Finance Bill

House of Lords

Session 2013 - 14
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 46 — Ordinary residence
Part 2 — Income tax: arising basis of taxation
587

57    (1)
Section 476 (how to work out whether settlor meets condition C) is amended
as follows.
      (2)
In subsection (2)(b), omit “, ordinarily UK resident”.
      (3)
In subsection (3)(b), omit “, ordinarily UK resident”.
      (4)
The amendment made by sub-paragraph (2) does not apply if the person
5
died before 6 April 2013.
      (5)
The amendment made by sub-paragraph (3) does not apply if the settlement
was made before 6 April 2013.
58
In section 643 (non-residents), in subsection (1), omit “and is not ordinarily
UK resident during that year”.
10
59
In section 718 (meaning of “person abroad” etc), in subsection (2)(b), for
“neither UK resident nor ordinarily UK resident” substitute “non-UK
resident”.
60
In section 720 (charge to tax on income treated as arising under section 721),
in subsection (1), omit “ordinarily”.
15
61    (1)
Section 721 (individuals with power to enjoy income as a result of relevant
transactions) is amended as follows.
      (2)
In subsection (1), for “conditions A and B” substitute “conditions A to C”.
      (3)
After subsection (3) insert—
“(3A)
Condition C is that the individual is UK resident for the tax year.”
20
      (4)
In subsection (5), for paragraph (b) substitute—
“(b)
whether the individual is UK resident for the tax year in
which the relevant transfer is made (if different from the tax
year mentioned in subsection (1)), or”.
62
In section 727 (charge to tax on income treated as arising under section 728),
25
in subsection (1), omit “ordinarily”.
63    (1)
Section 728 (individuals receiving capital sums as a result of relevant
transactions) is amended as follows.
      (2)
In subsection (1)—
(a)
in paragraph (a), omit the “and” at the end of sub-paragraph (iii), and
30
(b)
at the end of paragraph (b) insert “, and
(c)
the individual is UK resident for the tax year.”
      (3)
In subsection (3), for paragraph (b) substitute—
“(b)
whether the individual is UK resident for the tax year in
which the relevant transfer abroad is made (if different from
35
the tax year mentioned in subsection (1)), or”.
64
In section 732 (non-transferors receiving benefit as a result of relevant
transactions), in subsection (1)(b), for “ordinarily UK resident receives a
benefit” substitute “UK resident for a tax year receives a benefit in that tax
year”.
40
65    (1)
In section 749 (restrictions on particulars to be provided by relevant
lawyers), in subsection (2), omit “ordinarily”.

Finance Bill
Schedule 46 — Ordinary residence
Part 2 — Income tax: arising basis of taxation
588

      (2)
The amendment made by this paragraph applies only if the transfer is made
or, in the case of an associated operation, the transfer is made and the
associated operation is effected on or after 6 April 2013.
66
In section 812 (case where limit on liability of non-UK residents is not to
apply), in subsection (1)(a), omit “ordinarily”.
5
67    (1)
In section 834 (residence of personal representatives), in subsection (3), omit
“, ordinarily UK resident”.
      (2)
The amendment made by this paragraph does not apply if D died before 6
April 2013.
68    (1)
In section 858 (declarations of non-UK residence: individuals)—
10
(a)
in subsection (3)(a) and (b), for “not ordinarily UK resident”
substitute “non-UK resident”, and
(b)
in subsection (4), omit “ordinarily”.
      (2)
The amendments made by this paragraph apply to the making of
declarations on or after 6 April 2014, and any declarations made before that
15
date continue to have effect in respect of interest paid on or after that date as
if those amendments had not been made.
69    (1)
In section 859 (declarations of non-UK residence: Scottish partnerships)—
(a)
in subsection (3), for “not ordinarily UK resident” substitute “non-
UK resident”, and
20
(b)
in subsection (4), omit “ordinarily”.
      (2)
The amendments made by this paragraph apply to the making of
declarations on or after 6 April 2014, and any declarations made before that
date continue to have effect in respect of interest paid on or after that date as
if those amendments had not been made.
25
70    (1)
In section 860 (declarations of non-UK residence: personal representatives),
in subsection (3), for “not ordinarily UK resident” substitute “non-UK
resident”.
      (2)
The amendment made by this paragraph applies only if the deceased died
on or after 6 April 2014.
30
71    (1)
Section 861 (declarations of non-UK residence: settlements) is amended as
follows.
      (2)
In subsection (3)(b)(i) and (iii), omit “ordinarily”.
      (3)
In subsection (4)—
(a)
in paragraphs (b) and (d), omit “ordinarily”, and
35
(b)
in paragraph (f), for “an ordinarily” substitute “a”.
      (4)
The amendments made by this paragraph apply to the making of
declarations on or after 6 April 2014, and any declarations made before that
date continue to have effect in respect of interest paid on or after that date as
if those amendments had not been made.
40

Finance Bill
Schedule 46 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
589

Commencement
72    (1)
The amendments made by this Part of this Schedule have effect for the
purposes of a person’s liability to income tax for the tax year 2013-14 or any
subsequent tax year.
      (2)
Sub-paragraph (1) is without prejudice to any provision in this Part of the
5
Schedule about the application of a particular amendment.
Savings
73    (1)
This paragraph applies to an individual who—
(a)
was resident in the United Kingdom for the tax year 2012-13, but
(b)
was not ordinarily resident there at the end of the tax year 2012-13.
10
      (2)
The provisions listed in sub-paragraph (3) have effect, in relation to such an
individual and a qualifying tax year, as if the amendments made to or with
respect to those provisions by this Part of this Schedule had not been made.
      (3)
The provisions are—
(a)
section 413 of ITEPA 2003 (exception for payments and benefits on
15
termination of employment etc in certain cases involving foreign
service),
(b)
section 414 of that Act (reduction in other cases of foreign service),
and
(c)
Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad).
20
      (4)
But, in the case of provisions within paragraph (a) or (b) of sub-paragraph
(3), this paragraph applies only if service in the employment in question
began before the start of the tax year 2013-14.
      (5)
The meaning of “qualifying tax year” depends on the individual’s residence
status—
25
(a)
if the individual was resident in the United Kingdom for the tax year
2010-11 and the tax year 2011-12, “qualifying tax year” means the tax
year 2013-14,
(b)
if the individual was not resident in the United Kingdom for the tax
year 2010-11 but was resident in the United Kingdom for the tax year
30
2011-12, “qualifying tax year” means each of the tax year 2013-14 and
the tax year 2014-15, and
(c)
if the individual was not resident in the United Kingdom for the tax
year 2011-12, “qualifying tax year” means each of the tax year 2013-
14, the tax year 2014-15 and the tax year 2015-16.
35
      (6)
Where, by virtue of this paragraph, it is necessary to determine whether an
individual is (or is not) ordinarily resident in the United Kingdom at a time
on or after 6 April 2013, the question is to be determined as it would have
been in the absence of this Schedule.
Part 3
40
Capital gains tax: accruals basis of taxation
TCGA 1992
74
TCGA 1992 is amended as follows.

Finance Bill
Schedule 46 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
590

75    (1)
Section 2 (persons and gains chargeable to capital gains tax, and allowable
losses) is amended as follows.
      (2)
In subsection (1), for the words from “during any part” to the end substitute
“if the residence condition is met”.
      (3)
After that subsection insert—
5
“(1A)
The residence condition is—
(a)
in the case of an individual, that the individual is resident in
the United Kingdom for the year in question,
(b)
in the case of personal representatives of a deceased person,
that the single and continuing body mentioned in section
10
62(3) is resident in the United Kingdom,
(c)
in the case of the trustees of a settlement, that the single
person mentioned in section 69(1) is resident in the United
Kingdom during any part of the year in question, and
(d)
in any other case, that the person is resident in the United
15
Kingdom when the gain accrues.”
76
In section 10 (non-resident with United Kingdom branch or agency), in
subsection (1), for “in which he is not resident and not ordinarily resident in
the United Kingdom but” substitute “if the residence condition is not met
(see section 2(1A)) but the person”.
20
77    (1)
Section 13 (attribution of gains to members of non-resident companies) is
amended as follows.
      (2)
In subsection (2), omit “or ordinarily resident”.
      (3)
In subsection (10), for “neither resident nor ordinarily resident” substitute
“not resident”.
25
      (4)
In subsection (13)(b), omit “or ordinarily resident”.
78
In section 16 (computation of losses), in subsection (3), for “during no part of
which he is resident or ordinarily resident in the United Kingdom”
substitute “where the residence condition is not met (see section 2(1A))”.
79
In section 62 (death: general provisions), in subsection (3), omit “, ordinary
30
residence,”.
80
In section 65 (liability for tax of trustees or personal representatives), in
subsection (3)(b), for “become neither resident nor ordinarily resident”
substitute “cease to be resident”.
81
In section 67 (provisions applicable where section 79 of the Finance Act 1980
35
has applied), in subsection (6)(a), in paragraph (b) of the substituted
subsection (1), for “becomes neither resident nor ordinarily resident”
substitute “ceases to be resident”.
82    (1)
Section 69 (trustees of settlements) is amended as follows.
      (2)
In subsection (2), omit “and ordinarily resident”.
40
      (3)
In subsection (2B)(c), omit “, ordinarily resident”.
      (4)
In subsection (2E), for the words from “and ordinarily resident” to the end
substitute “in the United Kingdom, then for the purposes of this Act it is
treated as being not resident in the United Kingdom”.

Finance Bill
Schedule 46 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
591

83
In section 76 (disposal of interests in settled property), in subsection (1B)(a),
for “neither resident nor ordinarily resident” substitute “not resident”.
84
In section 80 (trustees ceasing to be resident in UK), in subsection (1), for
“neither resident nor ordinarily resident” substitute “not resident”.
85    (1)
Section 81 (death of trustee: special rules) is amended as follows.
5
      (2)
In subsection (1)(b), omit “and ordinarily resident”.
      (3)
In subsection (3)(b), omit “and ordinarily resident”.
      (4)
In subsection (4)(b), omit “and ordinarily resident”.
      (5)
In subsection (5)(a), omit “and ordinarily resident”.
86
In section 82 (past trustees: liability for tax), in subsection (3)(b), for “become
10
neither resident nor ordinarily resident” substitute “cease to be resident”.
87
In section 83 (trustees ceasing to be liable to UK tax), in subsection (1), omit
“and ordinarily resident”.
88    (1)
Section 83A (trustees both resident and non-resident in a year of assessment)
is amended as follows.
15
      (2)
In subsection (3)(a), omit “and ordinarily resident”.
      (3)
In subsection (4)—
(a)
in paragraph (a), for “neither resident nor ordinarily resident”
substitute “not resident”, and
(b)
in paragraph (b), omit “and ordinarily resident”.
20
89
In section 84 (acquisition by dual resident trustees), in subsection (1)(b), omit
“and ordinarily resident”.
90
In section 85 (disposal of interests in non-resident settlements), in subsection
(1), for “neither resident nor ordinarily resident” substitute “not resident”.
91    (1)
Section 86 (attribution of gains to settlors with interest in non-resident or
25
dual resident settlements) is amended as follows.
      (2)
In subsection (1)(c), for the words from “either resident” to the end substitute
“resident in the United Kingdom for the year”.
      (3)
For subsection (2) substitute—
“(2)
The condition as to residence is that—
30
(a)
there is no time in the year when the trustees are resident in
the United Kingdom, or
(b)
there is such a time but, whenever the trustees are resident in
the United Kingdom during the year, they fall to be regarded
for the purposes of any double taxation relief arrangements
35
as resident in a territory outside the United Kingdom.”
      (4)
In subsection (3), omit “and ordinarily resident”.
92    (1)
Section 87 (non-UK resident settlements: attribution of gains to
beneficiaries) is amended as follows.

Finance Bill
Schedule 46 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
592

      (2)
In subsection (1), for the words from “the trustees” to the end substitute
“there is no time in that year when the trustees are resident in the United
Kingdom”.
      (3)
In subsection (4)(a), omit “and ordinarily resident”.
93
In section 88(1) (gains of dual resident settlements)—
5
(a)
in paragraph (a), omit “and ordinarily resident”, and
(b)
in paragraph (b), omit “and ordinary residence”.
94    (1)
Section 96 (payments by and to companies) is amended as follows.
      (2)
In subsection (3), omit “or ordinarily resident”.
      (3)
In subsection (4), in each of paragraphs (a) and (b), omit “or ordinarily
10
resident”.
      (4)
In subsection (5)(b), omit “or ordinary residence”.
95
In section 97 (supplementary provisions), in subsection (1)(a), for “neither
resident nor ordinarily resident” substitute “not resident”.
96
In section 99 (application of Act to unit trust schemes), in subsection (1)(c),
15
omit “and ordinarily resident”.
97
In section 106A(5A) (identification of securities: capital gains tax)—
(a)
in paragraph (a), for “neither resident nor ordinarily resident”
substitute “not resident”, and
(b)
in paragraph (b), omit “or ordinarily resident”.
20
98    (1)
Section 159 (non-residents: roll-over relief) is amended as follows.
      (2)
In subsection (2)(b), omit “or ordinarily resident”.
      (3)
In subsection (5), in the definition of “dual resident”, omit “or ordinarily
resident”.
99    (1)
Section 166 (gifts to non-residents) is amended as follows.
25
      (2)
In subsection (1), for “neither resident nor ordinarily resident” substitute
“not resident”.
      (3)
In subsection (2)(a), omit “or ordinarily resident”.
100   (1)
Section 167 (gifts to foreign-controlled companies) is amended as follows.
      (2)
In subsection (2)(a), for “neither resident nor ordinarily resident” substitute
30
“not resident”.
      (3)
In subsection (3), for the words from “or ordinarily resident” to “nor
ordinarily resident” substitute “in the United Kingdom is to be regarded as
not resident”.
101   (1)
Section 168 (emigration of donee) is amended as follows.
35
      (2)
In subsection (1)(b), for “becomes neither resident nor ordinarily resident”
substitute “ceases to be resident”.
      (3)
In subsection (4), for “becoming neither resident nor ordinarily resident”
substitute “ceasing to be resident”.
      (4)
In subsection (5)—
40

Finance Bill
Schedule 46 — Ordinary residence
Part 3 — Capital gains tax: accruals basis of taxation
593

(a)
in paragraph (a), for “becoming neither resident nor ordinarily
resident” substitute “ceasing to be resident”, and
(b)
in paragraph (b), omit “or ordinarily resident”.
102
In section 169 (gifts into dual resident trusts), in subsection (3)(a), omit “and
ordinarily resident”.
5
103
In section 199 (exploration or exploitation assets: deemed disposals), in
subsection (2), for “who is not resident and not ordinarily resident in the
United Kingdom” substitute “in respect of whom the residence condition
(see section 2(1A)) is not met”.
104   (1)
Section 261 (section 260 relief: gifts to non-residents) is amended as follows.
10
      (2)
In subsection (1), for “neither resident nor ordinarily resident” substitute
“not resident”.
      (3)
In subsection (2)(a), omit “or ordinarily resident”.
105
In Schedule 1 (application of exempt amount and reporting limits in cases
involving settled property), in paragraph 2(7)(a), omit “and ordinarily
15
resident”.
106   (1)
Schedule 4A (disposal of interest in settled property: deemed disposal of
underlying assets) is amended as follows.
      (2)
In paragraph 5(1) and (2), omit “and ordinarily resident”.
      (3)
In paragraph 6(1)—
20
(a)
for “in the relevant” substitute “as respects the relevant”, and
(b)
for the words from “either” to the end substitute “met the residence
condition set out in section 2(1A)”.
      (4)
If any of the previous 5 years of assessment mentioned in paragraph 6(1) of
Schedule 4A ends before 6 April 2013, the test in that paragraph is to be
25
applied, as respects any such year ending before that date, as if that
paragraph had not been amended by sub-paragraph (3).
107   (1)
Schedule 4C (transfers of value: attribution of gains to beneficiaries) is
amended as follows.
      (2)
In paragraph 1A(3), for the words from “the beneficiary” to the end
30
substitute “, as respects that year, the beneficiary meets the residence
condition set out in section 2(1A)”.
      (3)
In paragraph 4—
(a)
in sub-paragraph (1), omit “and ordinarily resident”, and
(b)
in sub-paragraph (2), omit “and ordinarily resident”.
35
      (4)
In paragraph 5(1)—
(a)
in paragraph (a), omit “and ordinarily resident”, and
(b)
in paragraph (b), omit “and ordinary residence”.
      (5)
In paragraph 9(3)(a)(i), omit “and ordinarily resident”.
      (6)
In paragraph 10(1), omit “and ordinarily resident”.
40
108   (1)
Schedule 5 (attribution of gains to settlors with interest in non-resident or
dual resident settlement) is amended as follows.