Finance Bill

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 11 — Miscellaneous
126

Offshore matters
135
Offshore funds
(1)
The provisions of the Taxes Act 1988 relating to offshore funds are amended in
accordance with Schedule 26 to this Act.
(2)
Except as otherwise provided—
5
(a)
the amendments have effect for account periods (within the meaning of
Chapter 5 of Part 17 of that Act) ending on or after the day on which this
Act is passed, and
(b)
regulations made under a power conferred by virtue of any of the
amendments may be made so as to have effect in relation to any such
10
account period.
136
Meaning of “offshore installation”
Schedule 27 to this Act (which makes amendments relating to the meaning of
“offshore installation”) has effect.
Health
15
137
Immediate needs annuities
(1)
The Taxes Act 1988 is amended as follows.
(2)
In section 431 (interpretative provisions relating to insurance companies) in
subsection (2) (interpretation for purposes of Chapter 1 of Part 12) in the
definition of “annuity business”, at the end insert “, other than the business of
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granting immediate needs annuities (within the meaning of section 580C)”.
(3)
After section 580B insert—
“580C Relief from tax on annual payments under immediate needs annuities
(1)
No liability to income tax arises in respect of a relevant annual payment
made under an immediate needs annuity to the extent that—
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(a)
it is made for the benefit of the person protected under the
immediate needs annuity, and
(b)
it is made to a care provider or a local authority in respect of the
provision of care for the person protected.
(2)
In this section “relevant annual payment” means an annual payment
30
which—
(a)
would (apart from this section) be brought into charge under
Case III of Schedule D, or
(b)
is equivalent to a description of payment brought into charge
under Case III of that Schedule but would (apart from this
35
section) be brought into charge under Case V of that Schedule.
(3)
In this section “immediate needs annuity” means a contract for a life
annuity—
(a)
the purpose, or one of the purposes, of which is to protect a
person against the consequences of his being unable, at the time
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Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 11 — Miscellaneous
127

the contract is made, to live independently without assistance
because of—
(i)
mental or physical impairment, or
(ii)
injury, sickness or other infirmity,

which is expected to be permanent, and
5
(b)
under which benefits are payable in respect of the provision of
care for the person protected.
(4)
In this section “care provider” means a person who carries on a trade,
profession or vocation which consists of or includes the provision of
care and who—
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(a)
in relation to care provided in England and Wales or Northern
Ireland, is registered under the relevant enactment in respect of
the provision of care;
(b)
in relation to care provided in Scotland, provides care which is
registered under the relevant enactment;
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(c)
in relation to care provided in a territory outside the United
Kingdom, satisfies comparable requirements under the law of
that territory relating to the provision of care.
(5)
In this section “the relevant enactment” means—
(a)
in relation to England and Wales, Part 2 of the Care Standards
20
Act 2000,
(b)
in relation to Scotland, Part 1 of the Regulation of Care
(Scotland) Act 2001,
(c)
in relation to Northern Ireland, Part 2 or 3 of the Registered
Homes (Northern Ireland) Order 1992 or Part 3 of the Health
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and Personal Social Services (Quality, Improvement and
Regulation) (Northern Ireland) Order 2003.
(6)
In this section “care” means accommodation, goods or services which it
is necessary or desirable to provide to a person because of—
(a)
mental or physical impairment, or
30
(b)
injury, sickness or other infirmity,

which is expected to be permanent.
(7)
In this section “life annuity” means an annuity to which section 656
(read with section 657) applies.
(8)
The Treasury may by order amend—
35
(a)
the definition of “immediate needs annuity” in subsection (3)
above;
(b)
the definitions of “care provider” in subsection (4) above and of
“the relevant enactment” in subsection (5) above.”.
(4)
The amendment made by subsection (2) has effect in relation to accounting
40
periods beginning on or after 1st January 2005.
(5)
For the purposes of section 547(5A)(b) of the Taxes Act 1988 (chargeable event
gains: method of charging gain to tax), an immediate needs annuity made
before 1st January 2005 shall not be taken, by virtue of the amendment made
by subsection (2), to fall or to have at any time fallen to be regarded as not
45
forming part of an insurance company or friendly society’s basic life assurance
and general annuity business the income and gains of which are subject to
corporation tax.

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 11 — Miscellaneous
128

(6)
The amendment made by subsection (3) has effect in relation to annual
payments made on or after 1st October 2004 (whenever the immediate needs
annuity in question was made).
138
Corporation tax: health service bodies
At the end of section 519A of the Income and Corporation Taxes Act 1988 (c. 1)
5
(health service bodies: exemptions from income and corporation tax) add—
“(3)
The Treasury may by order disapply subsection (1)(b) in relation to a
specified activity, or class of activity, of an NHS foundation trust.
(4)
An order under subsection (3) shall make provision for determining the
amount of the profits relating to an activity that are to be charged to
10
corporation tax as a result of the disapplication of subsection (1)(b).
(5)
An order under subsection (3) may, in particular—
(a)
make provision for disregarding profits of less than a specified
amount in respect of a financial year or accounting period or a
specified part of a financial year or accounting period;
15
(b)
make provision for disregarding a specified part of profits in
respect of a financial year or accounting period or a specified
part of a financial year or accounting period;
(c)
make provision for disregarding all or part of profits relating to
activity in respect of which receipts or turnover (as defined by
20
the order) are less than a specified amount in respect of a
financial year or accounting period or a specified part of a
financial year or accounting period.
(6)
An order under subsection (3)—
(a)
may apply, with or without modification, a provision of the Tax
25
Acts,
(b)
may disapply a provision of the Tax Acts,
(c)
may make provision similar to a provision of the Tax Acts, and
(d)
may make provision generally or in relation to a specified body
or class of bodies.
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(7)
The Treasury may make an order under subsection (3) only—
(a)
in relation to an activity or class of activity that appears to the
Treasury to be of a commercial nature,
(b)
where it appears to the Treasury to be expedient for the purpose
of avoiding, removing or reducing differences between—
35
(i)
the fiscal treatment of the body undertaking the activity,
and
(ii)
the fiscal treatment of another body or class of body
which is of a commercial nature and which undertakes
or might undertake the same or a similar activity, and
40
(c)
if a draft has been laid before, and approved by resolution of,
the House of Commons.
(8)
An activity authorised under section 14(1) of the Health and Social Care
(Community Health and Standards) Act 2003 (c. 43) shall not be treated
as an activity of a commercial nature for the purposes of subsection
45
(7)(a).”

Finance Bill
Part 4 — Pension schemes etc
Chapter 1 — Introduction
129

Part 4
Pension schemes etc
Chapter 1
Introduction
Introductory
5
139
Overview of Part 4
(1)
This Part contains tax provision about pension schemes and other similar
schemes.
(2)
This Chapter defines some basic concepts.
(3)
As for the rest of this Part—
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Chapter 2 is about the registration and de-registration of pension
schemes,

Chapter 3 is about the payments that may be made by registered pension
schemes and related matters,

Chapter 4 deals with tax reliefs and exemptions in connection with
15
registered pension schemes,

Chapter 5 imposes tax charges in connection with registered pension
schemes,

Chapter 6 is about some schemes that are not registered pension schemes,

Chapter 7 makes provision about compliance, and
20

Chapter 8 contains interpretation and other supplementary provisions.
Main concepts
140
Meaning of “pension scheme”
(1)
In this Part “pension scheme” means a scheme or other arrangements,
comprised in one or more instruments or agreements, having or capable of
25
having effect so as to provide benefits to or in respect of persons—
(a)
on retirement,
(b)
on death,
(c)
on having reached a particular age,
(d)
on the onset of serious ill-health or incapacity, or
30
(e)
in similar circumstances.
(2)
A pension scheme is a registered pension scheme for the purposes of this Part
at any time if it is at that time registered under Chapter 2.
(3)
In this Part “public service pension scheme” means a pension scheme—
(a)
established by or under any enactment,
35
(b)
approved by a relevant governmental or Parliamentary person or body,
or
(c)
specified in an order made by the Treasury.

Finance Bill
Part 4 — Pension schemes etc
Chapter 1 — Introduction
130

(4)
In subsection (3) “a relevant governmental or Parliamentary person or body”
means—
(a)
a Minister of the Crown or a government department,
(b)
the Scottish Parliament, the Scottish Parliamentary Corporate Body or
a member of the Scottish Executive,
5
(c)
the National Assembly for Wales, or
(d)
the Northern Ireland Assembly, the Northern Ireland Assembly
Commission, a Northern Ireland Minister, the head of a Northern
Ireland department or a Northern Ireland department.
(5)
In this Part “occupational pension scheme” means a pension scheme
10
established by an employer or employers and having or capable of having
effect so as to provide benefits to or in respect of any or all of the employees
of—
(a)
that employer or those employers, or
(b)
any other employer,
15

(whether or not it also has or is capable of having effect so as to provide benefits
to or in respect of other persons).
(6)
In this Part “sponsoring employer”, in relation to an occupational pension
scheme, means the employer, or any of the employers, to or in respect of any
or all of whose employees the pension scheme has, or is capable of having,
20
effect so as to provide benefits.
(7)
In this Part “recognised overseas pension scheme” means a pension scheme
which—
(a)
is established in a country or territory, other than the United Kingdom,
prescribed by regulations made by the Board of Inland Revenue,
25
(b)
is regulated as a pension scheme in the country or territory in which it
is established, and
(c)
satisfies any requirements so prescribed.
141
Meaning of “member”
(1)
In this Part “member” in relation to a pension scheme, means any active
30
member, pensioner member, deferred member or pension credit member of
the pension scheme.
(2)
For the purposes of this Part a person is an active member of a pension scheme
if there are presently arrangements made under the pension scheme for the
accrual of benefits to or in respect of the person.
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(3)
For the purposes of this Part a person is a pensioner member of a pension
scheme if the person is entitled to the present payment of benefits under the
pension scheme and is not an active member.
(4)
A person is a deferred member of a pension scheme if the person has accrued
rights under the pension scheme and is neither an active member nor a
40
pensioner member.
(5)
A person is a pension credit member of a pension scheme if the person has
rights under the pension scheme which are attributable (directly or indirectly)
to pension credits.