Finance Bill (HL Bill 123)

Part 1 continued    

(6)In section 224 (amount of relief: further provisions)—

(a)in the heading for “Amount of relief” substitute “Relief under sections
223 and 223B”,

(b)in subsection (1)—

(i)5for “the gain”, in the first place those words occur, substitute “a
gain to which section 222 applies”,

(ii)for “section 223” substitute “sections 223 and 223B”,

(c)in subsection (2) for “section 223” substitute “sections 223 and 223B”,
and

(d)10in subsection (3) for “Section 223” substitute “Sections 223 and 223B”.

(7)In section 225E (disposals by disabled persons or persons in care homes etc) in
subsection (4) for “18 months” substitute “9 months”.

(8)In section 248E(6) (relief on disposal of joint interests in private residence) for
“and 223” substitute “, 223 and 223B”.

(9)15The amendment made by subsection (2)(a) has effect in relation to a notice
given on or after 6 April 2020.

(10)The amendments made by subsection (2)(b) have effect in a case where the
disposal or death mentioned in subsection (7)(a) of section 222 of TCGA 1992
is made or occurs on or after 6 April 2020.

(11)20The amendments made by subsections (3) to (8) have effect in relation to
disposals made on or after 6 April 2020.

25 Corporate capital losses

Schedule 4 makes provision relating to capital losses made by companies.

26 Quarterly instalment payments

(1)25The Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175)
are amended as follows.

(2)At the end of regulation 3 (large and very large companies) insert—

“(11)A company which—

(a)is chargeable to corporation tax for an accounting period only
30because of a chargeable gain accruing to the company on the
disposal of an asset, and

(b)would, apart from this paragraph, be a very large company by
virtue of this regulation in respect of the accounting period,

is to be treated for the purposes of these regulations as if it were a large
35company by virtue of paragraph (1).”

(3)In regulation 3(10), in the words before paragraph (a), after “12 months” insert
“and paragraph (11) does not apply”.

(4)The amendments made by this section have effect in relation to accounting
periods beginning on or after 11 March 2020.

27 Relief from CGT for loans to traders

In section 253(1)(b) of TCGA 1992 (which provides that a loan qualifies for
relief only if the borrower is UK resident), at the beginning insert “if the loan is
made before 24 January 2019,”.

5Reliefs for business

28 Research and development expenditure credit

(1)In section 104M(3) of CTA 2009 (amount of R&D expenditure credit) for “12%”
substitute “13%”.

(2)The amendment made by this section has effect in relation to expenditure
10incurred on or after 1 April 2020.

29 Structures and buildings allowances: rate of relief

(1)Part 2A of CAA 2001 (structures and buildings allowances) is amended as
follows.

(2)In section 270AA (application of Part 2A)—

(a)15in subsection (2) (entitlement to an allowance), at the beginning of
paragraph (b) insert “the beginning of”,

(b)in subsection (2)(b)(ii), for “50 years” substitute “33 1/3 years”, and

(c)in subsection (5) (basic rule: allowance for a chargeable period of one
year), for “2%” substitute “3%”.

(3)20In section 270EA (proportionate adjustment in certain cases), in subsection
(3)—

(a)in paragraph (a), for “(b)” substitute “(b)(i)”, and

(b)after paragraph (a) (but before the “or”) insert—

“(aa)the period mentioned in section 270AA(2)(b)(ii) expires
25part way through the chargeable period,”.

(4)In section 270EB (multiple uses), in subsection (2), for “2%” substitute “3%”.

(5)After section 270GC (but before Chapter 8) insert—

“Chapter 7A Adjustment for pre-April 2020 allowance

270GD 30 Adjustment for pre-April 2020 allowance

(1)This section applies if—

(a)on the relevant date, a person is entitled to an allowance under
this Part by reference to qualifying expenditure incurred in
relation to a building or structure,

(b)35the person does not dispose of the relevant interest in the
building or structure before the end of the period mentioned in
section 270AA(2)(b)(ii) (the “allowance period”), and

(c)at the end of the allowance period, the person is entitled to an
allowance under this Part by reference to the qualifying
40expenditure mentioned in paragraph (a).

(2)The person is entitled to an additional amount of allowance for the
chargeable period in which the allowance period ends.

(3)The additional amount of the allowance is 1% of the qualifying
expenditure multiplied by the following fraction—

5D/365

where D is the number of days during the period beginning with 29
October 2018 and ending with the relevant date in respect of which an
allowance under this Part by reference to the qualifying expenditure
was made to the person.

(4)10For the purposes of this section “the relevant date” means—

(a)for income tax purposes, 5 April 2020, or

(b)for corporation tax purposes, 31 March 2020.”

(6)The amendments made by this section are treated as having come into force—

(a)for income tax purposes, on 6 April 2020, or

(b)15for corporation tax purposes, on 1 April 2020,

and in subsection (7) references to the commencement date are to be read
accordingly.

(7)For the purposes of subsection (6), in relation to a chargeable period beginning
before the commencement date and ending on or after that date, Part 2A of
20CAA 2001 applies as if—

(a)the part of the chargeable period falling before the commencement
date, and

(b)the part of the chargeable period falling on or after that date,

were separate chargeable periods.

30 25Structures and buildings allowances: miscellaneous amendments

Schedule 5 makes miscellaneous amendments of CAA 2001 in relation to
structures and buildings allowances.

31 Intangible fixed assets: pre-FA 2002 assets etc

(1)Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.

(2)30In section 711 (overview of Part 8) in subsection (8) after paragraph (fa) (but
before the “and” at the end of that paragraph) insert—

“(fb)Chapter 16A (debits in respect of assets that were pre-FA 2002
assets etc),

(fc)Chapter 16B (fungible assets),”.

(3)35In section 845 (transfer between company and related party treated as at
market value) in subsection (4) (exceptions)—

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

(b)at the end of paragraph (e) insert “, and

(f)sections 900E and 900F (special rules in respect of assets
40that were pre-FA 2002 assets etc)”.

(4)In section 849AB (grant of licence or other right treated as at market value) in
subsection (6) (exceptions)—

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

(b)at the end of paragraph (b) insert “, and

(c)5section 900F (special rules in respect of assets that were
pre-FA 2002 assets etc)”.

(5)Omit section 858 (fungible assets) and the italic heading before that section.

(6)In section 882 (application of Part 8 to assets created or acquired on or after 1
April 2002) for subsection (1) substitute—

“(1)10The general rule is that this Part applies to an intangible fixed asset of a
company (“the company”) only if one or more of the conditions in
subsections (1A) to (1D) is met.

(1A)The condition in this subsection is that the asset is created by the
company on or after 1 April 2002.

(1B)15The condition in this subsection is that the asset is acquired by the
company during the period beginning with 1 April 2002 and ending
with 30 June 2020 and either—

(a)it is acquired from a person who at the time of the acquisition is
not a related party in relation to the company, or

(b)20it is acquired in case A (in subsection (3)), case B (in subsection
(4)) or case C (in subsection (5)) from a person who at the time
of the acquisition is a related party in relation to the company.

(1C)The condition in this subsection is that the asset is acquired by the
company on or after 1 July 2020.

(1D)25The condition in this subsection is that the asset is held by the company
immediately before 1 July 2020 and at that time the company is not
within the charge to corporation tax in respect of the asset.

(1E)But the condition in subsection (1D) is to be treated as not met if—

(a)at any time during the period beginning with 19 March 2020
30and ending with 30 June 2020 the asset is a pre-FA 2002 asset in
the hands of any company that is within the charge to
corporation tax in respect of the asset, and

(b)after that time but during that period the asset is not acquired
by any other company from a person who at the time of the
35acquisition is not a related party in relation to that other
company.”

(7)In section 883 (assets treated as created or acquired when expenditure
incurred)—

(a)after subsection (3) insert—

“(3A)40An intangible asset is treated as acquired on or after 1 July 2020
so far as expenditure on its acquisition is incurred on or after
that date.

(3B)An intangible asset is treated as acquired during the period
beginning with 1 April 2002 and ending with 30 June 2020 so far
45as expenditure on its acquisition is incurred during that period.

(3C)An intangible asset is treated as acquired during the period
beginning with 19 March 2020 and ending with 30 June 2020 so
far as expenditure on its acquisition is incurred during that
period.”,

(b)5in subsection (4)—

(i)for “whether” substitute “when”, and

(ii)omit “on or after 1 April 2002”, and

(c)for subsection (5) substitute—

“(5)If by reason of any of subsections (3) to (3C) of this section this
10Part would apply to an intangible fixed asset of a company to a
limited extent only, the asset is to be treated as if it consisted of
two separate assets—

(a)one asset being an asset to which this Part applies, and

(b)one asset being an asset to which the alternative
15enactments apply.”

(8)Omit section 890 (fungible assets: application of section 858) and the italic
heading before that section.

(9)Omit section 891 (realisation and acquisition of fungible assets).

(10)In section 892 (certain assets acquired on transfer of business)—

(a)20in the heading at the end insert “or transfer within a group”,

(b)in subsection (2) omit “and” at the end of paragraph (b),

(c)in subsection (2) after paragraph (c) insert “, and

(d)section 171 of that Act (transfers within a group)”, and

(d)after subsection (4) insert—

“(5)25If the transfer mentioned in subsection (1) occurred before 1 July
2020, this section applies as if paragraph (d) of subsection (2)
were omitted.”

(11)In section 893 (assets whose value derives from pre-2002 assets) in subsection
(1)(a) for “on or after 1 April 2002” substitute “during the period beginning
30with 1 April 2002 and ending with 30 June 2020”.

(12)In section 895 (assets acquired in connection with disposals of pre-FA 2002
assets) in subsection (1)(b) at the beginning insert “at any time before 1 July
2020”.

(13)After Chapter 16 insert—

35“Chapter 16A Debits in respect of assets that were pre-FA 2002 assets etc

Introduction

900A Introduction

(1)This Chapter contains special rules affecting the debits to be brought
40into account by a company for tax purposes in respect of an intangible
fixed asset that is a restricted asset.

(2)Sections 900B to 900D make provision determining when an intangible
fixed asset of a company is a restricted asset for the purposes of this
Chapter.

(3)Sections 900E and 900F contain the special rules.

(4)5The following sections contain supplementary provisions—

(a)section 900G (meaning of relieving acquisition),

(b)section 900H (when two persons are related), and

(c)section 900I (acquisition of asset in pursuance of an
unconditional obligation).

10When an intangible fixed asset is a restricted asset

900B When an intangible fixed asset is a restricted asset: the first case

(1)An intangible fixed asset of a company is a restricted asset if—

(a)the company acquired the asset on or after 1 July 2020,

(b)the company acquired the asset from a person who at the time
15of the acquisition was a related party in relation to the company,
and

(c)the asset is within subsection (2) or (3).

(2)The asset is within this subsection if—

(a)the asset was a pre-FA 2002 asset in the hands of any company
20on 1 July 2020, and

(b)at no time on or after 1 July 2020 has the asset been the subject
of a relieving acquisition.

(3)The asset is within this subsection if—

(a)the asset was created before 1 April 2002,

(b)25immediately before 1 July 2020 the asset was held by a person
other than a company, and

(c)at no time on or after 1 July 2020 has the asset been the subject
of a relieving acquisition.

(4)But the asset is not within subsection (3) if the person mentioned in that
30subsection (“the intermediary”) acquired the asset on or after 1 April
2002 from a person (“the third party”) who meets the conditions in
subsections (5), (6) and (7).

(5)The third party meets the condition in this subsection if—

(a)the third party is not a company, or

(b)35the third party is a company in relation to which the
intermediary is not a related party at the time of the
intermediary’s acquisition.

(6)The third party meets the condition in this subsection if at the time of
the intermediary’s acquisition the third party is not a related party in
40relation to a company in relation to which the intermediary is a related
party.

(7)The third party meets the condition in this subsection if at the time of
the acquisition of the asset by the company mentioned in subsection (1)
the third party is not a related party in relation to that company.

900C When an intangible fixed asset is a restricted asset: the second case

(1)An intangible fixed asset of a company (“the asset concerned”) is a
restricted asset if—

(a)the company acquired the asset concerned on or after 1 July
52020,

(b)the company acquired the asset concerned from a person who
at the time of the acquisition was a related party in relation to
the company, and

(c)the asset concerned is within subsection (2).

(2)10The asset concerned is within this subsection if—

(a)the asset concerned was created on or after 1 July 2020,

(b)at no time has the asset concerned been the subject of a relieving
acquisition,

(c)the value of the asset concerned derives in whole or in part from
15another asset (“the other asset”), and

(d)the other asset was a pre-FA 2002 asset or a restricted asset in
the hands of any company on the date the asset concerned was
created.

(3)The condition in subsection (2)(d) is to be treated as met if—

(a)20the other asset was held by a person other than a company on
the date the asset concerned was created,

(b)on the date the asset concerned was created that person was a
related party in relation to a company, and

(c)the other asset would have been a pre-FA 2002 asset or a
25restricted asset in the hands of that company on the date the
asset concerned was created had that company acquired the
other asset from that person immediately before that date.

(4)For the purposes of this section the cases in which the value of an asset
may be derived from any other asset include any case where—

(a)30assets have been merged or divided,

(b)assets have changed their nature, or

(c)rights or interests in or over assets have been created or
extinguished.

900D When an intangible fixed asset is a restricted asset: the third case

(1)35An intangible fixed asset of a company (“the asset concerned”) is a
restricted asset if—

(a)the company acquired the asset concerned on or after 1 July
2020, and

(b)the asset concerned is within subsection (2).

(2)40The asset concerned is within this subsection if—

(a)the asset concerned was acquired by any company on or after 1
July 2020 directly or indirectly as a consequence of, or otherwise
in connection with, the realisation by another person of an asset
(“the other asset”),

(b)45that company and that other person were related parties at the
time of the realisation of the other asset,

(c)the other asset was a pre-FA 2002 asset or a restricted asset in
the hands of any company at any time during the period
beginning with 1 July 2020 and ending with the time of the
realisation mentioned in paragraph (a),

(d)5the other asset was not the subject of a relieving acquisition at
any time during the period beginning with 1 July 2020 and
ending with the time of the realisation mentioned in paragraph
(a), and

(e)the asset concerned has not been the subject of a relieving
10acquisition at any time after the realisation mentioned in
paragraph (a).

(3)The condition in subsection (2)(c) is to be treated as met if—

(a)immediately before 1 July 2020 the other asset was held by a
person that was not a company,

(b)15immediately before 1 July 2020 that person was a related party
in relation to a company, and

(c)the other asset would have been a pre-FA 2002 asset in the
hands of that company on 1 July 2020 had that company
acquired the asset from that person immediately before that
20date.

(4)For the purposes of subsection (2) it does not matter whether—

(a)the other asset is the same as the asset concerned,

(b)the asset concerned is acquired at the time of the realisation of
the other asset, or

(c)25the asset concerned is acquired by merging assets or otherwise.

The special rules

900E Special rule: section 900B case

(1)This section applies in respect of a restricted asset of a company if it is
a restricted asset by reason of section 900B.

(2)30If the company was the first company to acquire the asset on or after 1
July 2020, the relevant Chapters of this Part have effect as if the
company acquired the asset at no cost.

(3)If the company was not the first company to acquire the asset on or after
1 July 2020, the relevant Chapters of this Part have effect as if the
35company acquired the asset for the adjusted amount.

(4)The adjusted amount is—

where—

• A is the amount of consideration—

  (a)

  40for which the company actually acquired the asset, or

  (b)

  if different, for which it would (ignoring this section) be
  treated for the purposes of the Taxes Acts as having
  acquired the asset, and

• B is the market value of the asset on the date it was first acquired
  45by a company on or after 1 July 2020.

(5)Where B is greater than A the adjusted amount is nil.

(6)In this section—

• “market value”, in relation to an asset, means the price the asset
  might reasonably be expected to fetch on a sale in the open
  market, and

• 5“the relevant Chapters of this Part” means—

  (a)

  Chapter 3 (debits in respect of intangible fixed assets),

  (b)

  Chapter 15 (adjustments on change of accounting
  policy), and

  (c)

  Chapter 5 (calculation of tax written-down value) in so
  10far as it has effect for the purposes of Chapters 3 and 15.

900F Special rule: section 900C or 900D case

(1)This section applies in respect of a restricted asset of a company if it is
a restricted asset by reason of section 900C or 900D.

(2)The relevant Chapters of this Part have effect as if the company
15acquired the asset for the adjusted amount.

(3)The adjusted amount is calculated as follows—

Step 1

Find the amount—

Step 2

Deduct from the amount found at Step 1 such proportion of the
notional deduction amount for the relevant other asset or each relevant
25other asset as is just and reasonable in the circumstances.

(4)Where the deduction at Step 2 results in a negative value the adjusted
amount is nil.

(5)In subsection (3)—

• “relevant other asset” means an asset by reference to which the
  30conditions in paragraphs (c) and (d) of section 900C(2) or (as the
  case may be) the conditions in section 900D(2) were met, and

• “the notional deduction amount”, in relation to a relevant other
  asset, means—

  (a)

  in a case where section 900E(2) would have applied had
  35the company acquired the relevant other asset instead of
  the restricted asset, an amount equal to the market value
  of the relevant other asset at the time the restricted asset
  was acquired, and

  (b)

  in a case where section 900E(3) would have applied had
  40the company acquired the relevant other asset instead of
  the restricted asset, an amount equal to the market value
  of the relevant other asset at the time it was first
  acquired by a company on or after 1 July 2020, and

  (c)

  in a case where subsection (2) of this section would have
  45applied had the company acquired the relevant other
  asset instead of the restricted asset, the amount that
  would have been deducted at step 2 of subsection (3) of

  Finance BillPage 29

   

  this section if the company had acquired the relevant
  other asset instead of the restricted asset.

(6)In this section “market value” and “the relevant Chapters of this Part”
have the same meaning as in section 900E.

5Supplementary provisions

900G Meaning of “relieving acquisition”

For the purposes of this Chapter, an asset is the subject of a relieving
acquisition if it is acquired by a company from a person who at the time
of the acquisition is not a related party in relation to the company.

900H 10Supplementary provision about when two persons are related

(1)References in this Chapter to one person being a related party in
relation to another person are to be read as including references to the
participation condition being met as between those persons.

(2)References in subsection (1) to a person include a firm in a case where,
15for section 1259 purposes, references in this Chapter to a company are
read as references to the firm.

(3)In subsection (2) “section 1259 purposes” means the purposes of
determining under section 1259 the amount of profits or losses to be
allocated to a partner in a firm.

(4)20Section 148 of TIOPA 2010 (when the participation condition is met)
applies for the purposes of subsection (1) as it applies for the purposes
of section 147(1)(b) of TIOPA 2010.

900I Acquisition of asset in pursuance of an unconditional obligation

(1)A company that acquires an intangible fixed asset in pursuance of an
25unconditional obligation under a contract is to be treated for the
purposes of this Chapter as having acquired the asset on the date on
which the company became subject to that obligation or (if later) the
date on which that obligation became unconditional.

(2)An obligation is unconditional if it may not be varied or extinguished
30by the exercise of a right (whether under contract or otherwise).

Chapter 16B Fungible assets

900J Fungible assets: general

(1)For the purposes of this Part—

(a)35fungible assets of the same kind that are held by the same
person in the same capacity are treated as indistinguishable
parts of a single asset,

(b)that asset is treated as growing as additional assets of the same
kind are created or acquired, and

(c)40that asset is treated as diminishing as some of the assets are
realised.