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Restate, with minor changes, certain enactments relating to income tax; and |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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1 | Overview of Income Tax Acts |
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(1) | The following Acts make provision about income tax— |
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(a) | ITEPA 2003 (which is about charges to tax on employment income, |
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pension income and social security income), |
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(b) | ITTOIA 2005 (which is about charges to tax on trading income, |
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property income, savings and investment income and some other |
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miscellaneous income), and |
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(c) | this Act (which contains the other main provisions about income tax). |
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(2) | There are also provisions about income tax elsewhere: see in particular— |
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(a) | Part 18 of ICTA (double taxation relief), |
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(b) | CAA 2001 (allowances for capital expenditure), and |
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(c) | Part 4 of FA 2004 (pension schemes etc). |
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(3) | Schedule 1 to the Interpretation Act 1978 (c. 30) defines “the Income Tax Acts” |
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(as all enactments relating to income tax). |
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(1) | This Act has 16 Parts. |
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(2) | Part 2 contains basic provisions about income tax including— |
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(a) | provision about the annual nature of income tax (Chapter 1), |
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(b) | the rates at which income tax is charged (Chapter 2), and |
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(c) | the calculation of income tax liability (Chapter 3). |
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(3) | Part 3 is about taxpayers’ personal reliefs including— |
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(a) | personal allowances (Chapter 2), |
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(b) | blind persons’ allowances (Chapter 2), and |
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(c) | tax reductions for married couples and civil partners (Chapter 3). |
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(4) | Part 4 is about loss relief including relief for— |
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(a) | trade losses (Chapters 2 and 3), |
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(b) | losses from property businesses (Chapter 4), |
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(c) | losses in an employment or office (Chapter 5), |
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(d) | losses on disposal of shares (Chapter 6), and |
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(e) | losses from miscellaneous transactions (Chapter 7). |
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(5) | Part 5 is about relief under the enterprise investment scheme. |
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(a) | relief for investment in venture capital trusts, and |
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(b) | other matters relating to venture capital trusts. |
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(7) | Part 7 is about community investment tax relief. |
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(8) | Part 8 is about a variety of reliefs including relief for— |
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(a) | interest payments (Chapter 1), |
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(b) | gifts to charity including gift aid (Chapters 2 and 3), |
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(c) | annual payments and patent royalties (Chapter 4), and |
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(d) | maintenance payments (Chapter 5). |
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(9) | Part 9 contains special rules about settlements and trustees including— |
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(a) | general provision about settlements and trustees (Chapter 2), |
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(b) | special income tax rates for trusts (Chapters 3, 4, 5 and 6), |
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(c) | rules about trustees’ expenses (Chapters 4 and 8), |
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(d) | rules about trustees’ discretionary payments (Chapter 7), |
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(e) | rules about unauthorised unit trusts (Chapter 9), and |
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(f) | rules about heritage maintenance settlements (Chapter 10). |
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(10) | Part 10 contains special rules about charitable trusts etc. |
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(11) | Part 11 is about manufactured payments and repos. |
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(12) | Part 12 is about tax avoidance in relation to— |
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(a) | transactions in securities (Chapter 1), |
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(b) | transfers of assets abroad (Chapter 2), |
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(c) | transactions in land (Chapter 3), |
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(d) | sales of occupation income (Chapter 4), and |
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(e) | trade losses (Chapter 5). |
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(13) | Part 13 deals with some miscellaneous rules about income tax liability, |
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(a) | limits on liability to income tax for non-UK residents (Chapter 1), |
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(b) | special rules about residence (Chapter 2), and |
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(c) | rules about jointly held property (Chapter 3). |
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(14) | Part 14 is about the deduction of income tax at source. |
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(15) | Part 15 contains definitions which apply for the purposes of the Income Tax |
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Acts and other general provisions which apply for the purposes of those Acts. |
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(a) | contains provisions to be used in interpreting this Act, |
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(b) | introduces Schedule 1 (minor and consequential amendments), |
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(c) | introduces Schedule 2 (transitional provisions and savings), |
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(d) | introduces Schedule 3 (repeals and revocations, including of spent |
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(e) | introduces Schedule 4 (index of defined expressions that apply for the |
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(f) | confers powers on the Treasury to make orders, and |
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(g) | makes provision about the coming into force of this Act. |
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3 | Overview of charges to income tax |
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(1) | Income tax is charged under— |
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(a) | Part 2 of ITEPA 2003 (employment income), |
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(b) | Part 9 of ITEPA 2003 (pension income), |
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(c) | Part 10 of ITEPA 2003 (social security income), |
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(d) | Part 2 of ITTOIA 2005 (trading income), |
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(e) | Part 3 of ITTOIA 2005 (property income), |
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(f) | Part 4 of ITTOIA 2005 (savings and investment income), and |
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(g) | Part 5 of ITTOIA 2005 (miscellaneous income). |
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(2) | Income tax is also charged under other provisions, including— |
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(a) | Chapter 5 of Part 4 of FA 2004 (registered pension schemes: tax |
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(b) | section 7 of F(No.2)A 2005 (social security pension lump sums), |
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(c) | Part 10 of this Act (special rules about charitable trusts etc), and |
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(d) | Part 12 of this Act (tax avoidance). |
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4 | Income tax an annual tax |
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(1) | Income tax is charged for a year only if an Act so provides. |
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(2) | A year for which income tax is charged is called a “tax year”. |
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(3) | A tax year begins on 6 April and ends on the following 5 April. |
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(4) | “The tax year 2007-08” means the tax year beginning on 6 April 2007 (and any |
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corresponding expression in which two years are similarly mentioned is to be |
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(5) | Every assessment to income tax must be made for a tax year. |
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(6) | Subsection (5) is subject to Chapter 15 of Part 14 (by virtue of which an |
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assessment may relate to a return period). |
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5 | Income tax and companies |
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(1) | Income tax is not charged on income of a company so far as the company is |
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within the charge to corporation tax in respect of the income. |
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(2) | See in particular sections 6(2) and 11(1) of ICTA for the circumstances in which |
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a company is within the charge to corporation tax in respect of its income. |
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Rates at which income tax is charged |
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6 | The starting rate, basic rate and higher rate |
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(1) | The main rates at which income tax is charged are— |
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(2) | The starting rate, basic rate and higher rate for a tax year are the rates |
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determined as such by Parliament for the tax year. |
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(3) | For other rates at which income tax is charged see— |
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(a) | section 7 (savings rate), |
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(b) | section 8 (dividend ordinary rate and dividend upper rate), and |
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(c) | section 9 (trust rate and dividend trust rate). |
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8 | The dividend ordinary rate and dividend upper rate |
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(1) | The dividend ordinary rate is 10%. |
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(2) | The dividend upper rate is 32.5%. |
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9 | The trust rate and dividend trust rate |
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(1) | The trust rate is 40%. |
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(2) | The dividend trust rate is 32.5%. |
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