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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

502

 

(c)   

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

company”, and

(d)   

for “he” substitute “it”.

555   (1)  

Amend section 354 (buildings temporarily out of use) as follows.

      (2)  

In subsection (3)—

5

(a)   

after “as may be made under” insert “section 254 of ITTOIA 2005 or”,

and

(b)   

after “chargeable to tax under” insert “Chapter 18 of Part 2 of ITTOIA

2005 or, as the case may be, under”.

      (3)  

In subsection (5) for “section 113(1)” to the end substitute “section 18 of

10

ITTOIA 2005 or section 337(1) of ICTA (effect of company ceasing to trade

etc).”

556        

In section 390(1) (interpretation of section 389) in the definition of

“premium”—

(a)   

after “corresponds to” insert “—

15

   

(a)”, and

(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

20

calculated by reference to the sum;”.

557   (1)  

Amend section 392 (Schedule A businesses) as follows.

      (2)  

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

business, or a Schedule A business,”.

      (3)  

After that subsection insert—

25

“(2A)   

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

allowance or charge and he was not carrying on a UK property

business at any time in that period, the allowance or charge is to be

given effect by treating him as if he had been carrying on such a

business in that period and as if—

30

(a)   

the allowance were an expense of that business, and

(b)   

the charge were a receipt of that business.”

      (4)  

In subsection (3)—

(a)   

after “the person” insert “is a company within the charge to

corporation tax in respect of the allowance or charge and it”,

35

(b)   

for “him” substitute “the company”, and

(c)   

for “he” substitute “it”.

      (5)  

In the sidenote for “Schedule A” substitute “UK property and Schedule A”.

558        

In section 393B(4) (meaning of “qualifying expenditure”) after “the profits of

a” insert “UK property business or”

40

559   (1)  

Amend section 393T (giving effect to allowances and charges) as follows.

      (2)  

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

business, or a Schedule A business,”.

 

 

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

503

 

      (3)  

After that subsection insert—

“(2A)   

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

allowance or charge and his interest in the flat is not an asset of a UK

property business carried on by him at any time in that period, the

allowance or charge is to be given effect by treating him as if he had

5

been carrying on a UK property business in that period and as if—

(a)   

the allowance were an expense of that business, and

(b)   

the charge were a receipt of that business.”

      (4)  

In subsection (3)—

(a)   

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

10

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

its”,

(b)   

for “him”, in both places where it occurs, substitute “the company”,

and

(c)   

for “he” substitute “it”.

15

560   (1)  

Amend section 406 (reduction where premium relief previously allowed) as

follows.

      (2)  

In subsection (1) for “section 87 of ICTA” substitute “sections 60 to 67 of

ITTOIA 2005 or under sections 87 and 87A of ICTA”.

      (3)  

In subsection (2) for “section 87 of ICTA” substitute “sections 60 to 67 of

20

ITTOIA 2005 or under sections 87 and 87A of ICTA”.

561        

In section 454(1)(c) (qualifying expenditure) after “an election under” insert

“section 194 of ITTOIA 2005 or under”.

562        

In section 455(4) (excluded expenditure) after “goodwill under” insert

“section 194(3) of ITTOIA 2005 or under”.

25

563        

In section 462(3) (disposal values) after “goodwill under” insert “section

194(2) of ITTOIA 2005 or under”.

564        

In section 479(4) (persons having qualifying non-trade expenditure: income

tax) for “taxed under Case VI of Schedule D” substitute “assessed to income

tax”.

30

565        

In section 481(5)(b) (anti-avoidance: limit on qualifying expenditure) after

“in accordance with section” insert “587 of ITTOIA 2005 or section”.

566        

In section 483(c) (meaning of “income from patents”) after “payable under”

insert “section 587, 593 or 594 of ITTOIA 2005 or under”.

567        

In section 488(3)(a) (balancing allowances) for “section 113(1)” to “to trade

35

etc.)” substitute “section 18 of ITTOIA 2005 or section 337(1) of ICTA (effect

of company ceasing to trade etc.)”.

568   (1)  

Amend section 529 (giving effect to allowances and charges) as follows.

      (2)  

In subsection (1) for “a Schedule A business” substitute “a UK property

business, or a Schedule A business,”.

40

      (3)  

After that subsection insert—

“(1A)   

If the person entitled or liable to an allowance or charge for a

chargeable period is within the charge to income tax in respect of the

allowance or charge and he was not carrying on a UK property

 

 

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

504

 

business at any time in that period, the allowance or charge is to be

given effect by treating him as if he had been carrying on such a

business in that period and as if—

(a)   

the allowance were an expense of that business, and

(b)   

the charge were a receipt of that business.”

5

      (4)  

In subsection (2)—

(a)   

for the words from the beginning to “chargeable period” substitute

“If the person entitled or liable to an allowance or charge for a

chargeable period is a company within the charge to corporation tax

in respect of the allowance or charge and it”,

10

(b)   

for “him” substitute “the company”, and

(c)   

for “he” substitute “it”.

569        

In section 536(5)(a) (contributions not made by public bodies and not eligible

for tax relief)—

(a)   

in sub-paragraph (i) for “Schedule A” substitute “property”, and

15

(b)   

in sub-paragraph (v) after “listed in” insert “section 12(4) of ITTOIA

2005 or”.

570        

In section 558(1)(c) (effect of partnership changes) for the words from “result

in” to the end substitute “—

(i)   

involve all of the persons carrying on the relevant

20

activity before the change permanently ceasing to

carry it on, or

(ii)   

result in the relevant activity being treated under

section 18 or 362 of ITTOIA 2005 as permanently

ceasing to be carried on by a company or treated as

25

discontinued under section 337(1) of ICTA

(companies beginning or ceasing to carry on trade

etc.).”

571   (1)  

Amend section 559 (effect of successions) as follows.

      (2)  

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

30

“(b)   

the following condition is met.”

      (3)  

After that subsection insert—

“(1A)   

The condition is that—

(a)   

all of the persons carrying on the relevant activity before the

succession permanently cease to carry it on, or

35

(b)   

the relevant activity is 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.).”

40

572        

In section 577(1) (definitions) in the definition of “property business” after

“means” insert “a UK property business,”.

573   (1)  

Amend Schedule 1 (abbreviations and defined expressions) as follows.

 

 

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

505

 

      (2)  

In Part 1 in the appropriate place insert—

 

“ITTOIA 2005

The Income Tax (Trading and Other

 
  

Income) Act 2005”.

 

      (3)  

In Part 2—

(a)   

in the entry for “ordinary Schedule A business” for “Schedule A”

5

substitute “property”,

(b)   

in the entry for “overseas property business” for “65A(4), 70A(4) and

832(1) of ICTA” substitute “70A(4) and 832(1) of ICTA and Chapter 2

of Part 3 of ITTOIA 2005”, and

(c)   

in the appropriate place insert—

10

 

“UK property business

section 832(1) of ICTA and

 
  

Chapter 2 of Part 3 of

 
  

ITTOIA 2005”.

 

Finance Act 2002 (c. 23)

574        

The Finance Act 2002 is amended as follows.

15

575        

In section 64(1) (adjustment on change of basis) after “to be made for” insert

“corporation”.

576   (1)  

Amend Schedule 16 (community investment tax relief) as follows.

      (2)  

In paragraph 27(2) omit “under Case VI of Schedule D”.

      (3)  

In paragraph 50(3), for “Chapter 1A of Part 15 of the Taxes Act 1988 (see

20

section 660G(1) and (2))” substitute “Chapter 5 of Part 5 of the Income Tax

(Trading and Other Income) Act 2005 (see section 620 of that Act)”.

577   (1)  

Amend Schedule 22 (computation of profits: adjustment of change of basis)

as follows.

      (2)  

In paragraph 2, in item 4 of the first step for “tax purposes” substitute

25

“corporation tax purposes”.

      (3)  

In paragraph 3(2) for “, profession” to the end substitute “is not regarded as

the same if section 337(1) of the Taxes Act 1988 applies (companies

beginning or ceasing to carry on trade).”

      (4)  

For paragraph 4 substitute—

30

“4         

If the amount of the adjustment is positive, it is chargeable to

corporation tax and is treated as receipt of the trade, profession or

vocation arising on the last day of the first period of account for

which the new basis is adopted.”

      (5)  

In paragraph 9—

35

(a)   

in sub-paragraph (1) for “person who is chargeable to tax” substitute

“company which is chargeable to corporation tax”,

(b)   

in sub-paragraph (2)(c) for “the time allowed” substitute “twelve

months of the end of the first accounting period to which the new

basis applies”,

40

 

 

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

506

 

(c)   

omit sub-paragraph (3),

(d)   

in sub-paragraph (4) for “tax” substitute “corporation tax”, and

(e)   

in sub-paragraph (5) for “tax”, in each place where it occurs,

substitute “corporation tax”.

      (6)  

Omit paragraphs 11 and 12.

5

      (7)  

In paragraph 13—

(a)   

in sub-paragraph (1) for “computed” to the end substitute

“computed as if the partnership were a company resident in the

United Kingdom”, and

(b)   

omit sub-paragraphs (3), (4) and (6).

10

      (8)  

Omit paragraph 14.

      (9)  

For paragraph 15 substitute—

“15        

In this Schedule “adjustment charge” means a charge under Part 2

of this Schedule.”

     (10)  

In paragraph 17—

15

(a)   

in sub-paragraph (2) omit paragraph (a), and

(b)   

in sub-paragraph (3) omit “9ZA or” and “personal, trustee or”.

578   (1)  

Amend paragraph 64 of Schedule 25 (transitional provisions concerning

loan relationships in the case of authorised unit trusts and open-ended

investment companies) as follows.

20

      (2)  

At the beginning of sub-paragraph (7) insert “Subject to sub-paragraph (9),”.

      (3)  

After sub-paragraph (8) insert—

    “(9)  

So far as sub-paragraphs (3) to (6) are capable of applying at any

time after 5th April 2005—

(a)   

they have effect as if any reference in them to a relevant

25

discounted security were a reference to a security that is a

deeply discounted security for the purposes of Chapter 8

of Part 4 of the Income Tax (Trading and Other Income)

Act 2005 (profits from deeply discounted securities) (see

430 of that Act), and

30

(b)   

in those sub-paragraphs—

“redeem” means make a disposal, within the

meaning of that Chapter (except by a transfer

within the meaning of that Chapter), or

convert as mentioned in section 437(1)(c) of

35

that Act, and

“transfer” has the same meaning as in that

Chapter.”

579        

In Schedule 29 (gains and losses of a company from intangible fixed assets),

in paragraph 101(3), for “Chapter 1A of Part 15 of the Taxes Act 1988

40

(settlements: liability of settlor) (see section 660G(1) and (2) of that Act)”

substitute “Chapter 5 of Part 5 of the Income Tax (Trading and Other

Income) Act 2005 (see section 620 of that Act)”.

 

 

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

507

 

Proceeds of Crime Act 2002 (c. 29)

580        

The Proceeds of Crime Act 2002 is amended as follows.

581        

In section 319(2) (source of income) for “Case 6 of Schedule D” substitute

“Chapter 8 of Part 5 of the Income Tax (Trading and Other Income) Act

2005”.

5

582   (1)  

Amend Schedule 10 (tax) as follows.

      (2)  

In paragraph 2(7) (introductory) at the end insert “, and “ITTOIA 2005”

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

      (3)  

In paragraph 5 (relevant discounted securities)—

(a)   

for “relevant” substitute “deeply”, and

10

(b)   

for the words from “Schedule 13” to “c.8)” and “that Schedule”

substitute respectively “Chapter 8 of Part 4 of ITTOIA 2005” and

“that Chapter”.

      (4)  

In paragraph 6 (rights to receive amounts stated in certificates of deposit

etc.)—

15

(a)   

after “deposit etc.)” insert “, or a right falling within the definition of

“deposit rights” in section 552(1) of ITTOIA 2005”, and

(b)   

for the words “of that Act”, in the second place where they occur,

substitute “of the Taxes Act 1988 or Chapter 11 of Part 4 of ITTOIA

2005”.

20

      (5)  

In paragraph 8 (futures and options)—

(a)   

for “paragraph 4 of Schedule 5AA to the Taxes Act 1988” substitute

“section 562 of ITTOIA 2005”, and

(b)   

for “that Schedule” substitute “Chapter 12 of Part 4 of that Act”.

      (6)  

In paragraph 11 (trading stock)—

25

(a)   

in sub-paragraph (3) after “1988” insert “or section 173 of ITTOIA

2005” and after “discontinuance” insert “or cessation”, and

(b)   

in sub-paragraph (4) for “that section” substitute “section 100 of the

Taxes Act 1988 or (as the case may be) section 174 of ITTOIA 2005”.

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

30

583        

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

584        

In section 6(5) (exception to charge to tax on employment income for income

of divers and diving supervisors) for the words from “Case I” to “ICTA”

substitute “Part 2 of ITTOIA 2005 (trading income) by virtue of section 15 of

that Act”.

35

585        

In section 61(1) (application of provisions to workers under arrangements

made by intermediaries: interpretation) in the definition of “business” after

“includes a” insert “UK property business or”.

586        

In section 178 (exception for loans where interest qualifies for tax relief)—

(a)   

in paragraph (c)—

40

(i)   

for “under Case I or II of Schedule D” substitute “to tax”, and

(ii)   

after “carried on” insert “wholly or partly in the United

Kingdom”, and

 

 

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

508

 

(b)   

in paragraph (d) for “under Schedule A in respect of a Schedule A

business” substitute “to tax in respect of a UK property business, or

a Schedule A business,”.

587        

In section 180(5) (threshold for benefit of loan to be treated as earnings)—

(a)   

in paragraph (c)—

5

(i)   

for “under Case I or II of Schedule D” substitute “to tax”, and

(ii)   

after “carried on” insert “wholly or partly in the United

Kingdom”, and

(b)   

in paragraph (d) for “under Schedule A in respect of a Schedule A

business” substitute “to tax in respect of a UK property business, or

10

a Schedule A business,”.

588        

In section 189(3)(a) (exception where double charge) for “section 677 of ICTA

(sums paid to settlor otherwise than as income)” substitute “section 633 of

ITTOIA 2005 (capital sums paid to settlor by trustees of settlement)”.

589        

In section 215 for “section 331(1) of ICTA” substitute “section 776(1) of

15

ITTOIA 2005”.

590        

In section 302(4) (exemption of consular employees’ employment income),

in the definition of “reciprocal arrangement”, for “and section 322 of ICTA”

substitute “, sections 646A and 681A of this Act and section 771 of ITTOIA

2005 (relevant foreign income of consular officers and employees)”.

20

591        

After section 325 insert—

“325A   

  Health and employment insurance payments

(1)   

No liability to income tax in respect of employment income arises on

any payment if or to the extent that—

(a)   

were the payment an annual payment falling within Chapter

25

7 of Part 5 of ITTOIA 2005, it would be exempt from income

tax under section 735 of that Act (health and employment

insurance payments), and

(b)   

it meets conditions A and B.

(2)   

Condition A is that the payments are made—

30

(a)   

to a person (“the employee”) who made payments or

contributions in respect of premiums under an insurance

policy which another person took out wholly or partly for the

employee’s benefit, or

(b)   

to the employee’s husband or wife.

35

(3)   

Condition B is that the payments are attributable on a just and

reasonable basis to the payments or contributions in respect of

premiums.”

592        

In section 357(2) (business entertainment and gifts: exception where

employer’s expenses disallowed) after “disallowed under” insert “section 45

40

or 867 of ITTOIA 2005 or under”.

 

 

 
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