Finance (No.2) Bill

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Finance (No.2) Bill

Finance (No.2) Bill
Part 7 — Pensions
135

159
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
5
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
10
pension scheme, or to any other registered pension scheme,
is significantly greater than it otherwise would be, and
(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
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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
within the period of 12 months ending with that day, does not exceed
1% of the standard lifetime allowance on that day.
      (4)
This paragraph does not apply if the amount by which the
20
contributions paid as mentioned in sub-paragraph (2)(a) is greater
than it otherwise would be because of the lump sum does not exceed
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
25
constituted by the payment of the lump sum, as does not
exceed
(b)
the amount of the member’s lifetime allowance which is
available on it.
      (6)
“The relevant time” is—
30
(a)
if paragraph (a) of sub-paragraph (2) is satisfied before the
lump sum is paid, the time when that paragraph is first
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.
35
160
Inheritance tax
(1)
Schedule 22 (provisions about inheritance tax in relation to registered pension
schemes) has effect.
(2)
This section and that Schedule are deemed to have come into force on 6th April
2006.
40
161
Miscellaneous
(1)
Schedule 23 (miscellaneous amendments relating to pension schemes etc) has
effect.

Finance (No.2) Bill
Part 8 — Stamp taxes
136

(2)
This section and that Schedule are deemed to have come into force on 6th April
2006.
Part 8
Stamp taxes
Stamp duty and stamp duty land tax: thresholds
5
162
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
Table A (bands and percentages for residential property), for “£120,000”, in
both places, substitute “£125,000”.
10
(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,
substitute “£125,000”.
(3)
In Schedule 13 to FA 1999 (stamp duty: instruments chargeable and rates of
15
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”.
(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
20
2003) is after 22nd March 2006.
(5)
The amendment made by subsection (3) has effect in relation to instruments
executed after 22nd March 2006.
Stamp duty land tax
163
Partnerships
25
Schedule 24 (amendments of Schedule 15 to FA 2003) has effect.
164
Leases
(1)
In section 77 of FA 2003 (notifiable transactions), for subsection (2A)
substitute—
“(2A)
The assignment of a lease is notifiable if there is chargeable
30
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
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
35
present value of rent payable over term of lease), for “in year i” substitute “in
respect of year i”.

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Part 8 — Stamp taxes
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(3)
Subsection (1) has effect in relation to any assignment of which the effective
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
(5)
Schedule 25 (amendments of Schedule 17A to FA 2003) has effect.
165
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—
10
(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
15
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
20
this Act is passed.
166
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)—
25
(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
30
“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
35
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.
40
(6)
For this purpose, a land transaction effected in pursuance of a contract is an
excluded transaction if—

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Part 8 — Stamp taxes
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(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
significantly affects the land transaction (see subsection (7)),
(c)
the subject-matter of the land transaction is not identified in the
5
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,
(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
10
(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
contract becomes entitled to call for a conveyance to him.
(7)
For the purposes of subsection (6)(b) the contract is varied in a way that
15
significantly affects the land transaction if (and only if)—
(a)
it is varied so as to substitute a different purchaser in relation to the
land transaction,
(b)
it is varied so as to alter the subject-matter of the land transaction, or
(c)
it is varied so as to alter the consideration for the land transaction.
20
(8)
Expressions which are used in Part 4 of FA 2003 and in this section have the
same meaning in this section as in that Part.
167
Demutualisation of insurance companies
(1)
Schedule 7 to FA 2003 (stamp duty land tax: group relief etc) is amended as
follows.
25
(2)
In paragraph 2 (restrictions on availability of group relief) in sub-paragraph (1)
(no relief if arrangements by virtue of which a person has or could have control
of purchaser but not vendor) at the end insert—

“For another exception to this, see sub-paragraph (3A).”.
(3)
In that paragraph after sub-paragraph (3) (arrangements which are within sub-
30
paragraph (2)(a)) insert—
   “(3A)
Sub-paragraphs (1) and (2)(b) do not apply to arrangements in so far
as they are for the purpose of facilitating a transfer of the whole or
part of the business of a company to another company in relation to
which—
35
(a)
section 96 of the Finance Act 1997 is intended to apply (stamp
duty relief: demutualisation of insurance companies), and
(b)
the conditions for relief under that section are intended to be
met.”.
(4)
In paragraph 4 (cases in which group relief not withdrawn under paragraph
40
3)—
(a)
after sub-paragraph (6) (the third case where the relief not withdrawn)
insert—
   “(6A)
The fourth case is where—
(a)
the purchaser ceases to be a member of the same
45
group as the vendor as a result of the transfer of the

Finance (No.2) Bill
Part 8 — Stamp taxes
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whole or part of the vendor’s business to another
company (“the acquiring company”) in relation to
which—
(i)
section 96 of the Finance Act 1997 applies
(stamp duty relief: demutualisation of
5
insurance companies), and
(ii)
the conditions for relief under that section are
met, and
(b)
the purchaser is immediately after that transfer a
member of the same group as the acquiring
10
company.”, and
(b)
in sub-paragraph (7) (re-imposition of the withdrawal of the relief), in
the opening words, after “in a case within sub-paragraph (6)” insert “or
(6A)”.
(5)
The amendments made by this section have effect in relation to any transfer
15
which takes place, or is intended to take place, after 22nd March 2006.
168
Alternative finance
(1)
In sections 71A to 73 of FA 2003 (alternative property finance) for “individual”
substitute “person” (and for “an individual” substitute “a person”).
(2)
Sections 71A(6), 72(6), 72A(6) and 73(4) shall cease to have effect.
20
(3)
In section 73(3) after “chargeable” insert “on a chargeable consideration that is
not less than the market value of the interest and, in the case of the grant of a
lease at a rent, the rent.”
(4)
After section 73 insert—
“73A
Sections 71A to 73: supplemental
25
Sections 71A to 73 do not apply to arrangements in which the first
transaction is exempt from charge by virtue of Schedule 7.”
(5)
This section shall have effect in relation to arrangements in which the effective
date of the first transaction (within the meaning of sections 71A to 73 of FA
2003) is on or after the date on which this Act is passed; and section 119(1) of
30
FA 2003 shall have effect for determining the effective date for the purposes of
this subsection.
Stamp duty
169
Reliefs for certain company acquisitions
(1)
Part 3 of FA 1986 (stamp duty) is amended as follows.
35
(2)
In section 75 (relief for acquisition of target company’s undertaking in
pursuance of reconstruction scheme)—
(a)
in subsection (4) (condition as to registered office etc) omit “that the
registered office of the acquiring company is in the United Kingdom
and”, and
40
(b)
in subsection (5)(c) (condition that any shareholder holds the same
proportion of shares in the companies) after “the same” insert “, or as
nearly as may be the same,”.

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Part 9 — Miscellaneous provisions
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(3)
In section 76 (other relief for acquisition of target company’s undertaking), in
subsection (3) (condition as to registered office etc) omit “that the registered
office of the acquiring company is in the United Kingdom and”.
(4)
In section 77 (relief for acquisition of target company’s share capital), in
subsection (3) (conditions for relief),—
5
(a)
omit paragraph (a) (condition as to registered office),
(b)
in paragraph (g) (condition that the number of shares of any particular
class bear to all the shares the same proportion) after “the same
proportion” insert “, or as nearly as may be the same proportion,”, and
(c)
in paragraph (h) (condition that proportion of shares of any particular
10
class held by any shareholder be the same) after “the same” insert “, or
as nearly as may be the same,”.
(5)
The amendments made by this section have effect in relation to instruments
executed after the day on which this Act is passed.
Part 9
15
Miscellaneous provisions
Landfill tax
170
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),
20
substitute “£21”.
(2)
The amendments made by this section have effect in relation to taxable
disposals made, or treated as made, on or after 1st April 2006.
Climate change levy
171
Climate change levy: rates
25
(1)
In Schedule 6 to FA 2000 (climate change levy) for the Table in paragraph 42(1)
(amount payable by way of levy) substitute—

Taxable commodity supplied
Rate at which levy payable if

supply is neither a half-rate

supply nor a reduced-rate supply

30

Electricity
£0.00441 per kilowatt hour

Gas supplied by a gas utility or
£0.00154 per kilowatt hour

any gas supplied in a gaseous

state that is of a kind supplied

by a gas utility

35

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Part 9 — Miscellaneous provisions
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Taxable commodity supplied
Rate at which levy payable if

supply is neither a half-rate

supply nor a reduced-rate supply

Any petroleum gas, or other
£0.00985 per kilogram

gaseous hydrocarbon, supplied

5

in a liquid state

Any other taxable commodity
£0.01201 per kilogram

(2)
This section has effect in relation to supplies treated as taking place on or after
1st April 2007.
172
Abolition of half-rate supplies etc
10
(1)
For the purposes of climate change levy, no supply made on or after 1st April
2006 is a half-rate supply.
(2)
Subsections (3) to (6) have effect for determining when a supply is to be
regarded as made for the purposes of subsection (1).
(3)
A supply—
15
(a)
of electricity, or
(b)
of gas that is in a gaseous state and is of a kind supplied by a gas utility,

is to be regarded as made at the time when the electricity or gas is actually
supplied.
(4)
In the case of a supply of a taxable commodity not falling within subsection (3)
20
by a person who is resident in the United Kingdom—
(a)
if the commodity is to be removed, the supply is to be regarded as made
at the time of the removal,
(b)
if the commodity is not to be removed, the supply is to be regarded as
made when the commodity is made available to the person to whom it
25
is supplied.

This subsection does not apply if subsection (6) (deemed self-supply) applies
in the case of the supply.
(5)
In the case of a supply of a taxable commodity not falling within subsection (3)
by a person who is not resident in the United Kingdom, the supply is to be
30
regarded as made—
(a)
when the commodity is delivered to the person to whom it is supplied,
or
(b)
if earlier, when it is made available in the United Kingdom to that
person.
35

This subsection does not apply if subsection (6) (deemed self-supply) applies
in the case of the supply.
(6)
In any case where, by virtue of paragraph 23(3) of Schedule 6 to FA 2000, a
person is, for the purposes of that Schedule, deemed to make a supply to
himself of a quantity of a taxable commodity—
40
(a)
which he has produced, and
(b)
which does not fall within subsection (3),