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Income and Corporation Taxes Act 1988 |
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1 | The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows. |
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2 | In section 1(1) (the charge to income tax)— |
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(a) | omit paragraph (a), and |
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(b) | omit the word “and” at the end of paragraph (b) and after that |
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“(ba) | all amounts which are charged to tax under any of the |
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following provisions of ITTOIA 2005— |
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(i) | Part 2 (trading income), |
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(ii) | Part 3 (property income), |
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(iii) | Part 4 (savings and investment income), and |
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(iv) | Part 5 (miscellaneous income), and”. |
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3 (1) | Amend section 1A (application of lower rate to income from savings and |
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distributions) as follows. |
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(a) | in paragraph (a) for “Schedule F” substitute “Chapter 3, 5 or 6 of Part |
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4 of ITTOIA 2005 (dividends etc. from UK resident companies etc., |
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stock dividends from UK resident companies and loans to |
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(b) | for paragraph (b) substitute— |
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“(b) | dividends chargeable under Chapter 4 of Part 4 of |
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that Act (dividends from non-UK resident |
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companies) or relevant foreign distributions |
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chargeable under Chapter 8 of Part 5 of that Act |
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(income not otherwise charged).” |
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(i) | for “Schedule F”, in the first place where it occurs, substitute |
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“Chapter 3, 5 or 6 of Part 4 of ITTOIA 2005”, and |
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(ii) | for “Schedule F”, in the second place where it occurs, |
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substitute “dividend”, and |
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(b) | for paragraph (b) and the word “and” at the end of the paragraph |
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“(b) | in the case of dividends chargeable under Chapter 4 |
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of Part 4 of that Act or relevant foreign distributions |
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chargeable under Chapter 8 of Part 5 of that Act, the |
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dividend ordinary rate; and”. |
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(a) | in paragraph (a) for the words from “chargeable under” to “section |
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119” substitute “(other than relevant foreign income) chargeable |
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(i) | Chapter 2 of Part 4 of ITTOIA 2005 (charge on |
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(ii) | Chapter 7 of that Part of that Act (charge on |
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purchased life annuity payments) other than |
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income from annuities specified in section |
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(iii) | Chapter 8 of that Part of that Act (charge on |
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profits from deeply discounted securities);”, |
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(b) | in paragraph (aa) omit “under Case VI of Schedule D”, |
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(c) | in paragraph (b) for “Schedule F” substitute “Chapter 3, 5 or 6 of Part |
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(d) | in paragraph (c) for “equivalent foreign income” substitute “income |
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falling within subsection (3) below”, and |
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(e) | in paragraph (d) for “547(1)(a) (chargeable event gains on life policies |
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etc)” substitute “465 of ITTOIA 2005 (gains from contracts for life |
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(5) | For subsection (3) substitute— |
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“(3) | The income which falls within this subsection is any relevant foreign |
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(a) | would fall within subsection (2)(a) but for the exclusion of |
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(b) | is a dividend chargeable under Chapter 4 of Part 4 of ITTOIA |
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(c) | is a relevant foreign distribution chargeable under Chapter 8 |
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(a) | in paragraph (a), for the words from “income” to “Kingdom” |
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substitute “relevant foreign income which is charged in accordance |
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with section 832 of ITTOIA 2005 (relevant foreign income charged on |
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the remittance basis)”, and |
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(b) | omit paragraph (b) and the word “or” at the end of paragraph (a). |
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(a) | for “section 550” substitute “sections 535 to 537 of ITTOIA 2005”, and |
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(b) | in paragraph (b)(i) for “Schedule F” substitute “Chapter 3, 5 or 6 of |
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Part 4 of ITTOIA 2005”, and |
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(c) | in paragraph (b) for sub-paragraph (ii) substitute— |
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“(ii) | dividends chargeable under Chapter 4 of Part |
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4 of that Act (if any) or relevant foreign |
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distributions chargeable under Chapter 8 of |
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Part 5 of that Act (if any),”. |
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(8) | In subsection (6) for “section 550” substitute “sections 535 to 537 of ITTOIA |
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(10) | After subsection (7) insert— |
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“(8) | In this section “relevant foreign distribution” means any distribution |
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of a company not resident in the United Kingdom which— |
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(a) | is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, |
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(b) | would be chargeable under Chapter 3 of that Part of that Act |
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if the company were resident in the United Kingdom. |
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(9) | And, for the meaning of “relevant foreign income”, see section |
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4 (1) | Amend section 1B (rates of tax applicable to Schedule F income) as follows. |
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(a) | for paragraphs (a) and (b) substitute— |
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“(a) | income chargeable under Chapter 3 of Part 4 of |
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ITTOIA 2005 (dividends etc. from UK resident |
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companies etc.) (if any), and |
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(b) | dividends chargeable under Chapter 4 of Part 4 of |
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that Act (dividends from non-UK resident |
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companies) (if any) or relevant foreign distributions |
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chargeable under Chapter 8 of Part 5 of that Act |
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(income not otherwise charged) (if any),” and |
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(b) | for “Schedule F”, in the second place where it occurs, substitute |
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(3) | In subsection (2) for “Schedule F”, in both places where it occurs, substitute |
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(4) | After subsection (2) insert— |
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“(3) | In this section “relevant foreign distribution” has the same meaning |
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as in section 1A (see subsection (8) of that section).” |
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(5) | In the side-note for the section for “Schedule F” substitute “distribution”. |
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5 | In section 4 (construction of references in Income Tax Acts to deduction of |
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tax), omit subsection (1B). |
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6 | After section 6(4) (the charge to corporation tax and exclusion of income tax |
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and capital gains tax) insert— |
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“(4A) | In sections 74(1), 79(1), 79A(1), 79B(1), 83A(1), 84(1), 86(1), 86A(2)(a), |
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87(1), (2) and (4), 88, 89, 90(1) and (3), 94(1), 100(2)(b), 101, 102, 401(1), |
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491(10), 577(7)(b), 579(2), 588(3), 589A(8) and 817(2), and in |
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paragraph 5(11) of Schedule 30, “profession” includes vocation.” |
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7 (1) | Amend section 9 (computation of income: application of income tax |
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(2) | After subsection (2) insert— |
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“(2A) | But no income shall be computed, and no assessment shall be made, |
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for purposes of corporation tax under ITTOIA 2005. |
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(2B) | Instead, income shall continue to be computed, and the assessment |
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shall continue to be made, for purposes of corporation tax under |
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Schedules A and D, and the Cases of those Schedules. |
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(2C) | For (but only for) the purpose of continuing to apply for purposes of |
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corporation tax, those Schedules and Cases are treated as if they were |
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still part of income tax law (and therefore applied in accordance with |
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subsection (1) above for purposes of corporation tax).” |
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(3) | In subsection (3)(a)— |
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(a) | for “, D and F,” substitute “and D”, and |
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(b) | omit “, as they apply for purposes of income tax” |
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(4) | In subsection (4) after “Acts” insert “(other than ITTOIA 2005)”. |
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(5) | In subsection (6) omit “60 to 69,”. |
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8 (1) | Amend section 15 (Schedule A) as follows. |
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(a) | in paragraph (b) for “within the charge to income tax under Schedule |
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A” substitute “the profits of a UK property business within the |
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charge to income tax under Chapter 3 of Part 3 of ITTOIA 2005”, and |
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(b) | for “as separate Schedule A businesses” substitute “for the purposes |
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of those charges as separate businesses”. |
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(3) | Before subsection (4) insert— |
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“(3A) | Subsection (1) applies for corporation tax purposes (and does not |
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apply for income tax purposes except so far as necessary to ensure its |
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application for corporation tax purposes by virtue of section 9).” |
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(4) | In subsection (4) at the end insert “and under Chapter 3 of Part 3 of ITTOIA |
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2005 (profits of a property business)”. |
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9 (1) | Amend section 18 (Schedule D) as follows. |
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(2) | After subsection (4) insert— |
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“(4A) | Subsections (1) to (4) apply for corporation tax purposes (and do not |
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apply for income tax purposes except so far as necessary to ensure |
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their application for corporation tax purposes by virtue of section |
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(3) | In subsection (5) at the end insert “and under ITTOIA 2005 (see, in particular, |
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the charge under Chapter 2 of Part 2 of that Act (trade profits))”. |
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10 | Omit section 20 (Schedule F). |
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11 | Omit section 21 (persons chargeable and basis of assessment under Schedule |
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12 (1) | Amend section 21A (computation of amount chargeable under Schedule A) |
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(2) | In subsection (2) omit “sections 112 and 113 of that Act (expenditure in |
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connection with provision of security asset or service);”. |
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(a) | omit “section 82 (interest paid to non-residents),”, and |
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(b) | omit “section 96 (farming and market gardening: relief for |
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13 | In section 21B (application of other rules applicable to Case I of Schedule |
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(b) | after “(post-cessation receipts and expenses, etc)” insert “, with any |
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reference to a trade within the charge to income tax being read as a |
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reference to a UK property business”, and |
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(c) | omit “section 113 (effect for income tax purposes of change in the |
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persons engaged on trade);”. |
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14 | In section 21C (the Schedule A charge and mutual business)— |
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(a) | in subsection (1) after “the charge to” insert “corporation”, and |
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(b) | in subsection (4) from the beginning to “the person who would” |
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substitute “The company to which the profit arises is the company |
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15 (1) | Amend section 30 (expenditure on making sea walls) as follows. |
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(2) | In subsection (1) for “he shall be” substitute “that person shall be”. |
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(3) | In subsection (2) for “he would be” substitute “that person would be”. |
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(4) | After that subsection insert— |
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(a) | the transferor is a company within the charge to corporation |
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tax and the transferee is a person within the charge to income |
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(b) | the transferor is a person within the charge to income tax and |
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the transferee is a company within the charge to corporation |
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| subsection (2) above shall apply only for the purpose of determining |
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the amount of the payment which the company is treated as making |
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in any year of assessment. |
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| For any entitlement of the person within the charge to income tax to |
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a deduction for any of the expenditure, see sections 316 and 318 of |
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ITTOIA 2005 (corresponding income tax provision).” |
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16 | Omit sections 31A and 31B (deductions for expenditure by landlords on |
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17 (1) | Amend section 34 (treatment of premiums etc. as rent) as follows. |
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(2) | In subsection (1) for “the purposes of the Tax Acts” substitute “corporation |
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(a) | for “that other person” substitute “if that other person is a company, |
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(b) | for “tax” substitute “corporation tax”, |
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(c) | for “he” substitute “the company”, and |
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(d) | for “his” substitute “its”. |
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(4) | In subsection (7A) for “chargeable” substitute “accounting”. |
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(a) | for “person” substitute “company”, |
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(b) | for “tax”, wherever it occurs, substitute “corporation tax”, and |
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(c) | for “his” substitute “the company’s”. |
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18 (1) | Amend section 35 (charge on assignment of lease granted at an undervalue) |
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(2) | In subsection (2) for “him in consequence of his” substitute “the assignor in |
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consequence of the assignor’s”. |
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(3) | In subsection (2A)(b) for “chargeable” substitute “accounting”. |
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(4) | In subsection (3) for “tax” substitute “corporation tax”. |
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19 (1) | Amend section 36 (charge on sale of land with right to reconveyance) as |
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(a) | for “him”, in both places where it occurs, substitute “the vendor”, |
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(b) | for “his” substitute “the vendor’s”. |
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(3) | In subsection (2)(b)— |
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(a) | for “tax” substitute “corporation tax”, and |
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(b) | for “him” substitute “the vendor”. |
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(4) | In subsection (3) for “him” substitute “the vendor”. |
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(5) | In subsection (4A)(b) for “chargeable” substitute “accounting”. |
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20 (1) | Amend section 37 (premiums paid etc: deductions from premiums and rent |
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(a) | omit “or” at the end of paragraph (a), |
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(b) | after paragraph (b) insert— |
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“(c) | any amount falls to be treated as a receipt of a UK |
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property business by virtue of any of sections 277 to |
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282 of ITTOIA 2005 (receipts in respect of lease |
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premiums, sums payable instead of rent, for |
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surrender of lease and for variation or waiver of term |
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of lease and assignments), or |
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(d) | any amount would fall to be so treated but for the |
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operation of the rule in section 288 of that Act (the |
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additional calculation rule),”, and |
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(c) | after “this section” insert “and section 37A”. |
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(a) | for “person” substitute “company”, and |
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(b) | for “he” substitute “the company”. |
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(a) | for “person” substitute “company”, and |
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(b) | for “he” substitute “the company”. |
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(a) | for “the person” substitute “a company which is”, and |
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(b) | for “he” substitute “the company”. |
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(6) | In subsection (7)(b) after sub-paragraph (ii) insert— |
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“(iii) | where it arose under Chapter 4 of Part 3 of ITTOIA |
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2005 (profits of property businesses: lease premiums |
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etc.), shall be its receipt period (within the meaning of |
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that Chapter (see section 288(6)).” |
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(7) | In subsection (8) after “section 34(2)” insert “or under section 277 of ITTOIA |
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2005 by virtue of section 278 of that Act (amount treated as lease premium |
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(a) | for “tax” substitute “income tax or corporation tax”, and |
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(b) | at the end insert “or if it has been deducted under the rule in section |
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288 of ITTOIA 2005 (the additional calculation rule) in calculating the |
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amount of a receipt of a property business (within the meaning of |
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that Act) under Chapter 4 of Part 3 of that Act.” |
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“(10) | In the application of this section to Scotland the reference to a lease |
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being granted out of the head lease is to the grant of a sublease of |
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land subject to the head lease.” |
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21 | After section 37 insert— |
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“37A | Section 37(4) and reductions in receipts under ITTOIA 2005 |
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(1) | This section applies if— |
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(a) | in calculating the amount that falls to be treated as a receipt |
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of a UK property business under Chapter 4 of Part 3 of |
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ITTOIA 2005 (“the ITTOIA receipt”), there is a reduction |
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under section 288 of that Act by reference to a taxed receipt, |
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(b) | the taxed receipt is the amount chargeable on the superior |
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interest for the purposes of section 37. |
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(2) | Section 37(4) shall apply for the period in respect of which the |
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ITTOIA receipt arose only if the appropriate fraction of the amount |
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chargeable on the superior interest exceeds the amount of the |
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ITTOIA receipt given by the formula in section 277, 279, 280, 281 or |
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282 of ITTOIA 2005, as the case may be. |
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(3) | Section 37(4) shall then apply as if the amount chargeable on the |
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superior interest were reduced in the proportion which that excess |
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bears to that appropriate fraction. |
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(4) | Subsection (5) applies if— |
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(a) | the ITTOIA receipt is in respect of a lease granted out of the |
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