|
| |
|
| “lessee acquisition expenditure” means the capital expenditure |
| |
incurred by the lessee in acquiring the plant or machinery as |
| |
described in paragraph 5(1)(b), |
| |
| “restricted qualifying expenditure” means the qualifying expenditure |
| |
| 5 |
| “section 226 restriction” means— |
| |
(a) | the lessee acquisition expenditure, minus |
| |
(b) | the restricted qualifying expenditure. |
| |
| |
6 (1) | This paragraph applies if the pre-commencement rentals are greater than the |
| 10 |
total of the actual taxed rentals for periods of account up to, but excluding, |
| |
the transitional period of account. |
| |
(2) | Section 228D shall not apply in relation to— |
| |
(a) | the transitional period of account if the lessor’s excess rentals are |
| |
greater than the notional taxed rental for that period, or |
| 15 |
(b) | a subsequent period of account if the untaxed portion of the lessor’s |
| |
excess rentals is greater than the notional taxed rental for that period. |
| |
(3) | Section 228D is subject to sub-paragraph (4) in its application to— |
| |
(a) | the transitional period of account if the lessor’s excess rentals are not |
| |
greater than the notional rental deduction for that period, or |
| 20 |
(b) | a subsequent period of account if the untaxed portion of the lessor’s |
| |
excess rentals is not greater than the notional rental deduction for |
| |
| |
(4) | The permitted threshold for that period of account is the total of— |
| |
(a) | the lessor’s excess rentals (in the case of the transitional period of |
| 25 |
account) or the untaxed portion of the lessor’s excess rentals (in the |
| |
case of a subsequent period of account), and |
| |
(b) | the amount given by this calculation—![equation: times[char[B],char[a],char[s],char[i],char[c],cross[times[string[" "],char[A],char[
m],char[o],char[u],char[n],char[t]],over[id[plus[times[char[N],char[o],char[t],char[
i],char[o],char[n],char[a],char[l],string[" "],char[T],char[a],char[x],char[e],char[
d],string[" "],char[R],char[e],char[n],char[t],char[a],char[l]],minus[times[char[
D],char[e],char[d],char[u],char[c],char[t],char[i],char[b],char[l],char[e],string[
" "],char[E],char[x],char[c],char[e],char[s],char[s]]]]],times[char[N],char[o],char[
t],char[i],char[o],char[n],char[a],char[l],string[" "],char[T],char[a],char[x],char[
e],char[d],string[" "],char[R],char[e],char[n],char[t],char[a],char[l]]]]]](missing.gif) |
| |
| |
| “Basic Amount” means the amount calculated in accordance with |
| 30 |
| |
| “Notional Taxed Rental” means the notional taxed rental for the |
| |
period of account in question, and |
| |
| “Deductible Excess” means the amount included in the permitted |
| |
threshold by virtue of sub-paragraph (4)(a). |
| 35 |
(5) | But where, in relation to the transitional period of account, the amount given |
| |
by sub-paragraph (4) is less than the appropriate fraction of the notional |
| |
taxed rental for that period, the permitted threshold shall be that fraction of |
| |
| |
| 40 |
(a) | “the lessor’s excess rentals” means— |
| |
(i) | the pre-commencement rentals, minus |
| |
(ii) | the total of the actual taxed rentals referred to in sub- |
| |
| |
|
| |
|
| |
|
(b) | “the untaxed portion of the lessor’s excess rentals”, in relation to a |
| |
| |
(i) | the lessor’s excess rentals, minus |
| |
(ii) | the total of the actual taxed rentals for periods of account |
| |
from and including the transitional period up to, but |
| 5 |
excluding, the period in question. |
| |
| |
| “actual taxed rental”, in relation to a period of account, means the |
| |
amount that should be taken into consideration in respect of |
| |
amounts receivable under the existing leaseback in calculating the |
| 10 |
lessor’s income or profits for that period of account for the purpose |
| |
of income tax or corporation tax; |
| |
| “notional taxed rental”, in relation to a period of account, means the |
| |
amount that would, if section 228D did not apply, be taken into |
| |
consideration in respect of amounts receivable under the existing |
| 15 |
leaseback in calculating the lessor’s income or profits for that |
| |
period of account for the purpose of income tax or corporation tax. |
| |
(8) | Nothing in sub-paragraphs (3) to (5) prevents the inclusion of an amount in |
| |
the permitted threshold by virtue of section 228D(5). |
| |
(9) | This paragraph does not apply in relation to any period of account later than |
| 20 |
a period of account for which the permitted threshold has been determined |
| |
in accordance with sub-paragraph (3) to (5). |
| |
7 (1) | This paragraph applies where— |
| |
(a) | the existing leaseback terminates, and |
| |
(b) | in the period of account immediately following that in which it |
| 25 |
terminates, paragraph 6(2)(b) or 6(3)(b) would apply were it not for |
| |
| |
(2) | The permitted threshold for the period of account in which the leaseback |
| |
terminates shall also include an amount equal to the amount that the |
| |
untaxed portion of the lessor’s excess rentals would have been in the period |
| 30 |
of account immediately following. |
| |
| |
8 | Section 228E shall not apply where the existing leaseback terminates before |
| |
| |
| 35 |
| |
| “existing leaseback” means a leaseback the term of which began |
| |
| |
| “pre-commencement rentals”, in relation to an existing leaseback, |
| |
| 40 |
(a) | any amounts payable by the lessee to the lessor under the |
| |
leaseback before 17 March 2004, |
| |
(b) | any amounts so payable on or after 17 March 2004 in respect |
| |
of a period that ends before 17 March 2004, or |
| |
(c) | where any amounts are so payable on or after 17 March 2004 |
| 45 |
in respect of a period which begins before that date and |
| |
|
| |
|
| |
|
ends on or after that date, the appropriate fraction of each of |
| |
| |
| “transitional period of account” means a period of account that |
| |
| |
(2) | In this Schedule the “appropriate fraction”, in respect of an amount that |
| 5 |
relates to a particular period, means this fraction—![equation: over[(*s12.00s*)plus[(*n*)times[char[P],char[r],char[e]],minus[times[char[c],char[
o],char[m],char[m],char[e],char[n],char[c],char[e],char[m],char[e],char[n],char[
t],string[" "],char[P],char[e],char[r],char[i],char[o],char[d]]]],times[char[W],
char[h],char[o],char[l],char[e],string[" "],char[P],char[e],char[r],char[i],char[
o],char[d]]]](missing.gif) |
| |
| |
| “Pre-commencement Period” means the number of days in the part of |
| |
the period that falls before 17 March 2004, and |
| |
| “Whole Period” means the number of days in the whole of the period. |
| 10 |
| |
| |
| |
Amendments of sections 231AA, 231AB and 233 of the Taxes Act 1988 |
| |
1 (1) | In section 231AA of the Taxes Act 1988 (no tax credit for borrower under |
| |
stock lending arrangement or interim holder under repurchase agreement) |
| 15 |
after subsection (1) insert— |
| |
“(1A) | Where subsection (1) above applies to a relevant person in respect of |
| |
a qualifying distribution, section 233(1) (certain persons to be treated |
| |
as having paid income tax at Schedule F ordinary rate on certain |
| |
distributions etc) shall not apply in relation to that person in respect |
| 20 |
| |
| In this subsection “relevant person” means a person resident in the |
| |
United Kingdom, not being a company.”. |
| |
(2) | In section 231AB of that Act (no tax credit for original owner under |
| |
repurchase agreement in respect of certain manufactured dividends) after |
| 25 |
| |
“(1A) | Where subsection (1) above applies to a relevant person in respect of |
| |
a qualifying distribution, section 233(1) (certain persons to be treated |
| |
as having paid income tax at Schedule F ordinary rate on certain |
| |
distributions etc) shall not apply in relation to that person in respect |
| 30 |
| |
| In this subsection “relevant person” means a person resident in the |
| |
United Kingdom, not being a company.”. |
| |
(3) | In section 233 of that Act (taxation of certain recipients of distributions etc) |
| |
in subsection (1) (person other than United Kingdom resident company who |
| 35 |
is not entitled to tax credit on distribution: to be treated as having paid |
| |
income tax at Schedule F ordinary rate on the distribution etc) at the end |
| |
| |
| “But this subsection is subject to— |
| |
| section 231AA(1A) (section 233(1) not to apply to borrower |
| 40 |
under stock lending arrangement or interim holder under |
| |
| |
|
| |
|
| |
|
| section 231AB(1A) (section 233(1) not to apply to original |
| |
owner under repurchase agreement in respect of certain |
| |
manufactured dividends).”. |
| |
(4) | The amendment made by sub-paragraph (1) (and the amendment made by |
| |
sub-paragraph (3) so far as relating to that amendment) have effect in |
| 5 |
relation to any qualifying distribution received by a relevant person on or |
| |
after the commencement date where a manufactured dividend |
| |
representative of that distribution is or was paid, or treated as paid, by him |
| |
| |
(5) | In sub-paragraph (4) “the commencement date” means— |
| 10 |
(a) | if the relevant person is an individual, 6th November 2003; |
| |
(b) | if the relevant person is not an individual, 17th March 2004. |
| |
(6) | The amendment made by sub-paragraph (2) (and the amendment made by |
| |
sub-paragraph (3) so far as relating to that amendment) have effect in |
| |
relation to any qualifying distribution received by a relevant person on or |
| 15 |
after the day on which this Act is passed. |
| |
Amendments of paragraph 2A of Schedule 23A to the Taxes Act 1988 |
| |
2 (1) | In Schedule 23A to the Taxes Act 1988 (manufactured dividends and |
| |
interest) paragraph 2A (deductibility of manufactured payment in the case |
| |
of the manufacturer) is amended as follows. |
| 20 |
(2) | For sub-paragraph (1) (amount of manufactured dividend paid allowable as |
| |
deduction against total income, subject to sub-paragraph (1A)) substitute— |
| |
“(1) | Where, in the case of a manufactured dividend, the dividend |
| |
manufacturer is resident in the United Kingdom but is not a |
| |
company, an amount (“the relevant amount”) equal to the lesser |
| 25 |
| |
(a) | the amount of the manufactured dividend paid (so far as it |
| |
is not otherwise deductible), and |
| |
(b) | the amount of the dividend of which the manufactured |
| |
dividend is representative, |
| 30 |
| shall be allowable as a deduction for the purposes of income tax |
| |
only under sub-paragraph (1ZA) or (1A) below.”. |
| |
(3) | After sub-paragraph (1) insert— |
| |
“(1ZA) | The relevant amount shall be allowable under this sub-paragraph |
| |
as a deduction for the purposes of income tax to the extent that the |
| 35 |
| |
(a) | receives the dividend on the equities which is represented |
| |
by the manufactured dividend or receives a payment |
| |
which is representative of that dividend, and |
| |
(b) | is chargeable to income tax on the dividend or other |
| 40 |
| |
| and that deduction shall be made against the amount of the |
| |
dividend or other payment so received on which the dividend |
| |
manufacturer is chargeable to income tax. |
| |
(1ZB) | Sub-paragraph (1ZA) above shall apply only if the amount of the |
| 45 |
dividend or other payment so received is received by the dividend |
| |
| |
|
| |
|
| |
|
(a) | the year of assessment in which he pays the manufactured |
| |
| |
(b) | the year of assessment immediately before, or immediately |
| |
| |
(4) | In sub-paragraph (1A) (circumstances in which amount of manufactured |
| 5 |
dividend paid is allowable as deduction against total income)— |
| |
(a) | in the opening words, for the words from “An amount shall” to |
| |
“only” substitute “The relevant amount shall be allowable under this |
| |
sub-paragraph as a deduction for the purposes of income tax against |
| |
the total income of the dividend manufacturer”, |
| 10 |
| |
(c) | omit paragraph (c) and the word “or” before it, and |
| |
(d) | omit the words following paragraph (c). |
| |
(5) | In sub-paragraph (1B) (no double deduction allowed)— |
| |
(a) | for “sub-paragraph (1)” (in both places) substitute “sub-paragraph |
| 15 |
| |
(b) | in paragraph (a), for “paragraph (a) of sub-paragraph (1A)” |
| |
substitute “sub-paragraph (1ZA)” and at the end insert “, or”, |
| |
(c) | in paragraph (b) for “paragraph (b) of that sub-paragraph” substitute |
| |
“sub-paragraph (1A) above”, |
| 20 |
(d) | omit paragraph (c) and the word “or” before it, and |
| |
(e) | for “, other payment or chargeable gain” (in both places) substitute |
| |
| |
(6) | In sub-paragraph (4) (meaning of “deductible”)— |
| |
(a) | in paragraph (a), omit “or corporation tax”, and |
| 25 |
(b) | in paragraph (b), omit “or, as the case may be, total profits”. |
| |
(7) | Subject to sub-paragraph (10), the amendments made by sub-paragraphs (3), |
| |
(4)(b) and (5)(b) (and the amendments made by sub-paragraphs (2) and |
| |
(5)(a) so far as relating to those amendments) have effect in relation to a |
| |
manufactured dividend paid, or treated as paid, by a dividend |
| 30 |
manufacturer on or after the commencement date where the dividend or |
| |
other payment of which that manufactured dividend is representative is or |
| |
was received by him on or after that date. |
| |
(8) | In sub-paragraph (7) “the commencement date” means— |
| |
(a) | if the dividend manufacturer is an individual, 6th November 2003; |
| 35 |
(b) | if the dividend manufacturer is not an individual, 17th March 2004. |
| |
(9) | Subject to sub-paragraph (10), the amendments made by sub-paragraphs |
| |
(4)(a) and (5)(c) (and the amendments made by sub-paragraphs (2) and (5)(a) |
| |
so far as relating to those amendments) have effect in relation to a |
| |
manufactured dividend paid, or treated as paid, by a dividend |
| 40 |
manufacturer on or after 17th March 2004. |
| |
(10) | In relation to a manufactured dividend paid, or treated as paid, by a |
| |
dividend manufacturer before the day on which this Act is passed, the sub- |
| |
paragraph (1) of paragraph 2A of Schedule 23A to the Taxes Act 1988 |
| |
substituted by sub-paragraph (2) of this paragraph shall have effect with the |
| 45 |
| |
(a) | the words “the lesser of”, and |
| |
(b) | paragraph (b) and the word “and” before it. |
| |
|
| |
|
| |
|
(11) | The amendments made by sub-paragraphs (4)(c) and (d) and (5)(d) and (e) |
| |
have effect in relation to cases where— |
| |
(a) | the manufactured dividend is or was paid, or treated as paid, by the |
| |
dividend manufacturer on or after 17th March 2004, or |
| |
(b) | the chargeable gain accrues or accrued to the dividend manufacturer |
| 5 |
| |
Amendment of the Taxation of Chargeable Gains Act 1992 |
| |
3 (1) | After section 263C of the Taxation of Chargeable Gains Act 1992 (c. 12) |
| |
| |
| “263D Gains accruing to persons paying manufactured dividends |
| 10 |
(1) | This section applies where one of the following conditions is satisfied |
| |
in relation to a person who— |
| |
(a) | is resident in the United Kingdom, but |
| |
| |
| 15 |
(a) | the person is the interim holder under a repurchase |
| |
| |
(b) | he disposes of any United Kingdom equities transferred to |
| |
him under that agreement, |
| |
(c) | a chargeable gain accrues to him on that disposal, and |
| 20 |
(d) | under that agreement, he pays a manufactured dividend |
| |
which is representative of a dividend on those United |
| |
| |
| |
(a) | the person is the borrower under a stock lending |
| 25 |
| |
(b) | he disposes of any United Kingdom equities transferred to |
| |
him under that arrangement, |
| |
(c) | a chargeable gain accrues to him on that disposal, and |
| |
(d) | under that arrangement, he pays a manufactured dividend |
| 30 |
which is representative of a dividend on those United |
| |
| |
| |
(a) | the person is a party to a contract or other arrangements for |
| |
the transfer of United Kingdom equities which is neither a |
| 35 |
repurchase agreement nor a stock lending arrangement (“the |
| |
short sale transaction”), |
| |
(b) | he disposes of the United Kingdom equities under the short |
| |
| |
(c) | a chargeable gain accrues to him on that disposal, and |
| 40 |
(d) | under that transaction, he pays a manufactured dividend |
| |
which is representative of a dividend on those United |
| |
| |
(5) | For the purposes of capital gains tax, a loss shall be treated as |
| |
accruing to the person on the date on which the chargeable gain |
| 45 |
mentioned in Condition 1, 2 or 3 accrued to him. |
| |
|
| |
|
| |
|
(6) | The amount of that loss shall be equal to the lesser of— |
| |
(a) | the amount of that chargeable gain, and |
| |
| |
(7) | In subsection (6) above “the adjusted amount” means—![equation: plus[char[A],minus[char[B]]]](missing.gif) |
| |
| 5 |
| |
(a) | the amount of the manufactured dividend paid, and |
| |
(b) | the amount of the dividend of which the |
| |
manufactured dividend is representative; and |
| |
| B is an amount equal to so much of the manufactured |
| 10 |
dividend paid as is allowable to the person as a deduction for |
| |
the purposes of income tax under paragraph 2A of Schedule |
| |
| |
(8) | But that loss shall not be deductible except from the chargeable gain |
| |
mentioned in Condition 1, 2 or 3. |
| 15 |
(9) | For the purposes of this section “manufactured dividend” has the |
| |
same meaning as in paragraph 2 of Schedule 23A to the Taxes Act; |
| |
and any reference to a manufactured dividend being paid— |
| |
(a) | includes a reference to a payment falling by virtue of section |
| |
737A(5) of that Act to be treated for the purposes of Schedule |
| 20 |
23A as if it were made, but |
| |
(b) | does not include a reference to a payment falling by virtue of |
| |
section 736B(2) of that Act to be treated for the purposes of |
| |
that Schedule as if it were made. |
| |
(10) | For the purposes of this section the cases where there is a repurchase |
| 25 |
agreement are the following— |
| |
(a) | any case falling within subsection (1) of section 730A of the |
| |
| |
(b) | any case which would fall within that subsection if the sale |
| |
price and the repurchase price were different; |
| 30 |
| and, in any such case, any reference to the interim holder shall be |
| |
| |
(11) | In this section “stock lending arrangement” has the same meaning as |
| |
in section 263B of this Act; and, in relation to any such arrangement, |
| |
any reference to the borrower shall be construed accordingly. |
| 35 |
(12) | In this section “United Kingdom equities” has the meaning given by |
| |
paragraph 1(1) of Schedule 23A to the Taxes Act.”. |
| |
(2) | In section 737E of the Taxes Act 1988 (power to modify sections 727A, 730A, |
| |
| |
(a) | in subsection (4) (powers to modify also exercisable in relation to |
| 40 |
section 263A of the Taxation of Chargeable Gains Act 1992) after |
| |
“263A” insert “or 263D”, and |
| |
(b) | in subsection (6)(b) (particular power to modify in relation to section |
| |
263A of that Act) after “263A” insert “or 263D”. |
| |
(3) | The amendments made by sub-paragraphs (1) and (2) have effect in relation |
| 45 |
| |
|
| |
|