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
572

     (14)
In paragraph 25(1), omit “is a company and”.
     (15)
In paragraph 26—
(a)
in sub-paragraph (1), omit paragraph (a),
(b)
in sub-paragraph (2), omit “income or”, for “a tax year or” substitute
“an” and, in paragraph (b)(i), omit “year or”,
5
(c)
in sub-paragraphs (3) and (4), omit “income tax or”, and
(d)
in sub-paragraph (5), for “a tax year or” substitute “an” and for “that
year or period” substitute “that period”.
     (16)
In paragraph 27—
(a)
omit sub-paragraphs (2) and (3), and
10
(b)
in sub-paragraph (4), omit “Where the investor is a company,”.
     (17)
In paragraph 28(1), omit “tax year or”.
     (18)
In paragraph 29—
(a)
in sub-paragraph (2), omit “tax year or”,
(b)
in sub-paragraph (3), for “a tax year or” substitute “an”,
15
(c)
in sub-paragraph (5), omit “tax year or” and for “that year or period”,
in both places where it occurs, substitute “that period”, and
(d)
in sub-paragraph (6), for “a tax year or” substitute “an”.
     (19)
In paragraph 30(1), omit “tax year or”.
     (20)
In paragraphs 31(5), 32(1)(b), 32(3) and 34(5)(b)(ii) for “he” and “him”
20
substitute “the investor”.
     (21)
In paragraph 31(8), omit “tax years or”.
     (22)
In paragraph 32—
(a)
in sub-paragraph (1), omit “tax year or”, and
(b)
in sub-paragraph (5), omit “tax years or”.
25
     (23)
In paragraph 35(1)(d)(ii), omit “if the investor is a company,”.
     (24)
In paragraph 35(5)(a) for “his” substitute “the investor’s”.
     (25)
In paragraph 36(d)(ii), for “his” substitute “the investor”.
     (26)
In paragraph 37(6), for “him” substitute “the investor”.
     (27)
In paragraph 38—
30
(a)
in sub-paragraph (1), for “him” substitute “the investor”.
(b)
in sub-paragraph (2), omit “tax year or”,
(c)
in sub-paragraph (3), omit “tax years or” and, in both places where it
occurs, “tax year or”, and
(d)
in sub-paragraph (4), for “he” substitute “the investor”.
35
     (28)
Omit paragraphs 40 and 41.
     (29)
In paragraph 42—
(a)
in sub-paragraph (1), omit “tax year or”, and
(b)
in sub-paragraph (2), omit paragraph (a) and the “and” immediately
after it and, in paragraph (b), “if the investor is a company,”.
40
     (30)
In paragraph 43(1), for “Tax Acts” substitute “Corporation Tax Acts”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
573

     (31)
In paragraph 45, for “person”, in both places where it occurs, substitute
“company”.
     (32)
In paragraph 46(2), for “person”, in both places where it occurs, substitute
“company”.
     (33)
In paragraph 47—
5
(a)
in sub-paragraph (1), omit “tax years or”,
(b)
in sub-paragraphs (3) and (4), omit “of capital gains tax or
corporation tax on chargeable gains and”,
(c)
omit sub-paragraphs (5) and (6), and
(d)
in sub-paragraph (7) for “that Act” substitute “the 1992 Act”.
10
     (34)
In paragraph 48(2)—
(a)
omit “, and for the purposes of capital gains tax or corporation tax on
chargeable gains,” and
(b)
for “paragraph 41 he” substitute “section 151BC(1) of the 1992 Act the
investor”.
15
     (35)
In paragraph 49(2), for “he”, in both places where it occurs, substitute “the
investor”.
     (36)
In paragraph 51(1), omit the definition of “tax year”.
     (37)
In paragraph 52 before the entry for “associate” insert—

“Accreditation period
paragraph 4(3)”

20
416   (1)
Amend Schedule 18 (relief for community amateur sports clubs) as follows.
      (2)
In paragraph 5—
(a)
in sub-paragraph (3)(b) omit the words from “as it applies” to the
end, and
(b)
after that sub-paragraph insert—
25
    “(4)
For the purposes of this paragraph, section 25(10) of the
Finance Act 1990 (gift aid) has effect as if a registered club
were a charitable company.”
      (3)
In paragraph 9 for sub-paragraph (1) substitute—
    “(1)
Chapter 2 of Part 8 of ITA 2007 (gift aid) confers relief from income
30
tax for donors to registered clubs (see section 430 of that Act).”
417
In Schedule 25 (loan relationships), omit paragraph 57.
418   (1)
Amend Schedule 26 (derivative contracts) as follows.
      (2)
In paragraph 24 (derivative contracts for unallowable purposes:
supplementary) for sub-paragraph (5) substitute—
35
    “(5)
In this paragraph “tax advantage” has the meaning given by
section 840ZA of the Taxes Act 1988.”
      (3)
Omit paragraph 40.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
574

      (4)
In paragraph 45I(3) in the definition of “the retail prices index” for “section
833(2) of the Taxes Act 1988” substitute “section 923 of ITA 2007”.
      (5)
In paragraph 45J(10), in paragraph (b) of the definition of “securities house”,
for “section 349(5) and (6) of the Taxes Act 1988” substitute “section 917 of
ITA 2007”.
5
      (6)
For paragraph 51 substitute—
“51
See section 913 of ITA 2007 (derivative contracts: exception from
duties to deduct).”
419
Omit Schedule 33 (venture capital trusts).
Income Tax (Earnings and Pensions) Act 2003 (c. 1)
10
420
The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.
421
In section 1 (overview of contents of Act) omit subsection (2).
422
In section 11(3) (calculation of “net taxable earnings”) for “section 380(1) of
ICTA” substitute “section 128 of ITA 2007”.
423
In section 24(6)(a) (limit on chargeable overseas earnings where duties of
15
associated employment performed in UK) for “section 840 of ICTA”
substitute “section 929 of ITA 2007”.
424
In section 48(2) (scope of Chapter) for “subject to deduction of tax under
section 555 of ICTA (payments to non-resident entertainers and sportsmen)”
substitute “or transfers to which section 899(3) or (4) of ITA 2007 applies
20
(visiting performers: duty to deduct and account for sums representing
income tax)”.
425
In section 69(1) (extended meaning of “control”) for “section 840 of ICTA”
substitute “section 929 of ITA 2007”.
426
In section 178 (exception for loans where interest qualifies for tax relief)—
25
(a)
in paragraph (a) for the words from “(general” to “MIRAS)”
substitute “or section 383 of ITA 2007 (relief for interest payments)”,
and
(b)
in paragraph (b) for “that section” substitute “section 353 of ICTA”.
427
In section 180(5) (threshold for benefit of loan to be treated as earnings)—
30
(a)
in paragraph (a) for the words from “(general” to “MIRAS)”
substitute “or section 383 of ITA 2007 (relief for interest payments)”,
and
(b)
in paragraph (b) for “that section” substitute “section 353 of ICTA”.
428
In section 230(5)(a) (the approved amount for mileage allowance payments)
35
for “section 840 of ICTA” substitute “section 929 of ITA 2007”.
429
In section 329(6) (deductions from earnings not to exceed earnings) for
“section 380 of ICTA” substitute “section 128 of ITA 2007”.
430
In section 347(2) (payments made after leaving an employment) for “from
total income” substitute “in calculating net income”.
40
431
In section 357(2) after “section 505(1)(e) of ICTA” insert “or section 524 of
ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
575

432
After section 404 insert—
“404A
Amounts charged to be treated as highest part of total income
(1)
A payment or other benefit which counts as a person’s employment
income as a result of section 403 is treated as the highest part of the
person’s total income.
5
(2)
Subsection (1) has effect for all income tax purposes except the
purposes of sections 535 to 537 of ITTOIA 2005 (gains from contracts
for life insurance etc: top slicing relief).
(3)
See section 946 of ITA 2007 (relationship between highest part rules)
for the relationship between—
10
(a)
the rule in subsection (1), and
(b)
other rules requiring particular income to be treated as the
highest part of a person’s total income.”
433
In section 476 (charge on occurrence of chargeable event) after subsection (5)
insert—
15
“(5A)
An amount charged under subsection (5)(a) is treated for income tax
purposes as an amount of income.”
434   (1)
Amend section 515 (tax advantages and charges relating to SIPs) as follows.
      (2)
In subsection (1)—
(a)
for “provisions of ICTA relate” substitute “provision of ICTA
20
relates”, and
(b)
omit paragraph (b) and the “and” immediately after it.
      (3)
In subsection (2)—
(a)
omit the “and” immediately after paragraph (b), and
(b)
after paragraph (c) insert “, and
25
(d)
Chapter 5 of Part 9 of ITA 2007 (which provides for
section 479 of that Act not to apply to income of the
trustees of an approved SIP in certain
circumstances)”.
      (4)
Omit subsection (3).
30
435   (1)
Amend section 555 (deduction for liabilities related to former employment)
as follows.
      (2)
In subsection (2)—
(a)
for “when computing the former employee’s total income” substitute
“in calculating the former employee’s net income”, and
35
(b)
at the end insert “(see Step 2 of the calculation in section 23 of ITA
2007)”.
      (3)
For subsection (6) substitute—
“(6)
See section 263ZA of TCGA 1992 for relief from capital gains tax
where the amount of the deduction allowed under this section
40
exceeds the remaining total income (as defined in that section).”
      (4)
In the sidenote for “from total income” substitute “in calculating net
income”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
576

      (5)
In the italic cross-heading before the section for “from total income”
substitute “in calculating net income”.
436
In section 609(1) after “section 273 of ICTA” insert “or section 459 of ITA
2007”.
437
Omit section 627 (meaning of “grossing up”).
5
438
In section 718 (connected persons) for “Section 839 of ICTA” substitute
“Section 927 of ITA 2007”.
439
In section 719 (control in relation to a body corporate)—
(a)
for “Section 840 of ICTA (meaning of control in relation to a body
corporate)” substitute “Section 929 of ITA 2007 (meaning of
10
“control”)”, and
(b)
for the sidenote substitute “Meaning of “control””.
440   (1)
Amend section 721 (other definitions) as follows.
      (2)
In subsection (1)—
(a)
after the definition of “foreign employer” insert “and”, and
15
(b)
omit the words after the definition of “non-cash voucher”.
      (3)
Omit subsection (2).
441
In Part 1 of Schedule 1 (abbreviations) in the appropriate place insert—

“ITA 2007
The Income Tax Act 2007”.

442   (1)
Amend Part 2 of Schedule 1 (defined expressions) as follows.
20
      (2)
In the entry for “assignment (in the application of the Act to Scotland)”, in
the second column, for “section 721(2)” substitute “section 942(1) of ITA
2007”.
      (3)
In the entry for “basic rate”, in the second column, for “section 832(1) of
ICTA” substitute “section 6(2) of ITA 2007 (as applied by section 923 of that
25
Act)”.
      (4)
In the entry for “body of persons”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
      (5)
In the entry for “capital allowance”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
30
      (6)
In the entry for “child, children”, in the second column, omit “section 832(5)
of ICTA, and see”.
      (7)
In the entry for “close company”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
      (8)
In the entry for “company”, in the second column, for “section 832(1) of
35
ICTA” substitute “section 926 of ITA 2007”.
      (9)
In the entry for “connected”, in the second column, for “section 839 of ICTA”
substitute “section 927 of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
577

     (10)
In the entry for “control”, in the second column, for “section 840 of ICTA”
substitute “section 929 of ITA 2007”.
     (11)
In the entry for “distribution”, in the second column, for “section 832(1) of
ICTA” substitute “section 923 of ITA 2007”.
     (12)
In the entry for “generally accepted accounting practice”, in the second
5
column, for “section 832(1) of ICTA” substitute “section 931 of ITA 2007”.
     (13)
After the entry for “generally accepted accounting practice” insert—

“grossing up
section 932 of ITA

2007”

     (14)
Omit the entry for “interest”.
10
     (15)
In the entry for “local authority”, in the second column, for “section 842A of
ICTA” substitute “section 933 of ITA 2007”.
     (16)
After the entry for “national insurance contributions” insert—

“net income
section 23 of ITA 2007

(as applied by section

15

923 of that Act)”

     (17)
In the entry for “the normal self-assessment filing date”, in the second
column, for “section 721(1)” substitute “section 923 of ITA 2007”.
     (18)
In the entry for “notice”, in the second column, for “section 832(1) of ICTA”
substitute “section 923 of ITA 2007”.
20
     (19)
In the entry for “offshore installation”, in the second column, for “section
837C of ICTA” substitute “sections 935 and 936 of ITA 2007”.
     (20)
In the entry for “ordinary share capital”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”.
     (21)
In the entry for “personal representatives”, in the second column, for
25
“section 721(1)” substitute “section 923 of ITA 2007”.
     (22)
In the entry for “recognised stock exchange”, in the second column, for
“section 841 of ICTA” substitute “section 939 of ITA 2007”.
     (23)
In the entry for “registered pension scheme”, in the second column, for
“section 832(1) of ICTA” substitute “section 150(2) of FA 2004 (as applied by
30
section 923 of ITA 2007)”.
     (24)
In the entry for “Schedule A business”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”.
     (25)
In the entry for “stepchild”, in the second column, for “section 832(1) of
ICTA” substitute “section 246 of the Civil Partnership Act 2004 (as applied
35
by section 923 of ITA 2007)”.
     (26)
In the entry for “51% subsidiary”, in the second column, for “section 838(1)
of ICTA” substitute “section 923 of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
578

     (27)
In the entry for “tax”, in the second column, at the end insert “(as applied by
section 923 of ITA 2007)”.
     (28)
In the entry for “tax credit”, in the second column, for “section 832(1) of
ICTA” substitute “section 397(1) of ITTOIA 2005 (as applied by section 923
of ITA 2007)”.
5
     (29)
In the entry for “tax year”, in the second column, for “section 721(1)”
substitute “section 4(2) of ITA 2007 (as applied by section 923 of that Act)”.
     (30)
In the entry for “the tax year 2003-04 etc”, in the second column, for “section
721(1)” substitute “section 4(4) of ITA 2007 (as applied by section 923 of that
Act)”.
10
     (31)
In the entry for “total income” for “section 835 of ICTA” substitute “section
23 of ITA 2007 (as applied by section 923 of that Act)”.
     (32)
In the entry for “trade”, in the second column, for “section 832(1) of ICTA”
substitute “section 923 of ITA 2007”.
     (33)
In the entry for “United Kingdom”, in the second column, for “section 830 of
15
ICTA” substitute “section 947 of ITA 2007”.
     (34)
In the entry for “UK property business”, in the second column, omit “section
832(1) of ICTA and” and at the end insert “(as applied by section 923 of ITA
2007)”.
443   (1)
Amend Schedule 2 (approved share incentive plans) as follows.
20
      (2)
In paragraph 49(3)—
(a)
in paragraph (a) for “section 840A(1)(b) of ICTA” substitute “section
925(2)(b) of ITA 2007”, and
(b)
in paragraph (c) for “section 840A(1)(c) of ICTA” substitute “section
925(2)(c) of ITA 2007”.
25
      (3)
In paragraph 100—
(a)
in the entry for “building society”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(b)
in the entry for “child”, in the second column, for “section 832(5) of
ICTA (and see section 721(6))” substitute “section 721(6)”,
30
(c)
in the entry for “close company”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(d)
in the entry for “distribution”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(e)
in the entry for “notice”, in the second column, for “section 832(1) of
35
ICTA” substitute “section 923 of ITA 2007”,
(f)
in the entry for “ordinary share capital”, in the second column, for
“section 832(1) of ICTA” substitute “section 923 of ITA 2007”,
(g)
in the entry for “personal representatives”, in the second column, for
“section 721(1)” substitute “section 923 of ITA 2007”,
40
(h)
in the entry for “recognised stock exchange”, in the second column,
for “section 841 of ICTA” substitute “section 939 of ITA 2007”,
(i)
in the entry for “tax”, in the second column, at the end insert “(as
applied by section 923 of ITA 2007)”, and