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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. | 5 |
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; | 10 |
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). | 15 |
(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”)— | 20 |
(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”. | 25 |
(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). | 30 |
(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 | 35 |
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 | 40 |
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 | |
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provision corresponding to paragraph 12(a) of Schedule 15) after “death” insert | |
“or disability”. | |
(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. | 5 |
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 | |
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 | 10 |
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. | |
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 | 15 |
purposes of section 638 or 640 above”. | |
(2) In determining “the permitted maximum” for the purposes of any provision of | |
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 | 20 |
earnings after applying section 640A (the earnings cap). | |
An “existing approved scheme” means a personal pension scheme approved | |
under Chapter 4 of Part 14 of that Act before 9th April 2003. | |
(3) In section 641A(1) of that Act (election for contributions to be treated as paid in | |
previous year), for “A person who pays a contribution under approved | 25 |
personal pension arrangements” substitute “An individual who under | |
approved personal pension arrangements made by him pays a contribution”. | |
(4) This section has effect in relation to contributions paid on or after 9th April | |
2003. | |
Miscellaneous | 30 |
174 Payments to adopters | |
(1) After section 327 of the Taxes Act 1988 insert— | |
“327A Payments to adopters | |
(1) The following payments shall not be treated as income for any purpose | |
of the Income Tax Acts— | 35 |
(a) any payment or reward falling within section 57(3) of the | |
Adoption Act 1976 (payments authorised by the court) which is | |
made to a person who has adopted, or intends to adopt, a child; | |
(b) payments under section 57(3A)(a) of that Act (payments by | |
adoption agencies of legal or medical expenses of persons | 40 |
seeking to adopt); | |
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(c) payments of allowances under regulations under section 57A of | |
that Act (permitted allowances to persons who have adopted, | |
or intend to adopt, children) (as at 9th April 2003, see the | |
Adoption Allowance Regulations 1991); | |
(d) any payment or reward falling within section 51(3) of the | 5 |
Adoption (Scotland) Act 1978 (payments authorised by the | |
court) which is made to a person who has adopted, or intends | |
to adopt, a child; | |
(e) payments under section 51(4)(a) of that Act (payments by | |
adoption agencies of legal or medical expenses of persons | 10 |
seeking to adopt); | |
(f) payments of allowances by virtue of section 51B of that Act | |
(transitional provisions) in accordance with a scheme approved | |
by the Secretary of State under section 51(5) of that Act (schemes | |
for payment of allowances to persons who have adopted, or | 15 |
intend to adopt, a child); | |
(g) payments of allowances in accordance with an adoption | |
allowances scheme under section 51A of that Act; | |
(h) any payment or reward falling within Article 59(2)(b) of the | |
Adoption (Northern Ireland) Order 1987 (payments authorised | 20 |
by the court) which is made to a person who has adopted, or | |
intends to adopt, a child; | |
(i) any payment under Article 59(2)(c) of that Order (payments by | |
registered adoption societies) which is made to a person who | |
has adopted, or intends to adopt, a child; | 25 |
(j) payments of allowances under regulations under Article 59A of | |
that Order (permitted allowances to persons who have adopted, | |
or intend to adopt, children) (as at 9th April 2003, see the | |
Adoption Allowance Regulations (Northern Ireland) 1996); | |
(k) payments of financial support made in the course of providing | 30 |
adoption support services within the meaning of the Adoption | |
and Children Act 2002 (see sections 2(6) and (7) and 4 of that | |
Act); | |
(l) payments made under regulations under paragraph 3(1) of | |
Schedule 4 to that Act (transitional and transitory provisions: | 35 |
adoption support services). | |
(2) The Treasury may by order amend this section for the purposes of— | |
(a) adding a description of payment, or | |
(b) removing a description of payment if the power to make a | |
payment of that description has been repealed or revoked or | 40 |
has otherwise ceased to be exercisable.”. | |
(2) The amendment made by this section has effect for the year 2003-04 and | |
subsequent years of assessment. | |
175 Foster carers | |
(1) Schedule 36 to this Act (foster carers) has effect. | 45 |
(2) This section has effect in relation to the year 2003-04 and subsequent years of | |
assessment. | |
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176 Currency contracts and currency options | |
(1) This section applies in any case where at any time on or after 30th September | |
2002— | |
(a) a qualifying company becomes party to a qualifying contract which is | |
a currency contract or currency option, or | 5 |
(b) the terms of such a qualifying contract held by such a company are | |
varied, | |
and the conditions in subsection (2) are, or subsequently become, satisfied. | |
(2) The conditions are that— | |
(a) in accordance with generally accepted accounting practice, the | 10 |
company in preparing its statutory accounts uses the exchange rate | |
implied by the qualifying contract (“the accounting rate”); | |
(b) there is a difference between the accounting rate and the final payment | |
rate; and | |
(c) the difference between those exchange rates is more than 1 per cent of | 15 |
the final payment rate. | |
(3) In subsection (2) “the final payment rate” means the exchange rate found by | |
reference only to the amounts which fall or would, apart from this section and | |
the provisions specified in subsection (4), fall to be regarded for the purposes | |
of subsection (2) or, as the case may be, (7) of section 150 of the Finance Act 1994 | 20 |
(c. 9) as the amounts of the currency to be received, and the currency to be paid | |
in exchange, under the qualifying contract as mentioned in that subsection. | |
(4) Where this section first applies in relation to the qualifying contract in an | |
accounting period of the company which begins before 1st October 2002 (“the | |
relevant contract period”), the following provisions of the Finance Act 2002 | 25 |
(c. 23), namely— | |
(a) section 79(1)(b) (repeal of forex), | |
(b) section 80 and Schedule 24 (corporation tax: currency), and | |
(c) section 83 and Schedules 26 and 27 (derivative contracts), | |
shall be taken to have effect in the case of the company, so far as relating to that | 30 |
contract, in relation to that accounting period and any subsequent accounting | |
periods. | |
(5) Where— | |
(a) the qualifying contract is a currency contract which arises from the | |
exercise of a currency option which is or was itself a qualifying contract | 35 |
(or a series of such currency options), and | |
(b) that currency option was entered into or varied on or after 30th | |
September 2002 (or, in the case of a series of currency options, any of | |
them was entered into or varied on or after that date), | |
the provisions specified in subsection (4) shall be taken to have effect in the case | 40 |
of the company, so far as relating to the currency option (or, in the case of a | |
series of currency options, each of the options entered into or varied on or after | |
30th September 2002), in relation to the earliest accounting period (“the | |
relevant options period”) in which the option (or any of the options) was so | |
entered into or varied and any subsequent accounting periods. | 45 |
(6) Where the provisions specified in subsection (4) have effect by virtue of this | |
section in relation to a currency contract or currency option the following | |
provisions of the Finance Act 2002, namely— | |
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(a) section 81 (transitional provision), so far as relating to section 80 and | |
Schedule 24, and | |
(b) Schedule 28 (derivative contracts: transitional provisions etc), | |
shall have effect accordingly. | |
(7) In the application of Schedule 28 to the Finance Act 2002 (c. 23) by virtue of this | 5 |
section, any reference to the company’s commencement day is to be taken— | |
(a) in the case of a currency contract, as a reference to the first day of the | |
relevant contract period; or | |
(b) in the case of a currency option, as a reference to the first day of the | |
relevant options period. | 10 |
(8) This section does not apply in relation to any contract entered into or varied in | |
an accounting period beginning on or after 1st October 2002 unless the contract | |
arises from the exercise of a currency option which was entered into or varied | |
on or after 30th September 2002 and in an accounting period beginning on or | |
before that date. | 15 |
(9) In this section the following expressions, namely— | |
(a) qualifying company, | |
(b) qualifying contract, | |
(c) currency contract, | |
(d) currency option, | 20 |
have the same meaning as in Chapter 2 of Part 4 of the Finance Act 1994 (c. 9), | |
(disregarding for this purpose the provisions specified in subsection (4)) and | |
references to the exercise of an option shall be construed accordingly. | |
(10) In this section “statutory accounts” has the meaning given by paragraph 52 of | |
Schedule 26 to the Finance Act 2002. | 25 |
(11) This section shall be deemed to have come into force on 30th September 2002. | |
177 Loan relationships: amendments | |
Schedule 37 to this Act (which makes amendments in relation to loan | |
relationships) has effect. | |
178 Derivative contracts: transactions within groups | 30 |
(1) In paragraph 28 of Schedule 26 to the Finance Act 2002, in sub-paragraph (3)(a) | |
(credits and debits to be brought into account: disregard of the transaction or | |
series of transactions except for certain purposes) after “except” insert— | |
“(i) for the purpose of determining the credits and debits | |
to be brought into account in respect of exchange | 35 |
gains or losses and identifying the company which is | |
to bring them into account, or | |
(ii)”. | |
(2) In sub-paragraph (3)(b) of that paragraph (transferor and transferee deemed to | |
be the same person, except for that purpose) for “that purpose” substitute | 40 |
“those purposes”. | |
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(3) For sub-paragraph (4) of that paragraph substitute— | |
“(4) References in this paragraph to one company replacing another as | |
party to a derivative contract shall include references to a company | |
becoming party to any derivative contract which— | |
(a) confers rights or imposes liabilities, or | 5 |
(b) both confers rights and imposes liabilities, | |
where those rights or liabilities, or rights and liabilities, are | |
equivalent to those of the other company under a derivative contract | |
to which that other company has previously ceased to be party.”. | |
(4) For paragraph 30 of that Schedule (amount to be brought into account on | 10 |
transaction within a group where transferor uses mark to market basis of | |
accounting) substitute— | |
“30 (1) Paragraph 28 does not apply where the transferor company uses an | |
authorised mark to market basis of accounting as respects the | |
derivative contract in question, but in any such case— | 15 |
(a) the amount to be brought into account by the transferor | |
company in respect of the transaction referred to in that | |
paragraph, or in respect of the series of transactions there | |
referred to, taken together, must be the fair value of the | |
derivative contract as at the date of transfer to the transferee | 20 |
company; and | |
(b) the amount to be brought into account by the transferee | |
company in respect of the transaction referred to in that | |
paragraph, or in respect of the series of transactions there | |
referred to, taken together, must be the same as the amount | 25 |
brought into account by the transferor company in respect of | |
that transaction or, as the case may be, that series of | |
transactions, taken together. | |
(2) In this paragraph “transferor company” and “transferee company” | |
have the same meaning as in paragraph 28.”. | 30 |
(5) The amendments made by this section have effect where the date of transfer to | |
the transferee company falls on or after 9th April 2003. | |
179 Contributions to urban regeneration companies | |
(1) After section 79A of the Taxes Act 1988 (contributions to training and | |
enterprise councils and local enterprise companies) insert— | 35 |
“79B Contributions to urban regeneration companies | |
(1) Notwithstanding anything in section 74, but subject to the provisions of | |
this section, where a person carrying on a trade, profession or vocation | |
makes any contribution (whether in cash or in kind) to a designated | |
urban regeneration company, any expenditure incurred by him in | 40 |
making the contribution may be deducted as an expense in computing | |
the profits of the trade, profession or vocation if it would not otherwise | |
be so deductible. | |
(2) Where any such contribution is made by an investment company, any | |
expenditure allowable as a deduction under subsection (1) above shall | 45 |
for the purposes of section 75 be treated as expenses of management. | |
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(3) Subsection (1) above does not apply in relation to a contribution made | |
by any person if either he or any person connected with him receives or | |
is entitled to receive a benefit of any kind whatsoever for or in | |
connection with the making of that contribution, whether from the | |
urban regeneration company concerned or from any other person. | 5 |
(4) In any case where— | |
(a) relief has been given under subsection (1) above in respect of a | |
contribution, and | |
(b) any benefit received in any chargeable period by the contributor | |
or any person connected with him is in any way attributable to | 10 |
that contribution, | |
the contributor shall in respect of that chargeable period be charged to | |
tax under Case I or Case II of Schedule D or, if he is not chargeable to | |
tax under either of those Cases for that period, under Case VI of | |
Schedule D on an amount equal to the value of that benefit. | 15 |
(5) In this section “urban regeneration company” means any body of | |
persons (whether corporate or unincorporate) which the Treasury by | |
order designates as an urban regeneration company for the purposes of | |
this section. | |
(6) The Treasury may only make an order under subsection (5) above | 20 |
designating a body as an urban regeneration company for the purposes | |
of this section if they consider that each of the criteria in subsection (7) | |
below is satisfied in the case of the body. | |
(7) The criteria are that— | |
(a) the sole or main function of the body is to co-ordinate the | 25 |
regeneration of a specific urban area in the United Kingdom; | |
(b) the body is expected to seek to perform that function by creating | |
a plan for the development of that area and endeavouring to | |
secure that the plan is carried into effect; | |
(c) in co-ordinating the regeneration of that area, the body is | 30 |
expected to work together with some or all of the public or local | |
authorities which exercise functions in relation to the whole or | |
part of that area. | |
(8) An order under subsection (5) above may be framed so as to take effect | |
on a date earlier than the making of the order, but not earlier than— | 35 |
(a) 1st April 2003, in the case of the first order under that | |
subsection, or | |
(b) three months before the date on which the order is made, in the | |
case of any subsequent order. | |
(9) Section 839 (connected persons) applies for the purposes of this section. | 40 |
(10) This section applies to contributions made on or after 1st April 2003.”. | |
(2) In section 828(4) of the Taxes Act 1988 (orders or regulations under specified | |
provisions not to be subject to Commons negative resolution parliamentary | |
procedure) after “section 1(6),” insert “79B(5),”. | |
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