Income Tax (Trading and Other Income) Bill

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Session 2004 - 05
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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
471

(c)
Chapter 10 of that Part (distributions from unauthorised unit
trusts),
(d)
Chapter 13 of that Part (sales of foreign dividend coupons) so
far as the income arises from foreign holdings within section
571(1)(a) (meaning of “foreign holdings” in that Chapter),
5
(e)
Chapter 2 of Part 5, so far as it relates to annual payments
(receipts from intellectual property),
(f)
Chapter 4 of that Part, so far as it relates to annual payments
(certain telecommunication rights: non-trading income), and
(g)
Chapter 7 of that Part (annual payments not otherwise
10
charged).”
Oil Taxation Act 1975 (c. 22)
391
The Oil Taxation Act 1975 is amended as follows.
392
In section 3(2) (allowance of expenditure (other than expenditure on long-
term assets and abortive exploration expenditure))—
15
(a)
in the first sentence—
(i)
after “section 579 of the Taxes Act” insert “or under section 77
of the Income Tax (Trading and Other Income) Act 2005
(“ITTOIA 2005”)”,
(ii)
after “under that subsection” insert “or that section”, and
20
(iii)
omit “less the amount of the rebate recoverable (within the
meaning of that subsection)”, and
(b)
in the second sentence—
(i)
after “section 492 of the Taxes Act” insert “or by virtue of
section 16 of ITTOIA 2005”,
25
(ii)
after “paragraph (a) or (b) of that subsection” insert “or
within the definition of “oil-related activities” in section 16(2)
of ITTOIA 2005”, and
(iii)
after “if that subsection” insert “or section”.
Inheritance Tax Act 1984 (c. 51)
30
393
The Inheritance Tax Act 1984 is amended as follows.
394
In section 6(3) (excluded property), in paragraph (e)—
(a)
for “certified contractual savings scheme” substitute “certified SAYE
savings arrangement”, and
(b)
for “section 326 of the Taxes Act 1988” substitute “section 703(1) of
35
the Income Tax (Trading and Other Income) Act 2005”.
395
In section 21(3) (normal expenditure out of income)—
(a)
for “section 657 of the Taxes Act 1988” substitute “section 423 of the
Income Tax (Trading and Other Income) Act 2005”, and
(b)
for “, for the purposes” to “annuity” substitute “exempt from income
40
tax under section 717 of that Act”.
396
In section 174(1) (liabilities for which allowance is to be made in determining
the value of an estate) in paragraph (b)—
(a)
for “Schedule 13 to the Finance Act 1996 (discounted securities)”
substitute “Chapter 8 of Part 4 of the Income Tax (Trading and Other
45
Income) Act 2005 (deeply discounted securities)”, and

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
472

(b)
for “paragraph 4(2) of that Schedule” substitute “section 437(2) of
that Act”.
Films Act 1985 (c. 21)
397
The Films Act 1985 is amended as follows.
398
In section 6(1) (certification of master negatives, tapes and discs) after “1992”
5
insert “or Chapter 9 of Part 2 of the Income Tax (Trading and Other Income)
Act 2005”.
399   (1)
Amend Schedule 1 (certification in case of British films) as follows.
      (2)
In paragraph 2(1) (applications for certification of master negatives, tapes or
discs) after “1992” insert “, or Chapter 9 of Part 2 of the Income Tax (Trading
10
and Other Income) Act 2005,”.
      (3)
In paragraph 3(1) (certification by Secretary of State of master negatives,
tapes or discs) at the end insert “or, as the case may be, Chapter 9 of Part 2 of
the Income Tax (Trading and Other Income) Act 2005”.
Finance Act 1988 (c. 39)
15
400
The Finance Act 1988 is amended as follows.
401   (1)
Amend section 38 (maintenance payments under existing obligations: 1989-
90 onwards) as follows.
      (2)
In subsection (1) for paragraph (c) substitute—
“(c)
is (apart from this section) within a charge to tax under
20
Chapter 7 of Part 5 of the Income Tax (Trading and Other
Income) Act 2005 (annual payments not otherwise charged)
and is not, by virtue of Chapter 5 of that Part (settlements),
treated for any purpose as the income of the person making
it.”
25
      (3)
In subsection (9) for the words from “65(1)(b)” to “1988” substitute “839 of
the Income Tax (Trading and Other Income) Act 2005 (annual payments
payable out of relevant foreign income)”.
402
In section 73(2) (consideration for certain restrictive undertakings)—
(a)
for “person” substitute “company”, and
30
(b)
for “tax” substitute “corporation tax”.
403
In Schedule 6 (commercial woodlands) in paragraph 3(2) for “person”
substitute “company”.
404
In Schedule 12 (building societies: change of status) for paragraph 7
substitute—
35
“Certified SAYE savings arrangements
7
Section 702 of the Income Tax (Trading and Other Income) Act
2005 (interest under certified SAYE savings arrangements to be
exempt from income tax) shall have effect in relation to any
interest (or bonus) payable after the transfer under a savings
40
arrangement which immediately before the transfer was a
certified SAYE savings arrangement (within the meaning of

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
473

section 703(1) of that Act) in relation to the society despite the fact
that it ceased to be such an arrangement by reason of the transfer.”
Water Act 1989 (c. 15)
405
In section 95(11) of the Water Act 1989 (vesting in successor company of
liability for loans not to affect directions by the Treasury under section 581
5
of ICTA) for “section 581 of the Income and Corporation Taxes Act 1988”
substitute “section 755 of the Income Tax (Trading and Other Income) Act
2005”.
Finance Act 1989 (c. 26)
406
The Finance Act 1989 is amended as follows.
10
407
In section 68(2) (principal charges to tax: employee share ownership
trusts)—
(a)
in paragraph (a) for “annual profits or gains whose amount”
substitute “income of an amount that”, and
(b)
for paragraph (b) and the word “and” at the end of it substitute—
15
“(b)
that income shall be chargeable to income tax for the
year of assessment in which the event occurs,
(ba)
the tax so chargeable shall be charged on the full
amount of the income the trustees are treated as
receiving in the year of assessment,
20
(bb)
the trustees are liable for any tax so chargeable, and”.
408
In section 71(4) (further charges to tax: borrowing)—
(a)
in paragraph (a) for “annual profits or gains whose amount”
substitute “income of an amount that”, and
(b)
for paragraph (b) and the word “and” at the end of it substitute—
25
“(b)
that income shall be chargeable to income tax for the
year of assessment at the end of which the further
event occurs,
(ba)
the tax so chargeable shall be charged on the full
amount of the income the trustees are treated as
30
receiving in the year of assessment,
(bb)
the trustees are liable for any tax so chargeable, and”.
409   (1)
Amend section 76 (non-approved retirement benefits schemes) as follows.
      (2)
In subsection (1) after “Schedule D” insert “or under Part 2 of the Income Tax
(Trading and Other Income) Act 2005”.
35
      (3)
In subsection (4)(a) after “Schedule D” insert “or under Part 2 of the Income
Tax (Trading and Other Income) Act 2005”.
      (4)
In subsection (6C)(a) omit “of the Taxes Act 1988”.
410
Omit sections 112 and 113 (security: trades etc.).
411
In section 151(2) (assessment of trustees etc) in each of paragraphs (a) and (b)
40
for “Chapter II of Part XIII of the Taxes Act” substitute “Chapter 9 of Part 4
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
474

412
In paragraph 1 of Schedule 12 (close companies: administrative
provisions)—
(a)
omit the word “and” at the end of paragraph (a), and
(b)
after paragraph (b) insert—
“(c)
section 397 of the Income Tax (Trading and Other
5
Income) Act 2005, and
(d)
Chapter 6 of Part 4 of that Act.”
Electricity Act 1989 (c. 29)
413
In paragraph 10 of Schedule 11 to the Electricity Act 1989 (vesting in
successor company of liability for loans not to affect directions by the
10
Treasury under section 581 of ICTA) for “section 581 of the 1988 Act”
substitute “section 755 of the Income Tax (Trading and Other Income) Act
2005”.
Finance Act 1990 (c. 29)
414
The Finance Act 1990 is amended as follows.
15
415   (1)
Amend section 25 (donations to charity by individuals) as follows.
      (2)
In subsection (6) for “section 550(2)(a) or (b) of that Act (relief where gain
charged at higher rate)” substitute “sections 535 to 537 of the Income Tax
(Trading and Other Income) Act 2005 (top slicing relief)”.
      (3)
In subsection (9)—
20
(a)
for paragraph (b) substitute—
“(b)
any tax treated as having been paid under—
(i)
section 399(2) or 400(2) of the Income Tax
(Trading and Other Income) Act 2005
(distributions from UK resident companies
25
etc. on which there is no tax credit);
(ii)
section 414(1) of that Act (stock dividend
income);
(iii)
section 421(1) of that Act (release of loan to
participator in close company); or
30
(iv)
section 530(1) of that Act (gains from contracts
for life insurance etc);”,
(b)
in paragraph (c) for “of that Act” substitute “of the Taxes Act 1988”,
(c)
in paragraph (e) omit sub-paragraph (i) and the word “or” at the end
of that sub-paragraph, and
35
(d)
in paragraph (e)(ii) for the words from “a relevant amount” to
“Schedule F” substitute “estate income under section 656(3) or 657(4)
of the Income Tax (Trading and Other Income) Act 2005, so far as that
income is treated under section 679 of that Act as paid from sums
within section 680(3)(b) or (4) of that Act”.
40
416   (1)
Amend section 126 (pools payments for football ground improvements) as
follows.
      (2)
In subsection (2)—
(a)
for “person” substitute “company”, and
(b)
for “tax purposes” substitute “corporation tax purposes”.
45

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
475

      (3)
In subsection (3) after “not” insert “, for corporation tax purposes,”.
      (4)
In subsection (4) after “2001” insert “(general rule excluding contributions:
income and corporation tax)”.
Finance Act 1991 (c. 31)
417
The Finance Act 1991 is amended as follows.
5
418   (1)
Amend section 121 (pools payments to support games etc.) as follows.
      (2)
In subsection (2)—
(a)
for “person” substitute “company”, and
(b)
for “tax purposes” substitute “corporation tax purposes”.
      (3)
In subsection (3) after “not” insert “, for corporation tax purposes,”.
10
Social Security Contributions and Benefits Act 1992 (c. 4)
419
The Social Security Contributions and Benefits Act 1992 is amended as
follows.
420   (1)
Amend section 15 (Class 4 contributions recoverable under the Income Tax
Acts) as follows.
15
      (2)
In subsection (1)—
(a)
for “annual profits or gains” substitute “profits”,
(b)
omit the “and” at the end of paragraph (a),
(c)
in paragraph (b) for “are profits or gains chargeable to income tax
under Case I or Case II of Schedule D” substitute “are profits
20
chargeable to income tax under Chapter 2 of Part 2 of the Income Tax
(Trading and Other Income) Act 2005”, and
(d)
at the end of that paragraph insert “and
(c)
are not profits of a trade, profession or vocation
carried on wholly outside the United Kingdom.”
25
      (3)
In subsections (2), (3) and (3A) omit “or gains” in each place where they
occur.
      (4)
Omit subsection (4).
421
In section 16(1) (application of Income Tax Acts and destination of Class 4
contributions) for “Case I or II of Schedule D” substitute “Chapter 2 of Part
30
2 of the Income Tax (Trading and Other Income) Act 2005 in respect of the
profits of a trade, profession or vocation which is not carried on wholly
outside the United Kingdom”.
422   (1)
Amend Schedule 2 (levy of Class 4 contributions with income tax) as
follows.
35
      (2)
In paragraph 1 after paragraph (a) insert—
“(ab)
“ITTOIA 2005” means the Income Tax (Trading and Other
Income) Act 2005;”.
      (3)
In paragraph 2 for “profits or gains” to the end substitute “profits—
(a)
which are the profits of any relevant trade, profession or
40
vocation which is not carried on wholly outside the United
Kingdom, and

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
476

(b)
which are chargeable to income tax under Chapter 2 of Part
2 of ITTOIA 2005.”
      (4)
In paragraphs 3(1), (4) and (5) and 4 omit “or gains” in each place where they
occur.
      (5)
In paragraph 5—
5
(a)
in paragraph (a) omit “or gains”, and
(b)
in paragraph (b)—
(i)
for “section 59 of the 1988 Act” substitute “section 8 of
ITTOIA 2005”, and
(ii)
omit “or gains”.
10
      (6)
In paragraph 7 omit “or gains”.
Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7)
423
The Social Security Contributions and Benefits (Northern Ireland) Act 1992
is amended as follows.
424   (1)
Amend section 15 (Class 4 contributions recoverable under the Income Tax
15
Acts) as follows.
      (2)
In subsection (1)—
(a)
for “annual profits or gains” substitute “profits”,
(b)
omit the “and” at the end of paragraph (a),
(c)
in paragraph (b) for “are profits or gains chargeable to income tax
20
under Case I or Case II of Schedule D” substitute “are profits
chargeable to income tax under Chapter 2 of Part 2 of the Income Tax
(Trading and Other Income) Act 2005”, and
(d)
at the end of that paragraph insert “and
(c)
are not profits of a trade, profession or vocation
25
carried on wholly outside the United Kingdom.”
      (3)
In subsections (2), (3) and (3A) omit “or gains” in each place where they
occur.
      (4)
Omit subsection (4).
425   (1)
Amend Schedule 2 (Schedule 2 to the Social Security Contributions and
30
Benefits Act 1992: levy of Class 4 contributions with income tax) as follows.
      (2)
In paragraph 1 after paragraph (a) insert—
“(ab)
“ITTOIA 2005” means the Income Tax (Trading and Other
Income) Act 2005;”.
      (3)
In paragraph 2 for “profits or gains” to the end substitute “profits—
35
(a)
which are the profits of any relevant trade, profession or
vocation which is not carried on wholly outside the United
Kingdom, and
(b)
which are chargeable to income tax under Chapter 2 of Part
2 of ITTOIA 2005.”
40
      (4)
In paragraphs 3(1), (4) and (5) and 4 omit “or gains” in each place where they
occur.
      (5)
In paragraph 5—

Income Tax (Trading and Other Income) Bill
Schedule 1 — Consequential amendments
Part 2 — Other enactments
477

(a)
in paragraph (a) omit “or gains”, and
(b)
in paragraph (b)—
(i)
for “section 59 of the 1988 Act” substitute “section 8 of
ITTOIA 2005”, and
(ii)
omit “or gains”.
5
      (6)
In paragraph 7 omit “or gains”.
Taxation of Chargeable Gains Act 1992 (c. 12)
426
The Taxation of Chargeable Gains Act 1992 is amended as follows.
427
In section 4(2) and (3) (rates of capital gains tax) for “Schedule F” substitute
“dividend”.
10
428   (1)
Amend section 6 (rates of capital gains tax: special cases) as follows.
      (2)
In subsection (2)—
(a)
in paragraph (a)—
(i)
for “549(2) of the Taxes Act (gains under life policy or life
annuity contract)” substitute “539 of ITTOIA 2005 (gains
15
from contracts for life insurance etc)”, and
(ii)
for “excess” substitute “extra”, and
(b)
in paragraph (c), for “699(1) of that Act (income accruing before
death)” substitute “669(1) and (2) of ITTOIA 2005 (reduction in
residuary income: inheritance tax on accrued income)”.
20
      (3)
In subsection (3)—
(a)
for “547(1)(a) of the Taxes Act (gains from insurance policies etc)”
substitute “465 of ITTOIA 2005 (gains from contracts for life
insurance etc)”,
(b)
in paragraph (a) for “appropriate fraction within the meaning of
25
section 550(3)” substitute “annual equivalent within the meaning of
section 536(1) of that Act or (as the case may be) the total annual
equivalent within the meaning of section 537”, and
(c)
in paragraph (b)—
(i)
for “550” substitute “535”,
30
(ii)
for “required by section 550(2)(b)” substitute “under section
536(1) of that Act or (as the case may be) section 537 of that
Act”, and
(iii)
for “Schedule F” substitute “dividend”.
429
In section 12(2) (foreign assets of person with foreign domicile) for the words
35
from “, and subsections (6) to (9)” to the end substitute “, and sections 833
and 834 of ITTOIA 2005 shall apply as they would apply for the purposes of
section 832 of that Act (remittance basis) if the gain were relevant foreign
income.”
430
In section 41(4) (restriction of losses by reference to capital allowances and
40
renewals allowances)—
(a)
in paragraph (b) after “Taxes Act” insert “or any deduction under
section 315 of ITTOIA 2005”, and
(b)
in paragraph (c) after “Taxes Act” insert “or section 170 of ITTOIA
2005”.
45