|
| |
|
(2) | Subsection (1) and Schedule 1 shall come into force on such day as the Treasury |
| |
may by order made by statutory instrument appoint. |
| |
(3) | An order under subsection (2) may— |
| |
(a) | appoint different days for different purposes, and |
| |
(b) | contain transitional provisions and savings. |
| 5 |
| |
Income tax, corporation tax and capital gains tax |
| |
| |
| |
Social security pension lump sums |
| 10 |
7 | Charge to income tax on lump sum |
| |
(1) | A charge to income tax arises where a person becomes entitled to a social |
| |
security pension lump sum. |
| |
(2) | For the purposes of the Tax Acts (including subsection (5)) a social security |
| |
| 15 |
(a) | is to be treated as income, but |
| |
(b) | is not to be taken into account in determining the total income of any |
| |
| |
(3) | The person liable to a charge under this section is the person (“P”) entitled to |
| |
the lump sum, whether or not P is resident, ordinarily resident or domiciled in |
| 20 |
| |
(4) | The charge is imposed on P for the applicable year of assessment (see |
| |
| |
(5) | A charge under this section is a charge in respect of the amount of the lump |
| |
sum at the following rate— |
| 25 |
(a) | if P’s total income for the applicable year of assessment is nil, 0%; |
| |
(b) | if P’s total income for that year of assessment is greater than nil but does |
| |
not exceed the starting rate limit for that year, the starting rate for that |
| |
| |
(c) | if P’s total income for that year of assessment exceeds the starting rate |
| 30 |
limit but does not exceed the basic rate limit for that year, the basic rate |
| |
| |
(d) | if P’s total income for that year of assessment exceeds the basic rate |
| |
limit for that year, the higher rate for that year. |
| |
(6) | Section 8 makes provision as to the meaning of “the applicable year of |
| 35 |
assessment” for the purposes of this section. |
| |
(7) | Section 9 contains further definitions and makes provision as to |
| |
| |
(8) | Section 10 contains consequential amendments. |
| |
|
| |
|
| |
|
8 | Meaning of “applicable year of assessment” in section 7 |
| |
(1) | For the purposes of section 7 “the applicable year of assessment” has the |
| |
meaning given by this section. |
| |
(2) | Subject to subsections (5) to (7), the applicable year of assessment is— |
| |
(a) | the year of assessment in which the first benefit payment day falls, or |
| 5 |
(b) | if P dies before the beginning of that year of assessment, the year of |
| |
assessment in which P dies. |
| |
(3) | For the purposes of subsection (2) “the first benefit payment day” is, subject to |
| |
subsection (4), the day as from which P’s— |
| |
(a) | Category A or Category B retirement pension, |
| 10 |
(b) | shared additional pension, or |
| |
(c) | graduated retirement benefit, |
| |
| becomes payable following the period of deferment by virtue of which P’s |
| |
entitlement to the lump sum arises. |
| |
| 15 |
(a) | the lump sum is a state pension lump sum to which P is entitled under |
| |
paragraph 7A of Schedule 5 to SSCBA 1992 or paragraph 7A of |
| |
Schedule 5 to SSCB(NI)A 1992 or a graduated retirement benefit lump |
| |
sum to which P is entitled under a provision corresponding to either of |
| |
| 20 |
(b) | at the time of S’s death, P was entitled to a Category A or Category B |
| |
retirement pension or (as the case may be) graduated retirement |
| |
| |
| the first benefit payment day is the day on which S died; and for this purpose |
| |
“S” is the person by virtue of whose period of deferment P’s entitlement to the |
| 25 |
| |
(5) | Subsections (6) and (7) apply where social security regulations make provision |
| |
enabling the making of an election for a social security pension lump sum to be |
| |
paid in the year of assessment (“the later year of assessment”) next following |
| |
that given by subsection (2). |
| 30 |
(6) | If such an election is made by P and is not revoked, the applicable year of |
| |
| |
(a) | the later year of assessment, or |
| |
(b) | if P dies before the beginning of that year of assessment, the year of |
| |
assessment in which P dies. |
| 35 |
| |
(a) | P dies after the beginning of the later year of assessment, |
| |
(b) | by the time of P’s death, P has not notified the Secretary of State as to |
| |
whether or not P wishes to make such an election, |
| |
(c) | social security regulations make provision enabling the making of such |
| 40 |
an election in such a case by the personal representatives of P, and |
| |
(d) | P’s personal representatives make such an election in accordance with |
| |
| |
| the applicable year of assessment is the later year of assessment. |
| |
(8) | For the purposes of determining the applicable year of assessment, it does not |
| 45 |
matter when the lump sum is actually paid. |
| |
|
| |
|
| |
|
| |
“Category A or Category B retirement pension” means Category A or |
| |
Category B retirement pension under Part 2 of SSCBA 1992 or Part 2 of |
| |
| |
“graduated retirement benefit” means graduated retirement benefit |
| 5 |
under section 36 or 37 of NIA 1965 or section 35 or 36 of NIA(NI) 1966; |
| |
“shared additional pension” means shared additional pension under Part |
| |
2 of SSCBA 1992 or Part 2 of SSCB(NI)A 1992; |
| |
“social security regulations” means any regulations under— |
| |
(a) | the Social Security Administration Act 1992 (c. 5), or |
| 10 |
(b) | the Social Security Administration (Northern Ireland) Act 1992 |
| |
| |
(10) | This section is to be construed as one with section 7. |
| |
9 | Interpretation and commencement |
| |
(1) | In sections 7 and 8 “social security pension lump sum” means— |
| 15 |
(a) | a state pension lump sum, |
| |
(b) | a shared additional pension lump sum, or |
| |
(c) | a graduated retirement benefit lump sum. |
| |
(2) | In section 8 and this section— |
| |
“graduated retirement benefit lump sum” means a lump sum payable |
| 20 |
| |
(a) | section 36 or 37 of NIA 1965, or |
| |
(b) | section 35 or 36 of NIA(NI) 1966; |
| |
“shared additional pension lump sum” means a lump sum payable |
| |
| 25 |
(a) | section 55C of, and Schedule 5A to, SSCBA 1992, or |
| |
(b) | section 55C of, and Schedule 5A to, SSCB(NI)A 1992; |
| |
“state pension lump sum” means a lump sum payable under— |
| |
(a) | section 55 of, and Schedule 5 to, SSCBA 1992, or |
| |
(b) | section 55 of, and Schedule 5 to, SSCB(NI)A 1992. |
| 30 |
(3) | In section 8 and this section— |
| |
“NIA 1965” means the National Insurance Act 1965 (c. 51); |
| |
“NIA(NI) 1966” means the National Insurance Act (Northern Ireland) |
| |
| |
“SSCBA 1992” means the Social Security Contributions and Benefits Act |
| 35 |
| |
“SSCB(NI)A 1992” means the Social Security Contributions and Benefits |
| |
(Northern Ireland) Act 1992 (c. 7). |
| |
(4) | Sections 7 and 8 and this section have effect in relation to the year 2006-07 and |
| |
subsequent years of assessment. |
| 40 |
10 | Consequential amendments |
| |
(1) | ITEPA 2003 is amended as follows. |
| |
|
| |
|
| |
|
(2) | In section 577 (UK social security pensions) after subsection (1) insert— |
| |
“(1A) | But this section does not apply to any social security pension lump |
| |
sum (within the meaning of section 7 of F(No.2)A 2005).”. |
| |
(3) | In section 683 (PAYE income) in subsection (3) (meaning, subject to subsection |
| |
(4), of “PAYE pension income”) in the opening words, for “subsection (4)” |
| 5 |
substitute “subsections (3A) and (4)”. |
| |
(4) | In that section, after subsection (3) insert— |
| |
“(3A) | “PAYE pension income” for a tax year also includes any social security |
| |
pension lump sum (within the meaning of section 7 of F(No.2)A 2005) |
| |
in respect of which a charge to income tax arises under that section for |
| 10 |
| |
(5) | In section 686 (meaning of “payment”) in subsection (1) (rules as to when |
| |
payment of, or on account of, PAYE income is to be treated as made for the |
| |
purposes of PAYE regulations) at the end of the subsection insert— |
| |
| “But this is subject to subsection (5) (PAYE pension income: social |
| 15 |
security pension lump sums).”. |
| |
(6) | In that section, after subsection (4) insert— |
| |
“(5) | For the purposes of PAYE regulations, a payment of, or on account of, |
| |
an amount which is PAYE pension income of a person by virtue of |
| |
section 683(3A) (social security pension lump sums) is to be treated as |
| 20 |
made at the time when the payment is made.”. |
| |
(7) | In Schedule 1 (abbreviations and defined expressions) in Part 1 (abbreviations |
| |
of Acts and instruments) insert at the end— |
| |
| | The Finance (No. 2) Act 2005 |
| | | | | | | 25 |
|
| |
11 | Donations to charity by individuals |
| |
(1) | For section 25(5E) to (5G) of FA 1990 (donations to charity by individuals: |
| |
benefits: disregard of certain rights of admission) substitute— |
| |
“(5E) | In determining whether a gift to a charity is a qualifying donation the |
| 30 |
benefit of any right of admission received in consequence of the gift |
| |
shall be disregarded if subsections (5F) to (5H) are satisfied in relation |
| |
| |
(5F) | This subsection is satisfied if the opportunity to make a gift and to |
| |
receive the right of admission in consequence is available to the public. |
| 35 |
(5G) | This subsection is satisfied if the right of admission is a right granted by |
| |
the charity for the purpose of viewing property preserved, maintained, |
| |
kept or created by a charity in pursuance of its charitable purposes, |
| |
including, in particular— |
| |
| 40 |
(b) | grounds or other land, |
| |
|
| |
|
| |
|
| |
| |
(e) | works of art (but not performances), |
| |
| |
(g) | property of a scientific nature. |
| 5 |
(5H) | This subsection is satisfied if— |
| |
(a) | the right of admission applies, during a period of at least one |
| |
year, at all times at which the public can obtain admission, or |
| |
(b) | a member of the public could purchase the same right of |
| |
admission and the amount of the gift is greater by at least 10% |
| 10 |
than the amount which he would have to pay. |
| |
(5I) | In subsection (5E) “right of admission” means a right of admission— |
| |
(a) | of the person who makes the gift or of that person and one or |
| |
more members of his family (whether or not the right must be |
| |
exercised by all those persons at the same time), |
| 15 |
(b) | to premises or property to which the public are admitted on |
| |
payment of an admission fee, and |
| |
(c) | without payment of the admission fee or on payment of a |
| |
| |
| and in the application of subsection (5H)(b) “the same right of |
| 20 |
admission” means a right relating to the same property, classes of |
| |
person and periods of time as the right received in consequence of the |
| |
| |
(5J) | For the purposes of subsection (5H)(a) a right of admission shall be |
| |
treated as applying at all times at which the public can obtain |
| 25 |
admission despite the fact that the right does not apply on days |
| |
specified by the charity, being days on each of which an event is to take |
| |
place on the premises to which the right relates; provided that no more |
| |
than 5 days are specified for that purpose in relation to— |
| |
(a) | the period during which the right applies, in the case of a period |
| 30 |
| |
(b) | each calendar year during all or part of which the right applies, |
| |
in the case of a right applying for a period of more than one |
| |
| |
(2) | This section shall have effect in relation to gifts made on or after 6th April 2006. |
| 35 |
| |
12 | Employee securities: anti-avoidance |
| |
Schedule 2 contains amendments relating to employee securities. |
| |
|
| |
|
| |
|
| |
Scientific research organisations |
| |
13 | Corporation tax exemption for organisations |
| |
(1) | Section 508 of ICTA (tax exemption for scientific research organisations) is |
| |
| 5 |
(2) | In subsection (1) (Associations undertaking scientific research and approved |
| |
by Secretary of State), for paragraph (a) substitute— |
| |
“(a) | an Association has as its object the undertaking of research and |
| |
development which may lead to or facilitate an extension of any |
| |
class or classes of trade; and”. |
| 10 |
(3) | In that subsection, for “, be allowed in the case of the Association” substitute |
| |
“in relation to any accounting period, be allowed in the case of the Association |
| |
for that accounting period”. |
| |
(4) | After that subsection insert— |
| |
“(1A) | The Treasury may by regulations prescribe circumstances in which the |
| 15 |
conditions in subsection (1) above shall be deemed not to be complied |
| |
| |
(1B) | The Treasury may by regulations make provision specifying for the |
| |
purposes of paragraph (a) of that subsection— |
| |
(a) | what shall be deemed to be, or not to be, an Association, |
| 20 |
(b) | circumstances in which an Association shall be deemed to have, |
| |
or not to have, the undertaking of research and development as |
| |
| |
(c) | circumstances in which the undertaking of research and |
| |
development shall be deemed to be, or not to be, capable of |
| 25 |
leading to or facilitating an extension of a class of trade, or |
| |
(d) | what shall be deemed to be, or not to be, a class of trade.” |
| |
(5) | For subsection (3) (meaning of “scientific research”) substitute— |
| |
“(3) | Section 837A (meaning of “research and development”) applies for the |
| |
purposes of subsection (1)(a) above. |
| 30 |
(4) | Regulations under subsection (3) of that section (power to prescribe |
| |
activities which are, or are not, research and development) may make |
| |
provision for the purposes of that section as it applies by virtue of |
| |
subsection (3) of this section which is additional to, or different from, |
| |
the provision made otherwise for the purposes of that section.” |
| 35 |
(6) | This section has effect in relation to accounting periods beginning on or after |
| |
such day as the Treasury may by order made by statutory instrument appoint. |
| |
14 | Income tax deduction for payments to organisations |
| |
(1) | Section 88 of ITTOIA 2005 (income tax deduction for payments to research |
| |
associations etc.) is amended as follows. |
| 40 |
(2) | In subsection (1) (conditions for deduction), for the words from the beginning |
| |
|
| |
|
| |
|
of paragraph (a) to “research” in paragraph (b) substitute— |
| |
“(a) | pays any sum to an Association in the case of which exemption |
| |
may be claimed under section 508 of ICTA and which has as its |
| |
object the undertaking of research and development which may |
| |
lead to or facilitate an extension of the class of trade to which the |
| 5 |
trade carried on by the person belongs, or |
| |
(b) | pays any sum to be used for scientific research related to that |
| |
| |
(3) | In subsection (4), omit paragraph (a) (meaning of “approved” in relation to |
| |
scientific research association). |
| 10 |
(4) | In subsection (5) (references to scientific research related to a class of trade), for |
| |
“references in this section” substitute “reference in subsection (1)(b)”. |
| |
(5) | This section has effect in relation to sums paid to an Association during any |
| |
accounting period of the Assocation beginning on or after the day appointed |
| |
| 15 |
15 | Corporation tax deduction for payments to organisations |
| |
(1) | Section 82B of ICTA (corporation tax deduction for payments to research |
| |
associations etc.) is amended as follows. |
| |
(2) | In subsection (1) (conditions for deduction), for the words from the beginning |
| |
of paragraph (a) to “above” in paragraph (b) substitute— |
| 20 |
“(a) | pays any sum to an Association in the case of which exemption |
| |
may be claimed under section 508 and which has as its object the |
| |
undertaking of research and development which may lead to or |
| |
facilitate an extension of the class of trade to which the trade |
| |
carried on by the company belongs, or |
| 25 |
(b) | pays any sum to be used for scientific research related to that |
| |
| |
(3) | In subsection (3) (reference to scientific research related to a class of trade), for |
| |
“this section” substitute “subsection (1)(b) above”. |
| |
(4) | This section has effect in relation to sums paid to an Association during any |
| 30 |
accounting period of the Assocation beginning on or after the day appointed |
| |
| |
| |
Authorised investment funds etc |
| |
16 | Open-ended investment companies |
| 35 |
After section 468 of ICTA (authorised unit trust schemes) insert— |
| |
“468A | Open-ended investment companies |
| |
(1) | In relation to an open-ended investment company the rate of |
| |
corporation tax for the financial year 2005 and subsequent financial |
| |
years shall be deemed to be the rate at which income tax at the lower |
| 40 |
rate is charged for the year of assessment which begins on 6th April in |
| |
|
| |
|