Income Tax (Trading and Other Income) Bill

House of Commons

Session 2004 - 05
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Other Bills before Parliament

Income Tax (Trading and Other Income) Bill

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
516

      (8)
In paragraph 25—
(a)
in the heading, for “schemes” substitute “arrangements”,
(b)
in sub-paragraph (1), for “CCS scheme” substitute “the approved
savings arrangement”, and
(c)
in sub-paragraph (3)(a), for “CCS schemes linked to approved SAYE
5
option schemes” substitute “certified SAYE savings arrangements
linked to approved SAYE option schemes”.
      (9)
In paragraph 26—
(a)
in the heading, for “scheme” substitute “arrangement”,
(b)
in sub-paragraph (1), for “CCS scheme” substitute “certified SAYE
10
savings arrangement”, and
(c)
in sub-paragraph (2), for “scheme” substitute “arrangement”.
     (10)
In paragraph 30(3), for “the CCS scheme” substitute “the approved savings
arrangement”.
     (11)
In paragraph 48(1)—
15
(a)
for “certified contractual savings scheme” substitute “certified SAYE
savings arrangement”, and
(b)
for “section 326(2) to (6) of ICTA” substitute “section 703(1) of
ITTOIA 2005”.
     (12)
In paragraph 49, for “certified contractual savings scheme (CCS scheme)”
20
substitute “certified SAYE savings arrangement”.
618
In Schedule 4 (approved CSOP schemes), in paragraph 12(3), for “Chapter
1A of Part 15 of ICTA (see section 660G(1) and (2))” substitute “Chapter 5 of
Part 5 of ITTOIA 2005 (see section 620 of that Act)”.
619   (1)
Amend Schedule 5 (enterprise management incentives) as follows.
25
      (2)
In paragraph 27(3)(a), for “under Case I or II of Schedule D” substitute “as
the profits of a trade, profession or vocation carried on wholly or partly in
the United Kingdom”.
      (3)
In paragraph 31(3), for “Chapter 1A of Part 15 of ICTA (see section 660G(1)
and (2))” substitute “Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of
30
that Act)”.
Finance Act 2003 (c.14)
620
The Finance Act 2003 is amended as follows.
621
In section 151(2) (non-resident companies: extent of charge to income tax)—
(a)
for paragraph (a) substitute—
35
“(a)
income (other than relevant foreign income)
chargeable to tax under—
(i)
Chapter 2, 7, 8, 10 or 11 of Part 4 of the Income
Tax (Trading and Other Income) Act 2005
(interest, purchased life annuity payments,
40
profits from deeply discounted securities,
distributions from unauthorised unit trusts
and transactions in deposits),

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
517

(ii)
section 579 of that Act so far as it relates to
annual payments (royalties etc. from
intellectual property),
(iii)
Chapter 4 of Part 5 of that Act so far as it
relates to annual payments (certain
5
telecommunication rights: non-trading
income), or
(iv)
Chapter 7 of Part 5 of that Act (annual
payments not otherwise charged),
(aa)
income chargeable to tax under Chapter 3 of Part 4 of
10
that Act (dividends etc. from UK resident companies
etc.),”, and
(b)
omit paragraph (b).
622
Omit section 176 (foster carers).
623   (1)
Amend Schedule 24 (restriction of deductions for employee benefit
15
contributions) as follows.
      (2)
In paragraph 1—
(a)
in sub-paragraph (1)(a) for “tax purposes” substitute “corporation
tax purposes”, and
(b)
in sub-paragraph (2)(a) for “he” substitute “the employer”.
20
      (3)
In paragraph 3(a) for “tax purposes” substitute “corporation tax purposes”.
      (4)
In paragraph 9(1) omit the definition of “for tax purposes”.
624
In Schedule 34 (policies of life insurance etc: miscellaneous amendments), in
paragraph 15(1), after “1988” insert “or Chapter 9 of Part 4 of the Income Tax
(Trading and Other Income) Act 2005”.
25
625
Omit Schedule 36 (foster carers).
Courts Act 2003 (c. 39)
626
In section 101(4)(a) of the Courts Act 2003 (bankruptcy of individuals with
rights to receive periodical payments) for “section 329AA of the Income and
Corporation Taxes Act 1988” substitute “section 731 of the Income Tax
30
(Trading and Other Income) Act 2005”.
Child Trust Funds Act 2004 (c. 6)
627
In section 14(1) of the Child Trust Funds Act 2004 (insurance companies and
friendly societies) for “section 333 business” substitute “plan business”.
Finance Act 2004 (c. 12)
35
628
The Finance Act 2004 is amended as follows.
629
In section 71(3)(b) (collection and recovery of sums to be deducted:
construction industry scheme) for “any tax purposes” substitute “any
corporation tax purpose (but see also sections 54 and 869 of the Income Tax
(Trading and Other Income) Act 2005 for corresponding rule for income tax
40
purposes)”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
518

630
Omit section 97 (exemption from income tax for certain interest and royalty
payments: introductory).
631
Omit section 98 (exemption from income tax for certain interest and royalty
payments).
632
Omit section 99 (permanent establishments and “25% associates”).
5
633
Omit section 100 (interest payments: exemption notices).
634   (1)
Amend section 101 (payment of royalties without deduction at source) as
follows.
      (2)
In subsection (1) for “section 98” substitute “section 758 (exemption from
income tax for certain interest and royalty payments) of the Income Tax
10
(Trading and Other Income) Act 2005”.
      (3)
In each of subsections (2) and (3) for “section 98” substitute “section 758 of
the Income Tax (Trading and Other Income) Act 2005”.
      (4)
In subsection (5)—
(a)
in paragraph (a) for “section 98” substitute “section 758 of the Income
15
Tax (Trading and Other Income) Act 2005”, and
(b)
in paragraph (b) for “Conditions 1 to 3 in section 98” substitute
“conditions A to C in that section”.
      (5)
After subsection (7) insert—
“(8)
In a case where section 763 of the Income Tax (Trading and Other
20
Income) Act 2005 (special relationships) applies, this section has
effect in relation to only so much of the payment as does not exceed
the arm’s length amount (within the meaning of that section).
(9)
Expressions used in this section and in sections 757 to 767 of the
Income Tax (Trading and Other Income) Act 2005 have the same
25
meaning in this section as in those sections.”
635
In section 102 (claim for tax deducted at source from exempt interest or
royalty payments) for “section 98” substitute “section 758 of the Income Tax
(Trading and Other Income) Act 2005”.
636
Omit section 103 (special relationships).
30
637
Omit section 104 (anti-avoidance).
638
Omit section 106 (transitional provision).
639
In section 119(4) (individuals benefited by film relief) for “, the individual
shall” to the end substitute “—
(a)
the individual shall be treated as receiving at the time of that
35
event an amount of income equal to the chargeable amount;
(b)
that income (which shall not be treated as profits of the trade)
shall be chargeable to income tax for the year of assessment
in which the event occurs; and
(c)
the individual shall be liable for any tax so chargeable.”
40
640
In section 123(1) (meaning of “film-related loss”) for “any of the following”
to the end substitute “any provision of Chapter 9 of Part 2 of the Income Tax
(Trading and Other Income) Act 2005.”

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
519

641
In section 127(2) (losses derived from exploiting licence: individuals in
partnership (charge to income tax)) for “, so much of” to the end substitute
“—
(a)
the individual shall be treated as receiving in that year of
assessment an amount of income equal to so much of the total
5
consideration as does not exceed the chargeable amount;
(b)
that income (which shall not be treated as profits of the trade)
shall be chargeable to income tax for that year of assessment;
and
(c)
the individual shall be liable for any tax so chargeable.”
10
642   (1)
Amend section 130 (“A significant amount of time”) as follows.
      (2)
In subsection (3) for “sections 60 to 63” to the end substitute “Chapter 15 of
Part 2 of the Income Tax (Trading and Other Income) Act 2005 as applied by
section 853 of that Act.”
      (3)
In subsection (4) for “section 61(1)” substitute “section 199(1)”.
15
643
In section 186(1)(b) (scheme investments: income) for “which would” to the
end substitute “which are not relevant foreign income and which would
otherwise be chargeable to income tax under Chapter 8 of Part 5 of ITTOIA
2005 (income not otherwise charged).”
644   (1)
Amend section 189(2) (meaning of “relevant UK earnings”) as follows.
20
      (2)
In paragraph (b) for “Schedule D” substitute “Part 2 of ITTOIA 2005”.
      (3)
For paragraph (c) substitute—
“(c)
income to which section 833(5B) of ICTA (patent income)
applies.”
645
In section 196(2) (relief for employers in respect of contributions paid) after
25
“the purposes of” insert “Part 2 of ITTOIA 2005 (trading income) or”.
646
In section 197(10)(a) (spreading relief) after “charged under” insert “Part 2 of
ITTOIA 2005 (trading income) or”.
647
In section 199(2)(a) (deemed contributions) at the beginning insert “Part 2 of
ITTOIA 2005 (trading income) or”.
30
648
In section 200(a) (no other relief for employers in connection with
contributions) after “the purposes of” insert “Part 2 of ITTOIA 2005 (trading
income) or”.
649   (1)
Amend section 246 (restriction of deduction for non-contributory provision)
as follows.
35
      (2)
In subsection (2)(a) after “the purposes of” insert “Part 2 of ITTOIA 2005
(trading income) or”.
      (3)
In subsection (3)(a) after “charged under” insert “Part 2 of ITTOIA 2005
(trading income) or”.
650   (1)
Amend section 249 of FA 2004 (amendments of ITEPA 2003) as follows.
40
      (2)
In subsection (3), in subsection (4) of the inserted section 393B—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
520

(a)
for paragraph (a) substitute—
“(a)
an excepted group life policy as defined in section 480
of ITTOIA 2005,”, and
(b)
in paragraph (b) for the words from “condition 1” to the end of the
paragraph substitute “—
5
(i)
condition A in section 481 of that Act would
be met if paragraph (a) in that condition
referred to the death, in any circumstances or
except in specified circumstances, of that
individual (rather than the death in any
10
circumstances of each of the individuals
insured under the policy) and if the condition
did not include paragraph (b), and
(ii)
conditions C and D in that section and
conditions A and C in section 482 of that Act
15
are met, or”.
      (3)
In subsection (8), in the inserted section 395 of ITEPA 2003, for “Case VI of
Schedule D” substitute “subsection (2) of that section”.
651
In section 280(1) (abbreviations and general index for Part 4) omit the “and”
before the definition of “ITEPA 2003” and after that definition insert “and
20
“ITTOIA 2005” means the Income Tax (Trading and Other
Income Act) 2005.”
652   (1)
Amend Schedule 15 (charge to income tax on benefit received by former
owner of property) as follows.
      (2)
In paragraph 1 (introductory) insert in the appropriate place—
25
““ITTOIA 2005” means the Income Tax (Trading and Other
Income Act) 2005;”.
      (3)
In paragraph 8 (intangible property comprised in settlement where settlor
retains an interest)—
(a)
in sub-paragraph (1)(a)—
30
(i)
for “section 660A of the Taxes Act 1988” substitute “section
624 of ITTOIA 2005”, and
(ii)
for “Part 15” substitute “Chapter 5 of Part 5”, and
(b)
in sub-paragraph (1)(b) for “subsection (2) of that section” substitute
“section 625(1) of ITTOIA 2005 (settlor’s retained interest)”.
35
      (4)
In paragraph 9(1) (intangible property comprised in settlement where settlor
retains an interest), in the definition of “T”—
(a)
in paragraph (a), for “section 547 of the Taxes Act 1988” substitute
“section 461 of ITTOIA 2005”,
(b)
in paragraph (b) for “section 660A of that Act” substitute “section 624
40
of that Act”, and
(c)
in paragraph (c) for “that Act” substitute “the Taxes Act 1988”.
      (5)
In paragraph 22(3)(b) (election for application of inheritance tax provisions)
for “section 660A of the Taxes Act 1988” substitute “section 624 of ITTOIA
2005”.
45
653
In paragraph 1(4) and (6) of Schedule 24, for the words from “(and” to “have”
substitute “has”.

Income Tax (Trading and Other Income) Bill
Schedule 2 — Transitionals and savings etc.
Part 1 — General provisions
521

654
In paragraph 12 of Schedule 35 (pension schemes etc: minor and
consequential amendments) for the words from “for” to the end substitute
“for the words from the beginning to “, if the claimant” substitute “Subject to
subsection (2) below, section 274 of this Act and sections 192 to 194 of the
Finance Act 2004, if the claimant”.”
5
655   (1)
Amend Schedule 36 (pension schemes etc: transitional provisions and
savings) as follows.
      (2)
In paragraph 41(a) (employers’ contributions relieved before 6th April 2006)
after “the purposes of” insert “Part 2 of ITTOIA 2005 (trading income) or”.
      (3)
In paragraph 53(2)(b) (benefits taxable under Chapter 2 of Part 6 of ITEPA
10
2003: contributions taxed pre-commencement) for “to tax under Case VI of
Schedule D by virtue of” substitute “to income tax under subsection (2) of”.
Pensions Act 2004 (c. 35)
656
The Pensions Act 2004 is amended as follows.
657
In Schedule 3 (restricted information held by the Regulator: certain
15
permitted disclosures to facilitate exercise of functions), in the second
column, in the entry relating to the Commissioners of Inland Revenue or
their officers—
(a)
omit the “or” before paragraph (e), and
(b)
at the end of that paragraph insert “or
20
(f)
the Income Tax (Trading and Other
Income) Act 2005 (so far as relating to
functions previously exercised under the
Income and Corporation Taxes Act 1988).”
658
In Schedule 8 (restricted information held by the Board: certain permitted
25
disclosures to facilitate exercise of functions), in the second column, in the
entry relating to the Commissioners of Inland Revenue or their officers—
(a)
omit the “or” before paragraph (e), and
(b)
at the end of that paragraph insert “or
(f)
the Income Tax (Trading and Other
30
Income) Act 2005 (so far as relating to
functions previously exercised under the
Income and Corporation Taxes Act 1988).”
Schedule 2
Section 883

Transitionals and savings etc.
35
Part 1
General provisions
Continuity of the law: general
1
The repeal of provisions and their enactment in a rewritten form by this Act
does not affect the continuity of the law.
40

Income Tax (Trading and Other Income) Bill
Schedule 2 — Transitionals and savings etc.
Part 1 — General provisions
522

2
Paragraph 1 does not apply to any change made by this Act in the effect of
the law.
3
Any subordinate legislation or other thing which—
(a)
has been made or done, or has effect as if made or done, under or for
the purposes of a superseded enactment so far as it applied for
5
relevant tax purposes, and
(b)
is in force or effective immediately before the commencement of the
corresponding rewritten provision,

has effect after that commencement as if made or done under or for the
purposes of the rewritten provision.
10
4     (1)
Any reference (express or implied) in this Act, another enactment or an
instrument or document to a rewritten provision is to be read as including,
in relation to times, circumstances or purposes in relation to which any
corresponding superseded enactment had effect for relevant tax purposes, a
reference to the superseded enactment so far as applying for those relevant
15
tax purposes.
      (2)
In particular, any reference (express or implied) in this Act, another
enactment or an instrument or document to—
(a)
the profits of a UK property business,
(b)
relevant foreign income, or
20
(c)
similar concepts created by this Act,

is to be read as including, in relation to times, circumstances or purposes in
relation to which any corresponding concept in a superseded enactment had
effect for income tax purposes, a reference to that concept so far as applying
for income tax purposes.
25
      (3)
Any reference (express or implied) in this Act, another enactment or an
instrument or document to—
(a)
things done under or for the purposes of a rewritten provision, or
(b)
things falling to be done under or for the purposes of a rewritten
provision,
30

is to be read as including, in relation to times, circumstances or purposes in
relation to which any corresponding superseded enactment had effect for
relevant tax purposes, a reference to things done or falling to be done under
or for the purposes of the superseded enactment so far as applying for those
relevant tax purposes.
35
5     (1)
Any reference (express or implied) in any enactment, instrument or
document to a superseded enactment in its application for relevant tax
purposes is to be read, so far as is required for those relevant tax purposes,
as including, in relation to times, circumstances or purposes in relation to
which any corresponding rewritten provision has effect, a reference to the
40
rewritten provision.
      (2)
In particular, any reference (express or implied) in any enactment,
instrument or document to Schedule A, D or F or the Cases of Schedule D in
their application for income tax purposes is to be read, so far as is required
for income tax purposes, as including, in relation to times, circumstances or
45
purposes in relation to which any corresponding rewritten concept has
effect, a reference to the rewritten concept.
      (3)
Any reference (express or implied) in any enactment, instrument or
document to—