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(b) section 2(5)(aa)(ii) (taper relief), | |
(c) section 2(5)(b) (addition of certain amounts treated as amounts | |
of chargeable gains), and | |
(d) section 2A (taper relief), | |
except that paragraphs (b) and (d) above are not to affect the operation | 5 |
of section 2(7) for the purposes of subsection (6) above. | |
(9) All such adjustments shall be made, whether by discharge or | |
repayment of tax, the making of assessments or otherwise, as are | |
required to give effect to the election under section 279A made by the | |
taxpayer for the relevant loss to be treated as accruing in an earlier year | 10 |
in accordance with this section. | |
(10) Any reference in this section or section 279D to deduction in accordance | |
with section 2(2)(a), section 2(2)(b) or section 2(2) includes a reference | |
to such deduction by virtue of section 2(5)(a)(i) or (aa)(i). | |
279D Elections under section 279A | 15 |
(1) An election under section 279A is irrevocable. | |
(2) Any election under that section must be made by giving a notice in | |
accordance with this section. | |
(3) The notice must be given to an officer of the Board. | |
(4) Subsections (5) to (8) below have effect in relation to the notice given by | 20 |
the taxpayer in respect of the relevant loss. | |
(5) The notice must specify each of the following— | |
(a) the amount of the relevant loss; | |
(b) the right disposed of; | |
(c) the year of the right’s disposal; | 25 |
(d) the year of the loss (if different from the year of the right’s | |
disposal); | |
(e) the year in which the right was acquired; | |
(f) the original asset or assets. | |
(6) The notice must also specify each of the following— | 30 |
(a) the eligible year in which the relevant loss is to be treated in | |
accordance with section 279C(2) as accruing to the taxpayer; | |
(b) the first year limit (see section 279C(3) and (4)); | |
(c) how much of the relevant loss falls to be deducted in accordance | |
with section 2(2)(a) from chargeable gains accruing to the | 35 |
taxpayer in that year. | |
(7) If, in accordance with section 279C, any part of the relevant loss falls to | |
be deducted in accordance with section 2(2)(b) from chargeable gains | |
accruing to the taxpayer in any later eligible year, the notice must also | |
specify— | 40 |
(a) each such year; | |
(b) in the case of each such year, the later year limit (see section | |
279C(6)); | |
(c) how much of the relevant loss falls to be deducted in accordance | |
with section 2(2)(b) in each such year from chargeable gains | 45 |
accruing to the taxpayer in that year. | |
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(8) The notice must be given on or before the first anniversary of the 31st | |
January next following the year of the loss. | |
(9) An election under section 279A is made on the date on which the notice | |
of the election is given. | |
(10) Different notices must be given in respect of different losses. | 5 |
(11) Where a person makes two or more elections under section 279A on the | |
same day, the notices must specify the order in which the elections are | |
made. | |
(12) For the purposes of any provisions of sections 279A to 279C whose | |
operation is affected by the order in which any elections under section | 10 |
279A are made, elections made by a person on the same day shall be | |
treated as made at different times and in the order specified in | |
accordance with subsection (11) above.”. | |
(2) Where— | |
(a) on the disposal of a right to which section 279A of the Taxation of | 15 |
Chargeable Gains Act 1992 (c. 12) applies, an allowable loss would, | |
apart from section 279C of that Act, accrue to a person in any year of | |
assessment, | |
(b) an election is made under section 279A of that Act for the loss to be | |
treated as accruing in an earlier year in accordance with section 279C, | 20 |
and | |
(c) the right is an earn-out right, within the meaning of section 138A of that | |
Act, which was conferred before 10th April 2003, | |
no election may be made under section 138A of that Act (election for earn-out | |
right to be treated as security etc) in respect of the right, whether at the same | 25 |
time as the election under section 279A or subsequently. | |
(3) The amendment made by subsection (1) has effect in relation to allowable | |
losses that would, apart from that amendment, accrue on or after 10th April | |
2003. | |
For this purpose, losses that would, apart from that amendment, be treated by | 30 |
virtue of section 10A of the Taxation of Chargeable Gains Act 1992 as accruing | |
in the year 2003-04 shall be treated as so accruing on or after 10th April 2003. | |
(4) Subsection (2) shall be deemed to have come into force on 10th April 2003. | |
162 Transfers of value: attribution of gains to beneficiaries | |
(1) For section 85A of the Taxation of Chargeable Gains Act 1992 substitute— | 35 |
“85A Transfers of value: attribution of gains to beneficiaries and treatment | |
of losses | |
(1) Schedule 4C to this Act has effect with respect to the attribution of gains | |
to beneficiaries where there has been a transfer of value to which | |
Schedule 4B applies. | 40 |
(2) Sections 86A to 95 have effect subject to the provisions of Schedule 4C. | |
(3) No account shall be taken of any chargeable gains or allowable losses | |
accruing by virtue of Schedule 4B in computing the trust gains for a | |
year of assessment in accordance with sections 87 to 89, except in | |
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computing for the purposes of paragraph 7A(2) of Schedule 4C the | |
amount on which the trustees would have been chargeable to tax under | |
section 2(2) if they had been resident or ordinarily resident in the | |
United Kingdom. | |
(4) No account shall be taken of any chargeable gains or allowable losses | 5 |
to which sections 87 to 89 apply in computing the gains or losses | |
accruing by virtue of Schedule 4B.”. | |
(2) Schedule 4C to that Act (transfers of value: attribution of gains to beneficiaries) | |
is amended in accordance with Schedule 29 to this Act. | |
(3) In section 90 of that Act (transfers between settlements), for subsection (5) | 10 |
substitute— | |
“(5) This section does not apply— | |
(a) to a transfer to which Schedule 4B applies, or | |
(b) to gains to which Schedule 4C applies (that is, to “Schedule 4C | |
gains” within the meaning of that Schedule).”. | 15 |
(4) The following provisions have effect with respect to the coming into force of | |
the amendments made by this section and Schedule 29— | |
(a) the amendments apply where the trustees of a settlement have made a | |
transfer to which Schedule 4B applies at any time on or after 21st March | |
2000; | 20 |
(b) where there has been a transfer of value to which Schedule 4B applies | |
before 9th April 2003, the transferor settlement shall be treated as | |
having a Schedule 4C pool as from that date containing such Schedule | |
4C gains as would fall to be included in the pool if— | |
(i) a year of assessment had ended with 8th April 2003, and | 25 |
(ii) the reference in paragraph 1(2)(b) of Schedule 4C as amended to | |
the end of the year of assessment in which the transfer of value | |
was made were to that date; | |
(c) where a transferor settlement ceased to exist on or after 21st March 2000 | |
and before 9th April 2003, Schedule 4C as amended applies as if it had | 30 |
ceased to exist on 8th April 2003 (so that paragraph (b) above applies); | |
(d) in a case within paragraph (b), including a case to which that paragraph | |
applies by virtue of paragraph (c), so much of Schedule 4C as amended | |
as provides that no account is to be taken of capital payments to | |
beneficiaries who are not chargeable to tax does not apply; | 35 |
(e) gains included in a settlement’s Schedule 4C pool by virtue of | |
paragraph 1(2)(b) of that Schedule as amended shall only be attributed | |
in accordance with the provisions of that Schedule to beneficiaries who | |
receive capital payments on or after 9th April 2003. | |
(5) Paragraph 8A(3) and (4) of Schedule 4C, inserted by paragraph 4 of Schedule | 40 |
29 to this Act, applies only where the transfer referred to in that provision | |
occurs on or after 9th April 2003. | |
(6) Expressions used in subsection (4) that are defined for the purposes of | |
Schedule 4C to the Taxation of Chargeable Gains Act 1992 (c. 12) as amended | |
by Schedule 29 to this Act have the same meaning as in that Schedule. | 45 |
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Capital allowances and related matters | |
163 Avoidance affecting proceeds of balancing event | |
(1) In Chapter 5 of Part 12 of the Capital Allowances Act 2001 (c. 2) (miscellaneous | |
supplementary provisions), after section 570 insert— | |
“Anti-avoidance | 5 |
570A Avoidance affecting proceeds of balancing event | |
(1) This section applies where an event occurs in relation to an asset (a | |
“balancing event”) as a result of which a balancing allowance would | |
(but for this section) fall to be made to a person (“the taxpayer”) under | |
Part 3, 4, 4A, 5 or 10. | 10 |
(2) The taxpayer is not entitled to any balancing allowance if, as a result of | |
a tax avoidance scheme, the amount to be brought into account as the | |
proceeds from the event is less than it would otherwise have been. | |
(3) In subsection (2) a “tax avoidance scheme” means a scheme or | |
arrangement the main purpose, or one of the main purposes, of which | 15 |
is the obtaining of a tax advantage by the taxpayer. | |
(4) Where this section applies to deny a balancing allowance, the residue | |
of qualifying expenditure immediately after the balancing event is | |
nevertheless calculated as if the balancing allowance had been made. | |
(5) In this section as it applies for the purposes of Part 5 (mineral extraction | 20 |
allowances)— | |
(a) the references to the proceeds from the balancing event that are | |
to be brought into account shall be read as references to the | |
disposal value to be brought into account, and | |
(b) the reference to the residue of qualifying expenditure shall be | 25 |
read as a reference to the unrelieved qualifying expenditure.”. | |
(2) This section applies in relation to any balancing event (within the meaning of | |
section 570A, inserted by subsection (1) above) occurring on or after 27th | |
November 2002, except where the event— | |
(a) occurs in pursuance of a contract entered into before that date, and | 30 |
(b) does not occur in consequence of the exercise on or after that date of an | |
option, right of pre-emption or similar right. | |
164 Extension of first-year allowances for ICT expenditure by small companies | |
In section 45(1) of the Capital Allowances Act 2001 (ICT expenditure incurred | |
by small companies: first-year qualifying expenditure), in paragraph (a) (under | 35 |
which the expenditure must be incurred on or before 31st March 2003) for “31st | |
March 2003” substitute “31st March 2004”. | |
165 Expenditure on software for sub-licensing | |
(1) Section 45 of the Capital Allowances Act 2001 (c. 2) (first-year allowances for | |
ICT expenditure incurred by small enterprises) is amended as follows. | 40 |
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(2) In subsection (1)(d) (expenditure must not be excluded by general exclusions | |
in section 46) at the end insert “or subsection (4) below”. | |
(3) After subsection (3) insert— | |
“(4) Expenditure on an item within Class C is not first-year qualifying | |
expenditure under this section if the person incurring it does so with a | 5 |
view to granting to another person a right to use or otherwise deal with | |
any of the software in question.”. | |
(4) This section applies in relation to expenditure incurred on or after 26th March | |
2003. | |
166 First-year allowances for expenditure on environmentally beneficial plant or | 10 |
machinery | |
Schedule 30 to this Act (first-year allowances for expenditure on | |
environmentally beneficial plant or machinery) has effect in relation to | |
expenditure incurred on or after 1st April 2003. | |
167 Relief for research and development | 15 |
(1) Schedule 31 to this Act (which makes amendments relating to relief for | |
expenditure on research and development) shall have effect. | |
(2) In that Schedule— | |
Part 1 amends Schedule 20 to the Finance Act 2000 (c. 17) (relief for small | |
and medium-sized enterprises); | 20 |
Part 2 amends Part 1 of Schedule 12 to the Finance Act 2002 (c. 23) (relief | |
for large companies); | |
Part 3 amends Part 2 of that Schedule (work sub-contracted to small or | |
medium-sized enterprise); | |
Part 4 inserts a new Part 2A into that Schedule (entitlement of small or | 25 |
medium-sized enterprise to additional relief available to large | |
companies in respect of subsidised expenditure); | |
Part 5 makes supplementary amendments to Parts 3 to 6 of that Schedule; | |
and | |
Part 6 amends Schedule 13 to the Finance Act 2002 (expenditure on | 30 |
vaccine research etc). | |
(3) Except as provided by subsection (4)— | |
(a) the amendments made by Parts 1 and 6 of Schedule 31 have effect in | |
relation to expenditure incurred on or after the appointed day, and | |
(b) the amendments made by Parts 2 to 5 of that Schedule have effect in | 35 |
relation to expenditure incurred on or after 9th April 2003. | |
(4) The exceptions are that— | |
(a) the amendments made by paragraphs 2 and 3 in Part 1 have effect for | |
accounting periods beginning on or after the appointed day; | |
(b) in the application of paragraph 5 of Schedule 20 to the Finance Act 2000 | 40 |
(staffing costs) for any purpose of Schedule 12 to the Finance Act 2002 | |
by virtue of paragraph 17(b) of that Schedule (meaning of “staffing | |
costs”), the amendments made by paragraph 5 in Part 1 of Schedule 31 | |
to this Act (persons partly engaged directly and actively in R&D) have | |
effect in relation to expenditure incurred on or after 9th April 2003; | 45 |
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(c) the amendments made by paragraph 6 in Part 1 (qualifying | |
expenditure on externally provided workers), in their application by | |
virtue of paragraph 19 in Part 5 (application for purposes of Schedule | |
12 to the Finance Act 2002 (c. 23)), have effect in relation to expenditure | |
incurred on or after 9th April 2003; | 5 |
(d) the amendments made by— | |
(i) paragraph 9 in Part 2, | |
(ii) paragraphs 12 and 13 in Part 3, and | |
(iii) paragraph 15 in Part 4, | |
have effect for accounting periods beginning on or after 9th April 2003; | 10 |
(e) the amendments made by paragraph 21 in Part 6 (reduction of | |
company’s required minimum qualifying expenditure in an | |
accounting period from £25,000 etc to £10,000 etc) have effect for | |
accounting periods beginning on or after the appointed day. | |
(5) In this section the “appointed day” means such day as the Treasury may by | 15 |
order appoint; and different days may be so appointed for different provisions | |
or different purposes. | |
168 Tonnage tax: extension of capital allowance restrictions on lessors of ships | |
Schedule 32 to this Act (tonnage tax: restrictions on capital allowances for | |
lessors of ships) has effect. | 20 |
Life insurance and pensions | |
169 Insurance companies | |
Schedule 33 to this Act (which makes provision about the taxation of insurance | |
companies, including companies which have ceased to be insurance | |
companies after a transfer of business) has effect. | 25 |
170 Policies of life insurance etc: miscellaneous amendments | |
(1) Schedule 34 to this Act (which makes provision relating to Chapter 2 of Part 13 | |
of the Taxes Act 1988) has effect. | |
(2) In that Schedule— | |
Part 1 relates to group life policies; | 30 |
Part 2 relates to charitable and non-charitable trusts; | |
Part 3 restricts the meaning of “life annuity”; and | |
Part 4 makes provision for and in connection with the repeal of section | |
540(2) of the Taxes Act 1988 (rollover of gain on maturity into new | |
policy). | 35 |
(3) This section and that Schedule shall be deemed to have come into force on 9th | |
April 2003. | |
171 Charges under life insurance policies for exceptional risk of disability | |
(1) In Schedule 15 to the Taxes Act 1988 (provisions for determining whether an | |
insurance policy is a “qualifying policy”)— | 40 |
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(a) in paragraph 12(a) (disregard of so much of premium as is charged on | |
the grounds of exceptional risk of death), and | |
(b) in paragraph 12(b) (disregard of provision in policy charging, on those | |
grounds, a sum as a debt against capital sum guaranteed on death), | |
after “death” insert “or disability”. | 5 |
(2) Accordingly, in the heading before paragraph 12 of that Schedule, for | |
“mortality risk” substitute “risk of death or disability”. | |
(3) In paragraph 3 of that Schedule (friendly society policies), omit paragraphs | |
(b)(iii) and (c) of sub-paragraph (8) (which make provision corresponding to | |
paragraph 12(a) and (b) but are unnecessary). | 10 |
(4) In paragraph 18 of that Schedule (rules about substituted policies applied | |
where policies are varied) insert after sub-paragraph (3)— | |
“(4) For the purposes of this paragraph there is no variation in the terms | |
of a policy where— | |
(a) an amount of premium chargeable on the grounds that an | 15 |
exceptional risk of death or disability is involved becomes or | |
ceases to be payable, or | |
(b) the policy is amended by the insertion, variation or removal | |
of a provision under which, on those grounds, any sum may | |
become chargeable as a debt against the capital sum | 20 |
guaranteed by the policy on death or disability.”. | |
(5) In section 460 of that Act (registered friendly societies: exemption from tax in | |
respect of life or endowment business), in subsection (3)(b) (which makes | |
provision corresponding to paragraph 12(a) of Schedule 15) after “death” insert | |
“or disability”. | 25 |
(6) The amendments made by this section shall be deemed always to have had | |
effect; but this section shall be disregarded to the extent that it would prevent | |
a policy from being a qualifying policy at any time before 9th April 2003. | |
172 Gains on policies of life insurance etc: rate of tax | |
(1) Schedule 35 to this Act (which makes provision for and in connection with | 30 |
charging certain gains on policies of life insurance, etc at the lower rate) has | |
effect. | |
(2) The amendments made by that Schedule have effect in relation to gains treated | |
as arising under Chapter 2 of Part 13 of the Taxes Act 1988 on the happening of | |
chargeable events on or after 6th April 2004. | 35 |
173 Personal pension arrangements: limit on contributions | |
(1) In section 640A(1) of the Taxes Act 1988 (personal pension arrangements: the | |
earnings cap), for “for the purposes of section 640 above” substitute “for the | |
purposes of section 638 or 640 above”. | |
(2) In determining “the permitted maximum” for the purposes of any provision of | 40 |
an existing approved scheme designed to meet the requirements of section | |
638(3) of that Act (maximum annual amount of contributions), a member’s net | |
relevant earnings for the year shall be taken to be the amount of his net relevant | |
earnings after applying section 640A (the earnings cap). | |
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