|
| |
|
(a) | an allowance under Chapter 2 of Part 3 of this Act or section 257 or 265 |
| |
of ICTA (personal allowance and blind person’s allowance), |
| |
(b) | a tax reduction under Chapter 3 of Part 3 of this Act or section 257A, |
| |
257AB, 257BA or 257BB of ICTA (tax reductions for married couples |
| |
| 5 |
(c) | relief under section 457 or 458 of this Act (payments to trade unions and |
| |
| |
(d) | a tax reduction under section 459 of this Act or section 273 of ICTA |
| |
(payments for benefit of family members), and |
| |
(e) | relief under section 266 of ICTA (life assurance premiums). |
| 10 |
745 | Case where limit not to apply |
| |
(1) | Section 744 does not apply to income tax to which non-UK resident trustees are |
| |
liable for a tax year, if there is a beneficiary of the trust who is— |
| |
(a) | an individual who is ordinarily UK resident, or |
| |
(b) | a UK resident company. |
| 15 |
(2) | For the purposes of subsection (1) a person is a beneficiary of the trust if— |
| |
(a) | the person is an actual or potential beneficiary of the trust, and |
| |
(b) | condition A or B is met in relation to the person. |
| |
(3) | Condition A is that the person is, or will or may become, entitled under the |
| |
trust to receive some or all of any income under the trust. |
| 20 |
(4) | Condition B is that some or all of any income under the trust may be paid to or |
| |
used for the benefit of the person in the exercise of a discretion conferred by the |
| |
| |
(5) | The references in subsections (3) and (4) to any income under the trust include |
| |
a reference to any capital under the trust so far as it represents amounts |
| 25 |
originally received by the trustees as income. |
| |
746 | Meaning of “disregarded income” |
| |
(1) | For the purposes of this Chapter income arising to a non-UK resident is |
| |
“disregarded income” if it is— |
| |
(a) | disregarded savings and investment income (see section 758), |
| 30 |
(b) | disregarded annual payments (see section 759), |
| |
(c) | disregarded pension income, |
| |
(d) | disregarded social security income, |
| |
(e) | disregarded transaction income (see section 747), or |
| |
(f) | income of such other description as the Treasury may by regulations |
| 35 |
designate for the purposes of this section. |
| |
(2) | But income in relation to which the non-UK resident has a UK representative |
| |
for the purposes of section 126 of, and Schedule 23 to, FA 1995 (UK |
| |
representatives of non-UK residents) is not disregarded income. |
| |
(3) | Income is “disregarded pension income” if it is chargeable under Part 9 of |
| 40 |
ITEPA 2003 (pension income) because any of the following provisions of that |
| |
| |
section 577 (UK social security pensions), |
| |
|
| |
|
| |
|
section 579A (pensions under registered pension schemes) (but see |
| |
| |
section 609 (annuities for the benefit of dependants), |
| |
section 610 (annuities under non-registered occupational pension |
| |
| 5 |
section 611 (annuities in recognition of another’s services). |
| |
(4) | Income chargeable under Part 9 of ITEPA 2003 because section 579A of that Act |
| |
applies to it is disregarded pension income only if the registered pension |
| |
| |
(a) | falls within paragraph 1(1)(f) of Schedule 36 to FA 2004, and |
| 10 |
(b) | was, immediately before 6 April 2006, a retirement annuity contract to |
| |
which section 605 of ITEPA 2003 applied. |
| |
(5) | Income is “disregarded social security income” if— |
| |
(a) | it is a taxable benefit listed in Table A in section 660 of ITEPA 2003, |
| |
other than income support or jobseeker’s allowance, and |
| 15 |
(b) | it is chargeable under Part 10 of that Act (social security income). |
| |
747 | Meaning of “disregarded transaction income” |
| |
(1) | Subsection (2) applies if a non-UK resident carries on (alone or in partnership) |
| |
a business through a broker in the United Kingdom. |
| |
(2) | Income is “disregarded transaction income”, subject to subsection (6), if— |
| 20 |
(a) | it is transaction income, and |
| |
(b) | the independent broker conditions are met in relation to the transaction |
| |
| |
(3) | Subsection (4) applies if a non-UK resident carries on (alone or in partnership) |
| |
a business through an investment manager in the United Kingdom. |
| 25 |
(4) | Income is “disregarded transaction income”, subject to subsection (6), if— |
| |
(a) | it is transaction income, and |
| |
(b) | the independent investment manager conditions are met in relation to |
| |
the transaction in question. |
| |
(5) | In this Chapter “transaction income”, in relation to a transaction carried out |
| 30 |
through a broker or investment manager in the United Kingdom on behalf of |
| |
a non-UK resident, means income which arises to the non-UK resident from— |
| |
(a) | so much of the non-UK resident’s business carried on (alone or in |
| |
partnership) through the broker or investment manager as relates to |
| |
| 35 |
(b) | property or rights which, as a result of the transaction, are used by, or |
| |
held by or for, the broker or investment manager on behalf of the non- |
| |
| |
(6) | Income is not disregarded transaction income if it is chargeable to income tax |
| |
in accordance with section 171(2) of FA 1993 (profits of the underwriting |
| 40 |
business of a member of Lloyd’s). |
| |
(7) | This section needs to be read with— |
| |
section 750 (the independent broker conditions), |
| |
sections 751 to 757 (the independent investment manager conditions), |
| |
|
| |
|
| |
|
section 760 (meaning of “investment manager” and “investment |
| |
| |
section 761 (transactions through brokers and investment managers). |
| |
Limit for non-UK resident companies |
| |
748 | Limit on liability to income tax of non-UK resident companies |
| 5 |
(1) | This section applies to income tax to which a non-UK resident company is |
| |
liable, otherwise than as a trustee. |
| |
(2) | The non-UK resident company’s liability to income tax for a tax year is limited |
| |
to the sum of amounts A and B. |
| |
(3) | Amount A is the sum of— |
| 10 |
(a) | any amounts representing income tax deducted from the non-UK |
| |
resident company’s disregarded company income for the tax year, |
| |
(b) | any amounts representing income tax that are treated as deducted from |
| |
or paid in respect of that income, and |
| |
(c) | any tax credits in respect of that income. |
| 15 |
(4) | Amount B is the amount that, apart from this section, would be the non-UK |
| |
resident company’s liability to income tax for the tax year if the non-UK |
| |
resident company’s disregarded company income for the tax year were left out |
| |
| |
749 | Meaning of “disregarded company income” |
| 20 |
(1) | For the purposes of this Chapter income arising to a non-UK resident company |
| |
is “disregarded company income” if it is— |
| |
(a) | disregarded savings and investment income (see section 758), |
| |
(b) | disregarded annual payments (see section 759), |
| |
(c) | income arising from a transaction carried out on behalf of the non-UK |
| 25 |
resident company in the course of the company’s trade through a |
| |
broker in the United Kingdom, in relation to which the independent |
| |
broker conditions are met, |
| |
(d) | income arising from an investment transaction carried out on behalf of |
| |
the non-UK resident company in the course of the company’s trade |
| 30 |
through an investment manager in the United Kingdom, in relation to |
| |
which the independent investment manager conditions are met, or |
| |
(e) | income of such other description as the Treasury may by regulations |
| |
designate for the purposes of this section. |
| |
(2) | This section needs to be read with— |
| 35 |
section 750 (the independent broker conditions), |
| |
sections 751 to 757 (the independent investment manager conditions), |
| |
section 760 (meaning of “investment manager” and “investment |
| |
| |
section 761 (transactions through brokers and investment managers). |
| 40 |
|
| |
|
| |
|
The independent broker conditions |
| |
750 | The independent broker conditions |
| |
(1) | The independent broker conditions are met in relation to a transaction carried |
| |
out on behalf of a non-UK resident by a broker in the United Kingdom if— |
| |
(a) | conditions A to D are met, if this section applies for the purposes of |
| 5 |
| |
(b) | conditions A to C and E are met, if this section applies for the purposes |
| |
| |
(2) | Condition A is that at the time of the transaction the broker is carrying on the |
| |
| 10 |
(3) | Condition B is that the transaction is carried out by the broker in the ordinary |
| |
| |
(4) | Condition C is that the remuneration which the broker receives in respect of |
| |
the transaction for the provision of the services of a broker to the non-UK |
| |
resident is not less than is customary for that class of business. |
| 15 |
(5) | Condition D is that the broker does not fall for the purposes of section 126 of, |
| |
and Schedule 23 to, FA 1995 to be treated as a UK representative of the non-UK |
| |
resident in relation to any other income which is chargeable to income tax, or |
| |
amounts which are chargeable to capital gains tax, for the same tax year as the |
| |
| 20 |
(6) | Condition E is that the broker does not fall to be treated as a permanent |
| |
establishment of the non-UK resident company in relation to any other |
| |
transaction of any kind carried out in the same accounting period of the non- |
| |
UK resident company as the transaction in question. |
| |
The independent investment manager conditions |
| 25 |
751 | The independent investment manager conditions |
| |
(1) | The independent investment manager conditions are met in relation to an |
| |
investment transaction carried out on behalf of a non-UK resident by an |
| |
investment manager in the United Kingdom if— |
| |
(a) | conditions A to F are met, if this section applies for the purposes of |
| 30 |
| |
(b) | conditions A to E and G are met, if this section applies for the purposes |
| |
| |
(2) | Condition A is that at the time of the transaction the investment manager is |
| |
carrying on a business of providing investment management services. |
| 35 |
(3) | Condition B is that the transaction is carried out in the ordinary course of that |
| |
| |
(4) | Condition C is that, when the investment manager acts on behalf of the non- |
| |
UK resident in relation to the transaction, the relationship between them, |
| |
having regard to its legal, financial and commercial characteristics, is a |
| 40 |
relationship between persons carrying on independent businesses dealing |
| |
with each other at arm’s length. |
| |
(5) | Condition D is that the requirements of the 20% rule are met (see section 752). |
| |
|
| |
|
| |
|
(6) | Condition E is that the remuneration which the investment manager receives |
| |
in respect of the transaction for the provision of investment management |
| |
services to the non-UK resident is not less than is customary for that class of |
| |
| |
(7) | Condition F is that the investment manager does not fall for the purposes of |
| 5 |
section 126 of, and Schedule 23 to, FA 1995 to be treated as a UK representative |
| |
of the non-UK resident in relation to any other income which is chargeable to |
| |
income tax, or amounts which are chargeable to capital gains tax, for the same |
| |
tax year as the transaction income. |
| |
(8) | Condition G is that the investment manager does not fall to be treated as a |
| 10 |
permanent establishment of the non-UK resident company in relation to any |
| |
other transaction of any kind carried out in the same accounting period of the |
| |
non-UK resident company as the transaction in question. |
| |
752 | Investment managers: the 20% rule |
| |
(1) | The requirements of the 20% rule are met if conditions A and B are met. |
| 15 |
(2) | Condition A is that in relation to a qualifying period it has been or is the |
| |
intention of the investment manager and the persons connected with the |
| |
investment manager that at least 80% of the non-UK resident’s relevant |
| |
disregarded income should consist of amounts to which none of them has a |
| |
| 20 |
(3) | Condition B is that, so far as there is a failure to fulfil that intention, that |
| |
| |
(a) | is attributable (directly or indirectly) to matters outside the control of |
| |
the investment manager and persons connected with the investment |
| |
| 25 |
(b) | does not result from a failure by any of them to take such steps as may |
| |
be reasonable for mitigating the effect of those matters in relation to the |
| |
fulfilment of that intention. |
| |
(4) | This section needs to be read with— |
| |
section 753 (meaning of “qualifying period”), |
| 30 |
section 754 (meaning of “relevant disregarded income”), and |
| |
section 755 (meaning of “beneficial entitlement”). |
| |
753 | Meaning of “qualifying period” |
| |
(1) | This section applies for the purposes of this Chapter. |
| |
(2) | If section 752 applies for the purposes of section 746, a “qualifying period” |
| 35 |
| |
(a) | the tax year in which the transaction income is chargeable to income |
| |
| |
(b) | a period of not more than 5 years comprising two or more tax years |
| |
| 40 |
(3) | If section 752 applies for the purposes of section 749, a “qualifying period” |
| |
| |
(a) | the accounting period of the non-UK resident company in which the |
| |
transaction in question is carried out, or |
| |
|
| |
|
| |
|
(b) | a period of not more than 5 years comprising two or more complete |
| |
accounting periods including that one. |
| |
754 | Meaning of “relevant disregarded income” |
| |
(1) | This section applies for the purposes of this Chapter. |
| |
(2) | If section 752 applies for the purposes of section 746, the “relevant disregarded |
| 5 |
income” of the non-UK resident for the qualifying period is the total of the non- |
| |
UK resident’s income for the tax years comprised in the qualifying period |
| |
which derives from the transactions mentioned in subsection (4). |
| |
(3) | If section 752 applies for the purposes of section 749, the “relevant disregarded |
| |
income” of the non-UK resident company for the qualifying period is the total |
| 10 |
of the non-UK resident company’s income for the accounting periods |
| |
comprised in the qualifying period which derives from the transactions |
| |
mentioned in subsection (4). |
| |
(4) | The transactions referred to in subsections (2) and (3) are investment |
| |
| 15 |
(a) | carried out by the investment manager on the non-UK resident’s |
| |
| |
(b) | in relation to which the independent investment manager conditions |
| |
are met, ignoring the requirements of the 20% rule. |
| |
755 | Meaning of “beneficial entitlement” |
| 20 |
(1) | This section applies for the purposes of this Chapter. |
| |
(2) | A person has a “beneficial entitlement” to relevant disregarded income if the |
| |
person has or may acquire a beneficial entitlement that is, or would be, |
| |
attributable to the relevant disregarded income as a result of having an interest |
| |
or other rights mentioned in subsection (3). |
| 25 |
(3) | The interests and rights referred to in subsection (2) are— |
| |
(a) | an interest (whether or not an interest giving a right to an immediate |
| |
payment of a share in the profits or gains) in property in which the |
| |
whole or any part of the relevant disregarded income is represented, or |
| |
(b) | an interest in, or other rights in relation to, the non-UK resident. |
| 30 |
756 | Treatment of transactions where requirements of 20% rule not met |
| |
(1) | This section applies in the case of an investment transaction in relation to |
| |
which the independent investment manager conditions are met, except for the |
| |
requirements of the 20% rule. |
| |
(2) | This Chapter has effect as if the requirements of that rule were met in relation |
| 35 |
to the transaction but only in relation to— |
| |
(a) | so much of the transaction income of the non-UK resident as falls |
| |
within subsection (3), if this section applies for the purposes of section |
| |
| |
(b) | so much of the income of the non-UK resident company deriving from |
| 40 |
the transaction as falls within subsection (3), if this section applies for |
| |
the purposes of section 749. |
| |
(3) | Income falls within this subsection if it does not represent income— |
| |
|
| |
|
| |
|
(a) | which is relevant disregarded income of the non-UK resident, and |
| |
(b) | to which the investment manager or a person connected with the |
| |
investment manager has or has had any beneficial entitlement. |
| |
757 | Application of 20% rule to collective investment schemes |
| |
(1) | This section applies if amounts arise or accrue to the non-UK resident as a |
| 5 |
participant in a collective investment scheme. |
| |
(2) | It applies for the purposes of determining whether the requirements of the 20% |
| |
rule are met in relation to a transaction carried out for the purposes of the |
| |
| |
(3) | In applying this section make the following assumptions— |
| 10 |
(a) | that all the transactions carried out for the purposes of the scheme are |
| |
carried out on behalf of a company (“the assumed company”) which |
| |
| |
(i) | constituted for the purposes of the scheme, and |
| |
(ii) | non-UK resident, and |
| 15 |
(b) | that the participants do not have any rights in respect of the amounts |
| |
arising or accruing in respect of those transactions, other than the rights |
| |
which, if they held shares in the assumed company, would be their |
| |
| |
(4) | If the scheme is such that the assumed company would not be regarded for tax |
| 20 |
purposes as carrying on a trade in the United Kingdom in relation to the |
| |
appropriate relevant period, the requirements of the 20% rule are treated as |
| |
met in relation to a transaction carried out for the purposes of the scheme. |
| |
(5) | If the scheme is such that the assumed company would be so regarded for tax |
| |
purposes, sections 752 to 756 have effect in relation to a transaction carried out |
| 25 |
for the purposes of the scheme with the modifications in subsection (6). |
| |
(6) | The modifications are— |
| |
(a) | for references to the non-UK resident substitute references to the |
| |
| |
(b) | for references to the non-UK resident’s relevant disregarded income for |
| 30 |
a qualifying period substitute references to the sum of the amounts that |
| |
would, for relevant periods comprised in the qualifying period, be |
| |
chargeable to tax on the assumed company as profits deriving from the |
| |
| |
(i) | carried out by the investment manager, and |
| 35 |
(ii) | assumed to be carried out on behalf of the company. |
| |
| |
“the appropriate relevant period” is— |
| |
(a) | the tax year in which the transaction income is chargeable to |
| |
income tax, if this section applies for the purposes of section |
| 40 |
| |
(b) | the accounting period in which the transaction is carried out, if |
| |
this section applies for the purposes of section 749, |
| |
“collective investment scheme” has the meaning given by section 235 of |
| |
| 45 |
“participant”, in relation to a collective investment scheme, is construed in |
| |
accordance with that section, and |
| |
|
| |
|