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Income Tax (Trading and Other Income) Bill


Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

418

 

174        

In section 431(2) (interpretative provisions relating to insurance companies)

in the definition of “annuity business” for the words “section 580C”

substitute “section 725 of ITTOIA 2005 (immediate needs annuities)”.

175        

In section 431D(3)(b) (meaning of “overseas life assurance business”) after

“Chapter II of Part XIII” insert “or Chapter 9 of Part 4 of ITTOIA 2005”.

5

176        

In section 434 (franked investment income etc.) omit subsection (1A).

177   (1)  

Amend section 437 (general annuity business) as follows.

      (2)  

In subsection (1C)(b)(ii) after “capital elements” insert “and amounts exempt

under section 717 of ITTOIA 2005”.

      (3)  

Omit “and” at the end of subsection (1C)(b).

10

      (4)  

After subsection (1C)(c) insert “and

(d)   

the amounts exempt under section 717 of ITTOIA 2005 shall

be determined in accordance with Chapter 7 of Part 6 of that

Act, but for this purpose—

(i)   

it is immaterial whether or not an annuitant claims

15

any relief to which the annuitant is entitled under that

section; and

(ii)   

where, by virtue of section 718 of that Act, section 717

does not apply to an annuity, the annuity shall be

treated as being exempt to the same extent that it

20

would have been apart from that section.”

178   (1)  

Section 468J (dividend distributions of authorised unit trusts) is amended as

follows.

      (2)  

In subsection (2) for “Tax Acts” substitute “Corporation Tax Acts”.

      (3)  

At the end of subsection (4) insert “(including a dividend treated as paid to

25

a unit holder who is not liable to corporation tax)”.

179   (1)  

Section 468L (interest distributions of authorised unit trusts) is amended as

follows.

      (2)  

In subsection (1A) after “this Chapter” insert “and Chapter 2 of Part 4 of

ITTOIA 2005 (interest)”.

30

      (3)  

In subsection (2) for “Tax Acts” substitute “Corporation Tax Acts”.

      (4)  

At the end of subsection (3) insert “(including a payment of interest treated

as made to a unit holder who is not liable to corporation tax)”.

180   (1)  

Amend section 469 (other unit trusts) as follows.

      (2)  

In subsection (2A) for “section 231(1)” substitute “section 397(1) of ITTOIA

35

2005”.

      (3)  

For subsection (2B) substitute—

“(2B)   

Section 348(4)(a) above and sections 399(2) and (6) and 400(2) and (3)

of ITTOIA 2005 shall not apply where the recipient of the

distribution in question is the trustees of the scheme.”

40

      (4)  

In subsection (3)—

(a)   

after “the Tax Acts” insert “other than ITTOIA 2005”, and

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

419

 

(b)   

at the end insert “(and see Chapter 10 of Part 4 of that Act for their

treatment under that Act)”.

      (5)  

In subsection (9) for “paragraph 7 of Schedule 5AA” substitute “section 568

of ITTOIA 2005”.

181        

In section 472A (trading profits etc. from securities: taxation of amounts

5

taken to reserves)—

(a)   

in subsection (1) for “person” substitute “company”, and

(b)   

in subsection (2) for “person’s” substitute “company’s”.

182        

In section 473(1) and (4) (conversion etc. of securities held as circulating

capital) for “person” substitute “company”.

10

183   (1)  

Amend section 477A (building societies: regulations for deduction of tax) as

follows.

      (2)  

In subsection (1A) for “a qualifying certificate of deposit and other than”

substitute “uncertificated eligible debt security units, a qualifying certificate

of deposit or”.

15

      (3)  

In subsection (4)—

(a)   

for “terminal bonus” substitute “interest”, and

(b)   

for “contractual savings scheme” substitute “SAYE savings

arrangement”.

      (4)  

Omit subsections (5) and (6).

20

      (5)  

In subsection (9) omit the words from “but” to the end of the subsection.

      (6)  

In subsection (10)—

(a)   

after “this section—” insert—

““certified SAYE savings arrangement” has the meaning

given by section 703 of ITTOIA 2005”, and

25

(b)   

at the end insert “and

“uncertificated eligible debt security units” has the same

meaning as in section 349”.

184        

Omit section 480C (relevant deposits: computation of tax on interest).

185   (1)  

Amend section 481 (“deposit-taker”, “deposit” and “relevant deposit”) as

30

follows.

      (2)  

In subsection (1A) for “sections 480A and 480C” substitute “section 480A”.

      (3)  

In subsection (5A)—

(a)   

at the end of paragraph (a) insert “above or an uncertificated right

falling within section 552(1)(c) of ITTOIA 2005”, and

35

(b)   

in paragraph (c)—

(i)   

for “, as defined in section 56(5), has” substitute “or

uncertificated eligible debt security units have”, and

(ii)   

omit “or 480C”.

      (4)  

In subsection (6) omit the word “, 480C”.

40

186   (1)  

Amend section 482 (supplementary provisions) as follows.

      (2)  

In subsection (6)—

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

420

 

(a)   

after “481(5)” insert “and (5A)”,

(b)   

after the definition of “appropriate person” insert—

““certificate of deposit” for corporation tax purposes has

the meaning given in section 56(5) above and for income

tax purposes has the meaning given in section 552(2) of

5

ITTOIA 2005,”

(c)   

in the definition of “qualifying certificate of deposit” for “, as defined

in section 56(5),” substitute “or uncertificated eligible debt security

units”, and

(d)   

after the definition of “qualifying time deposit” insert—

10

““uncertificated eligible debt security units” has the

meaning given in section 552(2) of ITTOIA 2005”.

      (3)  

In subsection (8) for “section 56(5)” substitute “subsection (6) above”.

187   (1)  

Section 486 (industrial and provident societies and co-operative

associations) is amended as follows.

15

      (2)  

In subsection (1)—

(a)   

after “distribution” insert “for the purposes of corporation tax”, and

(b)   

for “the purposes of corporation tax” substitute “those purposes”.

      (3)  

In subsection (4) at the end insert “for the purposes of corporation tax”.

      (4)  

Omit subsection (5).

20

188   (1)  

Amend section 491 (distribution of assets of body corporate carrying on

mutual business) as follows.

      (2)  

In subsection (1) for “any person” substitute “any company”.

      (3)  

In subsection (2) for “the person” substitute “the company”.

      (4)  

In subsection (3)—

25

(a)   

for “the purposes of tax”, wherever it occurs, substitute “the

purposes of corporation tax”,

(b)   

for “the recipient”, wherever it occurs, substitute “the recipient

company”,

(c)   

after “be charged” insert “to corporation tax”, and

30

(d)   

for “chargeable period” substitute “accounting period”.

      (5)  

In subsection (4) omit “113 or”.

      (6)  

Omit subsection (5).

      (7)  

In subsection (10) omit “or vocation”.

189   (1)  

Amend section 492 (treatment of oil extraction activities etc for tax purposes)

35

as follows.

      (2)  

In subsection (1) for “for all purposes of income tax, and for the purposes of

the charge of corporation tax on income,” substitute “for the purposes of the

charge of corporation tax on income”.

      (3)  

In subsection (4)—

40

(a)   

in paragraph (a) after “are treated by virtue of” insert “section 16(1)

of ITTOIA 2005 or”,

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

421

 

(b)   

in paragraph (a) for “the purposes specified in that subsection”

substitute “income tax purposes or (as the case may be) for the

purposes of the charge of corporation tax on income”,

(c)   

in paragraph (b) after “but which, apart from” insert “section 16(1) of

ITTOIA 2005 or”, and

5

(d)   

after “notwithstanding anything in that” insert “section or”.

190        

In section 493(2)(a)(i) (valuation of oil disposed of or appropriated in certain

circumstances) for “falling within section 492(1)(a) or (b)” substitute “falling

within the definition of “oil-related activities” in section 16(2) of ITTOIA

2005 or within section 492(1)(a) or (b) above”.

10

191        

In section 495(2) (regional development grants) for “section 492(1)”

substitute “section 16(1) of ITTOIA 2005 or section 492(1) above”.

192        

In section 496(1)(c) (tariff receipts and tax-exempt tariffing receipts) for

“section 492(1)” substitute “section 16(1) of ITTOIA 2005 or section 492(1)

above”.

15

193        

In section 502(1) (interpretation of Chapter 5), in the definition of “ring fence

trade”—

(a)   

in paragraph (a) for “any of paragraphs (a) to (c) of subsection (1) of

section 492” substitute “the definition of “oil-related activities” in

section 16(2) of ITTOIA 2005 or within section 492(1) above”, and

20

(b)   

in paragraph (b) for “that subsection” substitute “section 16(1) of

ITTOIA 2005 or section 492(1) above”.

194   (1)  

Amend section 503 (letting of furnished holiday accommodation treated as

a trade for certain purposes) as follows.

      (2)  

In subsection (1)—

25

(a)   

for “specified in subsection (2)” substitute “of Chapter 2 of Part 10

(loss relief for corporation tax)”,

(b)   

omit “in the United Kingdom”,

(c)   

after “chargeable to” insert “corporation”, and

(d)   

for “particular person or partnership or body of persons” substitute

30

“particular company or partnership”.

      (3)  

Omit subsections (2) and (3).

      (4)  

In subsection (5)—

(a)   

for “Part X” substitute “Chapter 2 of Part 10”, and

(b)   

after “other provision of the” insert “Corporation”.

35

      (5)  

In the side-note after “certain” insert “corporation tax”.

195   (1)  

Amend section 504 (meaning of the “commercial letting of furnished

accommodation”) as follows.

      (2)  

Omit subsection (4).

      (3)  

In subsection (6)—

40

(a)   

omit “year of assessment or”,

(b)   

for “person” substitute “company”,

(c)   

omit “year or” in each place where it occurs,

(d)   

for “he” substitute “the company”, and

(e)   

for “him” substitute “the company”.

45

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

422

 

      (4)  

In subsection (6A) for “above is—” to the end substitute “above is the period

of two years beginning at the end of the accounting period in which the

accommodation was let.”

      (5)  

In subsection (7)—

(a)   

omit “year of assessment or”, and

5

(b)   

omit “year or” in both places where it occurs.

      (6)  

In subsection (8) omit “year of assessment or”.

      (7)  

In subsection (9)—

(a)   

for “a person” substitute “a company”, and

(b)   

for “he” substitute “it”.

10

196        

After section 504 insert—

“504A   

  Letting of furnished holiday accommodation treated as trade for

certain income tax purposes

(1)   

For the purposes specified in subsection (2)—

(a)   

a UK property business which consists in, or so far as it

15

consists in, the commercial letting of furnished holiday

accommodation is treated as if it were a trade the profits of

which are chargeable to income tax under Part 2 of ITTOIA

2005, and

(b)   

all such lettings made by a particular person or partnership

20

or body of persons are treated as one trade.

   

The “commercial letting of furnished holiday accommodation” has

the same meaning as it has for the purposes of Chapter 6 of Part 3 of

ITTOIA 2005.

(2)   

Subsection (1) applies for the purposes of—

25

(a)   

Chapter 1 of Part 10 (loss relief for income tax),

(b)   

section 833(4)(c) (income regarded as earned income), and

(c)   

section 189(2)(b) of the Finance Act 2004 (income regarded as

relevant UK earnings for pension purposes).

(3)   

Chapter 1 of Part 10 as applied by this section has effect with the

30

following adaptations—

(a)   

no relief is to be given to an individual under section 381

(relief for losses in early years of trade) in respect of a year of

assessment if any of the accommodation in respect of which

the trade is carried on in that year was first let by that person

35

as furnished accommodation more than three years before

the beginning of that year of assessment;

(b)   

section 384 (restrictions on right of set-off) has effect with the

omission of subsections (6) to (8) (which relate to certain

losses attributable to capital allowances);

40

(c)   

section 390 (treatment of interest as loss) has effect as if the

reference to a trade carried on wholly or partly in the United

Kingdom were a reference to the UK property business so far

as it is treated as a trade.

(4)   

If there is a letting of accommodation only part of which is holiday

45

accommodation, such apportionments are to be made for the

purposes of this section as are just and reasonable.

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

423

 

(5)   

Relief is not to be given for the same loss, or the same portion of a

loss, both under a provision of Chapter 1 of Part 10 as applied by this

section and under any other provision of the Income Tax Acts.”

197   (1)  

Amend section 505 (charities: general) as follows.

      (2)  

In subsection (1)—

5

(a)   

in paragraph (a) after “Schedules A and D” insert “, or under Parts 2

and 3 of ITTOIA 2005,”,

(b)   

in paragraph (c)(ii) after “Schedule D” insert “or under Chapter 2, 7,

8 or 10 of Part 4 of ITTOIA 2005 (interest, purchased life annuity

payments, profits from deeply discounted securities and

10

distributions from unauthorised unit trusts), section 579 of that Act

so far as it relates to annual payments (royalties etc. from intellectual

property), Chapter 4 of Part 5 of that Act so far as it relates to annual

payments (certain telecommunication rights: non-trading income) or

Chapter 7 of Part 5 of that Act (annual payments not otherwise

15

charged)”,

(c)   

in paragraph (c)(iia) omit “IV or”,

(d)   

after paragraph (c)(iia) insert—

“(iiaa)   

from tax under Chapter 4 of Part 4 of ITTOIA

2005 (dividends from non-UK resident

20

companies) or from tax under Chapter 8 of

Part 5 of that Act (income not otherwise

charged) so far as it applies to relevant foreign

distributions,”,

(e)   

in paragraph (c)(iib) from “income” to “and” at the end of sub-

25

paragraph (iib) substitute “such dividends as would, in the case of

income tax, be chargeable to tax under Chapter 4 of Part 4 of ITTOIA

2005 or such distributions (other than dividends) as would, in the

case of income tax, be chargeable to tax under Chapter 8 of Part 5 of

that Act so far as it would apply to what would be a relevant foreign

30

distribution,”,

(f)   

in paragraph (c)(iii) for “Schedule F” substitute “Chapter 3 of Part 4

of ITTOIA 2005 (dividends etc. from UK resident companies etc.)”,

(g)   

in paragraph (d) after “Schedule D” insert “or Chapter 2 of Part 4 of

ITTOIA 2005 (interest)”,

35

(h)   

in paragraph (e) after “Schedule D” insert “or Part 2 of ITTOIA 2005

(trading income)”, and

(i)   

in paragraph (f) after “Schedule D” insert “or Part 2 or 5 of ITTOIA

2005 (trading and miscellaneous income)”.

      (3)  

After subsection (1) insert—

40

“(1AA)   

In section (1)(c)(ii)(aa) and (iib) “relevant foreign distribution” means

any distribution of a company not resident in the United Kingdom

which—

(a)   

is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005,

but

45

(b)   

would be chargeable under Chapter 3 of that Part of that Act

if the company were resident in the United Kingdom.”

      (4)  

In subsection (2) after “chargeable to”, in the second place where it occurs,

insert “income tax under Chapter 7 of Part 5 of ITTOIA 2005 (annual

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

424

 

payments not otherwise charged) so far as it does not apply to relevant

foreign income and shall be chargeable to corporation”.

198        

In section 512(1) (exemptions for Atomic Energy Authority and National

Radiological Protection Board)—

(a)   

in paragraph (a) after “under” insert “Part 3 of ITTOIA 2005 so far as

5

it relates to the profits of a UK property business and under”,

(b)   

in paragraph (b)—

(i)   

after “under” insert “ITTOIA 2005 and”, and

(ii)   

after “dividends” insert “or income within Chapter 10 of Part

4 of ITTOIA 2005 (distributions from unauthorised unit

10

trusts)”, and

(c)   

in paragraph (c) for “Schedule F” substitute “Chapter 3 of Part 4 of

ITTOIA 2005 (dividends etc. from UK resident companies etc.)”.

199        

Omit section 514 (funds for reducing the national debt).

200   (1)  

Amend section 524 (taxation of receipts from sale of patent rights) as follows.

15

      (2)  

In subsection (1)—

(a)   

for “person”, “he” and “him” substitute “company”, “the company”

and “it” respectively,

(b)   

for “tax” substitute “corporation tax”, and

(c)   

for “chargeable”, in both places where it occurs, substitute

20

“accounting”.

      (3)  

In subsection (2)—

(a)   

for “person” substitute “company”,

(b)   

after “charged to”, in both places where it occurs, insert

“corporation”, and

25

(c)   

for “chargeable” substitute “accounting”.

      (4)  

In subsection (2A)—

(a)   

omit paragraph (a), and

(b)   

in paragraph (b) omit “in the case of an election for the purposes of

corporation tax,”.

30

      (5)  

In subsection (3)—

(a)   

for the words from the beginning to “in the United Kingdom”

substitute “Where a relevant non-resident company”, and

(b)   

in paragraph (a), for “he shall be chargeable to tax” substitute “the

company shall be chargeable to corporation tax”.

35

      (6)  

Omit subsection (4).

      (7)  

For subsection (5) substitute—

“(5)   

In subsection (3) above “relevant non-resident company” means a

company not resident in the United Kingdom which would be

within the charge to corporation tax in respect of any proceeds of the

40

sale of the patent rights not consisting of a capital sum.”

      (8)  

In subsection (6) omit “subsection (4) shall not apply, but”.

      (9)  

In subsection (7)—

(a)   

for “person” substitute “company”,

 

 

 
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