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Part 3 | |
Meaning of “life annuity” | |
Restriction of “life annuity” to contracts to which section 656 of the Taxes Act 1988 applies | |
13 In section 539 of the Taxes Act 1988 (introductory) in subsection (3), for the | |
definition of “life annuity” substitute— | 5 |
““life annuity” means any annuity to which section 656 (as read with | |
section 657) applies.”. | |
Part 4 | |
Rollover of gain on maturity into new policy | |
Repeal of section 540(2) of the Taxes Act 1988 | 10 |
14 (1) Section 540(2) of the Taxes Act 1988 (maturity not a chargeable event if | |
option exercised to re-invest whole proceeds of maturing policy in new | |
policy) shall cease to have effect. | |
(2) This paragraph is subject to paragraph 15. | |
Saving for certain policies maturing on or after 9th April 2003 | 15 |
15 (1) The maturity of a policy of life insurance (“the old policy”) on or after 9th | |
April 2003 is not a chargeable event for the purposes of Chapter 2 of Part 13 | |
of the Taxes Act 1988 if— | |
(a) a new policy is issued in consequence of the exercise of an option | |
conferred by the old policy, | 20 |
(b) all sums becoming payable under the old policy on or after 9th April | |
2003 are retained by the company with which the insurance was | |
made and applied in the payment of one or more premiums under | |
the new policy, and | |
(c) sub-paragraph (2) applies. | 25 |
(2) This sub-paragraph applies if— | |
(a) the option was exercised in writing on or before 8th April 2003, or | |
(b) the old policy matures on or before 30th April 2003 and has not been | |
varied on or after 9th April 2003 so as to— | |
(i) change the date of maturity of the policy, | 30 |
(ii) change any option conferred by the policy, or | |
(iii) confer any option. | |
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Schedule 35 | |
Section 172 | |
Gains on policies of life insurance, etc: rate of tax | |
Application of the lower rate | |
1 (1) Section 1A of the Taxes Act 1988 (application of lower rate to income from | |
savings and distributions) is amended as follows. | 5 |
(2) In subsection (2) (which specifies the income to which the lower rate applies) | |
omit the word “and” immediately preceding paragraph (c) and at the end of | |
that paragraph insert “; and | |
(d) any amount included in an individual’s total income by | |
virtue of section 547(1)(a) (chargeable event gains on life | 10 |
policies etc).”. | |
(3) In subsection (5) (ordering rule for highest part of income for the purposes | |
of the Income Tax Acts) after “the Income Tax Acts” insert “(other than | |
section 550)”. | |
Method of charging gains from policies of life insurance etc to tax | 15 |
2 (1) Section 547 of the Taxes Act 1988 is amended as follows. | |
(2) In subsection (5)(a) (individual to be treated as having paid income tax at the | |
basic rate on a sum included in his income by virtue of subsection (1)(a)) for | |
“the basic rate” substitute “the lower rate”. | |
(3) In subsection (9A)(a) (definition of “the appropriate rate” where charitable | 20 |
trustees are liable to income tax on a gain by virtue of subsection (9)) for “the | |
basic rate for that year” substitute “the lower rate”. | |
Relief where gain charged at a higher rate | |
3 In section 550(3) of the Taxes Act 1988 (rates of tax to be applied in | |
calculating tax which would be chargeable on gain if calculated by reference | 25 |
to the appropriate fraction) for “the basic rate” substitute “the lower rate”. | |
Gains included in aggregate income of estate of deceased | |
4 In section 699A(4)(b) of the Taxes Act 1988 (sums included in aggregate | |
income of estate of the deceased by virtue of section 547(1)(c) to be assumed | |
to bear tax at the basic rate) for “the basic rate” substitute “the lower rate”. | 30 |
Income to be disregarded in determining highest part of person’s income | |
5 In section 833(3)(b) of the Taxes Act 1988 (which provides that, where | |
income falls to be treated as the highest part of a person’s income, his income | |
shall be calculated without regard to any amount included in total income | |
by virtue of section 547(1)(a)) after “section 547(1)(a)” add “which is a sum | 35 |
in relation to which section 547(5) applies”. | |
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Schedule 36 | |
Section 175 | |
Foster carers | |
Part 1 | |
Introduction | |
Introductory | 5 |
1 (1) This Schedule provides relief on income from the provision by an individual | |
of foster care (see paragraph 4). | |
(2) The form of relief available depends on whether his total foster care receipts | |
(see paragraph 5) exceed his limit (see paragraphs 6 to 9). | |
(3) If they do not, paragraph 10 provides for the income to be exempt from | 10 |
income tax. | |
(4) If they do, the individual may elect for an alternative method of calculating | |
the income (see paragraphs 11 to 14). | |
Individuals qualifying for relief | |
2 (1) An individual qualifies for relief under this Schedule for a year of | 15 |
assessment for which the following conditions are met. | |
(2) The first condition is that the individual has foster care receipts (see | |
paragraph 3). | |
(3) The second condition is that the individual does not derive any taxable | |
income, other than foster care receipts, from any relevant trade, profession | 20 |
or vocation, or from any relevant foster care arrangement. | |
(4) For the purposes of sub-paragraph (3)— | |
(a) “taxable income” means receipts or other income in respect of which | |
the individual is chargeable to tax for the year of assessment; | |
(b) a relevant trade, profession or vocation, or a relevant foster care | 25 |
arrangement, is one from which the individual derives any foster | |
care receipts for that year. | |
(5) In this Schedule, “foster care arrangement” means an arrangement by which | |
an individual provides foster care otherwise than as part of a trade, | |
profession or vocation carried on by that individual. | 30 |
Meaning of “foster care receipts” | |
3 (1) For the purposes of this Schedule, receipts are “foster care receipts” of an | |
individual for a year of assessment if— | |
(a) they are receipts in respect of the provision of foster care, | |
(b) apart from this Schedule, they would be chargeable— | 35 |
(i) under Case I or II of Schedule D as the profits of a trade, | |
profession or vocation, or | |
(ii) under Case VI of Schedule D as the profits of one or more | |
foster care arrangements, and | |
(c) they accrue to the individual during the income period for those | 40 |
receipts specified below. | |
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(2) In the case of receipts which would, apart from this Schedule, be chargeable | |
under Case I or II of Schedule D as the profits of a trade, profession or | |
vocation, the income period for those receipts is the basis period of the trade, | |
profession or vocation for the year of assessment (see sections 60 to 63 of the | |
Taxes Act 1988). | 5 |
(3) In the case of receipts which would, apart from this Schedule, be chargeable | |
under Case VI of Schedule D as the profits of one or more foster care | |
arrangements, the income period for those receipts is the year of assessment. | |
Meaning of “provision of foster care” | |
4 (1) In this Schedule, the “provision of foster care” means the provision of | 10 |
accommodation and maintenance for a child by an individual who— | |
(a) is a person falling within any of sub-paragraphs (2) to (4), and | |
(b) is not a person who is excluded by sub-paragraph (5). | |
(2) A person falls within this sub-paragraph if he is a person with whom the | |
child has been placed under— | 15 |
(a) section 23(2)(a) of the Children Act 1989 (c. 41) (provision of | |
accommodation and maintenance for children by local authorities), | |
or | |
(b) section 59(1)(a) of that Act (provision of accommodation for children | |
by voluntary organisations). | 20 |
(3) A person falls within this sub-paragraph if— | |
(a) he is a person who is approved as a foster carer by a local authority | |
or a voluntary organisation in accordance with regulations under | |
section 5 of the Social Work (Scotland) Act 1968 (c. 49) (as at 9th April | |
2003, see regulation 7 of the Fostering of Children (Scotland) | 25 |
Regulations 1996 (S.I. 1996/3263)) and is providing accommodation | |
for the child who is being “looked after” by a local authority within | |
the meaning of section 17(6) of the Children (Scotland) Act 1995 | |
(c. 36), or | |
(b) he is a person with whom the child has been placed— | 30 |
(i) under regulations under section 5 of the Social Work | |
(Scotland) Act 1968 (as at 9th April 2003, see regulations 14 | |
and 16 of the Fostering of Children (Scotland) Regulations | |
1996), or | |
(ii) pursuant to a supervision requirement under section 70 of | 35 |
the Children (Scotland) Act 1995. | |
(4) A person falls within this sub-paragraph if he is a person with whom the | |
child has been placed under— | |
(a) Article 27(2)(a) of the Children (Northern Ireland) Order 1995 (S.I. | |
1995/755 (N.I. 2)) (provision of accommodation and maintenance for | 40 |
children by authorities), or | |
(b) Article 75(1)(a) of that Order (provision of accommodation for | |
children by voluntary organisations). | |
(5) The persons who are excluded are— | |
(a) a parent of the child; | 45 |
(b) a person who is not a parent of the child but who has parental | |
responsibility, or (in Scotland) parental responsibilities, in relation to | |
the child; | |
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(c) where the child is in care and there was a residence order in force | |
with respect to him immediately before the care order was made, a | |
person in whose favour the residence order was made; | |
(d) in Scotland, where the child is in care and there was a residence order | |
or a contact order in force with respect to him immediately before he | 5 |
was placed in care, a person in whose favour the residence order or | |
contact order was made. | |
Meaning of “total foster care receipts” | |
5 (1) For the purposes of this Schedule, an individual’s “total foster care receipts” | |
for a year of assessment or (as the case may be) a period of account are all of | 10 |
the individual’s foster care receipts for that year or period. | |
(2) In calculating an individual’s total foster care receipts, no deduction is | |
allowed for any expenses or any other matter. | |
The individual’s limit | |
6 The individual’s limit for a year of assessment is the total of— | 15 |
(a) the individual’s share of the fixed amount for that year (see | |
paragraph 7), and | |
(b) each amount per child for that individual for that year (see | |
paragraph 8). | |
The individual’s share of the fixed amount | 20 |
7 (1) The fixed amount is £10,000. | |
(2) If, in a year of assessment, no adjustment falls to be made in the case of an | |
individual— | |
(a) under sub-paragraph (3), or | |
(b) under sub-paragraph (4), | 25 |
the individual’s share of the fixed amount for that year is the fixed amount. | |
(3) If, in a year of assessment,— | |
(a) the residence used to provide the foster care from which an | |
individual’s foster care receipts for that year are derived is also used | |
by one or more other individuals for the provision of foster care, and | 30 |
(b) that other individual, or those other individuals, also have foster care | |
receipts for that year, | |
each individual’s share of the fixed amount for that year is that amount | |
divided by the total number of individuals who use the residence in that | |
year for the provision of foster care and have foster care receipts for that | 35 |
year. | |
This sub-paragraph is subject to sub-paragraph (4). | |
(4) If, in a year of assessment, the individual’s income period for his foster care | |
receipts is a period other than a year, the individual’s share of the fixed | |
amount for that year of assessment is found by multiplying the amount that | 40 |
would be his share (apart from this sub-paragraph) by—![equation: over[char[D],num[365.00000000,"365"]]](missing.gif) | |
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where D is the number of days in the individual’s income period. | |
(5) In this paragraph “residence” means— | |
(a) a building, or part of a building, which is occupied or intended to be | |
occupied as a separate residence, or | |
(b) a caravan or houseboat. | 5 |
(6) If a building or part of a building is designed for permanent use as a single | |
residence, but is temporarily divided into two or more separate residences, | |
it is still treated as a single residence. | |
The amount per child | |
8 (1) An individual’s amount per child for a year of assessment is found by | 10 |
multiplying— | |
(a) the number of weeks during the income period for that year in which | |
the individual provides foster care for that child, by | |
(b) the weekly amount for that child. | |
(2) The weekly amount for a child is— | 15 |
(a) £200 for a week throughout which the child is under 11 years old, | |
and | |
(b) £250 for a week— | |
(i) in which the child reaches the age of 11, or | |
(ii) throughout which the child is 11 years old or over. | 20 |
(3) Where in the case of any week an individual provides foster care for a child | |
during an income period for part only of the week, that part of a week counts | |
as a whole week for the purposes of this paragraph. | |
(4) Where an income period begins or ends during a week, that week is to be | |
counted for the purposes of this paragraph as falling within the income | 25 |
period which ends during the week (unless there is no such income period, | |
in which case it falls within the income period which begins during the | |
week). | |
(5) In this paragraph “week” means any period of seven days beginning with a | |
Monday. | 30 |
Power to alter amounts | |
9 The Treasury may by order amend the amounts for the time being specified | |
in paragraph 7(1) and 8(2). | |
Part 2 | |
The exemption and the alternative methods of calculation | 35 |
The exemption | |
10 (1) This paragraph applies to an individual for a year of assessment for which— | |
(a) the individual qualifies for relief under this Schedule, | |
(b) his total foster care receipts do not exceed his limit, and | |
(c) paragraph 15 (cases where accounting date for trade, profession or | 40 |
vocation is other than 5th April) does not apply. | |
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(2) If the individual’s foster care receipts for the year of assessment are the | |
receipts of a trade, profession or vocation, the profits or losses from that | |
trade, profession or vocation for the year are to be treated as nil. | |
(3) If, in a case falling within sub-paragraph (2), the individual would, apart | |
from that sub-paragraph, be entitled to a deduction for the year under | 5 |
section 63A(1) or (3) of the Taxes Act 1988 (overlap profits and overlap | |
losses), the individual is entitled to that deduction notwithstanding that sub- | |
paragraph. | |
(4) Sub-paragraph (5) applies if the individual’s foster care receipts for the year | |
of assessment are receipts from one or more foster care arrangements. | 10 |
(5) For each foster care arrangement from which those receipts arise, the | |
amount of— | |
(a) the receipts arising in the year of assessment from the arrangement, | |
less | |
(b) any expenses associated with those receipts, | 15 |
is to be treated as nil. | |
Alternative calculation of profits where amount is above the limit | |
11 The alternative method of calculating profits given in paragraphs 12 and 13 | |
applies to an individual for a year of assessment for which— | |
(a) the individual qualifies for relief under this Schedule, | 20 |
(b) his total foster care receipts exceed his limit, | |
(c) paragraph 15 (cases where accounting date for trade, profession or | |
vocation is other than 5th April) does not apply, and | |
(d) an election by him under paragraph 14 has effect. | |
Alternative calculation of profits: income from trade, etc | 25 |
12 (1) This paragraph applies if— | |
(a) the alternative method of calculating profits applies to an individual | |
for a year of assessment, and | |
(b) his foster care receipts for the year are the receipts of a trade, | |
profession or vocation. | 30 |
(2) The profits of the year of assessment of the trade, profession or vocation | |
from which the individual’s foster care receipts arise are— | |
(a) the amount of the foster care receipts for the year arising from the | |
trade, profession or vocation, less | |
(b) the individual’s limit for the year. | 35 |
Alternative calculation of profits: income charged under Case VI of Schedule D | |
13 (1) This paragraph applies if— | |
(a) the alternative method of calculating profits applies to an individual | |
for a year of assessment, and | |
(b) his foster care receipts for the year are receipts from one or more | 40 |
foster care arrangements. | |
(2) The amount of the profits of the year of assessment from all of the foster care | |
arrangements from which the individual’s foster care receipts arise is— | |
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