|
| |
|
(a) | an individual is beneficially entitled to an interest in |
| |
possession in settled property, |
| |
| |
(i) | the individual became beneficially entitled to the |
| |
interest in possession before 22nd March 2006, or |
| 5 |
(ii) | the individual became beneficially entitled to the |
| |
interest in possession on or after 22nd March 2006 and |
| |
the interest is an immediate post-death interest, a |
| |
disabled person’s interest or a transitional serial |
| |
| 10 |
(c) | the interest in possession comes to an end during the |
| |
| |
| |
(a) | section 102 above, and |
| |
(b) | Schedule 20 to this Act, |
| 15 |
| the individual shall be taken (if, or so far as, he would not otherwise |
| |
be) to dispose, on the coming to an end of the interest in possession, |
| |
of the no-longer-possessed property by way of gift. |
| |
(3) | In subsection (2) above “the no-longer-possessed property” means |
| |
the property in which the interest in possession subsisted |
| 20 |
immediately before it came to an end, other than any of it to which |
| |
the individual becomes absolutely and beneficially entitled in |
| |
possession on the coming to an end of the interest in possession.” |
| |
(3) | In Schedule 20 (supplementary rules about gifts with reservation), after |
| |
| 25 |
“Termination of interests in possession |
| |
4A (1) | This paragraph applies where— |
| |
(a) | under section 102ZA of this Act, an individual (“D”) is |
| |
taken to dispose of property by way of gift, and |
| |
(b) | the property continues to be settled property immediately |
| 30 |
| |
(2) | Paragraphs 2 to 4 above shall not apply but, subject to the |
| |
following provisions of this paragraph, the principal section and |
| |
the following provisions of this Schedule shall apply as if the |
| |
property comprised in the gift consisted of the property |
| 35 |
comprised in the settlement on the material date, except in so far |
| |
as that property neither is, nor represents, nor is derived from, |
| |
property originally comprised in the gift. |
| |
| |
(a) | on the material date is comprised in the settlement, and |
| 40 |
(b) | is derived, directly or indirectly, from a loan made by D to |
| |
the trustees of the settlement, |
| |
| shall be treated for the purposes of sub-paragraph (2) above as |
| |
derived from property originally comprised in the gift. |
| |
(4) | If the settlement comes to an end at some time before the material |
| 45 |
date as respects all or any of the property which, if D had died |
| |
|
| |
|
| |
|
immediately before that time, would be treated as comprised in |
| |
| |
(a) | the property in question, other than property to which D |
| |
then becomes absolutely and beneficially entitled in |
| |
| 5 |
(b) | any consideration (not consisting of rights under the |
| |
settlement) given by D for any of the property to which D |
| |
| |
| shall be treated as comprised in the gift (in addition to any other |
| |
| 10 |
(5) | Where, under any trust or power relating to settled property, |
| |
income arising from that property after the material date is |
| |
accumulated, the accumulations shall not be treated for the |
| |
purposes of sub-paragraph (2) above as derived from that |
| |
| 15 |
(4) | Sub-paragraphs (1) to (3) shall be deemed to have come into force on 22nd |
| |
March 2006, but only as respects cases where an interest in possession comes |
| |
to an end on or after that day. |
| |
| |
Conditional exemption: relief from charges |
| 20 |
34 (1) | Section 79 of IHTA 1984 (subsection (3) of which provides for charges to tax |
| |
where, in the case of settled property designated under section 31 on a claim |
| |
under section 79, an event occurs that would be chargeable under section 32 |
| |
or 32A if the claim had been under section 30) is amended as follows. |
| |
(2) | After subsection (5) (amount on which tax charged under subsection (3)) |
| 25 |
| |
“(5A) | Where the event giving rise to a charge to tax under subsection (3) |
| |
above is a disposal on sale, and the sale— |
| |
(a) | was not intended to confer any gratuitous benefit on any |
| |
| 30 |
(b) | was either a transaction at arm’s length between persons not |
| |
connected with each other or a transaction such as might be |
| |
expected to be made at arm’s length between persons not |
| |
connected with each other, |
| |
| the value of the property at the time of that event shall be taken for |
| 35 |
the purposes of subsection (5) above to be equal to the proceeds of |
| |
| |
(3) | For subsection (7) (which provides that the “relevant period” mentioned in |
| |
subsection (6) begins with the latest of certain listed days and ends with the |
| |
day before the event giving rise to the charge under subsection (3)) |
| 40 |
| |
“(7) | In subsection (6) above “the relevant period” means the period given |
| |
by subsection (7A) below or, if shorter, the period given by |
| |
| |
(7A) | The period given by this subsection is the period beginning with the |
| 45 |
| |
|
| |
|
| |
|
(a) | the day on which the settlement commenced, |
| |
(b) | the date of the last ten-year anniversary of the settlement to |
| |
fall before the day on which the property became comprised |
| |
| |
(c) | the date of the last ten-year anniversary of the settlement to |
| 5 |
fall before the day on which the property was designated |
| |
under section 31 above on a claim under this section, and |
| |
| |
| and ending with the day before the event giving rise to the charge. |
| |
(7B) | The period given by this subsection is the period equal in length to |
| 10 |
the number of relevant-property days in the period— |
| |
(a) | beginning with the day that is the latest of those referred to in |
| |
paragraphs (a) to (d) of subsection (7A) above, and |
| |
(b) | ending with the day before the event giving rise to the charge. |
| |
(7C) | For the purposes of subsection (7B) above, a day is a “relevant- |
| 15 |
property day” if at any time on that day the property was relevant |
| |
| |
(4) | After subsection (9) insert— |
| |
“(9A) | Subsection (9B) below applies where the same event gives rise— |
| |
(a) | to a charge under subsection (3) above in relation to any |
| 20 |
| |
(b) | to a charge under section 32 or 32A above in relation to that |
| |
| |
(9B) | If the amount of each of the charges is the same, each charge shall |
| |
have effect as a charge for one half of the amount that would be |
| 25 |
charged apart from this subsection; otherwise, whichever of the |
| |
charges is lower in amount shall have effect as if it were a charge the |
| |
| |
| |
| |
Taxable property held by investment-regulated pension schemes |
| 30 |
1 | In section 271 of TCGA 1992 (exemptions), after subsection (1A) insert— |
| |
“(1B) | But subsection (1A) does not prevent such a gain from being treated |
| |
as a chargeable gain for the purposes of sections 185F to 185I of the |
| |
Finance Act 2004 (scheme chargeable payments: gains from taxable |
| |
| 35 |
2 | Part 4 of FA 2004 (pension schemes) is amended as follows. |
| |
3 (1) | Section 160 (payments by registered pension schemes) is amended as |
| |
| |
(2) | After subsection (7) insert— |
| |
“(7A) | Sections 185A to 185I contain provision about the receipt of income |
| 40 |
and gains from taxable property.” |
| |
|
| |
|
| |
|
(3) | In subsection (8), after “borrowing” insert “and the receipt of income and |
| |
gains from taxable property.” |
| |
4 | In section 173 (benefits), after subsection (7) insert— |
| |
“(7A) | This section does not apply if— |
| |
(a) | the pension scheme is an investment-regulated pension |
| 5 |
| |
(b) | the asset consists of taxable property.” |
| |
5 | After section 174 insert— |
| |
“174A | Taxable property held by investment-regulated pension schemes |
| |
(1) | An investment-regulated pension scheme is to be treated as making |
| 10 |
an unauthorised payment to a member of the pension scheme if— |
| |
(a) | the pension scheme acquires an interest in taxable property, |
| |
| |
(b) | the interest is held by the pension scheme for the purposes of |
| |
an arrangement under the pension scheme relating to the |
| 15 |
| |
(2) | An investment-regulated pension scheme is to be treated as making |
| |
an unauthorised payment to a member of the pension scheme if— |
| |
(a) | an interest in taxable property is held by the pension scheme |
| |
for the purposes of an arrangement under the pension |
| 20 |
scheme relating to the member, and |
| |
(b) | the property is improved. |
| |
(3) | An investment-regulated pension scheme is to be treated as making |
| |
an unauthorised payment to a member of the pension scheme if— |
| |
(a) | an interest in property which is not residential property is |
| 25 |
held by the pension scheme for the purposes of an |
| |
arrangement under the pension scheme relating to the |
| |
| |
(b) | the property is converted or adapted to become residential |
| |
| 30 |
(4) | Schedule 29A makes provision supplementing this section; and in |
| |
| |
(a) | Part 1 defines “investment-regulated pension scheme”, |
| |
(b) | Part 2 defines “taxable property” (and “residential |
| |
| 35 |
(c) | Part 3 explains what it means to acquire, and to hold, an |
| |
interest in taxable property, and |
| |
(d) | Part 4 contains provision for calculating the amounts of |
| |
unauthorised payments treated as made by this section and |
| |
explains when the unauthorised payments are treated as |
| 40 |
| |
|
| |
|
| |
|
6 | After section 185 insert— |
| |
“Income and gains from taxable property |
| |
185A | Income from taxable property |
| |
(1) | An investment-regulated pension scheme is to be treated as having |
| |
made a scheme chargeable payment if the pension scheme holds an |
| 5 |
interest in taxable property in a tax year. |
| |
(2) | The amount of the scheme chargeable payment depends on whether |
| |
a person who holds the interest in the property directly receives |
| |
profits arising from the interest in the tax year. |
| |
(3) | If a person who holds the interest in the property directly receives |
| 10 |
such profits in the tax year, the amount of the scheme chargeable |
| |
payment is the greater of— |
| |
(a) | an amount equal to the amount of the annual profits from the |
| |
interest in the property (see section 185B(1)), and |
| |
(b) | the amount of the deemed profits from the interest in the |
| 15 |
property for the year (see sections 185B(2) and 185C). |
| |
(4) | If no person who holds the interest in the property directly receives |
| |
such profits in the tax year, the amount of the scheme chargeable |
| |
payment is the amount of the deemed profits from the interest in the |
| |
property for the year (see sections 185B(2) and 185C). |
| 20 |
(5) | But where section 185D applies, the amount of the scheme |
| |
chargeable payment is the amount found under subsection (3) or (4) |
| |
as apportioned to the pension scheme in accordance with that |
| |
| |
(6) | Section 185E makes provision for credits against income tax charged |
| 25 |
under section 239 (scheme sanction charge) in respect of a scheme |
| |
chargeable payment treated as made by virtue of this section. |
| |
185B | Annual profits and deemed profits |
| |
(1) | For the purposes of section 185A(3) the amount of the annual profits |
| |
from the interest in the property is the total amount of profits |
| 30 |
received from the interest in the tax year— |
| |
(a) | by each person who holds the interest directly, and |
| |
(b) | at a time when the property is scheme-held taxable property. |
| |
(2) | For the purposes of section 185A(3) and (4) the amount of the |
| |
deemed profits from the interest in the property for the tax year is—![equation: cross[over[(*n*)times[char[D],char[M],char[V]],num[10.0000000000000000,"10"]],over[
times[char[D],char[T],char[P]],times[char[D],char[Y]]]]](missing.gif) |
| 35 |
| |
DMV is the deemed market value of the interest in the property |
| |
for the year (see section 185C), |
| |
DTP is the number of days in the year for which the property is |
| |
scheme-held taxable property, and |
| 40 |
DY is the number of days in the year. |
| |
(3) | In this Part “scheme-held taxable property” means property— |
| |
|
| |
|
| |
|
(a) | which is taxable property, and |
| |
(b) | an interest in which is held by the pension scheme. |
| |
| |
(1) | For the purposes of section 185B(2), where no person who holds the |
| |
interest in the property directly during the tax year does so by virtue |
| 5 |
of a lease of residential property, the deemed market value of the |
| |
interest for the year is—![equation: cross[id[plus[times[char[M],char[V]],times[char[U],char[P]]]],id[plus[num[1.0000000000000000,
"1"],times[char[R],char[P],char[I]]]]]](missing.gif) |
| |
| |
MV is the opening market value (see subsection (2)), |
| |
UP is the total of any unauthorised payments treated as made |
| 10 |
by the pension scheme under section 174A in relation to the |
| |
property in the tax year, other than any such payment treated |
| |
as made by virtue of the property becoming scheme-held |
| |
taxable property in the year, and |
| |
RPI is the figure expressed as a decimal which represents the |
| 15 |
percentage increase in the retail prices index between the first |
| |
day in the tax year on which the property is scheme-held |
| |
taxable property and the last such day (or, if there is no such |
| |
| |
(2) | In subsection (1) “the opening market value” means— |
| 20 |
(a) | if the property is not scheme-held taxable property |
| |
immediately before the beginning of the tax year, the market |
| |
value of the interest in the property immediately after the |
| |
time during the year when the property first becomes |
| |
scheme-held taxable property, and |
| 25 |
(b) | otherwise, the deemed market value of the interest for the |
| |
| |
(3) | For the purposes of section 185B(2), where a person who holds the |
| |
interest in the property directly during the tax year does so by virtue |
| |
of a lease of residential property, the deemed market value of the |
| 30 |
interest for the year is the relevant rental value of the property |
| |
calculated in accordance with paragraph 34 of Schedule 29A on the |
| |
| |
(a) | that the lease was granted when the property first became |
| |
scheme-held taxable property; |
| 35 |
(b) | that the term of the lease is 50 years; |
| |
(c) | that a fully commercial rent is payable for the first five years |
| |
| |
(d) | that afterwards the rent is reviewed on an upwards-only |
| |
| 40 |
185D | Apportionment to pension scheme |
| |
(1) | This section applies where the pension scheme holds the interest in |
| |
the property indirectly for the whole of the period in the tax year for |
| |
which the property is scheme-held taxable property. |
| |
(2) | The amount that would otherwise be the amount of the scheme |
| 45 |
chargeable payment is to be apportioned to the pension scheme by |
| |
applying paragraphs 41 to 43 of Schedule 29A to it as if it were the |
| |
|
| |
|
| |
|
total taxable amount in relation to an unauthorised payment treated |
| |
| |
(a) | by the pension scheme, |
| |
(b) | in connection with the acquisition of the interest in the |
| |
| 5 |
(c) | at the end of the last day in the tax year on which the property |
| |
is scheme-held taxable property. |
| |
| |
(a) | the amount found in relation to the pension scheme on the |
| |
day mentioned in paragraph (c) of subsection (2), differs from |
| 10 |
(b) | the amount that would be found in relation to the pension |
| |
scheme under that subsection on another day in the tax year |
| |
on which the property is scheme-held taxable property, |
| |
| the amount to be apportioned to the pension scheme under this |
| |
section is the average of the amounts produced by applying |
| 15 |
subsection (2) in relation to the pension scheme on each day in the tax |
| |
year on which the property is scheme-held taxable property. |
| |
| |
(1) | This section applies where— |
| |
(a) | the pension scheme holds the interest in the property |
| 20 |
indirectly in the tax year, |
| |
(b) | a person who holds the interest directly receives profits |
| |
arising from the interest at a time in the tax year when the |
| |
property is scheme-held taxable property, |
| |
(c) | tax is payable on those profits by that person (assuming them |
| 25 |
to be the highest part of the person’s income for the tax year |
| |
in which they are received), and |
| |
(d) | that tax has been paid. |
| |
(2) | The amount determined under subsection (3) is to be allowed as a |
| |
credit against any income tax charged under section 239 in respect of |
| 30 |
the scheme chargeable payment treated as made by virtue of the |
| |
pension scheme holding the interest in the property in the tax year. |
| |
(3) | That amount is a proportion of the tax payable and paid determined |
| |
by reference to the proportion of the amount that would otherwise |
| |
be the amount of the scheme chargeable payment that is apportioned |
| 35 |
to the pension scheme under section 185D. |
| |
| |
(a) | by virtue of this section an amount is allowed as a credit |
| |
against income tax charged under section 239, and |
| |
(b) | the amount of tax payable and paid by reference to which the |
| 40 |
amount of the credit was calculated is subsequently varied, |
| |
| the amount of the credit is to be varied accordingly, and any |
| |
necessary adjustments are to be made to give effect to the variation |
| |
(whether by making assessments or otherwise). |
| |
185F | Gains from taxable property |
| 45 |
(1) | An investment-regulated pension scheme is to be treated as having |
| |
made a scheme chargeable payment where— |
| |
|
| |
|