Finance Bill

House of Commons

Session 2004 - 05
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Finance Bill

Finance Bill
Part 4 — Stamp taxes
115

(4)
Regulation 3 of the Stamp Duty Land Tax (Consequential Amendment of
Enactments) Regulations 2005 (S. I. 2005/82) is hereby revoked.
(5)
Subsections (1) to (4) come into force on such day as the Treasury may by order
appoint.
(6)
Section 114(3) of FA 2003 (negative resolution procedure) does not apply to an
5
order made under subsection (5).
142
Miscellaneous amendments
Schedule 17 (which makes miscellaneous amendments of Part 4 of FA 2003)
has effect.
Stamp duty land tax and stamp duty
10
143
Raising of thresholds
(1)
In subsection (2) of section 55 of FA 2003 (amount of stamp duty land tax
chargeable: general), in Table A (bands and percentages for residential
property) for “£60,000” in both places substitute “£120,000”.
(2)
In paragraph 2(3) of Schedule 5 to that Act (amount of stamp duty land tax
15
chargeable: rent), in Table A (bands and percentages for residential property)
for “£60,000” in both places substitute “£120,000”.
(3)
In Schedule 13 to FA 1999 (stamp duty: instruments chargeable and rates of
duty), in paragraph 4 (bands and percentages for conveyance or transfer on
sale of property other than stock or marketable securities), for “£60,000” in both
20
places substitute “£120,000”.
(4)
Subsections (1) and (2) apply in relation to any transaction of which the
effective date (within the meaning of Part 4 of FA 2003) is after 16th March
2005.
(5)
Subsection (3) applies in relation to instruments executed after 16th March
25
2005.
144
Removal of disadvantaged areas relief for non-residential property
Schedule 18 (which provides for the removal, in relation to non-residential
property, of relief from stamp duty land tax and stamp duty for land in
disadvantaged areas) has effect.
30
Stamp duty and stamp duty reserve tax: miscellaneous reliefs
145
Demutualisation of insurance companies
(1)
Section 90 of FA 1986 (other exceptions to the principal charge to stamp duty
reserve tax under section 87 of that Act) is amended as follows.
(2)
In subsection (1A) (section 87 not to apply to agreement to transfer unit under
35
unit trust scheme if instrument giving effect to agreement would be exempt
from stamp duty by virtue of provision in paragraph (a) or (b)) after paragraph

Finance Bill
Part 4 — Stamp taxes
116

(b) insert “, or
(c)
section 96 of the Finance Act 1997 (demutualisation of
insurance companies).”.
(3)
Schedule 19 to FA 1999 (stamp duty and stamp duty reserve tax: unit trusts) is
amended as follows.
5
(4)
In paragraph 6 (exclusion, in certain cases of change of ownership, of charge to
stamp duty reserve tax on surrender of unit to managers) in sub-paragraph (5)
(provisions under which certain instruments would be exempt from stamp
duty) after paragraph (b) insert “; and
(c)
section 96 of the Finance Act 1997 (demutualisation of
10
insurance companies).”.
(5)
The amendment in subsection (2) applies where the relevant day for the
purposes of section 87 of FA 1986 falls on or after the day on which this Act is
passed.
(6)
The amendment in subsection (4) applies in relation to surrenders (within the
15
meaning of Part 2 of Schedule 19 to FA 1999) occurring on or after the day on
which this Act is passed.
146
Power to extend exceptions relating to recognised exchanges
(1)
The Treasury may by regulations extend the application of the provisions
mentioned in subsection (2) to any market (specified by name or by
20
description) which—
(a)
is not a recognised exchange, but
(b)
is a multilateral trading facility (or, assuming compliance with the
provisions of Title II of the Directive (authorisation and operating
conditions), would be such a facility).
25
(2)
The provisions referred to in subsection (1) are—
(a)
sections 80A and 80C of FA 1986 (stamp duty: exceptions for sales to
intermediaries and for repurchases and stock lending), and
(b)
sections 88A and 89AA of that Act (stamp duty reserve tax: exceptions
for intermediaries and for repurchases and stock lending).
30
(3)
In this section—
“the Directive” means Directive 2004/39/EC of the European Parliament
and of the Council of 21 April 2004 on markets in financial instruments;
“multilateral trading facility” has the same meaning as in the Directive
(see Article 4(15));
35
“recognised exchange” means any of the following—
(a)
an EEA exchange,
(b)
a recognised foreign exchange,
(c)
a recognised foreign options exchange,
within the meaning of the provisions mentioned in subsection (2).
40
(4)
Regulations under this section may provide for the application of the
provisions mentioned in subsection (2) subject to any adaptations appearing to
the Treasury to be necessary or expedient.
(5)
In subsection (1)(b) the words “(or, assuming compliance with the provisions
of Title II of the Directive (authorisation and operating conditions), would be
45

Finance Bill
Part 5 — Other taxes
117

such a facility)” shall cease to have effect on such day as the Treasury may by
order appoint.
(6)
Section 117 of FA 2002 (power to extend the exceptions in subsection (2) to any
market prescribed by order under section 118(3) of the Financial Services and
Markets Act 2000) shall cease to have effect on such day as the Treasury may
5
by order appoint.
(7)
The power to make regulations or an order under this section is exercisable by
statutory instrument.
(8)
A statutory instrument containing—
(a)
regulations under this section, or
10
(b)
an order under subsection (5),

shall be subject to annulment in pursuance of a resolution of the House of
Commons.
Part 5
Other taxes
15
Inheritance tax
147
Rates and rate bands for the next three years
(1)
For the Table in Schedule 1 to IHTA 1984 (rates and rate bands), as it has effect
from time to time, there shall be successively substituted—
(a)
the 2005-06 Table, which shall apply to any chargeable transfer made
20
on or after 6th April 2005 (but before 6th April 2006),
(b)
the 2006-07 Table, which shall apply to any chargeable transfer made
on or after 6th April 2006 (but before 6th April 2007), and
(c)
the 2007-08 Table, which shall apply to any chargeable transfer made
on or after 6th April 2007.
25
(2)
Subsection (1)(c) is without prejudice to the application of section 8 of IHTA
1984 (indexation) by virtue of the difference between the retail prices index for
the month of September in 2006 or any later year and that for the month of
September in the following year.
(3)
The 2005-06 Table is—
30

Table of Rates of Tax

Portion of value
Rate of tax

    Lower limit (£)
      Upper limit (£)
     Per cent.

              0
           275,000
        Nil

           275,000
                —
         40

35

Finance Bill
Part 5 — Other taxes
118

(4)
The 2006-07 Table is—

Table of Rates of Tax

Portion of value
Rate of tax

    Lower limit (£)
      Upper limit (£)
     Per cent.

              0
           285,000
        Nil

5

           285,000
                —
         40

(5)
The 2007-08 Table is—

Table of Rates of Tax

Portion of value
Rate of tax

    Lower limit (£)
      Upper limit (£)
     Per cent.

10

              0
           300,000
        Nil

           300,000
                —
         40

(6)
Section 8(1) of IHTA 1984 (indexation of rate bands) shall not have effect as
respects any difference between the retail prices index—
(a)
for the month of September 2003 and that for the month of September
15
2004,
(b)
for the month of September 2004 and that for the month of September
2005, or
(c)
for the month of September 2005 and that for the month of September
2006.
20
Landfill tax
148
Rate of landfill tax
(1)
In section 42 of FA 1996 (amount of landfill tax) for the amount specified in
subsection (1)(a), and the corresponding amount specified in subsection (2),
substitute “£18”.
25
(2)
The amendments made by this section have effect in relation to taxable
disposals made, or treated as made, on or after 1st April 2005.
Lorry road-user charge
149
Lorry road-user charge
For section 137(7) of FA 2002 (lorry road-user charge: preparatory expenditure)
30

Finance Bill
Part 6 — Pensions etc
119

substitute—
“(7)
A Minister of the Crown or government department may—
(a)
incur expenditure in connection with preparations for lorry
road-user charge (including any fuel credit to be paid in respect
of fuelling of lorries chargeable in respect of lorry road-user
5
charge);
(b)
enter into contracts in respect of the development or provision
of equipment, systems or services to be used in connection with
lorry road-user charge (including any fuel credit).”
Part 6
10
Pensions etc
150
Pension schemes etc.
Schedule 19 contains provision about pension schemes and related matters.
151
Pension Protection Fund etc.
(1)
The Treasury may by regulations make provision for and in connection with
15
the application of the relevant taxes in relation to—
(a)
the Pension Protection Fund,
(b)
the Fraud Compensation Fund, and
(c)
the Board of the Pension Protection Fund,

and in relation to any person in connection with either of those Funds or that
20
Board.
(2)
The provision that may be made by the regulations includes provision
imposing any of the relevant taxes (as well as provision for exemptions or
reliefs).
(3)
The relevant taxes are—
25
(a)
income tax,
(b)
capital gains tax,
(c)
corporation tax,
(d)
inheritance tax,
(e)
value added tax, and
30
(f)
stamp duty land tax.
(4)
The regulations may, in particular, include provision for and in connection
with the taxation of payments made in accordance with the pension
compensation provisions (within the meaning of Part 2 of the Pensions Act
2004 (c. 35): see section 162(2) of that Act).
35
(5)
The exemptions and reliefs that may be given by the regulations include, in
particular, exemption from—
(a)
charges to corporation tax in respect of any income arising from any
assets of the Board (or in either Fund) and other receipts of the Board
(or either Fund) and any chargeable gains arising from the disposal of
40
any assets of the Board (or in either Fund),

Finance Bill
Part 7 — European company statute
120

(b)
charges to income tax and corporation tax in respect of the levies
referred to in sections 117, 174, 175, 189 and 209 of the Pensions Act
2004 (c. 35), and
(c)
any charge to capital gains tax, or corporation tax on chargeable gains,
in respect of the receipt of fraud compensation payments (within the
5
meaning of Part 2 of that Act: see section 182(1) of that Act).
(6)
The regulations may make provision in relation to any time after 5th April
2005.
(7)
The provision made by the regulations may be framed as provision applying
with appropriate modifications—
10
(a)
for times before 6th April 2006, provisions having effect in relation to
exempt approved schemes (within the meaning of Chapter 1 of Part 14
of ICTA: see section 592(1) of that Act), and
(b)
for times on or after that date, provisions having effect in relation to
registered pension schemes (within the meaning of section 832(1) of
15
ICTA).
(8)
The regulations may include—
(a)
provision amending any enactment or instrument, and
(b)
consequential, supplementary and transitional provisions.
(9)
The regulations are to be made by statutory instrument which shall be subject
20
to annulment in pursuance of a resolution of the House of Commons.
(10)
In this section—
“the Board of the Pension Protection Fund” means the body corporate
established under section 107 of the Pensions Act 2004,
“the Fraud Compensation Fund” means the Fund required to be held,
25
managed and applied by that Board under paragraph (b) of subsection
(1) of section 110 of that Act, and
“the Pension Protection Fund” means the Fund required to be held,
managed and applied by that Board under paragraph (a) of that
subsection.
30
Part 7
European company statute
152
Chargeable gains
(1)
After section 140D of TCGA 1992 (transfer of non-UK trade) insert—
“Formation of SE by merger
35
140E
Merger leaving assets within UK tax charge
(1)
This section applies where—
(a)
an SE is formed by the merger of two or more companies in
accordance with Articles 2(1) and 17(2)(a) or (b) of Council
Regulation (EC) 2157/2001 on the Statute for a European
40
Company (Societas Europaea),
(b)
each merging company is resident in a member State,

Finance Bill
Part 7 — European company statute
121

(c)
the merging companies are not all resident in the same State,
and
(d)
section 139 does not apply to any qualifying transferred assets.
(2)
Where this section applies, qualifying transferred assets shall be treated
for the purposes of corporation tax on chargeable gains as if acquired
5
by the SE for a consideration resulting in neither gain nor loss for the
transferor.
(3)
For the purposes of subsections (1) and (2) an asset is a qualifying
transferred asset if—
(a)
it is transferred to the SE as part of the process of the merger
10
forming it, and
(b)
subsections (4) and (5) are satisfied in respect of it.
(4)
This subsection is satisfied in respect of a transferred asset if—
(a)
the transferor is resident in the United Kingdom at the time of
the transfer, or
15
(b)
any gain that would have accrued to the transferor, had it
disposed of the asset immediately before the time of the
transfer, would have been a chargeable gain forming part of the
transferor’s chargeable profits in accordance with section 10B.
(5)
This subsection is satisfied in respect of a transferred asset if—
20
(a)
the transferee SE is resident in the United Kingdom on
formation, or
(b)
any gain that would accrue to the transferee SE were it to
dispose of the asset immediately after the transfer would be a
chargeable gain forming part of the SE’s chargeable profits in
25
accordance with section 10B.
(6)
For the purposes of this section a company is resident in a member State
if—
(a)
it is within a charge to tax under the law of the State as being
resident for that purpose, and
30
(b)
it is not regarded, for the purposes of any double taxation relief
arrangements to which the State is a party, as resident in a
territory not within a member State.
(7)
This section does not apply to the formation of an SE by merger if—
(a)
it is not effected for bona fide commercial reasons, or
35
(b)
it forms part of a scheme or arrangements of which the main
purpose, or one of the main purposes, is avoiding liability to
corporation tax, capital gains tax or income tax;

and section 138 (clearance in advance) shall apply to this subsection as
it applies to section 137 (with any necessary modifications).
40
140F
Merger not leaving assets within UK tax charge
(1)
This section applies where—
(a)
an SE is formed by the merger of two or more companies in
accordance with Articles 2(1) and 17(2)(a) or (b) of Council
Regulation (EC) 2157/2001 on the Statute for a European
45
Company (Societas Europaea),
(b)
each merging company is resident in a member State,