House of Commons portcullis
House of Commons
Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill


Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

516

 

annual payments not to form part of the income of a company for

corporation tax purposes)”.

186   (1)  

Amend section 776 (transactions in land: taxation of capital gains) as follows.

      (2)  

In subsection (1) for “persons” substitute “companies”.

      (3)  

In subsection (3)—

5

(a)   

for “Tax Acts” substitute “Corporation Tax Acts”, and

(b)   

for “person by whom” substitute “company by which”.

      (4)  

In subsection (3A) omit paragraph (a).

      (5)  

Omit subsection (3B).

      (6)  

In subsection (6)—

10

(a)   

in paragraph (a)—

(i)   

omit “Part 2 of ITTOIA 2005 or”, and

(ii)   

for “person” substitute “company”, and

(b)   

in paragraph (b) omit from “section 158” to “be)”.

      (7)  

In subsection (7)—

15

(a)   

omit “Part 2 of ITTOIA 2005 or”, and

(b)   

for “person who” substitute “company which”.

      (8)  

In subsection (8)—

(a)   

for “some other person” substitute “another person which is a

company”, and

20

(b)   

for “that other person” substitute “that company”.

      (9)  

Omit subsection (9).

     (10)  

In subsection (11)—

(a)   

for “person” wherever it occurs substitute “company”,

(b)   

for “who” substitute “which”,

25

(c)   

for “he”, in the first two places where it occurs, substitute “it”, and

(d)   

for “his”, in the first place where it occurs, substitute “its”.

187   (1)  

Amend section 777 (provisions supplementary to sections 775 and 776) as

follows.

      (2)  

In subsection (1) for the words from “sections 775” to the end substitute

30

“section 776”.

      (3)  

In subsection (2)—

(a)   

for “the relevant provisions” substitute “section 776 and this section”,

and

(b)   

for “sections 775 and 776” substitute “section 776”.

35

      (4)  

In subsection (4) for “the relevant provisions” substitute “section 776 and

this section”.

      (5)  

In subsection (6)—

(a)   

for “the relevant provisions” substitute “section 776 and this section”,

and

40

(b)   

for “sections 775 and 776” substitute “section 776”.

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

517

 

      (6)  

In subsection (7) for “the relevant provisions” to “receipts)” substitute

“section 776 and this section”.

      (7)  

In subsection (8)—

(a)   

for “a person” substitute “a company”,

(b)   

for “tax under the relevant provisions” substitute “corporation tax

5

under section 776”,

(c)   

in paragraph (a) for “he”, in both places where it occurs, substitute

“it”,

(d)   

in paragraph (b) for “the person”, in both places where it occurs,

substitute “the company”, and

10

(e)   

omit the second sentence.

      (8)  

Omit subsection (9).

      (9)  

In subsection (10) for “Sections 775 and 776 have” substitute “Section 776

has”.

     (10)  

In subsection (11) for “person” substitute “company”.

15

     (11)  

For subsection (12) substitute—

“(12)   

Where under section 776(8) the company charged to corporation tax

is not the person (“P”) by whom the gain was realised and the tax has

been paid, then for the purposes of sections 37 and 39 of the 1992 Act

(profits taxable as income excluded from tax on chargeable gains) P

20

shall be regarded as having been charged to that tax.”

     (12)  

In subsection (13)—

(a)   

for “the relevant provisions” substitute “section 776 and this section”,

(b)   

for ““capital amount”” to “accordingly” substitute—

““capital”, in relation to a gain, means that, apart from section 776,

25

the gain does not fall to be included in any calculation of income

for corporation tax purposes;”, and

(c)   

omit the words from “and any” to the end.

     (13)  

In the sidenote for “sections 775 and 776” substitute “section 776”.

188        

In section 778 (power to obtain information)—

30

(a)   

in subsection (1) for “sections 775 and 776” substitute “section 776”.

(b)   

in subsection (2)(b)—

(i)   

for “sections 775 and 776” substitute “section 776”, and

(ii)   

for “those sections” substitute “that section”.

189        

In section 779(13)(ca) (sale and lease-back: limitation on tax reliefs)—

35

(a)   

for “section 836B” substitute “section 950 of ITA 2007”, and

(b)   

for “section 392” substitute “section 152 of ITA 2007”.

190        

In section 780 (sale and lease-back: taxation of consideration received) after

subsection (3B) insert—

“(3C)   

An amount charged to income tax by virtue of subsection (3A)(a)

40

above is treated for income tax purposes as an amount of income.”

191   (1)  

Amend section 781 (assets leased to traders and others) as follows.

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

518

 

      (2)  

After subsection (1) insert—

“(1A)   

An amount charged to income tax under subsection (1) above is

treated for income tax purposes as an amount of income.”

      (3)  

In subsection (4)(ab)—

(a)   

for “section 836B” substitute “section 950 of ITA 2007”, and

5

(b)   

for “section 392” substitute “section 152 of ITA 2007”.

192        

In section 785 (definitions for the purposes of sections 781 to 784) in the

definition of “capital sum” for “section 836B” substitute “section 950 of ITA

2007”.

193   (1)  

Amend section 789 (double taxation arrangements made under old law) as

10

follows.

      (2)  

In subsection (2) for paragraph (a) substitute—

“(a)   

to bear income tax at—

(i)   

the savings rate, where that income is savings income;

(ii)   

the dividend ordinary rate, where that income is

15

dividend income; or

(iii)   

the basic rate, in any other case; and”.

      (3)  

In subsection (2)(b) for the words from “except” to the end substitute

“except—

(i)   

for the purpose of section 274 (limits on relief under

20

sections 266 and 273); and

(ii)   

for the purpose of calculating “adjusted net income”

for the purposes of Chapter 1 of Part 7 of this Act (see

section 256A) or Chapters 2 and 3 of Part 3 of ITA 2007

(see section 58 of that Act).”

25

194        

In section 793 (reduction of United Kingdom taxes by amount of credit due)

after subsection (2) insert—

“(3)   

Credit against income tax is given effect at Step 6 of the calculation

in section 23 of ITA 2007.”

195   (1)  

Amend section 796 (limits on credit for foreign tax: income tax) as follows.

30

      (2)  

In subsection (1) after “Income Tax Acts” insert “, except a reduction under

section 26 of FA 2005”.

      (3)  

After subsection (2) insert—

“(2A)   

See section 29(2) and (3) of ITA 2007 (tax reductions limited by

reference to tax liability) for further limits on the total amount of

35

credit for foreign tax to be allowed to a person against income tax.”

      (4)  

Omit subsection (3).

196        

In section 798C (disallowed credit: use as deduction) for subsection (2)

substitute—

“(2)   

The taxpayer’s income shall be treated as reduced by the amount of

40

disallowed credit.

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

519

 

(3)   

Subsection (2) applies only in so far as the amount of disallowed

credit does not exceed the amount of any loss attributable to the

income or gain in respect of which the foreign tax was paid.

(4)   

For the purpose of subsection (3), payment of the foreign tax is to be

taken into account despite section 795(2).”

5

197        

In section 801A (restriction of relief for underlying tax) for subsection (9)

substitute—

“(9)   

For the purposes of this section, whether a person is connected with

another is determined in accordance with section 839.”

198        

In section 803(10) (underlying tax reflecting interest on loans) for “section

10

839” to the end substitute “, for the purposes of that subsection, whether a

company is connected with a bank is determined in accordance with section

839.”

199   (1)  

Amend section 804 (relief against income tax in respect of income arising in

years of commencement) as follows.

15

      (2)  

In subsection (5B)(a) for the words from “be treated” to “excess” substitute

“be chargeable for that year to an amount of income tax equal to the excess”.

      (3)  

Omit subsection (6).

200        

In section 809(1)(a) (relief in respect of discretionary trusts) for the words

from the beginning to “687(2)” substitute “income tax is treated under

20

section 494 of ITA 2007 as having been paid in relation to a payment made

by the trustees of a settlement”.

201        

In section 811(2) (deduction for foreign tax where no credit allowable)—

(a)   

insert “and” immediately after paragraph (a), and

(b)   

omit paragraph (b) and the “and” immediately after it.

25

202        

In section 812(5) (withdrawal of right to tax credit of certain non-resident

companies connected with unitary states) for paragraph (c) substitute—

“(c)   

whether a person is connected with another is determined in

accordance with section 839;”.

203        

In section 816 (disclosure of information)—

30

(a)   

in subsection (3) after “bank” insert “(within the meaning of that

subsection)”, and

(b)   

omit subsection (3A).

204        

Omit section 818 (arrangements for payments of interest less tax or of fixed

net amount).

35

205        

Omit section 819 (old references to standard rate tax).

206        

In section 821(3) (under-deductions from payments made before passing of

annual Act)—

(a)   

for paragraph (a) substitute—

“(a)   

any payment to which section 839 of ITA 2007 applies

40

(certain royalties etc where usual place of abode of

owner is abroad), and”, and

(b)   

omit paragraph (aa) and the “and” immediately after it.

207        

Omit section 823 (adjustments of reliefs where given at different times).

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

520

 

208        

Omit section 827A (territorial scope of charges under certain provisions to

which section 836B applies).

209   (1)  

Amend section 828 (orders and regulations made by the Treasury or the

Board) as follows.

      (2)  

In subsection (1) for “other provision of the Tax Acts” substitute “provision

5

of the Corporation Tax Acts not contained in this Act”.

      (3)  

In subsection (2) omit “841(1)(b) or”.

      (4)  

In subsection (3) for “other provision of the Tax Acts” substitute “provision

of the Corporation Tax Acts not contained in this Act”.

      (5)  

In subsection (4)—

10

(a)   

omit “1(6),”

(b)   

omit “257C, 582A(1),”, and

(c)   

omit “or section 82(4)(d) of the Capital Allowances Act”.

      (6)  

In subsection (5)—

(a)   

before “section 717 of ITEPA 2003” insert “section 570B of the Capital

15

Allowances Act or”,

(b)   

omit “or section 873 of ITTOIA 2005”,

(c)   

in paragraph (a) after “regulations under” insert “the Capital

Allowances Act or”, and

(d)   

in paragraph (a) omit “or ITTOIA 2005”.

20

210        

Omit section 829 (application of Income Tax Acts to public departments and

avoidance of exempting provisions).

211        

In section 830(1) (territorial sea) omit “income tax and”.

212        

In section 831(3) (interpretation of ICTA) after the definition of “ITTOIA

2005” insert—

25

““ITA 2007” means the Income Tax Act 2007;”.

213   (1)  

Amend section 832 (interpretation of the Tax Acts) as follows.

      (2)  

In subsection (1)—

(a)   

for “In the Tax Acts, except” substitute “In the Corporation Tax Acts,

except”,

30

(b)   

omit the definitions of “basic rate” and “basic rate limit”,

(c)   

omit the definition of “higher rate”,

(d)   

omit the definition of “industrial assurance business”,

(e)   

omit the definition of “interest”,

(f)   

omit the definitions of “investment LLP” and “property investment

35

LLP”,

(g)   

omit the definition of “lower rate”,

(h)   

in the definition of “notice” omit “or in a form authorised (in relation

to the case in question) by directions under section 118 of the Finance

Act 1998”,

40

(i)   

in the definition of “overseas property business” omit paragraph (a)

and, in paragraph (b), omit “for the purposes of corporation tax,”,

(j)   

omit the definition of “preference dividend”,

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

521

 

(k)   

in the appropriate place insert—

““property investment LLP” has the meaning given by

section 842B;”,

(l)   

omit the definition of “the rate applicable to trusts”,

(m)   

omit the definition of “relevant foreign income”,

5

(n)   

omit the definitions of “starting rate” and “starting rate limit”,

(o)   

omit the definition of “step-child”,

(p)   

in the definition of “tax credit”, in paragraph (a) omit “for the

purposes of corporation tax” and omit paragraph (b),

(q)   

omit the definitions of “the dividend ordinary rate”, “the dividend

10

trust rate” and “the dividend upper rate”,

(r)   

omit the definition of “UK property business”, and

(s)   

for the definition of “unit trust scheme” substitute—

““unit trust scheme” has the same meaning as in the Income Tax

Acts (see section 941 of ITA 2007);”.

15

      (3)  

After subsection (2) insert—

“(2A)   

Chapter 2 of Part 9 of ITA 2007 (which relates to settlements and

trustees) applies for the purposes of the Corporation Tax Acts as it

applies for the purposes of the Income Tax Acts.”

      (4)  

In subsection (4A) for “Tax Acts” substitute “Corporation Tax Acts”.

20

      (5)  

Omit subsection (5).

      (6)  

In the sidenote for “Tax Acts” substitute “Corporation Tax Acts etc”.

214        

Omit section 833 (interpretation of the Income Tax Acts).

215        

In section 834(1) (interpretation of the Corporation Tax Acts), at the end

insert—

25

““venture capital trust” has the same meaning as in Part 6 of ITA

2007.”

216        

Omit section 835 (“total income” in the Income Tax Acts).

217        

Omit section 836 (returns of total income).

218        

Omit section 836B (table of provisions to which that section applies).

30

219        

Omit section 837 (“annual value” of land).

220   (1)  

Amend section 837A (meaning of “research and development”) as follows.

      (2)  

In subsection (1) for “Tax Acts” substitute “Corporation Tax Acts”.

      (3)  

In subsection (2) for “regulations under subsection (3)” substitute

“subsections (2A) and (2B)”.

35

      (4)  

For subsections (3) and (4) substitute—

“(2A)   

Activities that, as a result of regulations made under section 940 of

ITA 2007, are “research and development” for the purposes of that

section are also “research and development” for the purposes of this

section.

40

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

522

 

(2B)   

And activities that, as a result of any such regulations, are not

“research and development” for the purposes of that section are also

not “research and development” for the purposes of this section.”

221        

In section 837B(1) (meaning of “oil and gas exploration and appraisal”) for

“Tax Acts” substitute “Corporation Tax Acts”.

5

222        

In section 837C(1) and (5) (meaning of “offshore installation”) for “Tax Acts”

substitute “Corporation Tax Acts”.

223        

In section 838(1) (subsidiaries) for “Tax Acts” substitute “Corporation Tax

Acts”.

224   (1)  

Amend section 839 (connected persons) as follows.

10

      (2)  

In subsection (1) for “Tax Acts” substitute “Corporation Tax Acts”.

      (3)  

In subsection (3B)(b) for the words from “in whom” to “vested” substitute—

“(i)   

in whom the property comprised in the settlement is

for the time being vested, or

(ii)   

in whom the management of that property is for the

15

time being vested,”.

225        

In section 840 (meaning of “control” in certain contexts) for “Tax Acts”

substitute “Corporation Tax Acts”.

226        

After section 840 insert—

“840ZA  

Meaning of “tax advantage”

20

(1)   

In any provision of the Corporation Tax Acts in relation to which it

is provided that “tax advantage” has the meaning given by this

section, “tax advantage” means—

(a)   

a relief from tax or increased relief from tax,

(b)   

a repayment of tax or increased repayment of tax,

25

(c)   

the avoidance or reduction of a charge to tax or an assessment

to tax, or

(d)   

the avoidance of a possible assessment to tax.

(2)   

For the purposes of subsection (1)(c) and (d) it does not matter

whether the avoidance or reduction is effected—

30

(a)   

by receipts accruing in such a way that the recipient does not

pay or bear tax on them, or

(b)   

by a deduction in calculating profits or gains.

(3)   

In this section “relief from tax” includes—

(a)   

a tax credit under section 231 for the purposes of corporation

35

tax, and

(b)   

a tax credit under section 397(1) of ITTOIA 2005 for the

purposes of income tax.”

227        

In section 840A(1) (banks)—

(a)   

after “In any provision” insert “of the Corporation Tax Acts”, and

40

(b)   

after paragraph (c) insert—

“(ca)   

the European Investment Bank; or”.

228   (1)  

Amend section 841 (recognised stock exchanges and recognised investment

exchanges) as follows.

 

 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2006
Revised 8 December 2006