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Session 2005 - 06
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Finance (No.2) Bill


Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Personal taxation

45

 

(5)   

After subsection (3) insert—

“(3A)   

A car has a low CO2 emissions figure for a year if its CO2 emissions

figure does not exceed the limit for that year in the following Table—

 

Tax year

Limit (in g/km)

 
 

2008-09 and subsequent tax years

120”.

 

5

(6)   

In the Table in subsection (4) (the lower threshold)—

(a)   

in the entry relating to 2005-06 and subsequent tax years, for “and

subsequent tax years” substitute “, 2006-07 or 2007-08”, and

(b)   

after that entry insert—

 

“2008-09 and subsequent tax

135”.

 

10

 

years

  

(7)   

After subsection (5) (rounding down of emissions figures to nearest multiple

of 5) insert—

“(5A)   

Subsection (5) does not apply for the purpose of determining whether

a car has a low CO2 emissions figure for a year.”.

15

(8)   

In section 170 of ITEPA 2003 (orders etc relating to the Chapter) before

subsection (3) (order varying lower threshold) insert—

“(2A)   

The Treasury may by order provide for a limit different from that

specified in the Table in section 139(3A) (car with a low CO2 emissions

figure) to apply for tax years beginning on or after 6th April 2009 or

20

such later date as may be specified in the order.”.

(9)   

If a qualifying low emissions car is a car which, within the meaning of

regulations under section 170(4) of ITEPA 2003,—

(a)   

is capable of being propelled by petrol and road fuel gas,

(b)   

is capable of being propelled by electricity and petrol, or

25

(c)   

is propelled solely by road fuel gas,

   

no reduction in the appropriate percentage is to be made by virtue of any such

regulations made before 22nd March 2006.

(10)   

Subsections (2) to (5) and (7) to (9) have effect for the tax year 2008-09 and

subsequent tax years.

30

Mobile telephones and computers

60      

Mobile telephones

(1)   

In section 266(2) of ITEPA 2003 (exemption of non-cash vouchers for exempt

benefits), insert at the end “or

(d)   

section 319 (mobile telephones).”

35

(2)   

In section 267(2) of that Act (exemption of credit-tokens used for exempt

 
 

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Personal taxation

46

 

benefits), after paragraph (f) insert—

“(g)   

section 319 (mobile telephones).”

(3)   

For section 319 of that Act (employment income: exemption for mobile

telephones) substitute—

“319    

Mobile telephones

5

(1)   

No liability to income tax arises by virtue of section 62 (general

definition of earnings) or Chapter 10 of Part 3 (taxable benefits: residual

liability to charge) in respect of the provision of one mobile telephone

for an employee without any transfer of property in it.

(2)   

In this section “mobile telephone” means telephone apparatus which—

10

(a)   

is not physically connected to a land-line, and

(b)   

is not used only as a wireless extension to a telephone which is

physically connected to a land-line,

   

or any thing which may be used in such apparatus for the purpose of

gaining access to, or using, a public electronic communications service.

15

(3)   

In this section the reference to the provision of a mobile telephone

includes a reference to the provision, together with the mobile

telephone provided, of access to, or the use of, a public electronic

communications service by means of one mobile telephone number.

(4)   

For the purposes of subsection (2) “telephone apparatus” means

20

wireless telegraphy apparatus designed or adapted for the primary

purpose of transmitting and receiving spoken messages and used in

connection with a public electronic communications service.”

(4)   

This section has effect for the year 2006-07 and subsequent years of assessment.

(5)   

But the amendment made by subsection (3) does not cause any liability to

25

income tax to arise in respect of the provision of a mobile telephone for an

employee, or a member of an employee’s family or household, if the mobile

telephone was first provided to him before 6th April 2006.

61      

Computer equipment

(1)   

Omit section 320 of ITEPA 2003 (employment income: limited exemption for

30

computer equipment).

(2)   

This section has effect for the year 2006-07 and subsequent years of assessment.

(3)   

But it does not cause any liability to income tax to arise in respect of the

provision of computer equipment by making it available to an employee, or a

member of an employee’s family or household, if the computer equipment was

35

first made available to him before 6th April 2006.

Eye care

62      

Exemption for employees’ eye tests and special glasses

(1)   

Part 4 of ITEPA 2003 (employment income: exemptions) is amended as follows.

(2)   

In Chapter 11 (miscellaneous exemptions), before section 321 (and the cross-

40

 
 

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Personal taxation

47

 

heading “Awards and gifts”) insert—

“Eye tests and special corrective appliances

320A    

Eye tests and special corrective appliances

(1)   

No liability to income tax arises in respect of the provision for an

employee of—

5

(a)   

an eye and eyesight test, or

(b)   

special corrective appliances that an eye and eyesight test

shows are necessary,

   

if conditions A and B are met.

(2)   

Condition A is that the provision of the test or appliances is required by

10

regulations made under the Health and Safety at Work etc. Act 1974.

(3)   

Condition B is that tests and appliances of the kind mentioned in

subsection (1) are made available generally to those employees of the

employer in question for whom they are required to be provided by the

regulations.”

15

(3)   

In section 266 (exemption of non-cash vouchers for exempt benefits), at the end

of subsection (3) insert “, or

(f)   

section 320A (eye tests and special corrective appliances).”

(4)   

In section 267 (exemption of credit-tokens used for exempt benefits), at the end

of subsection (2) insert “, and

20

(h)   

section 320A (eye tests and special corrective appliances).”

(5)   

This section has effect for the year 2006-07 and subsequent years of assessment.

Vouchers and tokens

63      

Power to exempt use of vouchers or tokens to obtain exempt benefits

In Chapter 4 of Part 3 of ITEPA 2003 (taxable benefits: vouchers and credit-

25

tokens), after section 96 insert—

“96A    

Power to exempt use of non-cash vouchers or credit-tokens to obtain

exempt benefits

(1)   

The Treasury may by regulations provide for exemption from any

liability that would otherwise arise by virtue of this Chapter in respect

30

of—

(a)   

non-cash vouchers which are or can be used to obtain specified

exempt benefits, or which evidence an employee’s entitlement

to specified exempt benefits;

(b)   

credit-tokens which are used to obtain specified exempt

35

benefits.

(2)   

In this section—

“exempt benefit” means a benefit the direct provision of which is

exempted from liability to income tax by a provision of Part 4

(employment income: exemptions), and

40

“specified” means specified in the regulations.

 
 

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Personal taxation

48

 

(3)   

Regulations under this section may operate by amending section 266

(exemption of non-cash vouchers for exempt benefits) or section 267

(exemption of credit-tokens used for exempt benefits).”

Holocaust victims

64      

Payments to or in respect of victims of National-Socialist persecution

5

(1)   

In section 369 of ITTOIA 2005 (charge to tax on interest), in subsection (3) (non-

exhaustive list of exemptions), in paragraph (e) (exemptions under sections 749

to 756)—

(a)   

for “756” substitute “756A”, and

(b)   

for “and interest on certain foreign currency securities)” substitute “,

10

certain foreign currency securities and interest on certain deposits of

victims of National-Socialist persecution)”.

(2)   

After section 756 of ITTOIA 2005 (which securities and loans are foreign

currency ones for section 755) insert—

“756A   

  Interest on certain deposits of victims of National-Socialist

15

persecution

(1)   

No liability to income tax arises in respect of interest which is paid—

(a)   

to or in respect of a victim of National-Socialist persecution,

(b)   

under a qualifying compensation scheme, and

(c)   

for a qualifying purpose in respect of a qualifying deposit of the

20

victim.

(2)   

A scheme is a qualifying compensation scheme if—

(a)   

it is constituted (whether under the law of any part of the

United Kingdom or elsewhere) by an instrument in writing, and

(b)   

the purpose of the scheme, or one of its purposes, is to make

25

payments of interest to or in respect of victims of National-

Socialist persecution for qualifying purposes in respect of

qualifying deposits.

(3)   

Interest is paid for a qualifying purpose in respect of a deposit if—

(a)   

it is paid for meeting a liability in respect of interest on the

30

deposit, or

(b)   

it is paid for compensating for the effects of inflation on the

deposit.

(4)   

In relation to a victim of National-Socialist persecution, a deposit is a

qualifying deposit if it was made—

35

(a)   

by, or on behalf of, the victim, and

(b)   

on or before 5th June 1945.

(5)   

In this section “deposit” has the meaning given by section 481(3) of

ICTA.”.

(3)   

In section 783 of ITTOIA 2005 (general disregard of exempt income for income

40

tax purposes)—

(a)   

for subsection (2) (exception to general disregard) substitute—

“(2)   

There are exceptions to this in the following cases.

 
 

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 5 — Personal taxation

49

 

(2A)   

Interest on deposits in ordinary accounts with the National

Savings Bank which is exempt under this Part from every

charge to income tax is not to be ignored for the purpose of

providing information.

(2B)   

Interest paid to or in respect of victims of National-Socialist

5

persecution which is so exempt is not to be ignored for the

purposes of sections 17 and 18 of TMA 1970 (information

provisions relating to interest).”, and

(b)   

in subsection (3) (subsection (2) without prejudice to other exceptions)

for “This express exception to subsection (1) is” substitute “These

10

express exceptions to subsection (1) are”.

(4)   

After section 268 of TCGA 1992 (decorations for valour or gallant conduct)

insert—

“268A   

  Victims of National-Socialist persecution

(1)   

A gain accruing on a disposal is not a chargeable gain if it accrues on—

15

(a)   

a disposal of the right to receive the whole or any part of a

qualifying payment in respect of National-Socialist persecution,

or

(b)   

a disposal of an interest in any such right.

(2)   

A payment is a qualifying payment in respect of National-Socialist

20

persecution if it is payable as mentioned in paragraphs (a) to (c) of

section 756A(1) of ITTOIA 2005 (income tax exemption for payments to

or in respect of victims of National-Socialist persecution).

(3)   

In this section “interest”, in relation to any right, means an interest as a

co-owner of the right.

25

(4)   

It does not matter—

(a)   

whether the right is owned jointly or in common, or

(b)   

whether or not the interests of the co-owners are equal.”.

(5)   

If at any time before claims could have been made under any qualifying

compensation scheme—

30

(a)   

a person beneficially entitled to a qualifying deposit has died, and

(b)   

no information in respect of that deposit was contained in any account

relating to that deceased person under any provision of IHTA 1984,

   

that deposit is to be ignored for all purposes of IHTA 1984.

(6)   

For this purpose “qualifying compensation scheme” and “qualifying deposit”

35

have the same meaning as in section 756A of ITTOIA 2005.

(7)   

Subsection (2) has effect (and is deemed always to have had effect)—

(a)   

for the year 1996-97, and

(b)   

subsequent years of assessment.

(8)   

Subsection (4) has effect (and is deemed always to have had effect) in relation

40

to disposals made on or after 6th April 1996; but no loss accruing on a disposal

made before 6th April 2006 is, as a result of that subsection, to cease to be an

allowable loss.

(9)   

In relation to any time before 6th April 2005 (the commencement of ITTOIA

2005)—

45

 
 

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 6 — The London Olympic Games and Paralympic Games

50

 

(a)   

the section inserted by subsection (2) is to be treated as if it were

inserted into ICTA (and as if, in subsection (5) of that section, “of ICTA”

were omitted), and

(b)   

any reference to that section in any enactment is to be read accordingly.

(10)   

In relation to the year 2005-06 or any earlier year of assessment, all such

5

adjustments are to be made as are required to give effect to the exemptions

conferred as a result of this section.

(11)   

But the adjustments are to be made only if the person entitled to the exemption

makes a claim for the exemption on or before 31st January 2012.

(12)   

The adjustments may be made by discharge or repayment of tax, the making

10

of an assessment or otherwise.

Chapter 6

The London Olympic Games and Paralympic Games

65      

London Organising Committee

(1)   

In this section “LOCOG” means the private company limited by guarantee

15

incorporated on 22nd October 2004 with the Company Number 05267819 and

with the name The London Organising Committee of the Olympic Games

Limited.

(2)   

LOCOG shall be exempt from corporation tax.

(3)   

Section 349(1) of ICTA (annual payments: deductions of tax) shall not apply to

20

payments to LOCOG.

(4)   

A claim may be made for any repayment of income tax required as a result of

an exemption conferred by this section.

(5)   

The Treasury may by regulations provide for subsections (2) to (4) to apply to

a wholly-owned subsidiary of LOCOG (within the meaning of section 736 of

25

the Companies Act 1985 (c. 6)) as they apply to LOCOG.

(6)   

Subsection (7) applies if it appears to the Treasury—

(a)   

that LOCOG has been or may have been, or is or may be, directly or

indirectly connected with another person, or

(b)   

has been or may have been, or is or may be, acting in association or co-

30

operation with another person (whether by virtue of part-ownership,

partnership, membership of a group or consortium or in any other

way).

(7)   

The Treasury may make regulations—

(a)   

restricting the application of a provision of this section to a specified

35

extent;

(b)   

removing or restricting an exemption or relief under an enactment

relating to corporation tax, income tax or capital gains tax;

(c)   

preventing a loss or expense of a specified kind from being used or

treated in a specified way for purposes of corporation tax, income tax

40

or capital gains tax;

(d)   

wholly or to a specified extent preventing an allowance from being

claimed for purposes of corporation tax, income tax or capital gains tax;

 
 

Finance (No.2) Bill
Part 3 — Income tax, corporation tax and capital gains tax
Chapter 6 — The London Olympic Games and Paralympic Games

51

 

(e)   

providing for a transfer of property to be disregarded, or treated in a

specified way, for purposes of corporation tax, income tax or capital

gains tax;

(f)   

providing for specified action taken by LOCOG or the other person to

have, or not to have, a specified effect for purposes of corporation tax,

5

income tax or capital gains tax;

(g)   

providing for an enactment relating to the treatment of groups of

companies for purposes of corporation tax, income tax or capital gains

tax to be wholly or partly disapplied or to be applied with

modifications;

10

(h)   

making any other provision which appears to the Treasury to be

expedient for the purpose of preventing this section from being used or

relied upon otherwise than in connection with the functions of LOCOG

under the Host City Contract;

   

and provision made under any of paragraphs (b) to (h) may relate to LOCOG

15

or to the other person mentioned in subsection (6).

(8)   

If it appears to the Treasury that LOCOG has undertaken, is undertaking or

may undertake activities other than in pursuance of the Host City Contract, the

Treasury may make regulations restricting the application of a provision of this

section to a specified extent.

20

(9)   

Regulations under subsection (5) may include provision of a kind similar to

that which may be made under subsection (7) or (8).

66      

Section 65: supplementary

(1)   

Regulations under section 65(5) to (8)—

(a)   

may make provision which applies generally or only in specified cases

25

or circumstances,

(b)   

may make different provision for different cases or circumstances,

(c)   

may have retrospective effect, and

(d)   

may include incidental, consequential or transitional provision.

(2)   

Regulations under section 65 shall be made by statutory instrument.

30

(3)   

Regulations under section 65(5)—

(a)   

shall be subject to annulment in pursuance of a resolution of the House

of Commons, or

(b)   

if they include provision by virtue of section 65(9), may not be made

unless a draft has been laid before and approved by resolution of the

35

House of Commons.

(4)   

Regulations under section 65(7) or (8) may not be made unless a draft has been

laid before and approved by resolution of the House of Commons.

(5)   

In section 65 “the Host City Contract” has the meaning given by section 1 of the

London Olympic Games and Paralympic Games Act 2006.

40

(6)   

Section 65 shall be treated as having come into force on 22nd October 2004.

(7)   

The Treasury may by order made by statutory instrument repeal section 65 and

this section.

 
 

 
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