as if any reference to property rental business of the member
were to its UK property rental business.

(5) In relation to a disposal of a right or interest in B—

(a) B is “UK property rich” for the purposes of this section if the
30disposal would be regarded for the purposes of Schedule 1A
to TCGA 1992 as a disposal of an asset deriving at least 75%
of its value from UK land, and

(b) any reference in this section to “the appropriate proportion”
is to the proportion that, at the beginning of the accounting
35period in which the disposal is made, the value of B’s
relevant PRB assets bears to the total value of B’s assets.

(6) For the purposes of subsection (5)(b)—

(a) “the value of B’s relevant PRB assets” means the value of B’s
assets deriving (directly or indirectly) from assets used for
40the purposes of UK property rental business,

(b) B’s assets are to be valued in accordance with section
533(1)(d), and

(c) if the asset disposed of was acquired after the beginning of
the accounting period, it is to be assumed that an accounting
45period began on the day on which the disposal is made.

(7) Any reference in this section to the disposal of a right or interest in B
includes the disposal of a right or interest in an offshore collective
investment scheme (a “relevant fund”)—

(a) to which paragraph 8 of Schedule 5AAA to TCGA 1992
5applies, but

(b) in relation to which an election under that paragraph has not
been made.

(8) In the case of a disposal which is, as a result of subsection (7), a
disposal of a right or interest in B, the value of B’s relevant PRB assets
10for the purposes of subsection (5)(b) is taken to be—

(a) the value of B’s assets that are used for the purposes of UK
property rental business, plus

(b) the value of B’s assets deriving indirectly from assets held by
a relevant fund that are used for the purposes of UK property
15rental business.

(9) This section is to be read as if it were contained in TCGA 1992.

(10) Apart from subsection (7) of section 535, nothing else in that section
applies in relation to a disposal to which this section applies.

(11) This section does not apply to a gain—

(a) 20if sub-paragraph (3) of paragraph 3A of Schedule 7AC to
TCGA 1992 applies in relation to the gain (no chargeable gain
accruing on disposals of certain shares by qualifying
institutional investors), or

(b) so far as sub-paragraph (4) of that paragraph applies to
25reduce the amount of the gain.

535B Section 535A: use of pre-April 2019 residual business losses or deficits

(1) In determining the amount of a gain accruing to a company which is
not to be a chargeable gain as a result of section 535A, any pre-April
2019 residual business losses or deficits which—

(a) 30have not been deducted from (or taken into account in
calculating) other profits or gains (of any kind) of the
company or any other person, and

(b) have not previously been deducted under this subsection,

may be deducted from the gain.

(2) 35For this purpose “pre-April 2019 residual business losses or deficits”
means—

(a) allowable losses accruing on disposals made before 6 April
2019, or

(b) deficits or other losses for accounting periods ending before
40that date,

which would otherwise have been deducted from (or taken into
account in calculating) profits or gains (of any kind) accruing to
residual business of the company.

(3) If an accounting period (a “straddling period”) begins before and
45ends on or after 6 April 2019—

(a) so much of the straddling period as falls before that date, and
so much of it as falls on or after that date, are to be treated as
separate accounting periods, and

(b) if it is necessary to apportion an amount for the straddling
period to the two separate accounting periods, it is to be
apportioned—

(i) on a time basis according to the respective length of
5the separate accounting periods, or

(ii) if that would produce a result that is unjust or
unreasonable, on a just and reasonable basis.”

115 In section 547 (funds awaiting reinvestment), at the end insert—

“(6) This section also applies to proceeds held in cash by a company on a
10disposal of an asset so far as section 535A secures that the
appropriate proportion of a gain or loss accruing on the disposal is
not a chargeable gain or allowable loss.”

116 In section 550(3) (attribution of distributions), after “section 535” insert “or
535A”.

117 (1) 15Section 556 (disposal of assets) is amended as follows.

(2) After subsection (3) insert—

“(3A) Subsection (3B) applies in the case of a company (“C”) which is, or is
a member of, a UK REIT if—

(a) one or more properties acquired (directly or indirectly) by a
20relevant UK property rich company have been developed
since acquisition,

(b) the cost of the development exceeds 30% of the fair value of
the property (determined in accordance with international
accounting standards) at entry or at acquisition, whichever is
25later,

(c) C disposes of any of its rights or interests in the relevant UK
property rich company,

(d) the disposal is made within the period of 3 years beginning
with the completion of the development, and

(e) 30if C is a member of a UK REIT, the disposal is not to another
member of the UK REIT.

(3B) If this subsection applies, section 535A is not to apply in relation to
so much of the amount of a gain accruing on the disposal as relates
to the property which has been developed.

(3C) 35For the purposes of subsection (3A)—

(a) a company is a “relevant UK property rich company” if, as a
result of section 535A, any part of a gain accruing to C on a
disposal of a right or interest in the company would not be a
chargeable gain, and

(b) 40a relevant UK property rich company acquires property
“indirectly” if property is acquired by someone other than the
relevant UK property rich company and the property is taken
into account in determining the value of the assets of the
relevant UK property rich company.”

(3) 45In subsection (7), for “Section 535 is” substitute “Sections 535 and 535A are”.

118 In section 582 (early exit), in subsection (3)(b), for “or 535(1)” substitute “,
535(1) or 535A”.

Part 3 Commencement and transitional provisions etc

119 (1) The amendments made by this Schedule have effect—

(a) for the purposes of capital gains tax, for the tax year 2019-20 and
5subsequent tax years, and

(b) for the purposes of corporation tax, for accounting periods beginning
on or after 6 April 2019.

(2) The amendments made by this Schedule also have effect for the purposes of
corporation tax in relation to disposals made on or after 6 April 2019
10(whether in their application to accounting periods beginning on, and
ending on or after, that date or to later accounting periods).

120 (1) This paragraph applies to—

(a) allowable NRCGT losses accruing to a person before 6 April 2019,
and

(b) 15ring-fenced ATED-related allowable losses accruing to a person
before that date,

so far as they have not been deducted under section 2B, 8(1)(b)(ii), 14D or
188D of TCGA 1992 (as those provisions have effect before the amendments
made by this Schedule) from chargeable gains accruing before that date.

(2) 20If losses to which this paragraph applies accrued to a company, they are
deductible in accordance with section 2A(1) of TCGA 1992 as if they had
accrued to the company while it was within the charge to corporation tax.

(3) If losses to which this paragraph applies accrued to any other person, they—

(a) are deductible in accordance with section 1(3) of TCGA 1992, and

(b) 25are to be treated for the purposes of section 1E of TCGA 1992 as if
they accrued on a disposal of assets that were within section 1A(3) of
that Act.

(4) In this paragraph—

(a) the reference to allowable NRCGT losses is to be read in accordance
30with Schedule 4ZZB to TCGA 1992 (as that Schedule has effect before
its repeal by this Schedule), and

(b) the reference to ring-fenced ATED-related allowable losses is to be
read in accordance with section 2B of that Act (as that section has
effect before its repeal by this Schedule).

121 35The Treasury may by regulations make any transitional provisions or
savings that they consider appropriate in connection with the coming into
force of any provision made by this Schedule.

122 (1) This paragraph applies where this Schedule re-enacts in TCGA 1992 (with or
without modification) an enactment contained in TCGA 1992 repealed by
40this Schedule.

(2) The repeal and re-enactment does not affect the continuity of the law.

(3) Any subordinate legislation or other thing which—

(a) has been made or done, or has effect as if made or done, under or for
the purposes of the repealed provision, and

(b) 45is in force or effective on 5 April 2019,

has effect in relation to times after that date as if made or done under or for
the purposes of the corresponding provision of TCGA 1992.

(4) Any reference (express or implied) in any enactment, instrument or
document to a provision of TCGA 1992 is to be read as including, in relation
5to times, circumstances or purposes in relation to which the corresponding
repealed provision had effect, a reference to that corresponding provision.

(5) Any reference (express or implied) in any enactment, instrument or
document to a repealed provision of TCGA 1992 is to be read as including,
in relation to times, circumstances or purposes in relation to which the
10corresponding provision has effect, as or (as the context may require) as
including a reference to that corresponding provision.

(6) The generality of this paragraph is not to be affected by specific transitional,
transitory or saving provision made elsewhere by this Schedule.

(7) This paragraph has effect instead of section 17(2) of the Interpretation Act
151978.

123 The Treasury may by regulations make such provision as they consider
appropriate in consequence of the provision made by this Schedule.

124 (1) The Treasury may by regulations make provision, in relation to a case in
which they consider that a provision of this Schedule changes the effect of a
20provision of TCGA 1992 that is re-enacted by this Schedule, for the purpose
of returning the effect of the law to what it would have been if this Act had
not been passed.

(2) The power conferred by this paragraph may not be exercised on or after 6
April 2022.

125 (1) 25This paragraph applies to regulations made under paragraph 123 or 124.

(2) The regulations may amend, repeal or revoke any provision made by or
under—

(a) this Schedule, or

(b) any other provision of the Taxes Acts (within the meaning of section
30118(1) of TMA 1970).

(3) The regulations may, if made before 6 April 2020, contain provision
(however expressed) for securing that the provision made by the regulations
has effect in accordance with paragraph 119 (commencement) as it were
included in the amendments made by this Schedule.

(4) 35The regulations may contain incidental, supplemental, consequential or
transitional provision or savings.