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(7) In subsection (4)— | |
(a) for “emolument” substitute “general earnings”; | |
(b) for “it” substitute “them”. | |
(8) In subsection (6) for “emolument” substitute “general earnings”. | |
(9) For subsection (7) substitute— | 5 |
“(7) In calculating for the purposes of this section the amount of general | |
earnings received by an earner from an employment, a deduction | |
under any of the excluded provisions is to be disregarded. | |
This subsection does not apply in relation to a deduction if | |
subsection (7A) applies in relation to it. | 10 |
(7A) Where— | |
(a) a deduction in respect of a matter is allowed under an | |
excluded provision, and | |
(b) the amount deductible is at least equal to the whole of any | |
corresponding amount which would (but for this section) fall | 15 |
by reference to that matter to be included in the general | |
earnings mentioned in subsection (7), | |
the whole of the corresponding amount shall be treated as not | |
included. | |
(7B) For the purposes of subsections (7) and (7A) “excluded provision” | 20 |
means— | |
(a) any provision of Chapter 2 of Part 5 of ITEPA 2003 | |
(deductions for employee’s expenses) other than section 352 | |
(limited deduction for agency fees paid by entertainers), and | |
(b) any provision of Chapter 5 of Part 5 of ITEPA 2003 | 25 |
(deductions for earnings representing benefits or reimbursed | |
expenses).” | |
(10) For subsection (8)(a) substitute— | |
“(a) modify the effect of subsections (7) and (7A) above by | |
amending subsection (7B) so as to include any enactment | 30 |
contained in the Income Tax Acts within the meaning of | |
“excluded provision”; or”. | |
(11) In subsection (8)(b)— | |
(a) for “subsection (7)” substitute “subsections (7) to (7B)”; | |
(b) for “under Schedule E” substitute “on employment income”. | 35 |
(12) In subsection (9)(a) for “emoluments” substitute “general earnings”. | |
(13) Omit subsection (10). | |
196 (1) Amend section 10ZA (liability of third party provider of benefits in kind) as | |
follows. | |
(2) In subsection (1)(a) for “an emolument” substitute “general earnings”. | 40 |
(3) Amend subsection (1)(b) as follows— | |
(a) for “the emolument, in so far as it is one in respect of which” | |
substitute “the general earnings, in so far as they are ones in respect | |
of which”; | |
(b) for “consists” substitute “consist”. | 45 |
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| |
(4) In subsection (2), in the words after paragraph (b) for “an emolument” | |
substitute “general earnings”. | |
(5) In subsection (6) for “section 168(4) of the Income and Corporation Taxes Act | |
1988” substitute “section 721(5) of ITEPA 2003”. | |
197 (1) Amend section 10ZB (non-cash vouchers provided by third parties) as | 5 |
follows. | |
(2) In subsection (2)(a) for the words from “employment” to the end of the | |
paragraph substitute “employment which is an excluded employment for | |
the purposes of the benefits code, and”. | |
(3) In subsection (2)(b) for “if that Chapter did apply to that employment” | 10 |
substitute “if that employment were not an excluded employment”. | |
(4) In subsection (2), in the words following paragraph (b) for “as if that | |
employment were employment to which that Chapter applied” substitute | |
“as if that employment were not an excluded employment”. | |
(5) In subsection (3) for “section 141 of the Income and Corporation Taxes Act | 15 |
1988” substitute “section 84 of ITEPA 2003”. | |
198 (1) Amend section 10A (Class 1B National Insurance contributions) as follows. | |
(2) In subsection (1) for “emoluments” substitute “general earnings”. | |
(3) In subsection (2)(a) for “the emoluments included” substitute “the general | |
earnings included”. | 20 |
(4) In subsection (4) for “Emoluments are chargeable emoluments” substitute | |
“General earnings are chargeable emoluments”. | |
(5) In subsection (5) for “emoluments” in both places where it occurs substitute | |
“general earnings”. | |
199 (1) Amend section 121(1) (interpretation of Parts 1 to 6 and supplementary | 25 |
provisions) as follows. | |
(2) Insert the following definitions in the appropriate places— | |
“‘the benefits code’ has the meaning given by section 63(1) of | |
ITEPA 2003;”. | |
“‘the employment income Parts of ITEPA 2003’ means Parts 2 to | 30 |
7 of that Act;”. | |
“‘excluded employment’ has the meaning given by section | |
63(4) of ITEPA 2003;”. | |
“‘general earnings’ has the meaning given by section 7 of ITEPA | |
2003 and accordingly sections 3 and 112 of this Act do not | 35 |
apply in relation to the word ‘earnings’ when used in the | |
expression ‘general earnings’;”. | |
“‘ITEPA 2003’ means the Income Tax (Earnings and Pensions) | |
Act 2003;”. | |
(3) In the definition of “PAYE settlement agreement” for “section 206A of the | 40 |
Income and Corporation Taxes Act 1988” substitute “Chapter 5 of Part 11 of | |
ITEPA 2003”. | |
200 In section 125(5)(a)(ii) (trade disputes) for “emoluments in pursuance of | |
section 203 of the Income and Corporation Taxes Act 1988 (PAYE)” | |
substitute “taxable earnings (as defined by section 10 of the Income Tax | 45 |
(Earnings and Pensions) Act 2003) under PAYE regulations”. | |
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201 (1) Amend section 146(2) (interpretation of Part 10) as follows. | |
(2) In paragraph (b) of the definition of “unemployability supplement or | |
allowance”— | |
(a) in sub-paragraph (ii) for “section 315(1) of the Income and | |
Corporation Taxes Act 1988” substitute “section 641 of the Income | 5 |
Tax (Earnings and Pensions) Act 2003”; | |
(b) omit sub-paragraph (v). | |
(3) In paragraph (b) of the definition of “war disablement pension”, for | |
“subsection (1) of section 315 of the Income and Corporation Taxes Act 1988” | |
substitute “any of paragraphs (a) to (f) of section 641(1) of the Income Tax | 10 |
(Earnings and Pensions) Act 2003”. | |
(4) In the definition of “war widow’s pension” for “subsection (2)(e) of the said | |
section 315” substitute “section 641(1)(e) or (f) of the Income Tax (Earnings | |
and Pensions) Act 2003”. | |
202 In section 159(1) (interpretation of Part 11), in paragraph (a) of the definition | 15 |
of “employee” for “emoluments chargeable to income tax under Schedule E” | |
substitute “general earnings (as defined by section 7 of the Income Tax | |
(Earnings and Pensions) Act 2003)”. | |
203 In section 167(1) (interpretation of Part 12), in paragraph (a) of the definition | |
of “employee” for ““emoluments chargeable to income tax under Schedule | 20 |
E” substitute “general earnings (as defined by section 7 of the Income Tax | |
(Earnings and Pensions) Act 2003)”. | |
204 In Schedule 1 (supplementary provisions relating to contributions of Classes | |
1, 1A, 1B, 2 and 3)— | |
(a) in paragraph 6(1)(a) for “regulations under section 203 of the Income | 25 |
and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE | |
regulations”; | |
(b) in paragraph 6(1)(b) for “regulations under that section” substitute | |
“PAYE regulations”; | |
(c) in paragraph 6(7) for “regulations made under section 203 of the | 30 |
Income and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE | |
regulations”. | |
(d) in paragraph 7(1)(a) for “regulations made by the Inland Revenue | |
under section 203(2) or” substitute “PAYE regulations or regulations | |
made under section”; and | 35 |
(e) in paragraph 7B(1) for “regulations under section 203 of the Income | |
and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE | |
regulations”. | |
Social Security Administration (Northern Ireland) Act 1992 (c. 8) | |
205 (1) Section 139B(6) of the Social Security Administration (Northern Ireland) Act | 40 |
1992 (effect of alterations affecting state pension credit) is amended as | |
follows. | |
(2) In paragraph (b) of the definition of “war disablement pension” for | |
“subsection (1) of section 315 of the Income and Corporation Taxes Act 1988” | |
substitute “any of paragraphs (a) to (f) of section 641(1) of the Income Tax | 45 |
(Earnings and Pensions) Act 2003”. | |
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(3) In paragraph (b) of the definition of “war widow’s or widower’s pension” | |
for “section 315(2)(e) of the Income and Corporation Taxes Act 1988” | |
substitute “section 641(1)(e) or (f) of the Income Tax (Earnings and Pensions) | |
Act 2003”. | |
206 In section 142(5) of that Act (destination of national insurance | 5 |
contributions)— | |
(a) in paragraph (c) for “emoluments” substitute “general earnings”; | |
(b) in paragraph (ca) for “emoluments” substitute “general earnings”. | |
Taxation of Chargeable Gains Act 1992 (c. 12) | |
207 The Taxation of Chargeable Gains Act 1992 is amended as follows. | 10 |
208 In section 9(2) (residence, including temporary residence)— | |
(a) for “Section 207 of the Taxes Act” substitute “Sections 42 and 43 of | |
ITEPA 2003”; | |
(b) for “it applies” substitute “they apply”; and | |
(c) for “that section” substitute “section 42 of that Act”. | 15 |
209 In section 11(1) (visiting forces, agents-general etc.)— | |
(a) for “section 323(1) of the Taxes Act” substitute “section 303(1) of | |
ITEPA 2003”; and | |
(b) for “subsection (2) of section 323 and subsections (4) to (8) of that | |
section shall apply accordingly” substitute “section 303(2) to (6) of | 20 |
that Act and section 323(2) of the Taxes Act”. | |
210 (1) Amend section 120 (increased expenditure by reference to tax charged in | |
relation to shares etc.) as follows. | |
(2) For subsection (1) substitute— | |
“(1) Subsection (1A) applies where— | 25 |
(a) a person (“the employee”) has acquired shares or an interest | |
in shares as mentioned in section 447(1) of ITEPA 2003, and | |
(b) an amount counts as employment income of the employee | |
under Chapter 4 of Part 7 of that Act in respect of the shares. | |
(1A) On the first disposal of the shares after the acquisition occurs, the | 30 |
employment income amount shall be treated for the purposes of | |
section 38(1)(a) as consideration given by the person making the | |
disposal for the acquisition of the shares. | |
(1B) For the purposes of subsections (1) and (1A)— | |
(a) the “employment income amount” means the amount | 35 |
counting as employment income of the employee under that | |
Chapter in respect of the shares, and | |
(b) it is immaterial whether the disposal of the shares mentioned | |
in subsection (1A) is made by the employee or another | |
person.” | 40 |
(3) In subsection (3)— | |
(a) for “is chargeable to tax by virtue of section 162(5) of the Taxes Act | |
substitute “is treated as earnings under section 195(2) of ITEPA | |
2003”, and | |
(b) for “so chargeable” substitute “so treated as earnings”. | 45 |
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| |
(4) In subsection (4)— | |
(a) for “chargeable to tax under section 135(1) or (6) of the Taxes Act” | |
substitute “counting as employment income under section 476 or 477 | |
of ITEPA 2003”, and | |
(b) for “so chargeable to tax” substitute “so counting as employment | 5 |
income”. | |
(5) In subsection (5A)— | |
(a) for “is chargeable to tax under section 140A of the Taxes Act” | |
substitute “counts as employment income under Chapter 2 of Part 7 | |
of ITEPA 2003”, and | 10 |
(b) for “so chargeable” substitute “so counting as employment income”. | |
(6) In subsection (5B)— | |
(a) for “is chargeable to tax under section 140D of the Taxes Act” | |
substitute “counts as employment income under Chapter 3 of Part 7 | |
of ITEPA 2003”, and | 15 |
(b) for “so chargeable” substitute “so counting as employment income”. | |
(7) Omit subsection (6). | |
(8) For subsection (7) substitute— | |
“(7) Each of the provisions of this section mentioned in the first column | |
of the following table is to be construed as if it were contained in the | 20 |
Chapter of ITEPA 2003 specified in the corresponding entry in the | |
second column— | |
| | Provision of this section | Chapter of ITEPA 2003 | | | | | subsections (1), (1A) and | Chapter 4 of Part 7 | | | | | (1B) | | | 25 | | | subsection (3) | Chapter 8 of Part 3 | | | | | subsection (4) | Chapter 5 of Part 7 | | | | | subsection (5A) | Chapter 2 of Part 7 | | | | | subsection (5B) | Chapter 3 of Part 7; | | |
|
and subsection (5) of this section is to be construed as one with | 30 |
section 138 of the Taxes Act.” | |
(9) After subsection (7) insert— | |
“(7A) In relation to events that gave rise to amounts chargeable to income | |
tax before 6th April 2003, this section is to be read as if any reference | |
to an amount mentioned in the first column of the following table | 35 |
included a reference to an amount mentioned in the corresponding | |
entry in the second column— | |
| |
| |
|
| |
| |
| | Amount mentioned in this section | Amount chargeable before | | | | | | 6th April 2003 | | | | | an amount counting as employment | an amount chargeable to | | | | | income under Chapter 4 of Part 7 of | tax under Chapter 2 of Part | | | | | ITEPA 2003 | 3 of the Finance Act 1988 | | 5 | | | an amount treated as earnings | an amount chargeable to | | | | | under section 195(2) of ITEPA 2003 | tax under section 162(5) of | | | | | | the Taxes Act | | | | | an amount counting as employment | an amount chargeable to | | | | | income under section 476 or 477 of | tax under section 135(1) or | | 10 | | | ITEPA 2003 | (6) of the Taxes Act | | | | | an amount which counts as | an amount chargeable to | | | | | employment income under Chapter | tax under section 140A of | | | | | 2 of Part 7 of ITEPA 2003 | the Taxes Act | | | | | an amount which counts as | an amount chargeable to | | 15 | | | employment income under Chapter | tax under section 140D of | | | | | 3 of Part 7 of ITEPA 2003 | the Taxes Act.” | | |
|
(10) In subsection (8) for “section 140A of the Taxes Act” substitute “Chapter 2 of | |
Part 7 of ITEPA 2003”. | |
211 (1) Amend section 149B (employee incentive schemes: conditional interests in | 20 |
shares) as follows. | |
(2) In subsection (1) for “section 140A of the Taxes Act” substitute “Chapter 2 of | |
Part 7 of ITEPA 2003 (conditional interests in shares)”. | |
(3) In subsection (2) for “section 140B of the Taxes Act” substitute “section 429 | |
of ITEPA 2003”. | 25 |
(4) In subsection (4)— | |
(a) for “section 140A of the Taxes Act” substitute “Chapter 2 of Part 7 of | |
ITEPA 2003”, and | |
(b) for “that section” substitute “that Chapter”. | |
212 After section 149B insert— | 30 |
“149C Priority share allocations | |
Section 17(1) shall not apply to an acquisition of shares if section 542 | |
or 544 of ITEPA 2003 applies in relation to it.” | |
213 In section 222(8D)(b) (relief on disposal of private residence), for “the same | |
meanings as they have for the purposes of Chapter II of Part V of the Taxes | 35 |
Act” substitute “the meanings given by Chapter 2 of Part 3 of ITEPA 2003”. | |
214 In section 236A (employee share ownership plans), and in the sidenote and | |
in the italic heading immediately before the section, for “employee share | |
ownership” wherever it occurs substitute “share incentive”. | |
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215 In section 238(2)(a) (approved profit sharing and share option schemes), for | |
“is chargeable to income tax” substitute “counts as employment income (or | |
was chargeable to income tax for 2002-03 or an earlier year of assessment)”. | |
216 After section 238 insert— | |
“238A Approved share schemes and share incentives | 5 |
(1) Schedule 7D (approved share schemes and share incentives) shall | |
have effect. | |
(2) Schedule 7D relates— | |
(a) in Part 1, to approved share incentive plans (SIPs) (see section | |
488 of ITEPA 2003), | 10 |
(b) in Part 2, to approved SAYE option schemes (see section 516 | |
of that Act), | |
(c) in Part 3, to approved CSOP schemes (CSOPs) (see section | |
521 of that Act), and | |
(d) in Part 4, to enterprise management incentives (see section | 15 |
527 of that Act).” | |
217 After section 263 insert— | |
“263ZA Former employees: employment-related liabilities | |
(1) This section applies if— | |
(a) a deduction of the amount of one or more deductible | 20 |
payments may be made under section 555 of ITEPA 2003 | |
(former employee entitled to deduction from total income in | |
respect of liabilities related to the former employment) when | |
computing a former employee’s total income for a tax year, | |
and | 25 |
(b) the total amount which may be deducted exceeds the total | |
income for that year. | |
(2) In this section “excess relief” means the amount of the difference | |
between— | |
(a) the total amount which may be deducted, and | 30 |
(b) the total income. | |
(3) The amount of the excess relief may be treated as an allowable loss | |
accruing to the former employee for that tax year. | |
This subsection applies only if the former employee makes a claim | |
for the purpose. | 35 |
(4) But no relief is available under subsection (3) in respect of any | |
amount of the excess relief that exceeds the maximum amount. | |
(5) For the purposes of this section the “maximum amount”, in relation | |
to the excess relief for a tax year, means the amount on which the | |
former employee would be chargeable to capital gains tax for that | 40 |
year if the following were disregarded— | |
(a) any relief available under this section, | |
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