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Restricted securities with artificially depressed value
Mr Paul Boateng
NC3
To move the following Clause:—
'(1) Section 446E of the Income Tax (Earnings and Pensions) Act 2003 (c.1) (employee securities with artificially depressed market value: charge on restricted securities) is amended as follows.
(2) In subsection (1), after "on restricted securities)," insert—
| "(aa) | immediately before the employment-related securities are disposed of (in circumstances which do not constitute such an event) or are cancelled without being disposed of,". |
(3) For subsections (3) to (6) substitute—
"(3) "The relevant period" is the period beginning—
| (a) | if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applied in relation to the employment-related securities, 7 years before the acquisition, and |
| (b) | in any other case, 7 years before the relevant date, |
and ending with the relevant date.
(4) "The relevant date" is—
| (a) | in a case within subsection (1)(a), the date on which the chargeable event concerned occurs, |
| (b) | in a case within subsection (1)(aa), the date on which the disposal or cancellation concerned occurs, and |
| (c) | in a case within subsection (1)(b), the 5th April concerned. |
(5) Where this section applies in a case within subsection (1)(aa) or (b), a chargeable event within section 427(3)(a) (lifting of restrictions) is to be treated as occurring in relation to the employment-related securities on the relevant date.
(6) In every case where this section applies, subsection (1) of section 428 (amount of charge on restricted securities) applies as if the reference in subsection (2) of that section to what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions were to what would be their market value at the appropriate time but for the matters to be disregarded.
(7) "The appropriate time" is—
| (a) | in a case within subsection (1)(a) or (b), the time immediately after the chargeable event concerned, and |
| (b) | in a case within subsection (1)(aa), the time immediately before the chargeable event concerned. |
(8) "The matters to be disregarded" are—
| (b) | the things done as mentioned in subsection (2), and |
| (c) | if the employment-related securities are about to be disposed of or cancelled, that fact. |
(9) Where this section applies in a case within subsection (1)(aa), section 428(1) applies with the omission of the reference to OP.
(10) Where this section applies in a case within subsection (1)(a) and the chargeable event concerned is within section 427(3)(c) (disposal for consideration), section 428 applies with the omission of subsection (9) (case where consideration is less than actual market value)."
(4) This section applies on and after 7th May 2004.
(5) But if the employment-related securities were acquired before that date, section 446E does not apply by virtue of the amendment made by subsection (2) of this section unless their market value would be artificially low immediately before the disposal or cancellation if the date on which the relevant period began were the later of—
| (a) | that on which it did begin, and |
Relationship with chargeable gains
Mr Paul Boateng
NC12
To move the following Clause:—
'(1) Subsection (3) below applies if—
| (a) | section 125 applies as a result of a receipt on or after 17 March 2004, by a company that is or has been a member of a partnership, of any consideration for a disposal on or after that date of all or any of its interest in the partnership ("the section 125 disposal"); |
| (b) | a chargeable gain accrues to the company on a relevant disposal; and |
| (c) | the total amount of chargeable gains accruing to the company on relevant disposals exceeds the total amount of any allowable losses accruing to it on such disposals. |
(2) References in this section to a "relevant disposal" are to any disposal of an asset that, alone or together with other disposals of assets, constitutes the section 125 disposal; and references in this subsection to a disposal of an asset are to be construed in accordance with the 1992 Act.
(3) Where this subsection applies—
| (a) | any chargeable gain accruing to the company on a relevant disposal must be excluded in computing, for the purposes of section 8(1) of the 1992 Act, the total amount of chargeable gains accruing to the company in the accounting period in which that gain accrued; |
| (b) | the relevant net gain (defined by subsection (4) below) must be included in computing for those purposes the total amount of chargeable gains accruing to the company in the accounting period in which the receipt mentioned in subsection (1) above occurred; and |
| (c) | any allowable loss accruing to the company on a relevant disposal must be excluded in computing for the purposes of section 8(1) of the 1992 Act the amount of any allowable losses. |
(4) To find "the relevant net gain" for the purposes of this section—
| (a) | take the amount by which the total amount of chargeable gains accruing to the company on relevant disposals exceeds the total amount of allowable losses accruing to it on such disposals; and |
| (b) | reduce it (but not below nil) by an amount equal to the chargeable amount. |
(5) Where section 125 applies as mentioned in subsection (1)(a) above, in computing any chargeable gain or allowable loss accruing to the company on a relevant disposal—
| (a) | neither the chargeable amount, nor any amount taken into account in computing it, shall be excluded by section 37(1) of the 1992 Act (exclusions from consideration); and |
| (b) | an amount that has been taken into account in computing the chargeable amount shall not by reason of that fact be excluded by section 39(1) of that Act (exclusions from allowable deductions). |
(6) If section 125 and this section apply more than once as a result of two or more receipts by a company of consideration relating to the same section 125 disposal—
| (a) | subsection (3)(b) above does not apply in relation to any of the receipts after the first; and |
| (b) | in relation to the first receipt, the amount to be deducted under subsection (4)(b) above is an amount equal to the total of the chargeable amounts found in relation to the receipts. |
(7) Subsection (8) below applies if subsection (3) above prevents an allowable loss that accrued to a company otherwise than on a relevant disposal from being deductible from a chargeable gain accruing to the company on a relevant disposal.
(8) That loss (to the extent that it has not been deducted from any other chargeable gain) shall instead be deductible from the total amount of chargeable gains accruing to the company in the accounting period in which the receipt mentioned in subsection (1) above occurred.
(9) But if, in any case where subsection (3) above applies, there are one or more allowable losses—
| (a) | that are losses to which section 18(3) of the 1992 Act applies, and |
| (b) | that accrued to the company otherwise than on a relevant disposal and are prevented by subsection (3) above from being deductible from a chargeable gain accruing to the company on a relevant disposal, |
the total amount deducted under subsection (8) above in respect of those losses must not exceed the relevant net gain.
(10) In this section—
"the 1992 Act" means the Taxation of Chargeable Gains Act 1992 (c.12);"the chargeable amount" means the amount found under section 125 in relation to the receipt mentioned in subsection (1) above; andreferences to chargeable gains, or allowable losses, accruing on disposals are to be construed in accordance with the 1992 Act.'.
Valuation assumptions
Mr Paul Boateng
NC16
*To move the following Clause:—
'For the purposes of this Part the valuation assumptions in relation to a person and any benefits are—
| (a) | if the person has not reached such age (if any) as must have been reached to avoid any reduction in the benefits on account of age, that the person reached that age on the date, and |
| (b) | that the person's right to receive the benefits had not been occasioned by physical or mental impairment.'. |
Premium bonds
Mr Paul Boateng
NC17
*To move the following Clause:—
'Regulations under section 11 of the National Debt Act 1972 (c.65) (power of Treasury to make regulations as to raising of money under auspices of Director of Savings) may repeal any provision contained in section 54 of, or Schedule 18 to, the Finance Act 1968 (c.44) (terms of issue of premium savings bonds).'.
Repeal of section 677 of Taxes Act 1988
Mr Oliver Letwin
Mr Howard Flight
Mr Mark Prisk
Mr Andrew Tyrie
Mr George Osborne
NC1
To move the following Clause:—
'Section 677 of the Taxes Act 1988 (sums paid to settlor otherwise than as income) is hereby repealed.'.
Expenditure incurred on assets leased by small or medium-sized enterprise
Mr Oliver Letwin
Mr Howard Flight
Mr Mark Prisk
Mr Andrew Tyrie
Mr George Osborne
NC4
To move the following Clause:—
'(1) The Capital Allowances Act 2001 is amended as follows.
(2) For subsection 44(1), substitute—
"(1) Expenditure is first-year qualifying expenditure if—
| (a) | it is incurred by a small or medium-sized enterprise, or |
| (b) | it is incurred by a lessor on equipment leased to a small or medium-sized enterprise, and |
| (c) | it is not excluded by subsection (2) or section 46 (general exclusions)." |
(3) In the table in subsection 52(3) insert in the second and third lines after "small or medium-sized enterprises"—
"or incurred by a lessor on equipment leased to a small or medium-sized enterprise".'.
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