Finance Bill

House of Lords

Session 2013 - 14
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Finance Bill

Finance Bill
Part 3 — Annual tax on enveloped dwellings
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Interpretation
170
Meaning of “chargeable day” and “within the charge”
(1)
Any day on which the conditions in section 94(2) are met with respect to a
single-dwelling interest is a “chargeable day” for that interest.
(2)
Where a day is a chargeable day as a result of subsection (1), the chargeable
5
person is “within the charge” with respect to a single-dwelling interest on that
day.
171
References to the state of affairs “on” a day
In determining for the purposes of any provision of this Part whether or not a
state of affairs obtains on a particular day, it is to be assumed that the state of
10
affairs obtaining at the end of the day persisted throughout the day.
172
Connected persons
(1)
Section 1122 of the Corporation Tax Act 2010 (connected persons) has effect for
the purposes of this Part (except where otherwise stated).
(2)
For the purposes of this Part a person is taken to be connected with a collective
15
investment scheme if the person is a participant in the scheme who—
(a)
is entitled to a share of at least 50% either of all the profits or income
arising from the scheme or of any profits or income arising from the
scheme that may be distributed to participants, or
(b)
would in the event of the winding up of the scheme be entitled to 50%
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or more of the assets of the scheme that would then be available for
distribution among the participants.
(3)
The reference in subsection (2) to a collective investment scheme does not
include a unit trust scheme; but see section 1123(2) of CTA 2010 (provision
about the application of rules about connected persons to unit trust schemes).
25
(4)
The reference in subsection (2)(a) to profits or income arising from the scheme
is to profits or income arising from the acquisition, holding, management or
disposal of the property subject to the scheme.
(5)
For the purposes of subsection (2) a person is taken to have any rights and
powers that the person—
30
(a)
is entitled to acquire at a future date, or
(b)
will at a future date be entitled to acquire.
(6)
For the purposes of subsection (2) the rights and powers of any associate of a
person (or of any two or more associates of a person) are to be attributed to the
person.
35
(7)
In this section “associate” has the same meaning as in Part 10 of CTA 2010 (see
section 448 of that Act); but for this purpose section 448 is to be read as if the
words “or partner” were omitted in subsection (1)(a).

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Part 3 — Annual tax on enveloped dwellings
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173
Connected persons: cell companies
(1)
For the purposes of this Part a person is to be treated as connected to a cell
company where, if any cell of the company were a separate company, the
person would be connected to that separate company.
(2)
For the purposes of this section a company is a “cell company” if it meets the
5
first or second condition.
(3)
The first condition is that under the law under which the company is
incorporated or formed, under the company’s articles of association or other
document regulating the company or under arrangements entered into by or
in relation to the company—
10
(a)
some or all of the assets of the company are available primarily, or only,
to meet particular liabilities of the company, and
(b)
some or all of the members of the company, and some or all of its
creditors, have rights primarily, or only, in relation to particular assets
of the company.
15
(4)
The second condition is that the company’s articles of association, or other
document regulating it, establish an entity (by whatever name known)
which—
(a)
under the law under which the company is incorporated or formed, has
legal personality distinct from that of the company, and
20
(b)
which is not itself a company.
(5)
For the purposes of this section a “cell”, in relation to a cell company, is—
(a)
an identifiable part of the company (by whatever name known) that
carries on distinct business activities and to which particular assets and
liabilities of the company are primarily or wholly attributable, or
25
(b)
an entity of the kind specified in subsection (4).
174
General interpretation of Part 3
(1)
In this Part—
“chargeable day” (in relation to a single-dwelling interest) is to be read in
accordance with section 170;
30
“chargeable interest” has the meaning given by section 107;
“the chargeable person” has the meaning given by section 96(2) or (3);
“closure notice” has the meaning given by paragraph 16 of Schedule 33;
“collective investment scheme” has the same meaning as in Part 17 of the
Financial Services and Markets Act 2000 (see section 235 of that Act);
35
“company” has the meaning given by section 166(1);
“completion”, in Scotland, means—
(a)
in relation to a lease, when it is executed by the parties (that is
to say, by signing) or constituted by any means,
(b)
in relation to any other transaction, the settlement of the
40
transaction;
“discovery assessment” has the meaning given by paragraph 21 of
Schedule 33;
“EEA UCITS” has the same meaning as in Part 17 of the Financial Services
and Markets Act 2000 (see section 237 of that Act);
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“excluded rents” has the meaning given by section 133(6);

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Part 3 — Annual tax on enveloped dwellings
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“farming” has the meaning given by section 148(4);
“filing date”, in relation to an annual tax on enveloped dwellings return
or a return of the adjusted chargeable amount, has the meaning given
by paragraph 58 of Schedule 33;
“financial institution” has the meaning given by section 143 (except where
5
otherwise stated);
“HMRC” means Her Majesty’s Revenue and Customs;
“HMRC determination” has the meaning given by paragraph 18 of
Schedule 33;
“jointly entitled” means—
10
(a)
in England and Wales, beneficially entitled as joint tenants or
tenants in common,
(b)
in Scotland, entitled as joint owners or owners in common,
(c)
in Northern Ireland, beneficially entitled as joint tenants,
tenants in common or coparceners;
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“land” includes—
(a)
buildings and structures, and
(b)
land covered by water;
“market value” has the meaning given by section 98(8);
“notice of enquiry” has the meaning given by paragraph 8 of Schedule 33;
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“open-ended investment company” has the same meaning as in Part 17 of
the Financial Services and Markets Act 2000 (see section 236(1) of that
Act);
“participant”, in relation to a collective investment scheme, has the
meaning given by section 98(7);
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“partnership” has the meaning given by section 167;
“property development trade” has the meaning given by section 138(4);
“property rental business” has the meaning given by section 133(4);
“property trading business” has the meaning given by section 141(3);
“qualifying property rental business” has the meaning given by section
30
133(3);
“self assessment” has the meaning given by section 161(3);
“tax” means tax under this Part;
“trade” has the same meaning as in section 35 of CTA 2009 (and cognate
expressions are to be read accordingly);
35
“unit trust scheme” has the same meaning as in Part 17 of the Financial
Services and Markets Act 2000 (see section 237(1) of that Act).
(2)
In this Part—
references to the “adjusted chargeable amount”, in relation to a person on
whom tax is charged for a chargeable period with respect to a single-
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dwelling interest, are to be read in accordance with section 105;
references to an “annual tax on enveloped dwellings return” are to be read
in accordance with section 159(4);
references to the “daily amount” for a day are to be read in accordance
with section 105(2);
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references to “delivery”, in relation to an annual tax on enveloped
dwellings return, are to be read in accordance with paragraph 2 of
Schedule 33;
references to the “effective date” of an acquisition are to be read in
accordance with section 121(4);
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references to the “effective date” of a disposal are to be read in accordance
with section 121(5);
references to a “major interest” in land are to be read in accordance with
section 117 of FA 2003;
references to a “return of the adjusted chargeable amount” are to be read
5
in accordance with section 160(6);
references to meeting the “ownership condition” are to be read in
accordance with section 94(4) to (6);
references to being “within the charge” with respect to a single-dwelling
interest are to be read in accordance with section 170.
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Part 4
Excise duties and other taxes
Inheritance tax
175
Open- ended investment companies and authorised unit trusts
(1)
In section 65 of IHTA 1984 (settlements without interests in possession etc:
15
charge when property ceases to be relevant property etc), after subsection (7)
insert—
“(7A)
Tax shall not be charged under this section by reason only that property
comprised in a settlement becomes excluded property by virtue of
section 48(3A)(a) (holding in an authorised unit trust or a share in an
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open-ended investment company is excluded property unless settlor
domiciled in UK when settlement made).”
(2)
The amendment made by this section is treated as having come into force on
16 October 2002.
176
Treatment of liabilities for inheritance tax purposes
25
Schedule 36 makes provision in relation to the treatment of liabilities for the
purposes of inheritance tax.
177
Election to be treated as domiciled in United Kingdom
(1)
IHTA 1984 is amended as follows.
(2)
In section 267 (persons treated as domiciled in United Kingdom), at the end
30
insert—
“(5)
In determining for the purposes of this section whether a person is, or
at any time was, domiciled in the United Kingdom, sections 267ZA and
267ZB are to be ignored.”
(3)
After that section insert—
35
“267ZA
  Election to be treated as domiciled in United Kingdom
(1)
A person may, if condition A or B is met, elect to be treated for the
purposes of this Act as domiciled in the United Kingdom (and not
elsewhere).

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(2)
A person’s personal representatives may, if condition B is met, elect for
the person to be treated for the purposes of this Act as domiciled in the
United Kingdom (and not elsewhere).
(3)
Condition A is that, at any time on or after 6 April 2013 and during the
period of 7 years ending with the date on which the election is made,
5
the person had a spouse or civil partner who was domiciled in the
United Kingdom.
(4)
Condition B is that a person (“the deceased”) dies and, at any time on
or after 6 April 2013 and within the period of 7 years ending with the
date of death, the deceased was—
10
(a)
domiciled in the United Kingdom, and
(b)
the spouse or civil partner of the person who would, by virtue
of the election, be treated as domiciled in the United Kingdom.
(5)
An election under this section does not affect a person’s domicile for
the purposes of section 6(2) or (3) or 48(4).
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(6)
An election under this section is to be ignored—
(a)
in interpreting any such provision as is mentioned in section
158(6), and
(b)
in determining the effect of any qualifying double taxation relief
arrangements in relation to a transfer of value by the person
20
making the election.
(7)
For the purposes of subsection (6)(b) a qualifying double taxation relief
arrangement is an arrangement which is specified in an Order in
Council made under section 158 before the coming into force of this
section (other than by way of amendment by an Order made on or after
25
the coming into force of this section).
(8)
In determining for the purposes of this section whether a person
making an election under this section is or was domiciled in the United
Kingdom, section 267 is to be ignored.
267ZB
  Section 267ZA: further provision about election
30
(1)
For the purposes of this section—
(a)
references to a lifetime election are to an election made by virtue
of section 267ZA(3), and
(b)
references to a death election are to an election made by virtue
of section 267ZA(4).
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(2)
A lifetime or death election is to be made by notice in writing to HMRC.
(3)
A lifetime or death election is treated as having taken effect on a date
specified, in accordance with subsection (4), in the notice.
(4)
The date specified in a notice under subsection (3) must—
(a)
be 6 April 2013 or a later date,
40
(b)
be within the period of 7 years ending with—
(i)
in the case of a lifetime election, the date on which the
election is made, or
(ii)
in the case of a death election, the date of the deceased’s
death, and
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(c)
meet the condition in subsection (5).

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(5)
The condition in this subsection is met by a date if, on the date—
(a)
in the case of a lifetime election—
(i)
the person making the election was married to, or in a
civil partnership with, the spouse or civil partner, and
(ii)
the spouse or civil partner was domiciled in the United
5
Kingdom, or
(b)
in the case of a death election—
(i)
the person who is, by virtue of the election, to be treated
as domiciled in the United Kingdom was married to, or
in a civil partnership with, the deceased, and
10
(ii)
the deceased was domiciled in the United Kingdom.
(6)
A death election may only be made within 2 years of the death of the
deceased or such longer period as an officer of Revenue and Customs
may in the particular case allow.
(7)
Subsection (8) applies if—
15
(a)
a lifetime or death election is made,
(b)
a disposition is made, or another event occurs, during the
period beginning with the time when the election is treated by
virtue of subsection (3) as having taken effect and ending at the
time when the election is made, and
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(c)
the effect of the election being treated as having taken effect at
that time is that the disposition or event gives rise to a transfer
of value.
(8)
This Act applies with the following modifications in relation to the
transfer of value—
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(a)
subsections (1) and (6)(c) of section 216 have effect as if the
period specified in subsection (6)(c) of that section were the
period of 12 months from the end of the month in which the
election is made, and
(b)
sections 226 and 233 have effect as if the transfer were made at
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the time when the election is made.
(9)
A lifetime or death election cannot be revoked.
(10)
If a person who made an election under section 267ZA(1) is not resident
in the United Kingdom for the purposes of income tax for a period of
four successive tax years beginning at any time after the election is
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made, the election ceases to have effect at the end of that period.”
178
Transfer to spouse or civil partner not domiciled in United Kingdom
(1)
Section 18 of IHTA 1984 (transfers between spouses or civil partners) is
amended as follows.
(2)
In subsection (2) (transfer to spouse or civil partner not domiciled in United
40
Kingdom), for “£55,000” substitute “the exemption limit at the time of the
transfer,”.
(3)
After subsection (2) insert—
“(2A)
For the purposes of subsection (2), the exemption limit is the amount
shown in the second column of the first row of the Table in Schedule 1
45
(upper limit of portion of value charged at rate of nil per cent).”

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Part 4 — Excise duties and other taxes
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(4)
The amendments made by this section have effect in relation to transfers of
value made on or after 6 April 2013.
Fuel
179
Fuel duties: rates of duty and rebates from 1 April 2013
(1)
HODA 1979 is amended as follows.
5
(2)
In section 6(1A) (main rates)—
(a)
in paragraph (a) (unleaded petrol), for “£0.6097” substitute “£0.5795”,
(b)
in paragraph (aa) (aviation gasoline), for “£0.3966” substitute “£0.3770”,
(c)
in paragraph (b) (light oil other than unleaded petrol or aviation
gasoline), for “£0.7069” substitute “£0.6767”, and
10
(d)
in paragraph (c) (heavy oil), for “£0.6097” substitute “£0.5795”.
(3)
In section 8(3) (road fuel gas)—
(a)
in paragraph (a) (natural road fuel gas), for “£0.2907” substitute
“£0.2470”, and
(b)
in paragraph (b) (other road fuel gas), for “£0.3734” substitute
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“£0.3161”.
(4)
In section 11(1) (rebate on heavy oil)—
(a)
in paragraph (a) (fuel oil), for “£0.1126” substitute “£0.1070”, and
(b)
in paragraph (b) (gas oil), for “£0.1172” substitute “£0.1114”.
(5)
In section 14(1) (rebate on light oil for use as furnace fuel), for “£0.1126”
20
substitute “£0.1070”.
(6)
In section 14A(2) (rebate on certain biodiesel), for “£0.1172” substitute
“£0.1114”.
(7)
The following instruments are revoked—
(a)
Excise Duties (Surcharges or Rebates) (Hydrocarbon Oils etc) Order
25
2012 (S.I. 2012/3055), and
(b)
Excise Duties (Road Fuel Gas) (Reliefs) Regulations 2012 (S.I. 2012/
3056).
(8)
The amendments and revocations made by this section are treated as having
come into force on 1 April 2013.
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Alcohol
180
Rates of alcoholic liquor duties
(1)
ALDA 1979 is amended as follows.
(2)
In section 5 (rate of duty on spirits), for “£26.81” substitute “£28.22”.
(3)
In section 36(1AA) (rates of general beer duty)—
35
(a)
in paragraph (za) (rate of duty on lower strength beer), for “£9.76”
substitute “£9.17”, and
(b)
in paragraph (a) (standard rate of duty on beer), for “£19.51” substitute
“£19.12”.