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Finance (No.2) Bill


Finance (No.2) Bill
Part 5 — Oil

131

 

(a)   

in sub-paragraph (1), in the definition of “post-commencement period”,

after “2004” insert “but before 1st January 2006”,

(b)   

in sub-paragraph (1), in the definition of “pre-commencement period”,

after “2004” insert “but before 1st January 2006”,

(c)   

at the end insert—

5

    “(3)  

In the case of an accounting period (a “straddling period”) of

any qualifying company beginning before 1st January 2006

and ending on or after that date—

(a)   

so much of the straddling period as falls before 1st

January 2006, and

10

(b)   

so much of the straddling period as falls on or after

that date,

           

are treated as separate accounting periods for the purposes of

this Schedule.

      (4)  

Special provision is made elsewhere in this Schedule in

15

relation to straddling periods (see paragraphs 16, 18A and

22).”.

(6)   

In paragraph 6 (qualifying E&A expenditure), in sub-paragraph (2) (condition

that expenditure incurred on or after 1st January 2004), after “2004” insert “but

before 1st January 2006”.

20

(7)   

In paragraph 15 (supplement in respect of a post-commencement period), in

sub-paragraph (2) (supplement to be treated as a loss for the purposes of

Corporation Tax Acts), for “this Schedule)” substitute “this Schedule or Part 4

of Schedule 19C)”.

(8)   

In paragraph 16 (amount of post-commencement supplement for a post-

25

commencement period), after sub-paragraph (2) (proportionate reduction of

supplement if post-commencement period less than 12 months) insert—

   “(2A)  

But, if the post-commencement period is the deemed accounting

period under paragraph 3(3) ending before 1st January 2006, sub-

paragraph (2) has no effect in relation to the amount of the

30

supplement for that period.”.

(9)   

After paragraph 18 (ring fence losses and non-qualifying losses) insert—

“Special rule for straddling periods

18A   (1)  

This paragraph applies in any case where the period of the loss in

which a ring fence loss is incurred is the deemed accounting period

35

under paragraph 3(3) ending before 1st January 2006.

      (2)  

The following assumption shall be made for the purpose of

calculating the amount of the qualifying E&A loss and the amount of

the non-qualifying loss.

      (3)  

The assumption is that the loss made in the trade is taken to be the

40

loss incurred in the accounting period beginning before 1st January

2006 and ending on or after that date (disregarding paragraph 3(3)).

      (4)  

The amount of the non-qualifying loss (found in accordance with

that assumption) is then reduced (but not below) by the following

amount.

45

 
 

Finance (No.2) Bill
Part 6 — Inheritance tax

132

 

      (5)  

The amount is the amount of the ring fence loss in the deemed

accounting period beginning on 1st January 2006 determined under

paragraph 18 of Schedule 19C for the purposes of Part 4 of that

Schedule.”.

(10)   

In paragraph 22 (reductions in respect of utilised ring fence profits), at the end

5

insert—

    “(4)  

If the post-commencement period is the deemed accounting period

under paragraph 3(3) ending before 1st January 2006 (“the deemed

accounting period”), the amount of the profits of the deemed

accounting period is determined as follows.

10

      (5)  

The amount of the profits of the straddling period is apportioned to

the deemed accounting period in proportion to the number of days

in the deemed accounting period that fall in the straddling period.

      (6)  

The apportioned amount is taken for the purposes of this paragraph

to be the amount of the profits of the deemed accounting period.

15

      (7)  

In this paragraph “the straddling period”, in relation to a qualifying

company, means an accounting period of the company beginning

before 1st January 2006 and ending on or after that date

(disregarding paragraph 3(3)).”.

(11)   

After Schedule 19B insert the Schedule 19C set out in Schedule 19 to this Act.

20

Part 6

Inheritance tax

Future rates and bands

156     

Rates and rate bands for 2008-09 and 2009-10

(1)   

For the Table in Schedule 1 to IHTA 1984 (rates and rate bands), as it has effect

25

in relation to chargeable transfers made on or after 6th April 2008, there shall

be successively substituted—

(a)   

the 2008-09 Table, which shall apply to any chargeable transfer made

on or after 6th April 2008 (but before 6th April 2009), and

(b)   

the 2009-10 Table, which shall apply to any chargeable transfer made

30

on or after 6th April 2009.

(2)   

Subsection (1)(b) 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 2008 or any later year and that for the month of

September in the following year.

35

(3)   

The 2008-09 Table is—

  

Table of Rates of Tax

 
  

Portion of value

Rate of tax

 
  

    Lower limit (£)

      Upper limit (£)

     Per cent.

 
 
 

Finance (No.2) Bill
Part 6 — Inheritance tax

133

 
  

Table of Rates of Tax

 
  

Portion of value

Rate of tax

 
  

              0

           312,000

        Nil

 
  

           312,000

                —

         40

 
 

(4)   

The 2009-10 Table is—

5

  

Table of Rates of Tax

 
  

Portion of value

Rate of tax

 
  

    Lower limit (£)

      Upper limit (£)

     Per cent.

 
  

              0

           325,000

        Nil

 
  

           325,000

                —

         40

 

10

(5)   

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 2006 and that for the month of September

2007, or

(b)   

for the month of September 2007 and that for the month of September

15

2008.

Trusts

157     

Rules for trusts etc

(1)   

Schedule 20 contains—

(a)   

amendments of provisions of IHTA 1984 relating to settled property,

20

(b)   

amendments of provisions relating to property that, for purposes of

that Act, is property subject to a reservation, and

(c)   

related amendments of provisions relating to chargeable gains.

(2)   

Those amendments have effect as mentioned in that Schedule.

158     

Purchase of interests in foreign trusts

25

(1)   

Section 48 of IHTA 1984 (settled property: excluded property) is amended as

follows.

(2)   

In subsection (3) (circumstances in which settled property situated outside the

United Kingdom is excluded property), after paragraph (b) insert—

   

“; but this subsection is subject to subsection (3B) below.”.

30

(3)   

In subsection (3A) (circumstances in which a holding in an authorised unit

trust or a share in an open-ended investment company comprised in settled

 
 

Finance (No.2) Bill
Part 7 — Pensions

134

 

property is excluded property), after paragraph (b) insert—

   

“; but this subsection is subject to subsection (3B) below.”.

(4)   

After subsection (3A) insert—

“(3B)   

Property is not excluded property by virtue of subsection (3) or (3A)

above if—

5

(a)   

a person is, or has been, beneficially entitled to an interest in

possession in the property at any time,

(b)   

the person is, or was, at that time an individual domiciled in the

United Kingdom, and

(c)   

the entitlement arose directly or indirectly as a result of a

10

disposition made on or after 5th December 2005 for a

consideration in money or money’s worth.

(3C)   

For the purposes of subsection (3B) above—

(a)   

it is immaterial whether the consideration was given by the

person or by anyone else, and

15

(b)   

the cases in which an entitlement arose indirectly as a result of

a disposition include any case where the entitlement arose

under a will or the law relating to intestacy.”.

(5)   

If, in consequence of the amendments made by this section, an amount of

inheritance tax would (but for this subsection) fall due before the day on which

20

this Act is passed, that amount is to be treated instead as falling due at the end

of the period of 14 days beginning with that day.

(6)   

This section is deemed to have come into force on 5th December 2005.

Part 7

Pensions

25

159     

Taxable property held by investment-regulated pension schemes

(1)   

Schedule 21 (taxable property held by investment-regulated pension schemes)

has effect.

(2)   

This section and that Schedule are deemed to have come into force on 6th April

2006.

30

160     

Recycling of lump sums

(1)   

In Schedule 29 to FA 2004 (authorised lump sums), after paragraph 3 insert—

“3A   (1)  

Where this paragraph applies in relation to a pension

commencement lump sum paid to the member, the pension scheme

is to be treated as making to the member an unauthorised payment

35

of the appropriate amount.

      (2)  

Subject to sub-paragraphs (3) and (4), this paragraph applies in

relation to a pension commencement lump sum if—

(a)   

because of the lump sum, the amount of the contributions

paid by or on behalf of, or in respect of, the member to the

40

pension scheme, or to any other registered pension scheme,

is significantly greater than it otherwise would be, and

 
 

Finance (No.2) Bill
Part 8 — Stamp taxes

135

 

(b)   

the member envisaged at the relevant time that that would be

so.

      (3)  

This paragraph does not apply in relation to any lump sum paid to

the member on any day if the amount of the lump sum, when added

to any other pension commencement lump sum paid to the member

5

within the period of 12 months ending with that day, does not exceed

1 per cent. of the standard lifetime allowance on that day.

      (4)  

This paragraph does not apply if the amount by which the

contributions paid as mentioned in sub-paragraph (2)(a) is greater

than it otherwise would be because of the lump sum does not exceed

10

30% of the amount of the lump sum.

      (5)  

“The appropriate amount” is so much of—

(a)   

the amount crystallised by the benefit crystallisation event

constituted by the payment of the lump sum, as does not

exceed

15

(b)   

the amount of the member’s lifetime allowance which is

available on it.

      (6)  

“The relevant time” is—

(a)   

if paragraph (a) of sub-paragraph (2) is satisfied before the

lump sum is paid, the time when that paragraph is first

20

satisfied, and

(b)   

otherwise, the time when the lump sum is paid.”

(2)   

This section is deemed to have come into force on 6th April 2006.

161     

Inheritance tax

(1)   

Schedule 22 (provisions about inheritance tax in relation to registered pension

25

schemes) has effect.

(2)   

This section and that Schedule are deemed to have come into force on 6th April

2006.

162     

Miscellaneous

(1)   

Schedule 23 (miscellaneous amendments relating to pension schemes etc) has

30

effect.

(2)   

This section and that Schedule are deemed to have come into force on 6th April

2006.

Part 8

Stamp taxes

35

Stamp duty and stamp duty land tax: thresholds

163     

Raising of thresholds

(1)   

In section 55 of FA 2003 (amount of stamp duty land tax chargeable: general)

in subsection (2) (calculation of percentage of chargeable consideration), in

 
 

Finance (No.2) Bill
Part 8 — Stamp taxes

136

 

Table A (bands and percentages for residential property), for “£120,000”, in

both places, substitute “£125,000”.

(2)   

In Schedule 5 to FA 2003 (stamp duty land tax: amount of tax chargeable: rent),

in paragraph 2(3) (calculation of tax chargeable in respect of rent), in Table A

(bands and percentages for residential property), for “£120,000”, in both places,

5

substitute “£125,000”.

(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 “£120,000”, in

both places, substitute “£125,000”.

10

(4)   

The amendments made by subsections (1) and (2) have effect in relation to any

transaction of which the effective date (within the meaning of Part 4 of FA

2003) is after 22nd March 2006.

(5)   

The amendment made by subsection (3) has effect in relation to instruments

executed after 22nd March 2006.

15

Stamp duty land tax

164     

Partnerships

Schedule 24 (amendments of Schedule 15 to FA 2003) has effect.

165     

Leases

(1)   

In section 77 of FA 2003 (notifiable transactions), for subsection (2A)

20

substitute—

“(2A)   

The assignment of a lease is notifiable if there is chargeable

consideration for the assignment and either—

(a)   

the lease is for a term of seven years or more, or

(b)   

the consideration for the assignment is chargeable at a rate of

25

1% or higher, or would be so chargeable but for a relief.”

(2)   

In Schedule 5 to FA 2003 (amount of tax chargeable: rent), in paragraph 3 (net

present value of rent payable over term of lease), for “in year i” substitute “in

respect of year i”.

(3)   

Subsection (1) has effect in relation to any assignment of which the effective

30

date (within the meaning of Part 4 of FA 2003) is on or after the day on which

this Act is passed.

(4)   

Subsection (2) has effect in relation to any lease granted or treated as granted

on or after that day.

(5)   

Schedule 25 (amendments of Schedule 17A to FA 2003) has effect.

35

166     

Reallocation of trust property as between beneficiaries

(1)   

In Schedule 16 to FA 2003 (trusts and powers), after paragraph 7 insert—

“Reallocation of trust property as between beneficiaries

8          

Where—

 
 

Finance (No.2) Bill
Part 8 — Stamp taxes

137

 

(a)   

the trustees of a settlement reallocate trust property in such a

way that a beneficiary acquires an interest in certain trust

property and ceases to have an interest in other trust

property, and

(b)   

the beneficiary consents to ceasing to have an interest in that

5

other property,

           

the fact that he gives consent does not mean that there is chargeable

consideration for the acquisition.”

(2)   

Subsection (1) has effect in relation to any acquisition of which the effective

date (within the meaning of Part 4 of FA 2003) is on or after the day on which

10

this Act is passed.

167     

Unit trust schemes

(1)   

Part 4 of FA 2003 (stamp duty land tax) is amended as follows.

(2)   

Omit section 64A (initial transfer of assets to trustees of unit trust scheme).

(3)   

In section 101 (unit trust schemes)—

15

(a)   

in subsection (1) (application of Part (except for provisions mentioned

in subsection (7)) to unit trust schemes) for “provisions” substitute

“provision”, and

(b)   

in subsection (7) (provisions for the purposes of which unit trust

schemes not to be treated as companies) omit from “section 53” to

20

“companies), or”.

(4)   

This section has effect in relation to any land transaction of which the effective

date is, or is after, 22nd March 2006 (but see subsections (5) and (6)).

(5)   

This section does not have effect in relation to—

(a)   

any land transaction which is effected in pursuance of a contract

25

entered into and substantially performed before 2 p.m. on 22nd March

2006 (“the relevant time”), or

(b)   

any other land transaction which is effected in pursuance of a contract

entered into before the relevant time and which is not an excluded

transaction.

30

(6)   

For this purpose, a land transaction effected in pursuance of a contract is an

excluded transaction if—

(a)   

any provision of the contract has effect by reference to a unit trust

scheme and the scheme is not established before the relevant time,

(b)   

at or after the relevant time the contract is varied in a way that

35

significantly affects the land transaction (see subsection (7)),

(c)   

the subject-matter of the land transaction is not identified in the

contract in a way that would have enabled its acquisition before the

relevant time,

(d)   

rights under the contract are assigned at or after the relevant time,

40

(e)   

the land transaction is effected in consequence of the exercise, at or after

the relevant time, of any option, right of pre-emption or similar right, or

(f)   

at or after the relevant time there is an assignment, subsale or other

transaction (relating to the whole or part of the contract’s subject-

matter) as a result of which a person other than the purchaser under the

45

contract becomes entitled to call for a conveyance to him.

 
 

 
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