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Finance Bill


Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 3 — Construction industry scheme

74

 

(c)   

the cancellation under section 66 of a person’s registration for gross

payment.

76      

Consequential amendments

Schedule 12 to this Act (which makes consequential amendments) has effect.

77      

Commencement and transitional provision

5

(1)   

This Chapter has effect in relation to payments made on or after the appointed

day under contracts relating to construction operations.

(2)   

Where a certificate issued to a person under section 561 of the Taxes Act 1988

is in force immediately before the appointed day, the person is to be treated as

if, on the appointed day, the Board of Inland Revenue had registered him for

10

gross payment.

(3)   

Where a registration card issued to a person in accordance with regulations

made under section 566(2A) of the Taxes Act 1988 is in force immediately

before the appointed day, the person is to be treated as if, on the appointed day,

the Board of Inland Revenue had registered him for payment under deduction.

15

(4)   

Subsection (5) applies in relation to the first payment (“the relevant payment”)

made after the appointed day by a person (“C”) to a sub-contractor (“SC”)

under a contract relating to construction operations if—

(a)   

before the appointed day, C had made one or more payments to SC

under the contract or another such contract,

20

(b)   

the last of those payments (“the last payment”) was made in the year of

assessment in which the relevant payment was made or in either of the

two years of assessment before that,

(c)   

at the time of the last payment—

(i)   

a certificate issued to SC under section 561 of the Taxes Act 1988

25

was in force, or

(ii)   

a registration card issued to SC in accordance with regulations

made under section 566(2A) of that Act was in force, and

(d)   

on making the relevant payment, C has no reason to believe that SC—

(i)   

did not become registered for gross payment or (as the case may

30

be) for payment under deduction by virtue of subsection (2) or

(3), and

(ii)   

is not still so registered.

(5)   

Where this subsection applies, regulations under section 69(1) shall not require

C, before making the relevant payment, to verify whether SC is registered for

35

gross payment or for payment under deduction.

(6)   

Where subsection (5) applies, C shall be entitled to assume, on making any

further payments to SC under a contract relating to construction operations,

that SC has not subsequently ceased to be so registered, unless notified to the

contrary in accordance with regulations made under section 69(3).

40

(7)   

In this section “the appointed day” means such day as the Treasury may by

order appoint.

(8)   

The Treasury may by order make such further supplemental and transitional

provision and savings as they think fit in connection with the coming into

effect of this Chapter.

45

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 4 — Personal taxation

75

 

Chapter 4

Personal taxation

Taxable benefits

78      

Childcare and childcare vouchers

(1)   

Schedule 13 to this Act contains amendments of the Income Tax (Earnings and

5

Pensions) Act 2003 (c. 1) relating to childcare and childcare vouchers.

(2)   

The amendments have effect for the year 2005-06 and subsequent years of

assessment.

79      

Exemption for loaned computer equipment

(1)   

In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003

10

(employment income: miscellaneous exemptions), section 320 (limited

exemption for computer equipment) is amended as follows.

(2)   

For subsection (1) substitute—

“(1)   

If conditions A and B are met in respect of the provision of computer

equipment—

15

(a)   

no liability to income tax arises by virtue of section 62 (general

definition of earnings), and

(b)   

liability to income tax by virtue of Chapter 10 of Part 3 (taxable

benefits: residual liability to charge) arises only in respect of so

much of the aggregate cash equivalent of the benefit in the tax

20

year as exceeds £500.”.

(3)   

Omit subsections (4) and (5).

(4)   

This section has effect for the year 2004-05 and subsequent years of assessment.

80      

Vans

(1)   

Schedule 14 to this Act contains amendments of the Income Tax (Earnings and

25

Pensions) Act 2003 (c. 1) relating to vans.

(2)   

The amendments have effect for the year 2005-06 and subsequent years of

assessment.

81      

Emergency vehicles

(1)   

In the Income Tax (Earnings and Pensions) Act 2003, after section 248 insert—

30

“248A   

 Emergency vehicles

(1)   

This section applies where—

(a)   

an emergency vehicle is made available to a person employed

in an emergency service for the person’s private use,

(b)   

the terms on which it is made available prohibit its private use

35

otherwise than when the person is on call or engaged in on-call

commuting, and

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 4 — Personal taxation

76

 

(c)   

the person does not make private use of it otherwise than in

such circumstances.

(2)   

No liability to income tax arises by virtue of Chapter 6 or 10 of Part 3

(taxable benefits: cars, vans etc. and residual liability to charge) in

respect of the benefit.

5

(3)   

“Emergency vehicle” means a vehicle which is used to respond to

emergencies and which either—

(a)   

has fixed to it a lamp designed to emit a flashing light for use in

emergencies, or

(b)   

would have such a lamp fixed to it but for the fact that (if it did)

10

a special threat to the personal physical security of those using

it would arise by reason of it being apparent that they were

employed in an emergency service.

(4)   

The following are “employed in an emergency service”—

(a)   

constables and other persons employed for police purposes,

15

(b)   

persons employed for the purposes of a fire, or fire and rescue,

service, and

(c)   

persons employed in the provision of ambulance or paramedic

services.

(5)   

The Treasury may by order amend subsection (4).

20

(6)   

“Private use”, in relation to a person, means any use other than for the

person’s business travel; and “business travel” has the same meaning

as in Chapter 6 of Part 3 (see section 171(1)).

(7)   

A person to whom an emergency vehicle is made available is on call

when liable, as part of normal duties, to be called on to use the

25

emergency vehicle to respond to emergencies.

(8)   

A person to whom an emergency vehicle is made available is engaged

in on-call commuting when the person—

(a)   

is using it for ordinary commuting or for travel between two

places that is for practical purposes substantially ordinary

30

commuting, and

(b)   

is required to do so in order that it is available for use by the

person, as part of normal duties, for responding to

emergencies.”

(2)   

In section 236(2)(c) of that Act (mileage allowance and passenger payments:

35

meaning of “company vehicle”), after “vans)” insert “and section 248A

(emergency vehicles)”.

(3)   

This section has effect for the year 2004-05 and subsequent years of assessment.

82      

European travel expenses of MPs and other representatives

(1)   

The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as follows.

40

(2)   

In section 294 (EU travel expenses of MPs and other representatives) in

subsection (1) (exemption from income tax in respect of sums paid to Members

of the House of Commons and other representatives in respect of EU travel

expenses) for “EU” (in both places) substitute “European”.

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 4 — Personal taxation

77

 

(3)   

In that section, for subsections (2) to (4) substitute—

“(2)   

“European travel expenses” means the cost of, and any additional

expenses incurred in, travelling between the United Kingdom and a

relevant European location.

(3)   

“Relevant European location” means—

5

(a)   

a European Union institution or agency, or

(b)   

the national parliament of—

(i)   

another member State,

(ii)   

a candidate or applicant country, or

(iii)   

a member State of the European Free Trade Association.

10

(4)   

The Treasury may by order amend subsection (3) by—

(a)   

adding a European location,

(b)   

removing a European location, or

(c)   

varying the description of a European location.”.

(4)   

In the heading of that section, “EU” accordingly becomes “European”.

15

(5)   

This section has effect in relation to sums paid in respect of costs or expenses

incurred on or after 6th April 2004.

Gift aid

83      

Giving through the self-assessment return

(1)   

This section applies where—

20

(a)   

as a result of the making by an individual of a personal return for a year

of assessment, a tax repayment in respect of one or more years of

assessment falls to be made to him,

(b)   

the personal return contains a single direction, in the form specified in

the return, requiring—

25

(i)   

the whole of the tax repayment, or

(ii)   

so much of the tax repayment as does not exceed a specified

amount,

   

to be paid on his behalf as a gift to a single specified charity,

(c)   

the direction also requires the gift to be treated as a qualifying donation

30

for the purposes of section 25 of the Finance Act 1990 (c. 29) (gift aid),

and

(d)   

the gift satisfies the requirements of subsection (2) of that section.

(2)   

The gift is to be treated as a qualifying donation for the purposes of that section

made by the individual at the time the payment is received by the charity.

35

(3)   

Section 98 of the Finance Act 2002 (c. 23) (gift aid: election to be treated as if gift

made in previous tax year) accordingly does not apply to the gift.

(4)   

The charity is to be treated as having made a claim for any exemption which

may be available under section 505(1)(c)(ii) of the Taxes Act 1988 (charities:

exemption from tax under Case III of Schedule D) as a result of the charity’s

40

receipt of the gift (see section 25(10) of the Finance Act 1990).

(5)   

In this section—

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 4 — Personal taxation

78

 

   

“charity” means a charity within the meaning of section 25 of the Finance

Act 1990 (see subsection (12)(a) of that section) which, at the time the

personal return in question is made, is included (at the request of the

charity) in a list maintained for the purposes of this section by the

Board;

5

   

“personal return” means a return under section 8 of the Taxes

Management Act 1970 (c. 9) (personal return);

   

“tax repayment” means a repayment (after any set-off that falls to be made

against the individual’s liabilities) of either or both of—

(a)   

income tax or amounts paid on account of income tax;

10

(b)   

capital gains tax;

   

  and, for the purposes of subsection (1)(b), includes any repayment

supplement (within the meaning of section 824 of the Taxes Act 1988 or

section 283 of the Taxation of Chargeable Gains Act 1992 (c. 12)).

(6)   

In section 25 of the Finance Act 1990 (gift aid) after subsection (12) insert—

15

“(13)   

This section is to be read with—

(a)   

section 98 of the Finance Act 2002 (gift aid: election to be treated

as if gift made in previous tax year);

(b)   

section 83 of the Finance Act 2004 (gift aid: giving through the

self-assessment return).”.

20

(7)   

This section has effect in relation to personal returns for the year 2003‑04 and

subsequent years of assessment.

Gifts with a reservation

84      

Charge to income tax by reference to enjoyment of property previously owned

(1)   

Schedule 15 (which contains provisions imposing a charge to income tax by

25

reference to benefits received in certain circumstances by a former owner of

property) has effect.

(2)   

That Schedule has effect for the year 2005-06 and subsequent years of

assessment.

Miscellaneous

30

85      

Relief where national insurance contributions met by employee

(1)   

Schedule 16 to this Act provides—

(a)   

for income tax relief in certain cases where national insurance

contributions are met by an employee, and

(b)   

for consequential amendments.

35

(2)   

This section (and that Schedule) come into force in accordance with provision

made by the Treasury by order made by statutory instrument.

86      

Income of spouses: jointly held property

(1)   

Section 282A of the Taxes Act 1988 is amended as follows.

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Enterprise incentives

79

 

(2)   

After subsection (4) insert—

“(4A)   

Subsection (1) above shall not apply to income consisting of a

distribution arising from property consisting of—

(a)   

close company shares to which either the husband or the wife is

beneficially entitled to the exclusion of the other, or

5

(b)   

close company shares to which they are beneficially entitled in

equal or unequal shares.

   

In this subsection “close company shares” means shares in or securities

of a close company; and for this purpose “shares” and “securities” have

the same meaning as in Part 6 (see section 254).”.

10

(3)   

This section has effect in relation to the year 2004-05 and subsequent years of

assessment.

87      

Minor amendments of or connected with ITEPA 2003

Schedule 17 to this Act contains minor amendments of or connected with the

Income Tax (Earnings and Pensions) Act 2003 (c. 1).

15

Chapter 5

Enterprise incentives

88      

Enterprise investment scheme

Schedule 18 (which makes amendments to the enterprise investment scheme)

has effect.

20

89      

Venture capital trusts

(1)   

In relation to shares issued on or after 6th April 2004 but before 6th April 2006,

paragraph 1(5)(a) of Schedule 15B to the Taxes Act 1988 (calculation of income

tax relief by reference to lower rate) is to have effect as if the reference to the

lower rate were a reference to the higher rate.

25

(2)   

Accordingly, paragraph 3(4) of that Schedule (loss of investment relief) is to

have effect in relation to such shares as if the reference to the lower rate were a

reference to the higher rate.

(3)   

Schedule 19 (which makes amendments relating to venture capital trusts) has

effect.

30

90      

Corporate venturing scheme

Schedule 20 (which makes amendments relating to the corporate venturing

scheme) has effect.

91      

Enterprise management incentives: subsidiaries

(1)   

Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (c. 1)

35

(enterprise management incentives) is amended as follows.

(2)   

In paragraph 8 (qualifying companies: introduction) after “having only

 

 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Enterprise incentives

80

 

qualifying subsidiaries (see paragraphs 10 and 11),” insert—

   

“property managing subsidiaries (see paragraphs 11A and 11B),”.

(3)   

In paragraph 10 (the qualifying subsidiaries requirement) for sub-paragraph

(2) substitute—

     “(2)  

In this paragraph “subsidiary” means any company which the

5

company controls, either on its own or together with any person

connected with it.

      (3)  

For the purpose of sub-paragraph (2), the question whether a person

controls a company is to be determined in accordance with section

416(2) to (6) of ICTA (“control” in the context of close companies).”.

10

(4)   

In paragraph 11 (meaning of “qualifying subsidiary”)—

(a)   

in sub-paragraph (2), omit paragraphs (a) to (c),

(b)   

before paragraph (d) of that sub-paragraph insert—

“(ca)   

that the subsidiary is a 51% subsidiary of the

holding company;”,

15

(c)   

in paragraph (d) of that sub-paragraph, after “company” insert “or

another of its subsidiaries”,

(d)   

in paragraph (e) of that sub-paragraph, for “the conditions in

paragraphs (a) to” substitute “either of the conditions in paragraphs

(ca) and”,

20

(e)   

omit sub-paragraph (3),

(f)   

after sub-paragraph (7) insert—

     “(8)  

Sub-paragraph (9) applies at a time when the subsidiary or

another company is in administration or receivership.

      (9)  

The subsidiary is not to be regarded, by reason only of

25

anything done as a consequence of the company concerned

being in administration or receivership, as having ceased to

be a company in relation to which the conditions in sub-

paragraph (2) are met if—

(a)   

the entry into administration or receivership, and

30

(b)   

everything done as a consequence of the company

concerned being in administration or receivership,

           

is for commercial reasons and is not part of a scheme or

arrangement the main purpose (or one of the main purposes)

of which is the avoidance of tax.

35

     (10)  

Section 312(2A) of ICTA (meaning of being in administration

or receivership) applies for the purposes of sub-paragraphs

(8) and (9) as it applies for the purposes of Chapter 3 of Part

7 of ICTA (enterprise investment scheme).”.

(5)   

After paragraph 11 insert—

40

“The property managing subsidiaries requirement

11A   (1)  

A company is not a qualifying company if it has a property

managing subsidiary which is not a qualifying 90% subsidiary of the

company (see paragraph 11B).

 

 

 
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