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Income Tax (Trading and Other Income) Bill


Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

74

 

157     

Relief in respect of mineral royalties

(1)   

This section applies for the purpose of calculating the profits of a trade if in a

tax year a person who is UK resident, or ordinarily UK resident, carries on the

trade the receipts of which include mineral royalties—

(a)   

which the person is entitled to receive under a mineral lease or

5

agreement, and

(b)   

which are not chargeable to tax under Chapter 8 of Part 3 (rent

receivable in connection with a UK section 12(4) concern) because of the

priority rule in section 261.

(2)   

The person is treated as entitled to receive only half of the total of the mineral

10

royalties arising under the lease or agreement in the tax year.

(3)   

Sections 341 to 343 (meaning of “mineral lease or agreement” and “mineral

royalties”) apply for the purposes of this section as they apply for the purposes

of Chapter 8 of Part 3.

158     

Lease premiums etc: reduction of receipts

15

(1)   

This section applies for the purpose of calculating the profits of a trade of

dealing in land if a receipt of the trade falls within one of the following

categories—

(a)   

lease premiums within section 277,

(b)   

sums within section 279 (sums payable instead of rent),

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(c)   

sums within section 280 (sums payable for surrender of a lease),

(d)   

sums within section 281 (sums payable for variation or waiver of term

of lease),

(e)   

consideration for the assignment of a lease within section 282 (lease

granted at an undervalue), and

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(f)   

amounts received on the sale of an estate or interest in land within

section 284 (sales with right to re-conveyance) or section 285 (sale and

leaseback transactions).

(2)   

The receipt is reduced by the relevant amount.

(3)   

The relevant amount is the amount which is treated as a receipt of a property

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business as a result of any of sections 277 to 285.

(4)   

But if—

(a)   

the person carrying on the trade makes a claim under section 301 or 302,

and

(b)   

as a result of the claim a repayment of tax is made to that person,

35

   

the relevant amount is the amount which, for the purpose of determining the

amount of the repayment of tax, is treated as brought into account as a receipt

in calculating the profits of the property business.

(5)   

If subsection (4) applies, any adjustment of liability to tax may be made—

(a)   

by assessment or otherwise, and

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(b)   

at any time at which it could be made if it related only to tax for the tax

year in which the claim under section 301 or 302 is made.

 
 

Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

75

 

Ministers of religion

159     

Ministers of religion

(1)   

This section applies for the purpose of calculating the profits of the profession

or vocation of a minister of a religious denomination.

(2)   

If the minister pays rent in respect of a dwelling-house and any part of the

5

dwelling-house is used mainly and substantially for the purposes of the

minister’s duty, a deduction is allowed for—

(a)   

one-quarter of the rent, or

(b)   

if less, the part of the rent that, on a just and reasonable apportionment,

is attributable to that part of the dwelling-house.

10

(3)   

If—

(a)   

an interest in premises belongs to a charity or an ecclesiastical

corporation,

(b)   

because of that interest, the minister has a residence in the premises

from which to perform the minister’s duty, and

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(c)   

the minister incurs expenses on the maintenance, repair, insurance or

management of the premises,

   

a deduction is allowed under this subsection for part of those expenses.

(4)   

The amount of the deduction under subsection (3) is—equation: plus[over[char[A],num[4.0000000000000000,"4"]],minus[char[B]]]

   

where—

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A is the amount of the expenses, and

B is the amount of the expenses for which a deduction is otherwise

allowable.

Barristers and advocates

160     

Alternative basis of calculation in early years of practice

25

(1)   

The profits of a barrister or advocate in independent practice for a period of

account ending not more than 7 years after the start of such practice may be

calculated in accordance with this section.

(2)   

For this purpose barristers and advocates start in independent practice when

they first hold themselves out as available for fee-earning work.

30

(3)   

The profits of a barrister or advocate for a period of account to which this

section applies may be calculated—

(a)   

on a cash basis, or

(b)   

by reference to fees earned whose amount has been agreed or in respect

of which a fee note has been delivered.

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(4)   

Once a particular basis has been adopted it must be applied consistently.

(5)   

If for any period of account an accounting basis is adopted that complies with

section 25 (generally accepted accounting practice), the exemption from that

section given by this section ceases.

 
 

Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

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(6)   

In that case, section 25 applies to all subsequent periods of account.

Mineral exploration and access

161     

Mineral exploration and access

(1)   

This section applies for the purpose of calculating the profits of a trade if—

(a)   

the person carrying on the trade incurs expenditure on mineral

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exploration and access in an area or group of sands, and

(b)   

the presence of mineral deposits in commercial quantities has already

been established in that area or group of sands.

(2)   

A deduction is allowed for the expenditure only if a deduction would have

been allowed for it if the presence of mineral deposits in commercial quantities

10

had not already been established in that area or group of sands.

(3)   

In this section “mineral exploration and access” has the same meaning as in

Part 5 of CAA 2001 (see section 396(1) of that Act).

Persons liable to pool betting duty

162     

Payments by persons liable to pool betting duty

15

(1)   

This section applies for the purpose of calculating the profits of a trade if—

(a)   

the person carrying on the trade is liable to pool betting duty,

(b)   

there is a reduction in that duty, and

(c)   

the person makes a qualifying payment in consequence of that

reduction.

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(2)   

A qualifying payment is one—

(a)   

made in order to meet (directly or indirectly) capital expenditure

incurred by any person in improving the safety or comfort of spectators

at a ground to be used for the playing of association football, or

(b)   

made to trustees established mainly for the support of athletic sports or

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athletic games but with power to support the arts.

(3)   

A deduction is allowed for the qualifying payment.

Intermediaries treated as making employment payments

163     

Deduction for deemed employment payment

(1)   

This section applies for the purpose of calculating the profits of a trade,

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profession or vocation carried on by an intermediary who is treated as making

a deemed employment payment in connection with the trade, profession or

vocation.

(2)   

A deduction is allowed for—

(a)   

the amount of the deemed employment payment, and

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(b)   

the amount of any employer’s national insurance contributions paid by

the intermediary in respect of it.

(3)   

The deduction is allowed for the period of account in which the deemed

employment payment is treated as made.

 
 

Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

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(4)   

No deduction in respect of—

(a)   

the deemed employment payment, or

(b)   

any employer’s national insurance contributions paid by the

intermediary in respect of it,

   

may be made except in accordance with this section.

5

(5)   

In this section “deemed employment payment” and “intermediary” have the

same meaning as in Chapter 8 of Part 2 of ITEPA 2003.

164     

Special rules for partnerships

(1)   

This section applies for the purpose of calculating the profits of a trade,

profession or vocation carried on by a firm that is treated as making a deemed

10

employment payment in connection with the trade, profession or vocation.

(2)   

The amount of the deduction allowed under section 163 is limited to the

amount that reduces the profits of the firm for the tax year to nil.

(3)   

The expenses of the firm in connection with the relevant engagements for any

period of account are limited to the total of—

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(a)   

5% of the amount taken into account in step 1 of the calculation in

section 54(1) of ITEPA 2003 (calculation of deemed employment

payment), and

(b)   

the amount deductible in step 3 of that calculation.

(4)   

In this section “deemed employment payment” and “the relevant

20

engagements” have the same meaning as in Chapter 8 of Part 2 of ITEPA 2003.

Waste disposal

165     

Deduction for site preparation expenditure

(1)   

This section applies for the purpose of calculating the profits of a trade of a

period of account in which waste materials are deposited on a waste disposal

25

site if—

(a)   

the person carrying on the trade (“the trader”), or a predecessor, has

incurred site preparation expenditure in relation to the site in the

course of carrying on the trade, and

(b)   

at the time the trader first deposits waste materials on the site, the

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trader holds a waste disposal licence which is then in force.

(2)   

A deduction is allowed for the amount of the site preparation expenditure

allocated to the period of account under section 166.

(3)   

For the purposes of this section “predecessor”, in relation to the trader, means

a person who—

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(a)   

has ceased to carry on the trade carried on by the trader or ceased to

carry on a trade so far as relating to the site, and

(b)   

has transferred the whole of the site to the trader,

   

and it does not matter for this purpose whether or not the estate or interest in

the site transferred to the trader is the same as that held by that person.

40

(4)   

For the purposes of this section and section 166, if site preparation expenditure

has been incurred by a predecessor—

 
 

Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

78

 

(a)   

the trade carried on by the trader is treated as the same as the trade

carried on by the predecessor, and

(b)   

deductions are to be allowed to the trader (and not to the predecessor)

as if everything done to or by the predecessor were done to or by the

trader.

5

(5)   

For—

(a)   

the meaning of “site preparation expenditure”, “waste disposal licence”

and “waste disposal site”, and

(b)   

a rule about pre-trading expenditure,

   

see section 167.

10

166     

Allocation of site preparation expenditure

(1)   

The amount of site preparation expenditure allocated to a period of account for

the purposes of section 165(2) is the amount given by the formula—equation: times[char[R],cross[char[E],over[string[(*i1i*)"WD"],plus[times[char[S],char[V]],

times[char[W],char[D]]]]]]

   

where—

RE means residual expenditure (see subsection (2)),

15

WD means the volume of waste materials deposited on the waste disposal

site during the period, and

SV means the volume of the waste disposal site not used up for the

deposit of waste materials at the end of the period.

(2)   

“Residual expenditure” means the total of all site preparation expenditure

20

incurred by the trader in relation to the waste disposal site at any time before

the end of the period, less—

(a)   

any of that expenditure for which an allowance has been, or may be,

made for income or corporation tax purposes under the enactments

relating to capital allowances,

25

(b)   

any of that expenditure for which a deduction has been allowed in

calculating for income or corporation tax purposes the profits of an

earlier period of account, and

(c)   

if the trader started to carry on the trade before 6th April 1989, the

excluded amount of any unrelieved old expenditure (see subsections

30

(3) and (4)).

(3)   

The excluded amount of unrelieved old expenditure is calculated by

multiplying the unrelieved old expenditure (see subsection (4)) by the

fraction—equation: over[string["WD"],plus[string["SV"],times[char[W],char[D]]]]

   

where—

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WD means the volume of waste materials deposited on the site before 6th

April 1989, and

SV means the volume of the site not used up for the deposit of waste

materials immediately before that date.

(4)   

“Unrelieved old expenditure” means site preparation expenditure which—

40

 
 

Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

79

 

(a)   

was incurred by the trader in relation to the waste disposal site before

6th April 1989, and

(b)   

does not fall within subsection (2)(a) or (b).

167     

Site preparation expenditure: supplementary

(1)   

For the purposes of this section and sections 165 and 166

5

“site preparation expenditure”, in relation to a waste disposal site, means

expenditure incurred on preparing the site for the deposit of waste

materials,

“waste disposal licence” means—

(a)   

a disposal licence under Part 1 of the Control of Pollution Act

10

1974 (c. 40) or Part 2 of the Pollution Control and Local

Government (Northern Ireland) Order 1978 (S.I. 1978/1049

(N.I. 19)),

(b)   

a waste management licence under Part 2 of the Environmental

Protection Act 1990 (c. 43) or any corresponding provision for

15

the time being in force in Northern Ireland,

(c)   

a permit under regulations under section 2 of the Pollution

Prevention and Control Act 1999 (c. 24) or any corresponding

provision for the time being in force in Northern Ireland,

(d)   

an authorisation under the Radioactive Substances Act 1960

20

(c. 34) or the Radioactive Substances Act 1993 (c. 12) for the

disposal of radioactive waste, or

(e)   

a nuclear site licence under the Nuclear Installations Act 1965

(c. 57), and

“waste disposal site” means a site used, or to be used, for the disposal of

25

waste materials by their deposit on the site.

(2)   

For the purposes of sections 165 and 166, expenditure incurred for the

purposes of a trade by a person about to carry on the trade is treated as if it

were incurred—

(a)   

on the date on which the person starts to carry on the trade, and

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(b)   

in the course of carrying it on.

168     

Site restoration payments

(1)   

This section applies for the purpose of calculating the profits of a trade if the

person carrying on the trade makes a site restoration payment in the course of

carrying it on.

35

(2)   

A deduction is allowed for the unrelieved amount of the payment.

(3)   

The deduction is allowed for the period of account in which the payment is

made.

(4)   

The unrelieved amount of a site restoration payment is the amount of the

payment, less—

40

(a)   

any amount of the payment that represents expenditure for which an

allowance has been, or may be, made under the enactments relating to

capital allowances, and

(b)   

any amount of the payment that represents expenditure for which a

deduction has been allowed in calculating the profits of the trade of an

45

earlier period of account.

 
 

Income Tax (Trading and Other Income) Bill
Part 2 — Trading income
Chapter 11 — Trade profits: other specific trades

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(5)   

A “site restoration payment” means a payment made in connection with the

restoration of a site (or part of a site) in order to comply with—

(a)   

a condition of a waste disposal licence (as defined in section 167(1)),

(b)   

a condition imposed on the grant of planning permission to use the site

for the collection, treatment, conversion and final depositing of waste

5

materials or for the carrying out of any of those activities, or

(c)   

a relevant planning obligation.

(6)   

For this purpose “a relevant planning obligation” means—

(a)   

an obligation arising under an agreement made under section 106 of the

Town and Country Planning Act 1990 (c. 8) (as originally enacted) or

10

any corresponding provision for the time being in force in Northern

Ireland,

(b)   

an obligation arising under an agreement made under section 75 of the

Town and Country Planning (Scotland) Act 1997 (c. 8),

(c)   

a planning obligation entered into under section 106 of the Town and

15

Country Planning Act 1990 (as substituted by section 12 of the Planning

and Compensation Act 1991 (c. 34)) or any corresponding provision for

the time being in force in Northern Ireland, or

(d)   

a planning obligation entered into under section 299A of the Town and

Country Planning Act 1990 or any corresponding provision for the time

20

being in force in Northern Ireland.

Cemeteries and crematoria

169     

Cemeteries and crematoria: introduction

(1)   

This section and sections 170 to 172 apply for the purpose of calculating the

profits of a period of account (“the relevant period”) of a trade which consists

25

of or includes—

(a)   

the carrying on of a cemetery, or

(b)   

the carrying on of a crematorium and, in connection with doing so, the

maintenance of memorial garden plots,

   

and the following provisions of this section apply for the interpretation of this

30

section and those sections.

(2)   

References to the sale of land in a cemetery include the sale of a right of

interment in land in a cemetery.

(3)   

References to the sale of land in a memorial garden include the appropriation

of part of a memorial garden in return for a dedication fee or similar payment.

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(4)   

“Ancillary capital expenditure” means capital expenditure incurred for the

purposes of the trade by the person carrying on the trade (“the trader”), or a

predecessor, on—

(a)   

any building or structure (other than a dwelling-house) which is in the

cemetery or memorial garden and is likely to have little or no value

40

when the cemetery or memorial garden is full,

(b)   

the purchase of an interest in, or the preparation of, any land taken up

by such a building or structure, or

(c)   

the purchase of an interest in, or the preparation of, any other land in

the cemetery or memorial garden which is not suitable or adaptable for

45

use for interments or memorial garden plots and which is likely to have

little or no value when the cemetery or memorial garden is full.

 
 

 
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