Income Tax (Trading and Other Income) Bill

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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
436

      (3)
In subsection (3) for “trade, profession or vocation” substitute “trade or
profession”.
      (4)
In subsection (5)—
(a)
for “tax” substitute “corporation tax”,
(b)
for “year” substitute “accounting period”,
5
(c)
for “he” substitute “it”,
(d)
omit “section 29(1) of the Management Act, or”, and
(e)
for “chargeable period” substitute “accounting period”.
      (5)
In subsection (7) for “he” substitute “it”.
251   (1)
Amend section 589A (counselling services for employees) as follows.
10
      (2)
In subsection (7)—
(a)
for “(8) to (10)” substitute “(8) and (9)”, and
(b)
for “person under whom” substitute “company under which”.
      (3)
In subsection (8) for “trade, profession or vocation” substitute “trade or
profession”.
15
252   (1)
Amend section 591C (cessation of approval: tax on certain schemes) as
follows.
      (2)
In subsection (1) for “tax shall be charged” substitute “income tax shall be
charged under and”.
      (3)
In subsection (2) omit “under Case VI of Schedule D”.
20
      (4)
In subsection (6A)(c)(iii) for “Schedule D” substitute “Part 2 of ITTOIA
2005”.
253   (1)
Amend section 592 (exempt approved schemes) as follows.
      (2)
In subsection (3)—
(a)
after “the schemes” insert “, are not relevant foreign income”, and
25
(b)
for “Case VI of Schedule D” substitute “Chapter 8 of Part 5 of ITTOIA
2005 (income not otherwise charged)”.
      (3)
In subsection (4)(a) after “for the purposes of” insert “Part 2 of ITTOIA 2005
or”.
254   (1)
Amend section 598 (charge to tax: repayment of employee’s contributions)
30
as follows.
      (2)
In subsection (1) after “this section,” insert “income”.
      (3)
In subsection (2) for the words from the beginning to “Schedule D”
substitute “The person liable for any tax chargeable under this section shall
be the administrator of the scheme”.
35
255   (1)
Amend section 599 (charge to tax: commutation of entire pension in special
circumstances) as follows.
      (2)
In subsection (1) after “whether wholly or not, under the rule,” insert
“income”.
      (3)
In subsection (1B) before “tax” insert “income”.
40

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
437

      (4)
In subsection (3) for the words from the beginning to “Schedule D on that
amount,” substitute “The person liable for any tax chargeable under this
section shall be the administrator of the scheme”.
256
In section 599A (charge to tax: payments out of surplus funds) for subsection
(2) substitute—
5
“(2)
On the making of a payment to which subsection (1) above applies—
(a)
income tax is charged at the relevant rate on such amount as,
after deduction of tax at that rate, would equal the amount of
the payment, and
(b)
the person liable for the tax so charged is the administrator of
10
the scheme.”
257
In section 601(5)(b) (charge to tax: payments to employers) for “to tax on the
amount of the payment under Case VI of Schedule D” substitute “—
(i)
to income tax on the full amount of the payment
arising in the year of assessment; or
15
(ii)
to corporation tax on the amount of the payment
under Case VI of Schedule D”.
258
In section 602(1)(a) (regulations relating to pension fund surpluses) omit
“under Case VI of Schedule D”.
259   (1)
Amend section 607 (pilots’ benefit fund) as follows.
20
      (2)
In subsection (2)(c) for “the provisions of Case II of Schedule D” substitute
“such of the provisions of Part 2 of ITTOIA 2005 as apply in calculating the
profits of a profession”.
      (3)
In subsection (3)(a) for “in assessing tax under Schedule D” substitute “in
calculating the profits of the profession”.
25
260
In section 608(2) (superannuation funds approved before 6th April 1980)—
(a)
in paragraph (b)—
(i)
after “commissions” insert “which are not relevant foreign
income and”, and
(ii)
for “Case VI of Schedule D” substitute “Chapter 8 of Part 5 of
30
ITTOIA 2005”, and
(b)
in paragraph (c) for the words from “under” onwards substitute
“under Chapter 11 of Part 4 of ITTOIA 2005 (transactions in deposits)
by virtue of a disposal of deposit rights falling within section
552(1)(a) or (b) of that Act”.
35
261
In section 614(2A) (exemptions and reliefs in respect of income from
investments etc. of certain pension schemes) for the words from “paragraph
1” to “(relevant” substitute “Chapter 8 of Part 4 of ITTOIA 2005 (profits from
deeply”.
262   (1)
Amend section 617 (social security benefits and contributions) as follows.
40
      (2)
In subsection (3)—
(a)
for “subsection (4) below” substitute “subsections (4) and (5) below”,
and
(b)
after “allowed” insert “for corporation tax purposes”.
      (3)
In subsection (4)—
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
438

(a)
at the end of paragraph (b) insert “or”, and
(b)
omit paragraphs (d) and (e).
      (4)
After subsection (4) insert—
“(5)
Subsection (3) above shall not apply for the purposes of deductions
under Chapter 2 of Part 5 of ITEPA 2003 (in relation to which section
5
360A of that Act applies).”
263   (1)
Amend section 623 (relevant earnings) as follows.
      (2)
In subsection (2)—
(a)
in paragraph (c) for “Schedule D” substitute “Part 2 of ITTOIA 2005”,
and
10
(b)
for paragraph (d) substitute—
“(d)
income to which section 833(5B) (patent income)
applies;”.
      (3)
In subsection (6)—
(a)
in paragraph (a) for “section 74(m), (p) or (q)” substitute “section 51
15
of ITTOIA 2005”, and
(b)
after the “or” at the end of that paragraph insert—
“(aa)
deductions in respect of any annuity or other annual
payment (other than interest) payable out of his
profits; or”.
20
264
In section 644(2) (meaning of “relevant earnings”)—
(a)
in paragraph (c) for “Schedule D” substitute “Part 2 of ITTOIA 2005”,
and
(b)
for paragraph (d) substitute—
“(d)
income to which section 833(5B) (patent income)
25
applies.”
265
In section 646(2) (meaning of “relevant net earnings”)—
(a)
in paragraph (a) for “section 74(m), (p) or (q)” substitute “section 51
of ITTOIA 2005”,
(b)
after that paragraph insert—
30
“(aa)
deductions in respect of any annuity or other annual
payment (other than interest) payable out of his
profits;”, and
(c)
in paragraph (bb) for “section 332(3) of this Act” substitute “section
159 of ITTOIA 2005”.
35
266   (1)
Amend section 648B (return of contributions after pension date) as follows.
      (2)
In subsection (1) for “Tax” substitute “Income tax”.
      (3)
In subsection (2) for the words from the beginning to “Schedule D”
substitute “The person liable for any tax chargeable under this section shall
be the administrator of the scheme”.
40
267   (1)
Amend section 650A (charge on withdrawal of approval from
arrangements) as follows.
      (2)
In subsection (1) for “tax shall be charged” substitute “income tax shall be
charged under and”.

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
439

      (3)
In subsection (2) omit “under Case VI of Schedule D”.
268   (1)
Amend section 656 (purchased life annuities other than retirement
annuities) as follows.
      (2)
In subsection (1)—
(a)
for “Tax Acts”, in the first place where it occurs, substitute
5
“Corporation Tax Acts”, and
(b)
for “other purposes of the Tax Acts” substitute “other corporation tax
purposes”.
      (3)
In subsections (5) and (6) for “he”, in each place it occurs, substitute “the
person”.
10
269
In section 657(2)(a) (purchased life annuities to which section 656 does not
apply) for “Tax Acts” substitute “Corporation Tax Acts”.
270   (1)
Amend section 658 (supplementary provisions about purchased life
annuities) as follows.
      (2)
In subsection (5)—
15
(a)
for “If any person” substitute “Any person who”, and
(b)
omit “for himself or for any other person” and “, he”.
      (3)
After subsection (5) insert—
“(6)
It does not matter for whom that relief or repayment is to be
obtained.”
20
271
Omit sections 660A and 660B (income arising under settlement where settlor
retains an interest and payments to unmarried minor children of settlor).
272   (1)
Amend section 660C (nature of charge on settlor) as follows.
      (2)
Omit subsections (1) to (2).
      (3)
In subsection (3)—
25
(a)
for “this Chapter” substitute “section 624 or 629 of ITTOIA 2005
(income where settlor retains an interest or income paid to
unmarried minor children of settlor)”, and
(b)
for “this section” substitute “section 619 of that Act (charge to tax
under Chapter 5 of Part 5 of that Act) so far as relating to income so
30
treated”.
      (4)
After subsection (3) insert—
“(4)
Income which is treated for income tax purposes as the income of the
settlor alone by virtue of section 624 or 629 of ITTOIA 2005 is
accordingly not the income of any company for corporation tax
35
purposes.”
273
Omit sections 660D to 660G (settlements: supplementary provisions etc.).
274
Omit section 677 (sums paid to settlor otherwise than as income).
275
Omit section 678 (capital sums paid by body connected with settlement).
276
Omit sections 682 and 682A (ascertainment of undistributed income and
40
supplementary provisions for Chapter 1B).

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
440

277   (1)
Amend section 686 (accumulation and discretionary trusts: special rates of
tax) as follows.
      (2)
In subsection (1) for “Schedule F” substitute “dividend”.
      (3)
In subsection (1AA)(a)—
(a)
for “Schedule F”, in the first place where it occurs, substitute
5
“distribution”, and
(b)
for “Schedule F”, in the second place where it occurs, substitute
“dividend”.
      (4)
In subsection (1A) for “Schedule F” substitute “dividend”.
      (5)
In subsection (2AA) for “Schedule F” substitute “dividend”.
10
      (6)
In subsection (5A) for ““Schedule F type” substitute ““distribution type” and
for paragraphs (a) to (g) substitute—
“(a)
income chargeable under Chapter 3 of Part 4 of ITTOIA 2005
(dividends etc. from UK resident companies etc.);
(b)
income chargeable under Chapter 4 of that Part (dividends
15
from non-UK resident companies);
(c)
income treated as arising to the trustees under Chapter 5 of
that Part (stock dividends from UK resident companies);
(d)
income chargeable under Chapter 6 of that Part (release of
loan to participator in close company);
20
(e)
a relevant foreign distribution chargeable under Chapter 8 of
Part 5 of that Act (income not otherwise charged); or
(f)
any amount which, by virtue of section 686A of this Act, is
treated for the purposes of the Tax Acts as if it were income
to which this section applies.”
25
      (7)
After that subsection insert—
“(5B)
In subsection (5A) “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,
30
but
(b)
would be chargeable under Chapter 3 of that Part if the
company were resident in the United Kingdom.”
      (8)
In subsection (6) for “Part XVI” substitute “Chapter 6 of Part 5 of ITTOIA
2005”.
35
278   (1)
Amend section 687 (payments under discretionary trusts) as follows.
      (2)
In subsection (1)(b) for “section 660B” substitute “section 629 of ITTOIA 2005
(income paid to unmarried minor children of settlor)”.
      (3)
In subsection (3)(a) for “Schedule F” substitute “dividend”.
      (4)
In subsection (3)(a1)—
40
(a)
for “Schedule F”, in the first two places where it occurs, substitute
“dividend”, and
(b)
for “Schedule F”, in the third place where it occurs, substitute
“Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident
companies etc.)”.
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
441

      (5)
In subsection (3)(a2)—
(a)
for “233(1A)” substitute “399 of ITTOIA 2005 (non-UK residents
other than eligible non-UK residents receiving qualifying
distributions)”, and
(b)
for “Schedule F”, in both places where it occurs, substitute
5
“dividend”.
      (6)
In subsection (3)(aa)—
(a)
for “233(1B)” substitute “400 of that Act (non-qualifying
distributions)”, and
(b)
for “Schedule F”, in both places where it occurs, substitute
10
“dividend”.
      (7)
In paragraphs (b), (bb) and (bc) of subsection (3) for “Schedule F”, in each
place where it occurs, substitute “dividend”.
      (8)
In subsection (3)(b) for “section 249(6)” substitute “section 410(3) of ITTOIA
2005 (when stock dividend income arises)”.
15
      (9)
In subsection (3)(bb) for “section 421(1)(a)” substitute “416(3) of ITTOIA 2005
(income charged on release of loan to participator in close company)”.
     (10)
In subsection (3) after paragraph (k) insert—
“(l)
the amount of any tax on an amount which is treated as
income of the trustees by virtue of Chapter 8 of Part 4 of
20
ITTOIA 2005 (profits from deeply discounted securities) and
is charged to tax at the rate applicable to trusts by virtue of
section 457of that Act.”
279
Omit section 688 (schemes for employees and directors to acquire shares).
280   (1)
Amend section 689B (order in which expenses to be set against income: trust
25
management expenses) as follows.
      (2)
In subsection (2) for paragraphs (za) to (c) substitute—
“(a)
so much of the income of the trustees as is income chargeable
under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc.
from UK resident companies etc.);
30
(b)
income treated as arising to the trustees under Chapter 5 of
that Part (stock dividends from UK resident companies); or
(c)
income chargeable under Chapter 6 of that Part (release of
loan to participator in close company).”
      (3)
In subsection (2A) for “income to which section 1A applies” to the end
35
substitute “—
(a)
income chargeable under Chapter 4 of Part 4 of ITTOIA 2005
(dividends from non-UK resident companies); or
(b)
a relevant foreign distribution chargeable under Chapter 8 of
Part 5 of that Act (income not otherwise charged).”
40
      (4)
After that subsection insert—
“(2B)
In subsection (2A) “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,
45
but

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 1 — Income and Corporation Taxes Act 1988
442

(b)
would be chargeable under Chapter 3 of that Part if the
company were resident in the United Kingdom.”
281
In section 691(2)(b)(ii) (certain income not to be income of settlor etc.) for
“section 677” substitute “section 633 of ITTOIA 2005 (capital sums paid to
settlor by trustees of settlement)”.
5
282
In section 692(1) (reimbursement of settlor) for “Schedule A business”
substitute “UK property business”.
283
In section 694(3) (trustees chargeable to income tax in certain cases at higher
rate reduced by rate applicable to trusts) for “Chapter IA of this Part”
substitute “section 624 or 629 of ITTOIA 2005 (income where settlor retains
10
an interest in settlement or income paid to unmarried minor children of
settlor)”.
284   (1)
Amend section 695 (estates of deceased persons in course of administration:
limited interests in residue) as follows.
      (2)
In subsection (1) for “person who” substitute “company which”.
15
      (3)
In subsection (2)—
(a)
for “all tax” substitute “corporation tax”,
(b)
for “person” substitute “company”, and
(c)
for “year of assessment”, in both places where it occurs, substitute
“accounting period”.
20
      (4)
In subsection (3)—
(a)
for “all tax” substitute “corporation tax”,
(b)
for “person” substitute “company”,
(c)
for “year of assessment”, in both places where it occurs, substitute
“accounting period”, and
25
(d)
for “that period” substitute “the administration period”.
      (5)
In subsection (4)—
(a)
for “person” substitute “company”,
(b)
for “for any year” substitute “for any accounting period”,
(c)
in paragraph (a) for “that year” substitute “the relevant year of
30
assessment”, and
(d)
in paragraph (b), omit the words from “and shall” to the end of the
paragraph.
      (6)
In subsection (5)—
(a)
for “person” substitute “company”,
35
(b)
for “income tax for any year” substitute “corporation tax for any
accounting period”,
(c)
for “him”, in both places where it occurs, substitute “it”, and
(d)
for “that year” substitute “the relevant year of assessment”.
      (7)
In subsection (6)—
40
(a)
for “he” substitute “the company”,
(b)
for “to income tax” substitute “to corporation tax”, and
(c)
omit “, for the purpose of computing his total income,”.