Income Tax Bill

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 2 — Other enactments
537

(b)
in paragraph (c) for “those purposes” substitute “the purposes of
extra liability”,
(c)
for “his income” substitute “the person’s Step 3 income”, and
(d)
for “that amount” substitute “the amount of the deficiency or (as the
case may be) the amount mentioned in paragraph (c)”.
5
      (3)
In subsection (3) for “his total income” substitute “the person’s Step 3
income”.
      (4)
Omit subsection (4).
298
For section 11 (visiting forces, agents-general etc) substitute—
“11
Visiting forces and official agents
10
(1)
If section 766 of ITA 2007 (visiting forces and staff of designated
allied headquarters) applies to an individual throughout a period,
the period is not treated for capital gains tax purposes as—
(a)
a period of residence in the United Kingdom, or
(b)
creating a change of the individual’s residence or domicile.
15
(2)
If an individual is entitled to immunity from income tax by virtue of
section 774 of ITA 2007 (which provides immunity from income tax
for official agents of Commonwealth countries or the Republic of
Ireland etc), the individual is entitled to the same immunity from
capital gains tax as that to which a member of the staff of a mission
20
is entitled under the Diplomatic Privileges Act 1964.
(3)
“A member of the staff of a mission” is to be read in accordance with
the Diplomatic Privileges Act 1964.”
299
In section 16(1) (computation of losses) for “section 72 of the Finance Act
1991” substitute “sections 261B, 261D and 263ZA”.
25
300
In section 37 (consideration chargeable to tax on income) at the end insert—
“(5)
If—
(a)
because section 692(4) or (6) of ITA 2007 applies, the person
charged to tax under Chapter 3 of Part 12 of that Act
(transactions in land) is a person other than the person (“A”)
30
by whom the gain was realised, and
(b)
the income tax has been paid,

for the purposes of this section the amount charged to that tax is
regarded as having been charged as the income of A.
(6)
If—
35
(a)
because section 710(5) of that Act applies, the person charged
to tax under Chapter 4 of Part 12 of that Act (sales of
occupation income) is a person other than the person (“B”)—
(i)
for whom the capital amount was obtained, or
(ii)
in the case of income treated as arising under section
40
712 of that Act, by whom the property or right was
sold or realised, and
(b)
the income tax has been paid,

for the purposes of this section the amount charged to that tax is
regarded as having been charged as the income of B.
45

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
538

(7)
In subsection (6) “capital amount” has the same meaning as in
Chapter 4 of Part 12 of that Act (sales of occupation income) (see
section 710(7) of that Act).”
301
In section 39 (exclusion of expenditure by reference to tax on income) after
subsection (3) insert—
5
“(4)
If—
(a)
because section 692(4) or (6) of ITA 2007 applies, the person
charged to tax under Chapter 3 of Part 12 of that Act
(transactions in land) is a person other than the person (“A”)
by whom the gain was realised, and
10
(b)
the income tax has been paid,

for the purposes of this section the amount charged to that tax is
regarded as having been charged as the income of A.”
302
In section 79(8) (charge on settlor with interest in settlement etc:
supplementary provisions) for “691(2) of the Taxes Act (certain income of
15
maintenance funds for historic buildings not to be income of settlor etc)”
substitute “508 of ITA 2007 (trustees’ election in respect of income arising
from heritage maintenance property)”.
303
In section 97(3) (settlements etc: supplementary provisions) for “section
740(2)(b) of the Taxes Act” substitute “section 666 of ITA 2007”.
20
304
In section 98(2) (power to obtain information for purposes of sections 87 to
90)—
(a)
for the words from the beginning to “745(1)” substitute “Sections
681(3) to (5), 682 and 683 of ITA 2007 shall have effect in relation to
subsection (1) above as they have effect in relation to section 681(1)
25
and (2) of that Act”, and
(b)
in paragraph (a) for “Chapter III of Part XVII of the Taxes Act”
substitute “Chapter 2 of Part 12 of that Act”.
305
In section 101B(1)(a) (transfer of a company’s assets to VCT), for “section
842AA of the Taxes Act” substitute “Part 6 of ITA 2007”.
30
306
In section 101C(7) (transfer within group to VCT), for “section 842AA of the
Taxes Act” substitute “Part 6 of ITA 2007”.
307   (1)
Amend section 105A (shares acquired on the same day: elections for
alternative treatment) as follows.
      (2)
In subsection (4)—
35
(a)
after “Chapter 3 of Part 7 of the Taxes Act” insert “, relief under Part
5 of ITA 2007”,
(b)
after “section 299 of the Taxes Act” insert “or section 246 of ITA
2007”,
(c)
for “of that Act” substitute “or subsection (3) of section 246”, and
40
(d)
for “that section” substitute “section 299 or subsection (4) of section
246”.
      (3)
In subsection (7)—
(a)
after “Chapter 3 of Part 7 of the Taxes Act” insert “or relief under Part
5 of ITA 2007”,
45
(b)
for “that Act” substitute “the Taxes Act or section 245 of ITA 2007”,
and

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
539

(c)
after “that Chapter” insert “or relief under that Part”.
      (4)
After subsection (8) insert—
“(9)
In this section references to Part 5 of ITA 2007 or any provision of that
Part are to a Part or provision that applies only in relation to shares
issued after 5 April 2007.”
5
308
After section 125 insert—
“Share loss relief
125A
Effect of share loss relief
(1)
If loss relief under section 573 of the Taxes Act or Chapter 6 of Part 4
of ITA 2007 (“share loss relief”) is obtained in respect of a loss or any
10
part of a loss, no deduction is to be made in respect of the loss or (as
the case may be) the part under this Act.
(2)
If a claim is made for share loss relief in respect of a loss accruing on
the disposal of shares, section 30 has effect in relation to the disposal
as if for the references in subsections (1)(b) and (5) to a tax-free
15
benefit there were substituted references to any benefit whether tax-
free or not.
(3)
All such adjustments of corporation tax on chargeable gains or
capital gains tax are to be made, whether by way of assessment or by
way of discharge or repayment of tax, as may be required in
20
consequence of—
(a)
share loss relief being obtained in respect of an allowable loss,
or
(b)
such relief not being obtained in respect of the whole or part
of such a loss in respect of which a claim is made.”
25
309
In section 148C(1) (deemed disposals at a loss under section 564(4) of
ITTOIA 2005) for “section 392 of ICTA” substitute “section 152 of ITA 2007”.
310   (1)
Amend section 150A (enterprise investment schemes) as follows.
      (2)
In subsection (2) after “section 312 (1A)(a) of the Taxes Act” insert “or section
159(2) of ITA 2007”.
30
      (3)
In subsection (3) for paragraphs (a), (aa) and (b) substitute—
“(a)
an individual’s liability to income tax has been reduced (or
treated by virtue of section 304 of the Taxes Act or section 245
of ITA 2007 (spouses and civil partners) as reduced) for any
year of assessment under section 289A of the Taxes Act or
35
section 158 of ITA 2007 in respect of any issue of shares,
(b)
the amount of the reduction (“A”) is less than the amount
(“B”) which is equal to tax at the savings rate for that year on
the amount subscribed for the issue, and
(c)
A is not found under section 289A(2)(b) of the Taxes Act or
40
(as the case may require) is not within paragraph (b) solely by
virtue of section 29(2) and (3) of ITA 2007,”.
      (4)
In subsection (4) after “the Taxes Act” insert “or as provided by section 246
of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
540

      (5)
In subsection (8B) for the words from “subsection (2)” to the end substitute
“section 306(2) of the Taxes Act or section 203(1) of ITA 2007 and in
accordance with section 306 of the Taxes Act or sections 204 and 205 of ITA
2007”.
      (6)
In subsection (8C) after “Taxes Act” insert “or section 159(2) of ITA 2007”.
5
      (7)
In subsection (8D)—
(a)
after “section 304A of the Taxes Act” insert “or section 247 of ITA
2007”, and
(b)
for paragraph (b) substitute—
“(b)
the following—
10
(i)
subsections (2)(b), (3) and (4) of section 304A
of the Taxes Act and subsection (5) of that
section so far as relating to section 306(2) of
that Act, or
(ii)
sections 247(3)(b), 248(2)(a) and 249 of ITA
15
2007,

shall apply for the purposes of this section as they
apply for the purposes of Chapter 3 of Part 7 of the
Taxes Act or Part 5 of ITA 2007.”
      (8)
In subsection (10A) for “the same meaning as in the Taxes Act” substitute
20
“the meaning given in section 923 of ITA 2007”.
      (9)
In subsection (11)—
(a)
after “Taxes Act” insert “or Part 5 of ITA 2007”, and
(b)
after “that Chapter” insert “or means shares that meet the
requirements of section 173(2) of ITA 2007”.
25
     (10)
After subsection (12) insert—
“(13)
References in this section to Part 5 of ITA 2007 or any provision of
that Part are to a Part or provision that applies only in relation to
shares issued after 5 April 2007.”
311   (1)
Amend section 150B (enterprise investment scheme: reduction of relief) as
30
follows.
      (2)
In subsection (1)—
(a)
after “section 300(1A)(a) of the Taxes Act” insert “or section 213(2)(a)
of ITA 2007”, and
(b)
for “that Act” substitute “the Taxes Act or section 224(2)(a) of ITA
35
2007”.
      (3)
In subsection (6) for “Subsections (11) and (12)” substitute “Subsections (11)
to (13)”.
312
In section 150D (enterprise investment scheme: application of taper relief)
after “or” insert “relief under” and after “Taxes Act” insert “or Part 5 of ITA
40
2007,”.
313
In section 151A(7) (venture capital trusts: reliefs) for “the meaning of the
Taxes Act” substitute “the meaning given in section 923 of ITA 2007”.
314   (1)
Amend section 151B (VCTs: supplementary) as follows.
      (2)
In subsection (3)—
45

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
541

(a)
in paragraph (a) for “been given” substitute “obtained” and for “Part
1 of Schedule 15B to the Taxes Act” substitute “Chapter 2 of Part 6 of
ITA 2007”, and
(b)
in paragraphs (b) and (c) for “been given” substitute “obtained” and
for “that Part of that Schedule” substitute “that Chapter of that Part”.
5
      (3)
In subsection (6)(b) for “section 842AA(8) of the Taxes Act” substitute
“section 281(3) of ITA 2007”.
      (4)
In subsection (8)(b) for “given” substitute “obtained” and for “Part 1 of
Schedule 15B to the Taxes Act” substitute “Chapter 2 of Part 6 of ITA 2007”.
315
After section 151B insert—
10
“151BA
CITR: identification of securities or shares on a disposal
(1)
This section applies for the purpose of identifying the securities or
shares disposed of in any case where—
(a)
an individual or company (“the investor”) disposes of part of
a holding of securities or shares (“the holding”), and
15
(b)
the holding includes securities or shares to which CITR is
attributable in respect of one or more years of assessment or
accounting periods that have been held by the investor
continuously from the time they were issued until the
disposal.
20
(2)
Any disposal by the investor of securities or shares included in the
holding which have been acquired by the investor on different days
is treated as relating to those acquired on an earlier day rather than
to those acquired on a later day.
(3)
If there is a disposal by the investor of securities or shares included
25
in the holding which have been acquired by the investor on the same
day, any of those securities or shares—
(a)
to which CITR is attributable, and
(b)
which have been held by the investor continuously from the
time they were issued until the time of disposal,
30

are treated as disposed of after any other securities or shares
included in the holding which were acquired by the investor on that
day.
(4)
For the purposes of this section a holding of securities is any number
of securities of a company which—
35
(a)
carry the same rights,
(b)
were issued under the same terms, and
(c)
are held by the investor in the same capacity.

It does not matter for this purpose that the number of the securities
grows or diminishes as securities carrying those rights and issued
40
under those terms are acquired or disposed of.
(5)
For the purposes of this section a holding of shares is any number of
shares in a company which—
(a)
are of the same class, and
(b)
are held by the investor in the same capacity.
45

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
542


It does not matter for this purpose that the number of the shares
grows or diminishes as shares of that class are acquired or disposed
of.
(6)
Chapter 1 of Part 4 (share pooling, etc) has effect subject to this
section.
5
(7)
Sections 104 to 107 (which make provision for the identification of
securities and shares on a disposal) do not apply to securities or
shares to which CITR is attributable.
(8)
In a case to which section 127 (equation of original shares and new
holding) applies, shares included in the new holding are treated for
10
the purposes of subsections (2) and (3) as acquired when the original
shares were acquired.
(9)
In subsection (8)—
(a)
the reference to section 127 includes a reference to that
section as it is applied by virtue of any enactment relating to
15
chargeable gains, and
(b)
“original shares” and “new holding” have the same meaning
as in section 127, or (as the case may be) that section as
applied by virtue of the enactment in question.
(10)
In this section and sections 151BB and 151BC—
20
(a)
if the investor is an individual—
(i)
“CITR” has the meaning given by section 333 of ITA
2007,
(ii)
references to CITR being attributable to securities,
shares or debentures are to be read in accordance with
25
section 357 of that Act, and
(iii)
references to securities, shares or debentures having
been held by the investor continuously are to be read
in accordance with section 380 of that Act,
(b)
if the investor is a company—
30
(i)
“CITR” means relief under Part 5 of Schedule 16 to
the Finance Act 2002,
(ii)
references to CITR being so attributable are to be read
in accordance with paragraph 26 of that Schedule,
and
35
(iii)
references to securities, shares or debentures having
been held by the investor continuously are to be read
in accordance with paragraph 49 of that Schedule.
316
After section 151BA insert—
“151BB
CITR: rights issues etc
40
(1)
If—
(a)
an individual or company (“the investor”) holds shares in the
CDFI which are of the same class and held in the same
capacity (“the existing holding”),
(b)
there is a reorganisation affecting the existing holding as a
45
result of an allotment which—

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
543

(i)
falls within section 126(2)(a) (an allotment of shares or
debentures in respect of and in proportion to an
original holding), and
(ii)
is not an allotment of corresponding bonus shares,
(c)
immediately after the reorganisation, CITR is attributable to
5
the shares included in the existing holding or the shares or
debentures allotted in respect of those shares, in respect of
one or more years of assessment or accounting periods, and
(d)
if CITR is attributable to the shares included in the existing
holding at that time, those shares have been held by the
10
investor continuously from the time they were issued until
the reorganisation,

sections 127 to 130 (treatment of share capital following a
reorganisation) do not apply in relation to the existing holding.
(2)
Section 116(10) (reorganisations, conversions and reconstructions)
15
does not apply in any case where the old asset consists of shares held
(in the same capacity) by the investor—
(a)
that have been held by the investor continuously from the
time they were issued until the relevant transaction, and
(b)
to which CITR is attributable immediately before that
20
transaction.

In this subsection “old asset” and “the relevant transaction” have the
meaning given by section 116.
(3)
For the purposes of subsection (1)—
“corresponding bonus shares” means bonus shares that—
25
(a)
are issued in respect of shares included in the existing
holding, and
(b)
are in the same company, are of the same class, and
carry the same rights as, those shares,
“reorganisation” has the meaning given in section 126.
30
(4)
The following provisions of this Act have effect subject to this
section—
section 116 (reorganisations, conversions and reconstructions);
Chapter 2 of Part 4 (reorganisation of share capital, conversion
of securities etc).
35
(5)
In this section “the CDFI” is to be read—
(a)
if the investor is an individual, in accordance with section
334(2) of ITA 2007,
(b)
if the investor is a company, in accordance with paragraph
1(2) of Schedule 16 to the Finance Act 2002.”
40
317
After section 151BB insert—
“151BC
CITR: company reconstructions etc
(1)
If—
(a)
an individual or company (“the investor”) holds shares in or
debentures of a company (“company A”),
45
(b)
there is a reconstruction or amalgamation affecting that
holding (“the existing holding”),