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
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”.
652
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.”
653   (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
654
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

655
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
656   (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)
657
The Pensions Act 2004 is amended as follows.
658
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).”
659
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—

Income Tax (Trading and Other Income) Bill
Schedule 2 — Transitionals and savings etc.
Part 1 — General provisions
523

(a)
things done under or for the purposes of a superseded enactment in
its application for relevant tax purposes, or
(b)
things falling to be done under or for the purposes of 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
5
including, in relation to times, circumstances or purposes in relation to
which any corresponding rewritten provision has effect, a reference to
things done or falling to be done under or for the purposes of the rewritten
provision.
6     (1)
Paragraphs 1 to 5 have effect instead of section 17(2) of the Interpretation Act
10
1978 (c. 30) (but are without prejudice to any other provision of that Act).
      (2)
Paragraphs 4 and 5 apply only so far as the context permits.
General saving for old transitional provisions and savings
7     (1)
The repeal by this Act of a transitional or saving provision relating to the
coming into force of a provision rewritten in this Act does not affect the
15
operation of the transitional or saving provision, so far as it is not specifically
rewritten in this Act but remains capable of having effect in relation to the
corresponding provision of this Act.
      (2)
The repeal by this Act of an enactment previously repealed subject to
savings does not affect the continued operation of those savings.
20
      (3)
The repeal by this Act of a saving on the previous repeal of an enactment
does not affect the operation of the saving so far as it is not specifically
rewritten in this Act but remains capable of having effect.
General saving for section 9(5) of ICTA
8     (1)
Sub-paragraph (2) applies if—
25
(a)
as a result of this Act, an enactment which applies to both income tax
and corporation tax (“the original enactment”) has become an
enactment which applies to income tax and an enactment which
applies to corporation tax (“the successor enactments”),
(b)
immediately before 6th April 2005, section 9(5) of ICTA (taxes treated
30
as one in certain circumstances) had effect in relation to the original
enactment, and
(c)
no express provision is made by this Act to preserve this effect.
      (2)
The successor enactments are not to be affected in their operation by the fact
that income tax and corporation tax are distinct taxes but they are to apply
35
in relation to income tax and corporation tax as if they were one tax so far as
is—
(a)
consistent with the Corporation Tax Acts, and
(b)
required to preserve the effect of section 9(5) of ICTA,

and the successor enactments are to be read accordingly.
40
Partnerships involving companies
9     (1)
References in this Act to any person are to be read, in the case of a person
acting in partnership with other persons of whom at least one is a company

Income Tax (Trading and Other Income) Bill
Schedule 2 — Transitionals and savings etc.
Part 2 — Changes in the law
524

chargeable to corporation tax, as references to all the partners so far as is
required for the purposes of preserving the continuity of the law.
      (2)
References to a company or other person in any provision amended in its
application for corporation tax purposes by this Act are to be read, in the
case of a company acting in partnership with other persons of whom at least
5
one is not a company, as references to all the partners so far as is required for
the purposes of preserving the continuity of the law.
Interpretation
10    (1)
In this Part—
“enactment” includes an enactment comprised in subordinate
10
legislation (within the meaning of the Interpretation Act 1978 (c. 30)),
“relevant tax purposes” means, in relation to a superseded enactment,
tax purposes for which the enactment has been rewritten by this Act,
and
“superseded enactment” means an earlier enactment which has been
15
rewritten by this Act for certain tax purposes (whether it applied
only for those purposes or for those and other tax purposes).
      (2)
References in this Part to the repeal of a provision include references to its
revocation and to its express or implied disapplication for income tax
purposes of this Act.
20
      (3)
References in this Part to tax purposes are not limited to income tax
purposes.
Part 2
Changes in the law
11    (1)
This paragraph applies if, in the case of any person—
25
(a)
a thing is done or an event occurs before 6th April 2005, and
(b)
because of a change in the law made by this Act, the tax
consequences of that thing or event for the relevant period are
different from what they would otherwise have been.
      (2)
If that person so elects, this Act applies with such modifications as may be
30
necessary to secure that the tax consequences for the relevant period are the
same as they would have been if the change in the law had not been made.
      (3)
In sub-paragraphs (1) and (2) “the relevant period” means—
(a)
for income tax purposes, any period of account beginning before and
ending on or after 6th April 2005, and
35
(b)
for corporation tax purposes, any accounting period beginning
before and ending on or after 6th April 2005.
      (4)
If this paragraph applies in the case of two or more persons in relation to the
same thing or event, an election made under this paragraph by any one of
those persons is of no effect unless a corresponding election is made by the
40
other or each of the others.
      (5)
An election under this paragraph must be made—

Income Tax (Trading and Other Income) Bill
Schedule 2 — Transitionals and savings etc.
Part 3 — Trading income
525

(a)
for income tax purposes, on or before the first anniversary of the
normal self-assessment filing date for the tax year in which the
period of account ends, and
(b)
for corporation tax purposes, no later than two years after the end of
the accounting period.
5
Part 3
Trading income
Unpaid remuneration
12    (1)
This paragraph applies for the purposes of section 36.
      (2)
In relation to a period of account ending before 27th November 2002, an
10
amount charged in the accounts in respect of employees’ remuneration
includes an amount which is held by an intermediary with a view to its
becoming employees’ remuneration.
      (3)
In relation to a period of account ending on or after 27th November 2002, an
amount charged in the accounts in respect of employees’ remuneration
15
includes an amount—
(a)
in respect of employee benefit contributions (within the meaning of
sections 38 to 44) made before that date, and
(b)
which is held by an intermediary,

with a view to its becoming employees’ remuneration.
20
Employee benefit contributions
13
Sections 38 to 44 do not apply to deductions that would otherwise be
allowed—
(a)
for a period ending before 27th November 2002, or
(b)
in respect of employee benefit contributions made before that date.
25
14    (1)
In relation to any time before the coming into force of ITEPA 2003—
(a)
section 40(7) applies as if, in the definition of “employment income
tax charge”, for “tax under ITEPA 2003” there were substituted
“income tax under Schedule E”,
(b)
section 41(1) applies as if for “treated as received” to the end there
30
were substituted “treated as received for the purposes of section
202A(1)(a) of ICTA (applying the rules in section 202B(1) to (6) of that
Act (receipts basis of assessment for Schedule E)).”, and
(c)
section 41(3) applies as if for “tax under ITEPA 2003” there were
substituted “income tax under Schedule E”.
35
      (2)
The express provision made by this paragraph does not affect the
construction of other provisions of this Act as a result of the operation of
paragraph 5 of this Schedule on paragraph 4 of Schedule 7 to ITEPA 2003
(references in enactment to rewritten provisions include corresponding
repealed provisions) or on any similar provision (for example paragraph 4
40
of Schedule 3 to CAA 2001).
15    (1)
Subject to sub-paragraph (7), sections 38 to 44 apply before 6th April 2006
with the following amendments.
      (2)
In section 38(4)—

Income Tax (Trading and Other Income) Bill
Schedule 2 — Transitionals and savings etc.
Part 3 — Trading income
526

(a)
for paragraphs (b) and (c) and the word “or” at the end of paragraph
(c) substitute—
“(b)
contributions under a retirement benefits scheme
within the meaning of Chapter 1 of Part 14 of ICTA
(see section 611 of that Act),
5
(c)
contributions under a personal pension scheme
approved under Chapter 4 of that Part (see section
630 of that Act), or”, and
(b)
omit “For the purposes of paragraph (c)” to the end.
      (3)
In section 39—
10
(a)
in subsection (1)(b) omit “, or in respect of, present or former”, and
(b)
in subsection (2) omit “present or former”.
      (4)
In section 40—
(a)
in subsection (1) for “, C or D” substitute “or C”, and
(b)
omit subsection (5).
15
      (5)
In section 41(1) omit paragraph (b) and the word “and” before it.
      (6)
In section 44(1) omit the definition of “employer-financed retirement
benefits scheme”.
      (7)
The power of the Treasury to make an order under section 281 or 283 of FA
2004 has effect as if Schedule 35 to that Act contained an amendment
20
substituting sections 38 to 44 of this Act for those sections as amended by
sub-paragraphs (2) to (6) above.
Car or motor cycle hire
16
In relation to expenditure incurred under a contract entered into before 11th
March 1992, section 48(1) and (2) apply with the substitution of “£8,000” for
25
“£12,000”.
17
Section 50 does not apply to expenditure which is incurred—
(a)
before 17th April 2002, or
(b)
on the hiring of a car mentioned in that section which is first
registered before that date.
30
Crime-related payments
18
Section 55(1)(b) does not apply to expenditure which was incurred before 1st
April 2002.
Tenants under taxed leases
19    (1)
This paragraph relates to the operation of sections 60 to 67 where, in respect
35
of a lease—
(a)
there is a receipt of a Schedule A business or an overseas property
business (within the meaning of section 65A(4) or 70A(4) of ICTA) as
a result of section 34 or 35 of ICTA (treatment of premiums etc. as
rent and assignments for profit of lease granted at an undervalue) for
40
a tax year before the tax year 2005-06 or an accounting period ending
before 6th April 2005, or