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Finance (No.2) Bill


Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

315

 

      (2)  

After section 63 insert—

“63A    

Death: application of law in Northern Ireland

(1)   

The provisions of this Act, so far as relating to the consequences of

the death of a person to whom property in Northern Ireland stands

limited for life (“the deceased”), shall have effect subject to the

5

provisions of this section.

(2)   

A person who acquires property in fee simple absolute or fee tail in

possession as a consequence of the deceased’s death shall be deemed

to have acquired all the assets forming part of the property at the

date of the deceased’s death for a consideration equal to their market

10

value at that date.”

      (3)  

The provisions of this paragraph shall have effect in relation to a death

occurring on or after 6th April 2006.

12    (1)  

In section 64(1) (expenses in administration)—

(a)   

for the words from “an asset” to the beginning of paragraph (a)

15

substitute “an asset held by another person as trustee, or as a

personal representative of a deceased person, to which he became

absolutely entitled as legatee or as against the trustee”, and

(b)   

in paragraphs (a) and (b) for “personal representatives or trustees”

substitute “personal representative or trustee”.

20

      (2)  

This paragraph shall have effect in relation to disposals made on or after 6th

April 2006.

13    (1)  

In section 77(1) (charge on settlor with interest in settlement), in the words

following paragraph (c), after “those” insert “gains”.

      (2)  

For section 77(8) (meaning of “derived property”) substitute—

25

“(8)   

In this section “derived property”, in relation to any property,

means—

(a)   

income from that property,

(b)   

property directly or indirectly representing—

(i)   

proceeds of that property, or

30

(ii)   

proceeds of income from that property, or

(c)   

income from property which is derived property by virtue of

paragraph (b) above.”

      (3)  

This paragraph shall be deemed always to have had effect.

14    (1)  

In section 79B(1) (attribution to trustees of gains of non-resident company)

35

before “trustees of a settlement” insert “the”.

      (2)  

This paragraph shall have effect in relation to gains accruing on or after 6th

April 2006.

15    (1)  

In section 97(7) (supplementary provisions for offshore settlements:

interpretation)—

40

(a)   

omit “the preceding provisions of”,

(b)   

for the definition of “settlement” and “settlor” substitute—

““settlement” has the meaning given by section 620 of

ITTOIA 2005, and

 

 

Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

316

 

“settled property” and references (however expressed)

to property comprised in a settlement shall be

construed accordingly.”

      (2)  

After section 97(7) insert—

“(7A)   

In this section, sections 86A to 96 and Schedule 4C “trustee”, in

5

relation to a settlement in relation to which there would be no

trustees apart from this subsection, means any person in whom the

settled property or its management is for the time being vested (and

a person who is treated as a trustee of the settlement by virtue of this

subsection shall be treated as a trustee of the settlement for the

10

purposes of section 69).”

      (3)  

This paragraph shall come into force on 6th April 2006 (in relation to

settlements whenever created).

16    (1)  

In section 98(2) (information: application of section 745 of ICTA)—

(a)   

for “(2) to (5)” substitute “(2) to (6)”,

15

(b)   

omit “and” at the end of paragraph (a), and

(c)   

omit paragraph (b).

      (2)  

This paragraph shall come into force on 6th April 2006 (in relation to

settlements whenever created).

17    (1)  

In section 104(1) (share pooling) after “for the purposes of this Act” insert

20

“(subject to express provision to the contrary)”.

      (2)  

This paragraph shall come into force on 6th April 2006.

18    (1)  

In section 109(2)(a) (share pooling: pre-1982 holdings) after “for the

purposes of this Act” insert “(subject to express provision to the contrary)”.

      (2)  

This paragraph shall come into force on 6th April 2006.

25

19    (1)  

In section 169D(5) after “(3)” insert “and to an individual’s dependent child

in section 169F(2A)”.

      (2)  

This paragraph shall come into force on 6th April 2006.

20    (1)  

In section 217 (building societies: successor companies)—

(a)   

in subsection (3)(a)—

30

(i)   

for “trustees” substitute “the trustees of a settlement”, and

(ii)   

omit the word “and” at the end of the paragraph,

(b)   

omit subsection (3)(b), and

(c)   

in subsection (5) for “arising” substitute “accruing”.

      (2)  

This paragraph shall have effect in relation to a transfer falling within

35

section 216(1) which is effected on or after 6th April 2006.

21    (1)  

In section 227(2) (employee share ownership trusts: conditions for roll-over

relief) for “the trustees of a trust” substitute “the trustees of a settlement”.

      (2)  

This paragraph shall have effect in relation to disposals made on or after 6th

April 2006.

40

22    (1)  

In section 228(5)(b) (employee share ownership trusts: unauthorised

arrangement) for “a beneficiary under the trust” substitute “a beneficiary

under the settlement”.

 

 

Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

317

 

      (2)  

In section 228(7) (qualifying employee share ownership trust) for “whether

a trust is” substitute “whether a settlement is”.

      (3)  

Sub-paragraph (1) shall have effect in relation to arrangements which allow

an acquisition to be made on or after 6th April 2006 (irrespective of when the

arrangements were made).

5

      (4)  

Sub-paragraph (2) shall have effect for the purposes of determining what

constitutes a qualifying share ownership trust for the purpose of section 227

on or after 6th April 2006.

23    (1)  

In section 251(5) (debts: trustee creditors)—

(a)   

for “Where the original creditor is a trustee and the debt, when

10

created, is settled property” substitute “Where the trustees of a

settlement are the original creditor”, and

(b)   

for “as against the trustee” substitute “as against the trustees”.

      (2)  

This paragraph shall have effect in relation to debts created on or after 6th

April 2006.

15

24    (1)  

In section 283(4) (repayment supplements)—

(a)   

for “a trust or,” substitute “the trustees of a settlement or”, and

(b)   

omit “as such (within the meaning of section 701(4) of that Act)”.

      (2)  

Sub-paragraph (1)(a) shall have effect in relation to a repayment made on or

after 6th April 2006.

20

      (3)  

Sub-paragraph (1)(b) shall have effect in relation to a repayment made on or

after 6th April 2006 (irrespective of the date on which the deceased person

died).

25    (1)  

In section 286(3) (connected persons: trustees) omit the words following

paragraph (c).

25

      (2)  

After section 286(3) insert—

“(3ZA)   

For the purpose of subsection (3) above—

(a)   

“settlement” has the same meaning as in section 620 of

ITTOIA 2005, and

(b)   

“trustee”, in relation to a settlement in relation to which there

30

would be no trustees apart from this paragraph, means any

person in whom the settled property or its management is for

the time being vested.”

      (3)  

This paragraph shall come into force (in relation to settlements whenever

created) on 6th April 2006.

35

26    (1)  

In section 288(8) (interpretation) at the appropriate places insert—

 

““Principal settlement”... ...

Sch.4ZA para. 1”,

 
 

““Settlor” ...    ...    ...   ...   ...

S.68A”,

 
 

““Settlor of property”...   ... 

S.68A”,

 
 

““Sub-fund”...   ...   ...   ...   

Sch.4ZA para. 1”,

 

40

 

 

Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

318

 
 

““Sub-fund election”...  ...   

Sch.4ZA para. 2”,

 
 

““Sub-fund settlement” ...

Sch.4ZA para. 1”.

 
 

      (2)  

This paragraph shall come into force on 6th April 2006 (in relation to

settlements whenever created).

27    (1)  

For paragraph 17(4) of Schedule A1 (taper relief: meaning of “derived

5

property”) substitute—

    “(4)  

In this paragraph “derived property”, in relation to any property,

means—

(a)   

income from that property,

(b)   

property directly or indirectly representing—

10

(i)   

proceeds of that property, or

(ii)   

proceeds of income from that property, or

(c)   

income from property which is derived property by virtue

of paragraph (b) above.”

      (2)  

In paragraph 17(5) of Schedule A1 (property settled by company) for

15

“section” substitute “paragraph”.

      (3)  

Paragraph 17(6) of Schedule A1 (meaning of “settlor”) shall cease to have

effect.

      (4)  

In paragraph 20(2) of Schedule A1 (application of section 79 to paragraph

20(1)) for “Subsections (1) to (5)” substitute “Subsections (1) to (5A)”.

20

      (5)  

Sub-paragraphs (1) and (3) shall have effect for the purpose of determining

whether a company which is a settlor in relation to a settlement (whenever

created) is to be regarded as having an interest in the settlement for the

purposes of paragraph 17(1) of Schedule A1 on or after 6th April 2006.

      (6)  

Sub-paragraph (4) shall have effect to determine any question arising on or

25

after 6th April 2006 as to whether, for the purposes of Schedule A1, settled

property in relation to a settlement (whenever created) originated from

more than one settlor (irrespective of when the property was provided).

28    (1)  

In paragraph 1(6) of Schedule 1 (exempt amount: interpretation) for the

words ““settlor” and “excluded settlement” have the same meanings”

30

substitute ““excluded settlement” has the same meaning”.

      (2)  

In paragraph 2(7) of that Schedule (meaning of “settlor” and “excluded

settlement”) omit the words from “settlor” to “intestate and”.

      (3)  

This paragraph shall have effect for the purposes of determining, for the

purposes of Schedule 1, whether a person is a settlor in relation to a

35

settlement (whenever created) on or after 6th April 2006.

29    (1)  

In paragraph 12 of Schedule 4A (meaning of “settlor”) for “(3) to (5)”

substitute “(3) to (5A)”.

      (2)  

This paragraph shall have effect to determine any question arising on or

after 6th April 2006 as to whether, for the purposes of Schedule 4A, a person

40

is a settlor in relation to a settlement (whenever created).

 

 

Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

319

 

Residence of trustees

30    (1)  

In each of the provisions set out in sub-paragraph (2) for “not resident or

ordinarily resident in the United Kingdom” substitute “neither resident nor

ordinarily resident in the United Kingdom”.

      (2)  

Those provisions are—

5

(a)   

section 76(1B)(a) (disposal of interest in settled property),

(b)   

section 86(2)(a) (attribution of gains to settlors: residence condition),

and

(c)   

paragraphs 2(1)(c), 3(1)(a) and 4(1)(a) of Schedule 5A (settlements

with foreign element).

10

      (3)  

In paragraph (2)(1)(d) of Schedule 5A for “resident or ordinarily resident”

substitute “resident and ordinarily resident”.

      (4)  

The amendments to sections 76(1B)(a) and 86(2)(a) shall come into force on

6th April 2007 (in relation to settlements whenever created).

      (5)  

The amendments to paragraph 2(1)(c) and (d) of Schedule 5A shall have

15

effect in relation to transfers of property made on or after 6th April 2007 (in

relation to settlements whenever created).

      (6)  

The amendments to paragraphs 3(1)(a) and 4(1)(a) of Schedule 5A shall have

effect in relation to settlements created on or after 6th April 2007.

31         

In section 77(7) (settlor with interest in settlement) for “the settlor is, and the

20

trustees are, either resident in the United Kingdom during any part of the

year or ordinarily resident in the United Kingdom during the year”

substitute “—

(a)   

the settlor is either resident in the United Kingdom during

any part of the year or ordinarily resident in the United

25

Kingdom during the year, and

(b)   

the trustees are resident and ordinarily resident in the United

Kingdom during any part of the year.”

32         

In section 83A(3) (trustee residence: split years)—

(a)   

in paragraph (a)—

30

(i)   

after “resident” insert “and ordinarily resident”, and

(ii)   

at the end omit “or”, and

(b)   

omit paragraph (b).

33         

Paragraphs 31 and 32 shall come into force on 6th April 2007 (in relation to

settlements whenever created).

35

34    (1)  

In each of the provisions set out in sub-paragraph (2) for “resident or

ordinarily resident in the United Kingdom” substitute “resident and

ordinarily resident in the United Kingdom”.

      (2)  

Those provisions are—

(a)   

section 83A(4)(b) (trustees to be treated as non-resident),

40

(b)   

section 85A(3) (attribution of gains to beneficiaries on transfer of

value to trustees),

(c)   

section 86(3) (assumption as to residence),

(d)   

section 87(2) (computation of gains),

(e)   

paragraph 5(2) of Schedule 4A (dual resident trustees),

45

 

 

Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

320

 

(f)   

paragraphs 4(2) and 10(1) and (3) of Schedule 4C (trustees:

chargeable amount and residence), and

(g)   

paragraphs 3(1)(b) and 4(1)(b) of Schedule 5A (settlement with

foreign element: information).

      (3)  

The amendments to sections 83A(4)(b), 85A(3), 86(3) and 87(2), paragraph

5

5(2) of Schedule 4A and paragraphs 4(2) and 10(1) and (3) of Schedule 4C

shall come into force on 6th April 2007 (in relation to settlements whenever

created).

      (4)  

The amendments to paragraphs 3(1)(b) and 4(1)(b) of Schedule 5A shall have

effect in relation to settlements created on or after 6th April 2007.

10

35    (1)  

In each of the provisions set out in sub-paragraph (2)—

(a)   

for “resident in the United Kingdom during any part of the year or

ordinarily resident in the United Kingdom during the year”

substitute “resident and ordinarily resident in the United Kingdom

during any part of the year”, and

15

(b)   

for “such residence or ordinary residence” substitute “such residence

and ordinary residence”.

      (2)  

Those provisions are—

(a)   

section 86(2)(b) (trustees resident outside United Kingdom),

(b)   

section 88(1) (gains of dual resident settlements), and

20

(c)   

paragraph 5(1) of Schedule 4C (chargeable amount: dual resident

settlement).

      (3)  

Sub-paragraph (2)(c) shall have effect in relation to a transfer of value made

on or after 6th April 2007 (in relation to settlements whenever created).

36    (1)  

In each of the provisions set out in sub-paragraph (2) for “at no time resident

25

or ordinarily resident in the United Kingdom” substitute “at no time

resident and ordinarily resident in the United Kingdom”.

      (2)  

Those provisions are—

(a)   

section 87(1) (attribution of gains to beneficiaries), and

(b)   

paragraph 4(1) of Schedule 4C (chargeable amount: non-resident

30

settlement).

      (3)  

Sub-paragraph (2)(b) shall have effect in relation to a transfer of value made

on or after 6th April 2007 (in relation to settlements whenever created).

37    (1)  

In section 169(3)(a) (availability of hold-over relief)—

(a)   

for “fall to be treated, under section 69, as” substitute “are”, and

35

(b)   

omit the words from “, although” to the end of the paragraph.

      (2)  

In section 169(3)(b)(ii) (notional disposal) for “arising” substitute “accruing”.

      (3)  

This paragraph shall have effect in relation to relevant disposals (within the

meaning given by section 169(2)) made on or after 6th April 2007 (in relation

to settlements whenever created).

40

38         

In paragraph 2(7)(a) of Schedule 1 (meaning of “excluded settlement”) omit

“treated under section 69(1) as”.

39         

In paragraph 5(1) of Schedule 4A (residence of trustees) for the words from

“either” to the end of the sub-paragraph substitute “resident and ordinarily

resident in the United Kingdom during any part of the year”.

45

 

 

Finance (No.2) Bill
Schedule 12 — Settlements: amendment of TCGA 1992 etc
Part 3 — Consequential and minor amendments

321

 

40         

In paragraph 10(2) of Schedule 4C (capital payments received by

beneficiaries when trustees resident in United Kingdom) for paragraphs (a)

and (b) substitute “during the whole of which the trustees are resident and

ordinarily resident in the United Kingdom”.

41         

Paragraphs 35 to 40 shall, unless otherwise expressly provided, come into

5

force on 6th April 2007 (in relation to settlements whenever created).

Sub-fund settlements

42         

After section 73(1) of TCGA 1992 (death of life tenant: exclusion of

chargeable gain) insert—

“(1A)   

Subsection (1)(b) above shall be treated as having effect in relation to

10

a sub-fund settlement if the property does not revert to the trustees

of the principal settlement in relation to that sub-fund settlement by

reason only that—

(a)   

a sub-fund election is or has been made in respect of another

sub-fund of the principal settlement, and

15

(b)   

the property becomes comprised in that other sub-fund

settlement on the death of the person entitled to the interest

in possession.”

43         

In section 286(3) of TCGA 1992 (connected persons: trustees)—

(a)   

omit “and” at the end of paragraph (b), and

20

(b)   

after paragraph (c) insert—

“(d)   

if the settlement is the principal settlement in relation

to one or more sub-fund settlements, the trustees of

the sub-fund settlements, and

(e)   

if the settlement is a sub-fund settlement in relation to

25

a principal settlement, the trustees of any other sub-

fund settlements in relation to the principal

settlement.”

44    (1)  

At the beginning of Schedule 1 to TCGA 1992 (trustees: exempt amount, etc)

insert—

30

“A1   (1)  

In determining the exempt amount available to the trustees of a

settlement in relation to a year of assessment—

(a)   

a principal settlement and its sub-fund settlements shall be

treated, for the purposes of paragraphs 1 and 2 below, as if

no sub-fund elections had been made, and

35

(b)   

paragraph 3 below shall apply for the purposes of

determining the exempt amount available to each member

of the class consisting of a principal settlement and its sub-

fund settlements.

      (2)  

The reference in sub-paragraph (1) above to a principal settlement

40

and its sub-fund settlements means a principal settlement in

respect of which one or more sub-fund elections are treated as

having taken effect.”

      (2)  

After paragraph 2 of Schedule 1 to TCGA 1992 insert—

“3    (1)  

The exempt amount available in relation to a year of assessment to

45

the trustees of each settlement in the class consisting of a principal

 

 

 
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