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
579

(j)
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)”.
444
In paragraph 49 of Schedule 3 (approved SAYE Option Schemes)—
(a)
in the entry for “child”, in the second column, for “section 832(5) of
5
ICTA (and see section 721(6) of this Act)” substitute “section 721(6)”,
(b)
in the entry for “close company”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(c)
in the entry for “distribution”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
10
(d)
omit the entry for “interest”,
(e)
in the entry for “notice”, in the second column, for “section 832(1) of
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”,
15
(g)
in the entry for “personal representatives”, in the second column, for
“section 721(1)” substitute “section 923 of ITA 2007”,
(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
20
applied by section 923 of ITA 2007)”, and
(j)
omit the entry for “United Kingdom”.
445
In paragraph 37 of Schedule 4 (approved CSOP Schemes)—
(a)
in the entry for “child”, in the second column, for “section 832(5) of
ICTA (and see section 721(6) of this Act)” substitute “section 721(6)”,
25
(b)
in the entry for “close company”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(c)
in the entry for “distribution”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(d)
in the entry for “notice”, in the second column, for “section 832(1) of
30
ICTA” substitute “section 923 of ITA 2007”,
(e)
in the entry for “ordinary share capital”, in the second column, for
“section 832(1) of ICTA” substitute “section 923 of ITA 2007”,
(f)
in the entry for “personal representatives”, in the second column, for
“section 721(1)” substitute “section 923 of ITA 2007”,
35
(g)
in the entry for “recognised stock exchange”, in the second column,
for “section 841 of ICTA” substitute “section 939 of ITA 2007”, and
(h)
omit the entry for “United Kingdom”.
446   (1)
Amend Schedule 5 (enterprise management incentives) as follows.
      (2)
In paragraph 11(10) (meaning of “qualifying subsidiary”)—
40
(a)
for “section 312(2A) of ICTA” substitute “section 252 of ITA 2007”,
and
(b)
for “Chapter 3 of Part 7 of ICTA” substitute “Part 5 of ITA 2007”.
      (3)
In paragraph 58, in the definition of “research and development”, for
“section 837A of ICTA” substitute “section 940 of ITA 2007”.
45
      (4)
In paragraph 59—
(a)
in the entry for “child”, in the second column, for “section 832(5) of
ICTA (and see section 721(6) of this Act)” substitute “section 721(6)”,

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
580

(b)
in the entry for “close company”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(c)
in the entry for “distribution”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
(d)
in the entry for “farming”, in the second column, for “section 832(1)
5
of ICTA” substitute “section 930 of ITA 2007”,
(e)
in the entry for “generally accepted accounting practice”, in the
second column, for “section 50(1) of the Finance Act 2004” substitute
“section 931 of ITA 2007”,
(f)
in the entry for “notice”, in the second column, for “section 832(1) of
10
ICTA” substitute “section 923 of ITA 2007”,
(g)
in the entry for “offshore installation”, in the second column, for
“section 837C of ICTA” substitute “sections 935 and 936 of ITA 2007”,
(h)
in the entry for “ordinary share capital”, in the second column, for
“section 832(1) of ICTA” substitute “section 923 of ITA 2007”,
15
(i)
in the entry for “personal representatives”, in the second column, for
“section 721(1)” substitute “section 923 of ITA 2007”,
(j)
in the entry for “51% subsidiary”, in the second column, for “section
838(1) of ICTA” substitute “section 923 of ITA 2007”,
(k)
in the entry for “tax”, in the second column, at the end insert “(as
20
applied by section 923 of ITA 2007)”,
(l)
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)”,
(m)
in the entry for “trade”, in the second column, for “section 832(1) of
25
ICTA” substitute “section 923 of ITA 2007”, and
(n)
in the entry for “United Kingdom”, in the second column, for
“section 830 of ICTA” substitute “section 947 of ITA 2007”.
Finance Act 2003 (c. 14)
447
The Finance Act 2003 is amended as follows.
30
448
Omit section 151 (non-resident companies: extent of charge to income tax).
449
In section 152 (non-resident companies: transactions carried out through
broker, investment manager or Lloyd’s agent) omit paragraph (b) and the
word “and” before it.
450
In section 153(2)(a) (general replacement of references to branch or agency
35
of company) for “paragraphs 3 and 4” substitute “paragraph 4”.
451
In paragraph 1(2) of Schedule 26 (non-resident companies: transactions
through broker, investment manager or Lloyd’s agent) omit paragraph (b)
and the word “and” before it.
Finance Act 2004 (c. 12)
40
452
The Finance Act 2004 is amended as follows.
453
In section 50 (generally accepted accounting practice) for “the Tax Acts”
wherever occurring substitute “the Corporation Tax Acts”.
454
In section 51 (use of different accounting practices within a group of

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
581

companies) for subsection (5) substitute—
“(5)
In this section “tax advantage” has the meaning given by section
840ZA of the Taxes Act 1988.”
455
In section 59 (construction industry scheme: contractors) after subsection (7)
insert—
5
“(8)
This section is subject to section 73A (designated international
organisations: exemption from section 59).”
456
In section 65 (change in control of company registered for gross payment)
for subsection (3) substitute—
“(3)
In this section references to a change in the control of a company are
10
references to such a change determined in accordance with section
929 of the Income Tax Act 2007.”
457
After section 73 (regulations under this Chapter: supplementary) insert—
“73A
Designated international organisations: exemption from section 59
(1)
The Treasury may by order designate for the purposes of this section
15
any international organisation of which the United Kingdom is a
member.
(2)
Section 59 does not apply to an organisation which is so designated.”
458   (1)
Amend section 83 (giving through the self-assessment return) as follows.
      (2)
Omit subsections (1) to (3).
20
      (3)
For subsections (4) and (5) substitute—
“(4)
A charitable company is treated as having made a claim for any
exemption to which it may be entitled under section 505(1)(c)(ii) of
the Taxes Act 1988 (charities: exemption from tax under Case III of
Schedule D) if—
25
(a)
it receives a gift as a result of a direction under section 429(2)
of the Income Tax Act 2007 (giving through self-assessment
return), and
(b)
as a result of section 429(4) of that Act, the gift is treated as a
qualifying donation for the purposes of Chapter 2 of Part 8 of
30
that Act (gift aid).
(5)
In this section “charitable company” means any body of persons
established for charitable purposes only.”
459
Omit sections 101 (payment of royalties without deduction at source) and
102 (claim for tax deducted at source from exempt interest or royalty
35
payments).
460
Omit sections 119 to 123 (individuals benefited by film relief).
461
Omit sections 126 to 130 (individuals in partnership: exit charge).
462
In section 155(6)(a) and (b) (persons by whom scheme may be established:
supplementary) for “section 840A(1)(b) of ICTA” substitute “section
40
925(2)(b) of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
582

463
In section 161 (meaning of “payment” etc) for subsection (8) substitute—
“(8)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
464   (1)
Amend section 162 (meaning of “loan”) as follows.
5
      (2)
In subsection (2)(a) for “section 841 of ICTA” substitute “section 939 of ITA
2007”.
      (3)
For subsection (6) substitute—
“(6)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
10
2007.”
465
In section 172A (surrender) for subsection (11) substitute—
“(11)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
15
466
In section 172B (increase in rights of connected person on death) for
subsection (9) substitute—
“(9)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
20
467
In section 172C (allocation of unallocated employer contributions) for
subsection (7) substitute—
“(7)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
25
468
In section 172D (limit on increase in benefits) for subsection (6) substitute—
“(6)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
469   (1)
Amend section 189 (relevant UK individual) as follows.
30
      (2)
In subsection (2)—
(a)
omit the “and” immediately after paragraph (b),
(b)
after paragraph (b) insert—
“(ba)
income which is chargeable under Part 3 of ITTOIA
2005 and is immediately derived from the carrying on
35
of a UK furnished holiday lettings business (whether
individually or as a partner acting personally in a
partnership), and”, and
(c)
for paragraph (c) substitute—
“(c)
income to which subsection (2A) applies.”
40
      (3)
After subsection (2) insert—
“(2A)
This subsection applies to income if—
(a)
it is patent income, and

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
583

(b)
the individual, alone or jointly, devised the invention for
which the patent in question was granted.”
      (4)
After subsection (4) insert—
“(5)
“UK furnished holiday lettings business” means a UK property
business so far as consisting of the commercial letting of furnished
5
holiday accommodation (within the meaning of Chapter 6 of Part 3
of ITTOIA 2005).
(6)
If there is a letting of accommodation only part of which is holiday
accommodation, just and reasonable apportionments are to be made
for the purpose of determining what is comprised in a UK furnished
10
holiday lettings business.
(7)
“Patent income” means—
(a)
royalties or other sums paid in respect of the use of a patent
charged to tax under section 579 of ITTOIA 2005,
(b)
amounts on which tax is payable under section 587 or 593 of
15
ITTOIA 2005, or
(c)
amounts on which tax is payable under—
(i)
section 472(5) of the Capital Allowances Act, or
(ii)
paragraph 100 of Schedule 3 to that Act.”
470
In section 192 (relief at source) omit subsection (5).
20
471
In section 193(6) (relief under net pay arrangements)—
(a)
for “from the total income” substitute “in calculating the net income”,
and
(b)
at the end insert “(see Step 2 of the calculation in section 23 of ITA
2007)”.
25
472
In section 194(1) (relief on making of claim)—
(a)
for “from the total income” substitute “in calculating the net income”,
and
(b)
at the end insert “(see Step 2 of the calculation in section 23 of ITA
2007)”.
30
473
In section 266A (member’s liability) for subsection (7) substitute—
“(7)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
474
In section 273 (members liable as scheme administrator) for subsection (11)
35
substitute—
“(11)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
475
In section 278 (market value) for subsection (4) substitute—
40
“(4)
For the purposes of this section whether a person is connected with
another person is determined in accordance with section 927 of ITA
2007.”
476   (1)
Amend section 279 (other definitions) as follows.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
584

      (2)
In subsection (1)—
(a)
in the definition of “charity” for “section 506 of ICTA” substitute
“section 923 of ITA 2007”,
(b)
after the definitions of “pension credit” and “pension debit” insert
“and”, and
5
(c)
omit the words after the definition of “pension sharing order or
provision”.
      (3)
After that subsection insert—
“(1A)
In this Part, so far as it forms part of the Corporation Tax Acts,
expressions which are defined for the purposes of the Income Tax
10
Acts are to be given the same meaning as they have in the Income
Tax Acts.”
477   (1)
Amend section 280 (abbreviations and general index) as follows.
      (2)
In subsection (1) omit the “and” immediately before the definition of
“ITTOIA 2005” and after that definition insert “, and
15
“ITA 2007” means the Income Tax Act 2007.”
      (3)
In subsection (2)—
(a)
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 Act)”,
20
(b)
in the entry for “basic rate limit”, in the second column, for “section
832(1) of ICTA” substitute “section 20(2) of ITA 2007 (as applied by
section 923 of that Act)”,
(c)
in the entry for “chargeable gain”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”,
25
(d)
in the entry for “company”, in the second column, for “section 832(1)
of ICTA” substitute “section 926 of ITA 2007”,
(e)
in the entry for “higher 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 Act)”,
30
(f)
after the entry for “money purchase benefits” insert—

“net income
section 23 of ITA 2007

(as applied by section

923 of that Act)”,

(g)
in the entry for “period of account”, in the second column, for
35
“section 832(1) of ICTA” substitute “section 923 of ITA 2007”,
(h)
in the entry for “personal representatives”, in the second column, for
“section 279(1)” substitute “section 923 of ITA 2007”,
(i)
in the entry for “property investment LLP”, in the second column, for
“section 842B of ICTA” substitute “section 938 of ITA 2007”,
40
(j)
in the entry for “retail prices index”, in the second column, for
“section 279(1)” substitute “section 923 of ITA 2007”,
(k)
in the entry for “tax year”, in the second column, for “section 279(1)”
substitute “section 4(2) of ITA 2007 (as applied by section 923 of that
Act)”,
45

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
585

(l)
in the entry for “the tax year 2006-07 etc”, in the second column, for
“section 279(1)” substitute “section 4(4) of ITA 2007 (as applied by
section 923 of that Act)”, and
(m)
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)”.
5
478   (1)
Amend Schedule 15 (charge to income tax on benefits received by former
owner of property) as follows.
      (2)
For paragraph 2 substitute—
“2    (1)
For the purposes of this Schedule whether a person is connected
with another person is determined in accordance with section 927
10
of the Income Tax Act 2007.
      (2)
But for those purposes sections 927 and 928 of that Act are to be
read as if in those sections—
(a)
“relative” included uncle, aunt, nephew and niece, and
(b)
“settlement”, “settlor” and “trustee” had the same
15
meanings as in IHTA 1984.”
      (3)
In paragraph 9(1) for paragraph (c) substitute—
“(c)
sections 653 to 663 of the Income Tax Act 2007,”.
479
In paragraph 4 of Schedule 27 (meaning of “offshore installation”) for
“sections 573 and 574” substitute “section 573”.
20
480
In paragraph 4 of Schedule 29A (investment-regulated pension schemes) for
sub-paragraph (2) substitute—
    “(2)
For the purposes of sub-paragraph (1) whether a person is
connected with another person is determined in accordance with
section 927 of ITA 2007.”
25
481
In paragraph 11D of Schedule 36 (transitional provisions) for sub-paragraph
(5) substitute—
    “(5)
For the purposes of this paragraph whether a person is connected
with another person is determined in accordance with section 927
of ITA 2007.”
30
Pensions Act 2004 (c. 35)
482
The Pensions Act 2004 is amended as follows.
483
In Schedule 3 (restricted information held by the Regulator: certain
permitted disclosures to facilitate exercise of functions), in the entry relating
to the Commissioners of Inland Revenue or their officers—
35
(a)
omit the “or” immediately after paragraph (f), and
(b)
in the second column after paragraph (g) insert “or—
(h)
the Income Tax Act 2007 (so far as relating to
functions previously exercised under the Income and
Corporation Taxes Act 1988).”
40
484
In Schedule 8 (restricted information held by the Board: certain permitted
disclosures to facilitate exercise of functions), in the entry relating to the
Commissioners of Inland Revenue or their officers—
(a)
omit the “or” immediately after paragraph (e), and