|
| |
|
(5) | Relief under this section does not affect the amount to be taken into |
| |
| |
(a) | as employment income in determining contributions payable |
| |
under the Contributions and Benefits Act, or |
| |
(b) | as relevant employment income for the purposes of |
| 5 |
paragraph 3A or 3B of Schedule 1 to that Act. |
| |
| |
| “approval”, in relation to an election, means approval by the |
| |
Inland Revenue under paragraph 3B of Schedule 1 to the |
| |
Contributions and Benefits Act, and |
| 10 |
| “secondary contributor” has the same meaning as in that Act |
| |
| |
Income tax relief: securities options |
| |
3 (1) | Chapter 5 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) |
| |
(employment income: securities options) is amended as follows. |
| 15 |
(2) | In section 476 (charge on occurrence of chargeable event), for subsections (1) |
| |
| |
“(1) | If a chargeable event occurs in relation to an employment-related |
| |
securities option, the taxable amount counts as employment income |
| |
of the employee for the relevant tax year. |
| 20 |
| |
(a) | “chargeable event” has the meaning given by section 477, |
| |
(b) | “the taxable amount” is the amount determined under |
| |
| |
(c) | “the relevant tax year” is the tax year in which the chargeable |
| 25 |
| |
(3) | Relief under section 481 or 482 (relief for secondary Class 1 |
| |
contributions or special contribution met by employee) may be |
| |
available against an amount counting as employment income under |
| |
| 30 |
(3) | In section 480 (deductible amounts), omit subsection (7). |
| |
(4) | In section 481 (deductible amount in respect of secondary Class 1 |
| |
contributions met by employee)— |
| |
(a) | in the heading for “Deductible amount in respect of” substitute |
| |
| 35 |
(b) | in subsection (1) for the opening words down to “if” substitute |
| |
“Relief is available under this section against an amount counting as |
| |
employment income under section 476 if“; |
| |
(c) | in subsection (2) for the opening words down to “of” substitute “The |
| |
amount of the relief is the total of“; |
| 40 |
(d) | after subsection (4) insert— |
| |
“(4A) | Relief under this section is given by way of deduction from |
| |
the amount otherwise counting as employment income. |
| |
(4B) | Relief under this section does not affect the amount to be |
| |
| 45 |
|
| |
|
| |
|
(a) | as employment income in determining contributions |
| |
payable under the Contributions and Benefits Act, or |
| |
(b) | as relevant employment income for the purposes of |
| |
paragraph 3A or 3B of Schedule 1 to that Act.”. |
| |
(5) | In section 482 (deductible amount in respect of special contribution met by |
| 5 |
| |
(a) | in the heading for “Deductible amount in respect of” substitute |
| |
| |
(b) | in subsection (1) for the opening words down to “if” substitute |
| |
“Relief is available under this section against an amount counting as |
| 10 |
employment income under section 476 if“; |
| |
(c) | after subsection (5) add— |
| |
“(6) | The amount of the relief is the amount of the liability referred |
| |
| |
“(7) | Relief under this section is given by way of deduction from |
| 15 |
the amount otherwise counting as employment income.”. |
| |
Consequential amendments: PAYE |
| |
4 (1) | Part 11 of the Income Tax (Earnings and Pensions) Act 2003 (Pay As You |
| |
Earn) is amended as follows. |
| |
(2) | In section 698 (PAYE: special charges on employment-related securities), |
| 20 |
after subsection (2) insert— |
| |
“(2A) | For the purposes of this section the amount likely to count as |
| |
employment income under section 426 or 438 means the amount |
| |
after deducting the amount of any relief likely to be available under |
| |
section 428A or 442A (relief for secondary Class 1 contributions met |
| 25 |
| |
(3) | In section 700 (PAYE: gains from securities options), after subsection (4) |
| |
| |
“(4A) | For the purposes of this section the amount likely to count as |
| |
employment income under section 476 means the amount after |
| 30 |
deducting the amount of any relief likely to be available under |
| |
section 481 or 482 (relief for secondary Class 1 contributions or |
| |
special contribution met by employee).”. |
| |
Consequential amendments: corporation tax relief |
| |
5 (1) | Schedule 23 of the Finance Act 2003 (c. 14) (corporation tax relief for |
| 35 |
employee share acquisition) is amended as follows. |
| |
(2) | In paragraph 21(4) (amount of relief on acquisition of restricted shares)— |
| |
(a) | omit the words “increased by any amounts deducted under sections |
| |
481 and 482 of that Act”, and |
| |
| 40 |
| “No account shall be taken for this purpose of any relief |
| |
under section 481 or 482 of that Act (relief for secondary |
| |
Class 1 contributions or special contribution met by |
| |
| |
(3) | In paragraph 21(6) (amount of relief on chargeable event in relation to |
| 45 |
|
| |
|
| |
|
restricted shares), at the end add— |
| |
| “No account shall be taken for this purpose of any relief under |
| |
section 428A of that Act (relief for secondary Class 1 contributions |
| |
| |
(4) | In paragraph 22C(4) (amount of relief on acquisition of convertible shares)— |
| 5 |
(a) | omit the words “increased by any amounts deducted under sections |
| |
481 and 482 of that Act”, and |
| |
| |
| “No account shall be taken for this purpose of any relief |
| |
under section 481 or 482 of that Act (relief for secondary |
| 10 |
Class 1 contributions or special contribution met by |
| |
| |
(5) | In paragraph 22C(6) (amount of relief on chargeable event in relation to |
| |
convertible shares), at the end add— |
| |
| “No account shall be taken for this purpose of any relief under |
| 15 |
section 442A of that Act (relief for secondary Class 1 contributions |
| |
| |
(6) | Nothing in this paragraph affects the operation of paragraph 21(4) or 22C(4) |
| |
of Schedule 23 to the Finance Act 2003 in relation to amounts deducted |
| |
under section 481 or 482 of the Income Tax (Earnings and Pensions) Act 2003 |
| 20 |
before the amendment of those paragraphs by this Schedule. |
| |
Consequential amendments: capital gains tax |
| |
6 (1) | Section 119A of the Taxation of Chargeable Gains Act 1992 (c. 12) (increase |
| |
in expenditure by reference to tax charged in relation to employment-related |
| |
securities) is amended as follows. |
| 25 |
(2) | For subsection (5) (determination of relevant amount) substitute— |
| |
“(5) | In determining for the purposes of subsection (4) the amount |
| |
counting as employment income— |
| |
(a) | in the case of an amount counting as employment income |
| |
under section 476 of ITEPA 2003 any amounts deducted |
| 30 |
under section 480(5)(a) or (b) of that Act shall be added back, |
| |
| |
(b) | no account shall be taken of any relief under section 428A, |
| |
442A, 481 or 482 of that Act (relief for secondary Class 1 |
| |
contributions or special contribution met by employee).”. |
| 35 |
| |
(4) | Nothing in this paragraph affects the operation of section 119A(5) of the |
| |
Taxation of Chargeable Gains Act 1992, as inserted by paragraph 50(1) of |
| |
Schedule 22 to the Finance Act 2003, in relation to amounts deducted under |
| |
section 481 or 482 of the Income Tax (Earnings and Pensions) Act 2003 before |
| 40 |
the amendment of those sections by this Schedule. |
| |
Other consequential amendments |
| |
7 (1) | In section 484(7) (definitions for Chapter 5 of Part 7), omit the definition of |
| |
“the Contributions and Benefits Act” and the words “and” preceding it. |
| |
(2) | In section 721(1) of that Act (general definitions), at the appropriate place |
| 45 |
|
| |
|
| |
|
| |
| ““the Contributions and Benefits Act” means SSCBA 1992 or |
| |
| |
(3) | In Part 2 of Schedule 1 to that Act (index of defined expressions), for the |
| |
entry relating to “the Contributions and Benefits Act” substitute— |
| 5 |
| “the Contributions and Benefits Act |
| | | |
|
| |
| |
Minor amendments of or connected with the Income Tax (Earnings and |
| |
| |
| 10 |
1 (1) | In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 |
| |
(employment income: miscellaneous exemptions), in section 317 (free or |
| |
subsidised meals), for subsection (1) substitute— |
| |
“(1) | No liability to income tax arises in respect of the provision for an |
| |
employee by the employer of free or subsidised meals if they are |
| 15 |
| |
| |
(b) | on the employer’s business premises, |
| |
| and conditions A to C are met.”. |
| |
(2) | This amendment has effect for the year 2004-05 and subsequent tax years. |
| 20 |
Payments to non-approved pension schemes: exception for employment where earnings not |
| |
within main charging provisions |
| |
2 (1) | In Chapter 1 of Part 6 of the Income Tax (Earnings and Pensions) Act 2003 |
| |
(payments to non-approved pension schemes), for section 389 (exception: |
| |
employments where earnings charged on remittance) substitute— |
| 25 |
| “389 Exception: employment where earnings not within main charging |
| |
| |
Section 386 does not apply if in the tax year in which the sum is paid |
| |
the earnings from the employment are not (or would not have been |
| |
if there were any) general earnings to which any of the following |
| 30 |
| |
(a) | section 15 (employee resident, ordinarily resident and |
| |
| |
(b) | section 21 (employee resident and ordinarily resident, |
| |
but not domiciled in UK), |
| 35 |
(c) | section 25 (employee resident but not ordinarily |
| |
| |
(d) | section 27 (UK-based earnings for year when |
| |
employee not resident in UK).”. |
| |
(2) | This amendment has effect for the year 2003-04 and subsequent tax years. |
| 40 |
|
| |
|
| |
|
Time limit for assessment: income received after year for which it is assessable |
| |
3 (1) | In Part 4 of the Taxes Management Act 1970 (c. 9) (assessments and claims), |
| |
for section 35 (time limit for assessment: emoluments received after year for |
| |
which they are assessable) substitute— |
| |
“35 | Time limit: income received after year for which they are assessable |
| 5 |
(1) | Where income to which this section applies is received in a year of |
| |
assessment subsequent to that for which it is assessable, an |
| |
assessment to income tax as respects that income may be made at any |
| |
time within six years after the year of assessment in which it was |
| |
| 10 |
(2) | This section applies to— |
| |
| |
| |
(c) | social security income.”. |
| |
(2) | This amendment has effect in relation to income assessable for the year 2004- |
| 15 |
05 and subsequent years of assessment. |
| |
Computation of profits or gains under Schedule D: delayed payment of remuneration |
| |
4 (1) | In section 43 of the Finance Act 1989 (c. 26) (Schedule D: computation)— |
| |
(a) | in subsection (1) for “profits or gains of a trade to be charged under |
| |
Schedule D” substitute “profits or gains to be charged under |
| 20 |
| |
(b) | in subsection (5) omit “of the trade”. |
| |
(2) | This amendment (which corrects an error in the amendment made by |
| |
paragraph 157 of Schedule 6 to the Income Tax (Pensions and Earnings) Act |
| |
| 25 |
(a) | for the purposes of income tax, for the year 2004-05 and subsequent |
| |
| |
(b) | for the purposes of corporation tax, for accounting periods ending |
| |
| |
Donations to charity by individuals: application to Crown employment |
| 30 |
5 (1) | In section 25(2) of the Finance Act 1990 (donations to charity by individuals: |
| |
qualifying conditions), in paragraph (i)(i) for the words from “or performs |
| |
duties” to “performed in the United Kingdom” substitute “or is in Crown |
| |
employment as defined in section 28(2) of the Income Tax (Earnings and |
| |
| 35 |
(2) | This amendment (which supersedes the amendment made by paragraph |
| |
166(3) of Schedule 6 to the Income Tax (Earnings and Pensions) Act 2003) has |
| |
effect for the year 2003-04 and subsequent years of assessment. |
| |
Payments on account of income tax |
| |
6 (1) | Section 108 of the Finance Act 1995 (c. 4) shall be deemed not to have been |
| 40 |
repealed by Part 1 of Schedule 8 to the Income Tax (Earnings and Pensions) |
| |
Act 2003 (c. 1) and the inclusion of that section among the enactments so |
| |
repealed shall be deemed not to have affected the amendments made by that |
| |
|
| |
|
| |
|
section in section 59A of the Taxes Management Act 1970 (c. 9) (payments on |
| |
| |
(2) | Nothing in this paragraph affects anything done— |
| |
(a) | on or after 6th April 2003 (when the Income Tax (Earnings and |
| |
Pensions) Act 2003 came into force), and |
| 5 |
(b) | before the passing of this Act, |
| |
| in reliance on the view that the amendments referred to in sub-paragraph (1) |
| |
had ceased to have effect. |
| |
Tax relief for expenditure on R&D or remediation of contaminated land: staff costs |
| |
7 (1) | In Schedule 20 to the Finance Act 2000 (c. 17) (tax relief for expenditure on |
| 10 |
research and development), in paragraph 5 (staffing costs)— |
| |
(a) | in sub-paragraph (1), for paragraph (a) substitute— |
| |
“(a) | the emoluments paid by the company to directors |
| |
or employees of the company, including all |
| |
salaries, wages, perquisites and profits whatsoever |
| 15 |
other than benefits in kind;”; and |
| |
(b) | omit sub-paragraph (1ZA). |
| |
(2) | In Schedule 22 to the Finance Act 2001 (c. 9) (remediation of contaminated |
| |
land), in paragraph 5 (employee costs)— |
| |
(a) | in sub-paragraph (1), for paragraph (a) substitute— |
| 20 |
“(a) | the emoluments paid by the company to directors |
| |
or employees of the company, including all |
| |
salaries, wages, perquisites and profits whatsoever |
| |
other than benefits in kind;”; and |
| |
(b) | omit sub-paragraph (1A). |
| 25 |
(3) | These amendments have effect in relation to expenditure incurred on or |
| |
| |
Gains and losses of a company from intangible fixed assets: delayed payment of remuneration |
| |
8 (1) | In Schedule 29 to the Finance Act 2002 (c. 23) (gains and losses of a company |
| |
from intangible fixed assets), paragraph 113 (delayed payments of |
| 30 |
emolument) is amended as follows. |
| |
(2) | In the heading, for “emoluments” substitute “employees’ remuneration”. |
| |
(3) | In sub-paragraph (1)— |
| |
(a) | in paragraph (a), for “emoluments” substitute “employees’ |
| |
| 35 |
(b) | in paragraph (b), for “emoluments are” substitute “remuneration is”, |
| |
| |
(c) | for “emoluments shall” substitute “remuneration shall”. |
| |
(4) | For sub-paragraph (2) substitute— |
| |
“(2) | Sub-paragraph (1) applies whether the amount is in respect of |
| 40 |
particular employments or in respect of employments generally.”. |
| |
(5) | For sub-paragraph (3) substitute— |
| |
“(3) | This paragraph applies to potential employees’ remuneration as it |
| |
applies to employees’ remuneration. |
| |
| 45 |
|
| |
|
| |
|
(a) | potential employees’ remuneration is an amount reserved |
| |
in the accounts of an employer, with a view to it becoming |
| |
employees’ remuneration, and |
| |
(b) | potential employees’ remuneration is regarded as paid |
| |
when it becomes employees’ remuneration that is paid.”. |
| 5 |
(6) | In sub-paragraph (5)— |
| |
(a) | for “emoluments have not” substitute “employees’ remuneration has |
| |
| |
(b) | in paragraph (a), for “they” substitute “it”, and |
| |
(c) | in paragraph (b), for “emoluments are” substitute “remuneration is”. |
| 10 |
(7) | After that sub-paragraph insert— |
| |
“(6) | For the purposes of this section remuneration is paid when it— |
| |
(a) | is treated as received by an employee for the purposes of |
| |
the Income Tax (Earnings and Pensions) Act 2003 by |
| |
section 18, 19, 31 or 32 of that Act (receipt of money and |
| 15 |
| |
(b) | would be so treated if it were not exempt income. |
| |
| |
| “employee” includes an office-holder and “employment” |
| |
correspondingly includes an office, and |
| 20 |
| “remuneration” means an amount which is or is treated as |
| |
earnings for the purposes of the Income Tax (Earnings |
| |
and Pensions) Act 2003.”. |
| |
(8) | These amendments have effect for accounting periods ending after 5th April |
| |
| 25 |
Minor corrections of the Income Tax (Earnings and Pensions) Act 2003 |
| |
9 (1) | The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as |
| |
| |
(2) | In section 286 (power to amend sections 279 to 285), in the heading and in |
| |
subsection (1), for “279” substitute “277”. |
| 30 |
(3) | In Chapter 11 of Part 7 (supplementary provisions about employee benefit |
| |
trusts), in section 554(1)(a) (attribution of further interest in company), for |
| |
“employment” substitute “employee”. |
| |
(4) | In section 577 (United Kingdom social security pensions)— |
| |
(a) | in subsection (2), in paragraph (b) of the definition of “state pension”, |
| 35 |
for “48” substitute “48A”, and |
| |
| |
(5) | In section 677 (UK social security benefits wholly exempt from income tax), |
| |
in Part 2 of Table B (benefits payable under regulations), omit the entry |
| |
relating to compensation payments where child support reduced because of |
| 40 |
| |
| |
10 (1) | In section 59A(8)(b) of the Taxes Management Act 1970 (c. 9) (payments on |
| |
account of income tax), for “that Act” substitute “the principal Act”. |
| |
|
| |
|