Finance Bill (HL Bill 123)

Part 1 continued    

which sub-paragraph (2) applies and T has made an election
for the purposes of this sub-paragraph, section 23E has
effect—

(a)as if the “relevant benefit amount” were one third of
5the amount of the loan or quasi-loan that is
outstanding at the time the relevant benefit is treated
as arising,

(b)as if section 23E(1)(a) specified the tax year in which
the relevant benefit is treated as arising and each of
10the two subsequent tax years, and

(c)where T ceases to carry on the relevant trade before
any tax year so specified in section 23E(1)(a), as if
section 23E(1)(b) were omitted and as if section 23E(1)
provided that the relevant benefit amount is to be
15treated for income tax purposes as a post-cessation
receipt of the trade received in that tax year.

(3B)An election for the purposes of sub-paragraph (3A)—

(a)may be made at any time before 1 October 2020, and

(b)may be made at a later time if an officer of Revenue
20and Customs allows it.

(3C)But a person who is under a duty imposed by paragraph 22
of this Schedule or paragraph 35C of Schedule 11 may not
make an election for the purposes of sub-paragraph (3A)
until that duty has been complied with.

(3D)25An election for the purposes of sub-paragraph (3A) may not
be revoked.

(3E)A person who has made an election for the purposes of
paragraph 1A of Schedule 11 is to be treated as having made
an election for the purposes of sub-paragraph (3A) of this
30paragraph.

(3F)The Commissioners for Her Majesty’s Revenue and Customs
may by regulations provide that sub-paragraph (3B)(a)
applies to a specified class of persons as if the reference to 1
October 2020 were to such later date as is specified.

(3G)35In sub-paragraph (3F) “specified” means specified in the
regulations.”

(6)Part 2 of Schedule 2 makes amendments in consequence of this section.

17 Loan charge reduced where underlying liability disclosed but unenforceable

(1)In Schedule 11 to F(No.2)A 2017 (employment income provided through third
40parties: loans etc outstanding on 5 April 2019) after paragraph 1A (as inserted
by section 16) insert—

“1B (1) This paragraph applies where—

(a)a person is treated as taking a relevant step within paragraph
1 by reason of making a loan or quasi-loan,

(b)a reasonable case could have been made that for a qualifying
tax year (“the relevant year”) A was chargeable to income tax
on an amount that was referable to the loan or quasi-loan,

(c)at a time when an officer of Revenue and Customs had power
5to recover (from A or any other person) income tax for the
relevant year in respect of that amount, a qualifying tax
return or two or more qualifying tax returns of the same type
taken together contained a reasonable disclosure of the loan
or quasi-loan, and

(d)10as at 6 April 2019 an officer of Revenue and Customs had not
taken steps to recover (from A or any other person) income
tax for the relevant year in respect of that amount.

(2)But this paragraph does not apply if—

(a)a reasonable case could have been made that for a tax year
15other than the relevant year (“the alternative year”) A was
chargeable to income tax on an amount within sub-
paragraph (3), and

(b)it is the case that—

(i)on or before 5 April 2019 an officer of Revenue and
20Customs took steps to recover (from A or any other
person) income tax for the alternative year in respect
of that amount, or

(ii)the alternative year is not a qualifying tax year.

(3)An amount is within this sub-paragraph if —

(a)25it is the same amount as is mentioned in sub-paragraph (1),

(b)it is part of the amount mentioned in sub-paragraph (1), or

(c)it is derived from or represents the whole or part of the
amount mentioned in sub-paragraph (1).

(4)Where this paragraph applies, then for the purposes of paragraph
301(4) and 1A(5) the amount of the loan or quasi-loan that is
outstanding is to be taken to be reduced (but not below nil) by the
amount mentioned in sub-paragraph (1).

(5)For the purposes of sub-paragraph (1)(c) a qualifying tax return, or
two or more qualifying tax returns taken together, contained a
35reasonable disclosure of the loan or quasi-loan if the return or returns
taken together—

(a)identified the loan or quasi-loan,

(b)identified the person to whom the loan or quasi-loan was
made in a case where the loan or quasi-loan was made to a
40person other than A,

(c)identified the relevant arrangements in pursuance of which
or in connection with which the loan or quasi-loan was made,
and

(d)provided such other information as was sufficient for it to be
45apparent that a reasonable case could be made that for the
relevant year A was chargeable to income tax on an amount
that was referable to the loan or quasi-loan.

(6)A reference in sub-paragraph (1)(b), (2) or (5)(d) to A being
chargeable to income tax does not include A being chargeable to

income tax by reason of section 175 of ITEPA 2003 (benefit of taxable
cheap loan treated as earnings).

(7)In this paragraph—

• “qualifying tax year” means the tax year 2015-16 and any earlier
  5tax year, and

• “qualifying tax return” means —

  (a)

  a return made by A or B under section 8 of TMA 1970
  for a qualifying tax year, and any accompanying
  accounts, statements or documents, or

  (b)

  10a return made by B under paragraph 3 of Schedule 18
  to FA 1998 for an accounting period that commenced
  before 6 April 2016,

  and a qualifying tax return is of the same type as another if
  both fall within the same paragraph of this definition.”

(2)15In Schedule 12 to F(No.2)A 2017 (trading income provided through third
parties: loans etc outstanding on 5 April 2019) after paragraph 1 insert—

“1A (1) This paragraph applies where—

(a)a loan or quasi-loan is to be treated for the purposes of
sections 23A to 23H of ITTOIA 2005 as a relevant benefit by
20reason of paragraph 1,

(b)a reasonable case could have been made that for a qualifying
tax year (“the relevant year”) T was chargeable to income tax
on an amount that was referable to the loan or quasi-loan,

(c)at a time when an officer of Revenue and Customs had power
25to recover ( from T or any other person) income tax for the
relevant year in respect of that amount, a qualifying tax
return or two or more qualifying tax returns taken together
contained a reasonable disclosure of the loan or quasi-loan,
and

(d)30as at 6 April 2019 an officer of Revenue and Customs had not
taken steps to recover (from T or any other person) income
tax for the relevant year in respect of that amount.

(2)But this paragraph does not apply if—

(a)a reasonable case could have been made that for a tax year
35other than the relevant year (“the alternative year”) T was
chargeable to income tax on an amount within sub-
paragraph (3), and

(b)it is the case that—

(i)on or before 5 April 2019 an officer of Revenue and
40Customs took steps to recover (from T or any other
person) income tax for the alternative year in respect
of that amount, or

(ii)the alternative year is not a qualifying tax year.

(3)An amount is within this sub-paragraph if—

(a)45it is the same amount as is mentioned in sub-paragraph (1),

(b)it is part of the amount mentioned in sub-paragraph (1), or

(c)it is derived from or represents the whole or part of the
amount mentioned in sub-paragraph (1).

(4)Where this paragraph applies, then for the purposes of paragraph
1(3)(a) and (3A)(a) the amount of the loan or quasi-loan that is
outstanding is to be taken to be reduced (but not below nil) by the
amount mentioned in sub-paragraph (1).

(5)5For the purposes of sub-paragraph (1)(c) a qualifying tax return, or
two or more qualifying tax returns taken together, contained a
reasonable disclosure of the loan or quasi-loan if the return or returns
taken together—

(a)identified the loan or quasi-loan,

(b)10identified the person to whom the loan or quasi-loan was
made in a case where the loan or quasi-loan was made to a
person other than T,

(c)identified the relevant arrangements in pursuance of which
or in connection with which the loan or quasi-loan was made,
15and

(d)provided such other information as was sufficient for it to be
apparent that a reasonable case could be made that for the
relevant year T was chargeable to income tax on an amount
that was referable to the loan or quasi-loan.

(6)20In this paragraph—

• “qualifying tax year” means the tax year 2015-16 and any earlier
  tax year, and

• “qualifying tax return” means a return made by T under section
  8 of TMA 1970 for a qualifying tax year, and any
  25accompanying accounts, statements or documents.”

18 Relief from interest on tax payable by a person subject to the loan charge

(1)This section applies where—

(a)a person is chargeable to income tax on any amount by reason of
Schedule 11 or 12 to F(No.2)A 2017 or would be so chargeable but for
30section 15 or 17 of this Act,

(b)before the end of September 2020 the person delivers a return under
section 8 of TMA 1970 for the tax year 2018-19, and

(c)at the end of September 2020 the person’s self-assessment included in
that return is complete and accurate.

(2)35If before the end of September 2020 the person discharges their liability to
income tax and capital gains tax for the tax year 2018-19—

(a)any amount paid in discharging that liability (other than a payment
made on account of income tax for that tax year) is to be taken to not
carry interest, and

(b)40any amount paid by the person on account of their liability to income
tax for the tax year 2019-20 is to be taken to not carry interest.

(3)If before the end of September 2020 the person enters into an agreement with
the Commissioners for Her Majesty’s Revenue and Customs as to the
discharge of their liability to income tax and capital gains tax for the tax year
452018-19—

(a)any amount paid before the end of September 2020 in discharging that
liability (other than a payment made on account of income tax for that
tax year) is to be taken to not carry interest,

(b)for the purposes of section 101 of FA 2009 the late payment interest start
date in respect of any amount paid in accordance with the agreement
after the end of September 2020 is 1 October 2020, and

(c)any amount paid by the person on account of their liability to income
5tax for the tax year 2019-20 is to be taken to not carry interest.

(4)Paragraph (b) of subsection (2) and paragraph (c) of subsection (3) do not apply
if at the end of January 2021 the person has neither discharged their liability to
income tax and capital gains tax for the tax year 2019-20 nor entered into an
agreement with the Commissioners for Her Majesty’s Revenue and Customs
10as to the discharge of that liability.

(5)The Commissioners for Her Majesty’s Revenue and Customs may by
regulations provide that this section applies to a specified class of persons as
if—

(a)the references in this section to the end of September 2020 were to such
15later time as is specified, and

(b)the reference in subsection (3)(b) to 1 October 2020 were to such later
date as is specified.

(6)In subsection (5) “specified” means specified in the regulations.

19 Minor amendments relating to the loan charge

(1)20Schedule 11 to F(No.2)A 2017 (employment income provided through third
parties: loans etc outstanding on 5 April 2019) is amended as follows.

(2)In paragraph 35C(2)(b) (date by which loan charge information must be
provided) for “1 October 2019” substitute “1 October 2020”.

(3)In paragraph 45 (meaning of “A” and “B”) after “section 554A(1)(a)” insert “and
25554AA(1)(a)”.

(4)In Schedule 12 to F(No.2)A 2017 (trading income provided through third
parties: loans etc outstanding on 5 April 2019) in paragraph 22(2)(b) (date by
which loan charge information must be provided) for “1 October 2019”
substitute “1 October 2020”.

20 30Repaying sums paid to HMRC under agreements relating to certain loans etc

(1)The Commissioners for Her Majesty’s Revenue and Customs (“the
Commissioners”) must establish a scheme under which they may on an
application made to them before 1 October 2021—

(a)repay the whole or part of a qualifying amount paid or treated as paid
35to them under a qualifying agreement, or

(b)waive the payment of the whole or part of a qualifying amount due to
be paid to them under a qualifying agreement.

(2)An agreement is a qualifying agreement if—

(a)it is an agreement with the Commissioners,

(b)40it is made on or after 16 March 2016 and before 11 March 2020, and

(c)it imposes an obligation on any party to the agreement to pay an
amount of income tax that is referable (directly or indirectly) to a
qualifying loan or quasi-loan.

(3)An amount paid, treated as paid or due to be paid under a qualifying
agreement is a qualifying amount if—

(a)the amount is referable (directly or indirectly) to a qualifying loan or
quasi-loan, and

(b)5the amount is one that an officer of Revenue and Customs had no
power to recover at the time the agreement was made.

(4)But an amount that is referable (directly or indirectly) to a qualifying loan or
quasi-loan made on or after 9 December 2010 is not a qualifying amount by
reason of subsection (3) unless at a time when an officer of Revenue and
10Customs had power to recover the amount a tax return, or two or more tax
returns of the same type taken together, contained a reasonable disclosure of
the loan or quasi-loan.

(5)For the purposes of subsection (4), a tax return, or two or more tax returns
taken together, contained a reasonable disclosure of the loan or quasi-loan if
15the return or returns taken together—

(a)identified the qualifying loan or quasi-loan,

(b)identified the person to whom the qualifying loan or quasi-loan was
made,

(c)identified any arrangements in pursuance of which, or in connection
20with which, the qualifying loan or quasi-loan was made, and

(d)provided such other information as was sufficient for it to be apparent
that a reasonable case could have been made that the amount
concerned was payable to the Commissioners.

(6)An amount paid, treated as paid or due to be paid under a qualifying
25agreement is also a qualifying amount if it is interest on another qualifying
amount paid, treated as paid or due to be paid under that agreement.

(7)A loan or quasi-loan is a qualifying loan or quasi-loan if it is made on or after
6 April 1999 and before 6 April 2016.

(8)In this section—

• 30“loan” and “quasi-loan” have the meaning they have in Part 1 of Schedule
  11 to F(No.2)A 2017 and Schedule 12 to that Act (see paragraph 2 of
  each of those Schedules),

• “tax return” means—

  (a)

  a return made under section 8 of TMA 1970 and any
  35accompanying accounts, statements or documents, or

  (b)

  a return made under paragraph 3 of Schedule 18 to FA 1998,

  and a tax return is of the same type as another if both fall within the
  same paragraph of this definition.

(9)Section 21 makes further provision in connection with the scheme established
40under this section.

21 Operation of the scheme

(1)The scheme may make provision—

(a)in relation to all qualifying agreements or specified descriptions of
qualifying agreements only, and

(b)45in relation to all qualifying amounts or specified descriptions of
qualifying amounts only.

(2)The scheme may make provision for an amount that is not a qualifying amount
by reason only of subsection (4) of section 20 to be treated in certain cases as if
it were a qualifying amount.

(3)The scheme may make provision about the making of applications under the
5scheme, including—

(a)provision as to who is or is not eligible to apply,

(b)provision as to the conditions that must be met in order to apply,

(c)provision as to the form, manner and content of an application, and

(d)provision as to information or evidence to be provided in support of an
10application.

(4)The scheme may make provision about the determination of applications
under the scheme, including—

(a)provision in accordance with which the Commissioners must
determine whether to exercise their discretion to repay or waive the
15payment of a qualifying amount, and

(b)provision in accordance with which the Commissioners must
determine how much of any qualifying amount to repay or waive.

(5)The scheme may make provision authorising the Commissioners to make a
repayment or waiver conditional—

(a)20on the applicant or any other person agreeing to the termination or
variation of the qualifying agreement concerned,

(b)on the applicant or any other person making a new agreement with the
Commissioners, or

(c)on the satisfaction of such other conditions as may be specified or
25determined by the Commissioners.

(6)The scheme may provide that in making any determination under the scheme
the Commissioners may or must take account of—

(a)the effect the qualifying agreement concerned has had, or may have, on
the applicant or any other person (for example, the effect it has had, or
30may have, on any liability, relief or benefit),

(b)the effect any repayment or waiver would have on the applicant or any
other person (for example, the effect it would have on any liability,
relief or benefit), and

(c)such other matters as may be specified.

(7)35The scheme may make provision as to the effect, if any, a repayment or waiver
is to have on—

(a)the entitlement of the applicant, or any other person, to a payment,
benefit or relief under an enactment,

(b)the amount or value of such a payment, benefit or relief,

(c)40any liability the applicant, or any other person, may have under an
enactment, or

(d)the extent of any such liability.

(8)The scheme may make provision for or in connection with the recovery by the
Commissioners of—

(a)45any amount repaid under the scheme in circumstances where the
Commissioners consider that the repayment should not have been
paid, or

(b)any amount the payment of which has been waived under the scheme
in circumstances where the Commissioners consider that the waiver
should not have been granted.

(9)The scheme may make—

(a)5different provision for different purposes or cases,

(b)provision generally or for specific cases,

(c)provision subject to exceptions, and

(d)incidental, supplementary, consequential or transitional provision.

(10)The scheme may be amended by the Commissioners from time to time.

(11)10An amendment making provision of a kind authorised by subsection (7) may
have effect in relation to a repayment paid or waiver granted before the
amendment comes into force, but only if the principal effect of the amendment
is to benefit persons other than the Commissioners.

(12)In this section—

• 15“the scheme” means the scheme established under section 20,

• “specified” means specified in the scheme, and

• “the Commissioners”, “qualifying amount” and “qualifying agreement”
  have the meaning they have in section 20.

Pensions

22 20Annual allowance: tapered reduction

(1)In Part 4 of FA 2004 (pension schemes), section 228ZA (annual allowance
charge: tapered reduction of annual allowance) is amended as follows.

(2)For subsection (1) substitute—

“(1)If the individual is a high-income individual for the tax year, the
25amount of the annual allowance for the tax year in the case of the
individual is the amount specified for the tax year by or under section
228 reduced (but not below £4,000) by—

where AI is the individual’s adjusted income for the tax year.”

(3)30In subsection (3)—

(a)in paragraph (a), for “£150,000” substitute “£240,000”;

(b)in paragraph (b), for “£150,000 minus A” substitute “£240,000 minus the
amount specified for the tax year by or under section 228”.

(4)The amendments made by this section have effect for the tax year 2020-21 and
35subsequent tax years.

Chargeable gains

23 Entrepreneurs’ relief

Schedule 3 makes provision about relief under Chapter 3 of Part 5 of TCGA
1992.

24 Relief on disposal of private residence

(1)TCGA 1992 is amended as follows.

(2)In section 222 (relief on disposal of private residence)—

(a)after subsection (5) insert—

“(5A)5But a notice or further notice under subsection (5)(a)
determining which of 2 or more residences is an individual’s
main residence for any period may be given more than 2 years
from the beginning of the period if during the period the
individual has not held an interest of more than a negligible
10market value in more than one of the residences.”,

(b)in subsection (7)(a) (disposal of dwelling-house to a spouse or civil
partner)—

(i)for “the dwelling-house” substitute “a dwelling-house”, and

(ii)omit “which is their only or main residence”,

(c)15in subsection (8A) (when living accommodation is job-related for a
person) after paragraph (b) insert “; or

(c)an armed forces accommodation allowance for or
towards costs of the accommodation is paid to, or in
respect of, the person or the person’s spouse or civil
20partner”, and

(d)in subsection (8D) (interpretation) after paragraph (b) insert “; and

(c)“armed forces accommodation allowance” means an
allowance which is exempt from income tax by reason of
section 297D of ITEPA 2003.”

(3)25In section 223 (amount of relief)—

(a)in subsections (1) and (2)(a) for “18 months” substitute “9 months”, and

(b)omit subsection (4).

(4)After section 223 insert—

“223ZA Amount of relief: individual’s residency delayed by certain events

(1)30Subsection (4) below applies where—

(a)a gain to which section 222 applies accrues to an individual on
the disposal of, or of an interest in, a dwelling-house or part of
a dwelling-house,

(b)the time at which the dwelling-house or the part of the
35dwelling-house first became the individual’s only or main
residence (“the moving-in time”) was within the first 24 months
of the individual’s period of ownership,

(c)at no time during the period beginning with the individual’s
period of ownership and ending with the moving-in time was
40the dwelling-house or the part of the dwelling-house another
person’s residence, and

(d)during the period beginning with the individual’s period of
ownership and ending with the moving-in time a qualifying
event occurred.

(2)45The following are qualifying events—

(a)the completion of the construction, renovation, redecoration or
alteration of the dwelling-house or the part of the dwelling-
house mentioned in subsection (1);

(b)the disposal by the individual of, or of an interest in, any other
5dwelling-house or part of a dwelling-house that immediately
before the disposal was the individual’s only or main residence.

(3)In determining whether and, if so, when a qualifying event within
subsection (2)(b) occurred, ignore section 28 (time of disposal where
asset disposed of under contract).

(4)10For the purposes of subsections (1) and (2) of section 223, as they have
effect in relation to the gain, the dwelling-house or the part of the
dwelling-house mentioned in subsection (1) above is to be treated as
having been the individual’s only or main residence from the
beginning of the individual’s period of ownership until the moving-in
15time.”

(5)After section 223A insert—

“223B Additional relief: part of private residence let out

(1)Where—

(a)a gain to which section 222 applies accrues to an individual on
20the disposal of, or of an interest in, a dwelling-house or part of
a dwelling-house, and

(b)at any time in the individual’s period of ownership the
condition in subsection (2) is met in respect of the dwelling-
house,

25the part of the gain that is within subsection (3) is a chargeable gain only
to the extent, if any, to which it exceeds the amount in subsection (4).

(2)The condition is that—

(a)part of the dwelling-house is the individual’s only or main
residence, and

(b)30another part of the dwelling-house is being let out by the
individual as residential accommodation.

(3)The part of the gain that is within this subsection is the part that (but for
subsection (1)) would be a chargeable gain by reason of the fact that, at
the times in the individual’s period of ownership when the condition in
35subsection (2) is met, the individual’s only or main residence does not
include the part of the dwelling-house that is being let out as residential
accommodation.

(4)The amount is whichever is the lesser of—

(a)the amount of the gain that is not a chargeable gain by virtue of
40section 223, and

(b)£40,000.

(5)Where by reason of section 222(7)(a) the individual’s period of
ownership mentioned in subsection (1) begins with the beginning of
the period of ownership of another person, any question whether the
45condition in subsection (2) is met at a time that is within both those
periods of ownership is to be determined as if the references in
subsection (2) to the individual were to that other person.”