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Income Tax (Trading and Other Income) Bill


Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

495

 

      (4)  

For subsection (5) substitute—

“(5)   

In this section—

“qualifying income” has the same meaning as in section 628 of

ITTOIA 2005; and

“resident”, in relation to the trustees of a trust, shall be

5

construed in accordance with section 110 of the Finance Act

1989.”

512        

Omit section 45 (loans to charities).

513   (1)  

Amend section 46 (exemption for small trades etc.) as follows.

      (2)  

In subsection (1) for the words from the beginning to “shall be granted,”

10

substitute—

“(1)   

Subject to subsections (2) and (2A) below, exemption—

(a)   

from income tax—

(i)   

under Part 2 of ITTOIA 2005 in respect of a trade

carried on wholly or partly in the United Kingdom, or

15

(ii)   

under or by virtue of any provision to which section

836B of the Taxes Act 1988 applies, or

(b)   

from corporation tax under Case I or VI of Schedule D,

   

shall be granted”.

      (3)  

For subsection (2) substitute—

20

“(2)   

Exemption shall not be granted under subsection (1) above in respect

of income which is chargeable to—

(a)   

income tax under or by virtue of any provision to which

section 836B of the Taxes Act 1988 applies, or

(b)   

corporation tax under Case VI of Schedule D,

25

   

by virtue of any of the provisions mentioned in subsection (2A).

(2A)   

The provisions are—

(a)   

sections 214, 547(1)(b), 703, 776, 788, 790 or 804 of the Taxes

Act 1988;

(b)   

paragraph 52(4) of Schedule 18 to the Finance Act 1998;

30

(c)   

Chapter 9 of Part 4, and Chapter 5 of Part 5, of ITTOIA 2005;

and

(d)   

any other enactment specified in an order made by the

Treasury.”

      (4)  

In subsection (6), in the definition of “income”—

35

(a)   

after “means” insert “—

(a)   

any profits or other income or gains —

(i)   

which are chargeable to income tax under Part

2 of ITTOIA 2005 in respect of a trade carried

on wholly or partly in the United Kingdom, or

40

(ii)   

which are chargeable to income tax under or

by virtue of any provision to which section

836B of the Taxes Act 1988 applies,

   

and which (in either case) are not, apart from this

section, exempted from income tax chargeable under

45

or by virtue of that Part or provision, or

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

496

 

(b)   

”,   

(b)   

after “chargeable to” insert “corporation”.

514        

Omit section 84 (exemption of payments under New Deal 50plus).

515        

Omit section 85 (exemption of payments under Employment Zones

programmes).

5

516        

Omit section 87 (treatment of certain telecommunication rights).

517        

In section 143(2) (power to provide incentives to use electronic

communications) for “purposes of the Tax Acts” substitute “corporation tax

purposes”.

518        

In section 155 (interpretation) at the end insert “and “ITTOIA 2005” means

10

the Income Tax (Trading and Other Income) Act 2005”.

519        

In Schedule 12 (provision of services through an intermediary), in

paragraphs 17(1) and 18(1), for “tax purposes” substitute “corporation tax

purposes”.

520        

In Schedule 15 (the corporate venturing scheme), in paragraph 99(3), for

15

“Chapter 1A of Part XV of the Taxes Act 1988 (see section 660G(1) and (2))”

substitute “Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)”.

521        

In Schedule 22 (tonnage tax), in paragraph 144(3), for “Chapter 1A of Part XV

of the Taxes Act 1988 (see section 660G(1) and (2) of that Act)” substitute

“Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)”.

20

522        

Omit Schedule 23 (treatment of certain telecommunication rights).

Capital Allowances Act 2001 (c.2)

523        

The Capital Allowances Act 2001 is amended as follows.

524        

In section 4 (capital expenditure) for subsection (5) substitute—

“(5)   

Subsection (4) does not apply to any expenditure or sum in the case

25

of which a deduction of income tax falls or may fall to be so made as

a result of section 595(2) of ITTOIA 2005 or section 524(3)(b) of ICTA

(receipts from sale of patent rights by person not resident in the UK:

income and corporation tax).”

525   (1)  

Amend section 15 (qualifying activities) as follows.

30

      (2)  

In subsection (1)—

(a)   

in paragraph (b) for “Schedule A” substitute “property”,

(b)   

in paragraph (f) after “listed in” insert “section 12(4) of ITTOIA 2005

or”.

      (3)  

In subsection (3)(a) for “Schedule A” substitute “property”.

35

526   (1)  

Amend section 16 (ordinary Schedule A businesses) as follows.

      (2)  

For ““ordinary Schedule A” substitute ““ordinary property”.

      (3)  

For “means a Schedule A business” substitute “means a UK property

business, or a Schedule A business,”.

      (4)  

In the side-note for “Schedule A” substitute “property”.

40

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

497

 

527   (1)  

Amend section 17 (furnished holiday lettings businesses) as follows.

      (2)  

In subsection (1) for “a Schedule A business in so far” to the end substitute

“a UK property business, or a Schedule A business, which consists in, or so

far as it consists in, the commercial letting of furnished holiday

accommodation”.

5

      (3)  

For subsection (3) substitute—

“(3)   

For the purposes of income tax 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.

   

For the purposes of corporation tax the “commercial letting of

10

furnished holiday accommodation” has the meaning given by

section 504 of ICTA.”

528        

In section 20(1) (employments and offices) for “section 314 of ICTA”

substitute “section 15 of ITTOIA 2005”.

529        

In section 23(2) (expenditure unaffected by sections 21 and 22) before “40D”

15

insert “143 of ITTOIA 2005 or section”.

530        

In section 28(2) (thermal insulation of industrial buildings) for “Schedule A”

substitute “property”.

531        

In section 33(8)(b) (personal security) for “Schedule A” substitute

“property”.

20

532        

In section 35(1)(a) (expenditure on plant or machinery for use in dwelling-

house not qualifying expenditure in certain cases) for “Schedule A”

substitute “property”.

533        

In section 38(a) (production of animals etc)—

(a)   

after “to which” insert “section 30 or Chapter 8 of Part 2 of ITTOIA

25

2005 or”, and

(b)   

after “purposes of” insert “Part 2 of ITTOIA 2005 or”,

534   (1)  

Amend section 63 (cases in which disposal value is nil) as follows.

      (2)  

In subsection (2)(c) after “within the meaning of” insert “section 110 of

ITTOIA 2005 or”.

30

      (3)  

In subsection (3)(b) for “Schedule A” substitute “property”.

      (4)  

In subsection (4) after “to be read with” insert “section 109 of ITTOIA 2005

and”.

535   (1)  

Amend section 106 (the designated period) as follows.

      (2)  

In subsection (3)(b) for the words from “the qualifying activity” to the end

35

substitute “—

(i)   

there was a change in the persons carrying on the

qualifying activity which did not involve all of the

persons carrying on that activity before the change

permanently ceasing to carry it on, or

40

(ii)   

the qualifying activity carried on by the person

making the disposal was treated as continuing under

section 114(1) of ICTA (effect of partnership changes

involving companies).”

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

498

 

      (3)  

Omit subsection (4).

536   (1)  

Amend section 108 (effect of disposal to connected person on overseas

leasing pool) as follows.

      (2)  

In subsection (1) for paragraph (b) and the word “and” at the end of that

paragraph substitute—

5

“(b)   

the disposal is one on the occasion of which—

(i)   

there was a change in the persons carrying on the

qualifying activity which involved all of the persons

carrying on that activity before the change

permanently ceasing to carry it on, or

10

(ii)   

the qualifying activity carried on by the person

making the disposal was not treated as continuing

under section 114(1) or 343(2) of ICTA (effect of

partnership changes involving companies or of

company reconstructions), and”.

15

      (3)  

Omit subsection (4).

537   (1)  

Amend section 112 (excess allowances: connected persons) as follows.

      (2)  

In subsection (1) for paragraph (b) and the word “and” at the end of that

paragraph substitute—

“(b)   

the transaction (or each of the transactions) is one—

20

(i)   

which involved all of the persons carrying on the

qualifying activity before the transaction

permanently ceasing to carry it on, or

(ii)   

in respect of which the qualifying activity carried on

by the person making the disposal was not treated as

25

continuing under section 114(1) or 343(2) of ICTA

(effect of partnership changes involving companies or

of company reconstructions), and”.

      (3)  

Omit subsection (5).

538   (1)  

Amend section 115 (prohibited allowances: connected persons) as follows.

30

      (2)  

In subsection (1) for paragraph (c) and the word “and” at the end of that

paragraph substitute—

“(c)   

the transaction (or each of the transactions) is one—

(i)   

which involved all of the persons carrying on the

qualifying activity before the transaction

35

permanently ceasing to carry it on, or

(ii)   

in respect of which the qualifying activity carried on

by the person making the disposal was not treated as

continuing under section 114(1) or 343(2) of ICTA

(effect of partnership changes involving companies or

40

of company reconstructions), and”.

      (3)  

Omit subsection (3).

539   (1)  

Amend section 122 (short-term leasing by buyer, lessee etc) as follows.

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

499

 

      (2)  

In subsection (2) for paragraph (c) substitute—

“(c)   

a person who acquired the plant or machinery from X as a

result of a disposal on the occasion of which, or two or more

disposals on the occasion of each of which—

(i)   

there was a change in the persons carrying on the

5

qualifying activity which did not involve all of the

persons carrying on that activity before the change

permanently ceasing to carry it on, or

(ii)   

the qualifying activity carried on by the person

making the disposal was treated as continuing under

10

section 114(1) of ICTA (effect of partnership changes

involving companies);”.

      (3)  

Omit subsection (3).

540   (1)  

Amend section 125 (other qualifying purposes) as follows.

      (2)  

In subsection (3) for paragraph (c) substitute—

15

“(c)   

a person who acquired the plant or machinery from X as a

result of a disposal on the occasion of which, or two or more

disposals on the occasion of each of which—

(i)   

there was a change in the persons carrying on the

qualifying activity which did not involve all of the

20

persons carrying on that activity before the change

permanently ceasing to carry it on, or

(ii)   

the qualifying activity carried on by the person

making the disposal was treated as continuing under

section 114(1) of ICTA (effect of partnership changes

25

involving companies).”

      (3)  

Omit subsection (5).

541        

In section 154(3) (further registration requirement) for paragraph (b)

substitute—

“(b)   

the only changes in the persons carrying it on between the

30

time that B does so and the time that A or a person connected

with A does so are changes—

(i)   

which do not involve all of the persons carrying it on

before the changes permanently ceasing to carry it on,

or

35

(ii)   

in respect of which the qualifying activity is treated as

continuing under section 343(2) of ICTA.”

542        

In section 155(1) (changes in the persons carrying on qualifying activity) for

paragraph (b) substitute— 

“(b)   

the only changes in the persons carrying on the qualifying

40

activity since the shipowner carried it on are changes—

(i)   

which do not involve all of the persons carrying it on

before the changes permanently ceasing to carry it on,

or

(ii)   

in respect of which the qualifying activity is treated as

45

continuing under section 343(2) of ICTA.”

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

500

 

543        

In section 156 (connected persons) for subsection (2) substitute—

“(2)   

The condition is that the only changes in the persons carrying on the

qualifying activity since A carried it on are changes—

(a)   

which do not involve all of the persons carrying it on before

the changes permanently ceasing to carry it on, or

5

(b)   

in respect of which the qualifying activity is treated as

continuing under section 343(2) of ICTA.”

544        

In section 162(2) (ring fence trade a separate qualifying activity)—

(a)   

in paragraph (a), after “fall within” insert “the definition of “oil-

related activities” in section 16(2) of ITTOIA 2005 or within”, and

10

(b)   

in paragraph (b), after “as a result of” insert “section 16(1) of ITTOIA

2005 or”.

545        

In section 248 (ordinary Schedule A businesses)—

(a)   

for “Schedule A” substitute “property”, and

(b)   

in the side-note for “Schedule A” substitute “property”.

15

546        

In section 252 (mines, transport undertakings etc)—

(a)   

after “is a concern listed in” insert “section 12(4) of ITTOIA 2005 or”,

and

(b)   

after “the profits of the concern under” insert “Chapter 2 of Part 2 of

ITTOIA 2005 or, as the case may be, under”.

20

547        

In section 258(4) (special leasing: income tax) for “taxed under Case VI of

Schedule D” substitute “assessed to income tax”.

548   (1)  

Amend section 263 (qualifying activities carried on in partnership) as

follows.

      (2)  

In subsection (1) for paragraph (c) substitute—

25

“(c)   

the following condition is met.”

      (3)  

After that subsection insert—

“(1A)   

The condition is that—

(a)   

the change does not involve all of the partners permanently

ceasing to carry on the qualifying activity, or

30

(b)   

the change does not result in the qualifying activity being

treated under section 18 or 362 of ITTOIA 2005 as

permanently ceasing to be carried on by a company or treated

as discontinued under section 337(1) of ICTA (companies

beginning or ceasing to carry on trade etc.).”

35

549   (1)  

Amend section 265 (successions: general) as follows.

      (2)  

In subsection (1) for paragraph (b) substitute—

“(b)   

the following condition is met.”

      (3)  

After that subsection insert—

“(1A)   

The condition is that—

40

(a)   

all of the persons carrying on the qualifying activity before

the succession permanently cease to carry it on, or

(b)   

the qualifying activity is treated under section 18 or 362 of

ITTOIA 2005 as permanently ceasing to be carried on by a

 

 

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments

501

 

company or treated as discontinued under section 337(1) of

ICTA (companies beginning or ceasing to carry on trade

etc.).”

550        

In 268(1) (successions by beneficiaries) for paragraph (b) and the word “and”

at the end of that paragraph substitute—

5

“(b)   

all of the persons carrying on the qualifying activity before

the succession permanently cease to carry it on, and”.

551        

In section 282 (buildings outside the United Kingdom) for “applicable to

Case I of Schedule D” substitute “that apply in calculating trade profits for

income tax purposes or that apply to Case I of Schedule D for corporation

10

tax purposes”.

552        

In section 326(1) (interpretation of section 325) in the definition of

“premium”—

(a)   

after “corresponds to” insert “—

   

(a)”, and

15

(b)   

at end insert “, or

(b)   

an amount brought into account as a receipt in

calculating the profits of a UK property business

under sections 277 to 281 of ITTOIA 2005 that is

calculated by reference to the sum;”.

20

553        

In section 331(1)(b) (capital value provisions: interpretation)—

(a)   

after “corresponds to” insert “—

   

(i)”, and

(b)   

at end insert “, or

(ii)   

an amount brought into account as a receipt in

25

calculating the profits of a UK property

business under sections 277 to 281 of ITTOIA

2005 that is calculated by reference to the

sum.”

554   (1)  

Amend section 353 (lessors and licensors) as follows.

30

      (2)  

In subsection (2) for “a Schedule A business” substitute “a UK property

business, or a Schedule A business,”.

      (3)  

After subsection (3) insert—

“(3A)   

If the person is within the charge to income tax in respect of the

allowance or charge and his interest in the building is not an asset of

35

any property business carried on by him at any time in the relevant

period, the allowance or charge is to be given effect by treating him

as if he had been carrying on a UK property business in that period

and as if—

(a)   

the allowance were an expense of that business, and

40

(b)   

the charge were a receipt of that business.”

      (4)  

In subsection (4)—

(a)   

for “the person’s” substitute “the person is a company within the

charge to corporation tax in respect of the allowance or charge and

its”,

45

(b)   

for “him”, in the first place where it occurs, substitute “it”,

 

 

 
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