|
| |
|
(b) | in the second column after paragraph (f) insert “or— |
| |
(g) | the Income Tax Act 2007 (so far as relating to |
| |
functions previously exercised under the Income and |
| |
Corporation Taxes Act 1988).” |
| |
Constitutional Reform Act 2005 (c. 4) |
| 5 |
485 | The Constitutional Reform Act 2005 is amended as follows. |
| |
486 | In paragraph 4 of Schedule 7 (protected functions of the Lord Chancellor) at |
| |
the end of Part A (general) insert— |
| |
| |
| 10 |
487 | In the table in Part 3 of Schedule 14 (appointments by the Lord Chancellor: |
| |
offices to which paragraph 2(2)(d) of Schedule 12 to the Act applies) at the |
| |
| |
| | Section 637(1) of the Income |
| | | | | | | 15 | | | | | | | | | | |
|
Income Tax (Trading and Other Income) Act 2005 (c. 5) |
| |
488 | The Income Tax (Trading and Other Income) Act 2005 is amended as |
| |
| 20 |
489 | In section 1 (overview of Act) omit subsection (2). |
| |
490 | In section 12(3) (profits of mines etc) for “Chapter 1 of Part 10 of ICTA” |
| |
substitute “Part 4 of ITA 2007”. |
| |
491 (1) | Amend section 13 (visiting performers) as follows. |
| |
(2) | In subsection (8) omit the definitions of “payment” and “transfer”. |
| 25 |
(3) | After that subsection insert— |
| |
“(9) | In this section and section 14— |
| |
(a) | references to a payment include references to a payment by |
| |
way of loan of money, and |
| |
(b) | references to a transfer do not include references to a transfer |
| 30 |
of money but, subject to that, include references to— |
| |
(i) | a temporary transfer (as by way of loan), and |
| |
(ii) | a transfer of a right (whether or not a right to receive |
| |
| |
(10) | This section does not apply to payments or transfers of a kind |
| 35 |
prescribed in regulations under section 899(6) of ITA 2007.” |
| |
492 | In section 17(3) (effect of becoming or ceasing to be a UK resident) for “set |
| |
off under section 385 of ICTA against” substitute “deducted under section 83 |
| |
| |
|
| |
|
| |
|
493 | Omit section 51 (patent royalties). |
| |
494 (1) | Amend section 52 (exclusion of double relief for interest) as follows. |
| |
(2) | In subsections (1), (5) and (6) for “section 353 of ICTA” substitute “section |
| |
| |
(3) | In subsection (6) for “section 368(3) of ICTA” substitute “section 387(2) and |
| 5 |
| |
495 | In section 87(5) (expenses of research and development) for “section 837A of |
| |
ICTA” substitute “section 940 of ITA 2007”. |
| |
496 | In section 108(4) (gifts of trading stock etc to charities) omit paragraphs (c) |
| |
| 10 |
497 | In section 179(a) (connected persons) for “section 839 of ICTA” substitute |
| |
“section 927 of ITA 2007”. |
| |
498 (1) | Amend section 232 (treatment of trading adjustment income) as follows. |
| |
(2) | In subsection (3) for “Chapter 1 of Part 10 of ICTA” substitute “Part 4 of ITA |
| |
| 15 |
(3) | In subsection (4) for the words from “the trade” to the end substitute “the |
| |
trade is relevant UK earnings within section 189(2)(b) of FA 2004, |
| |
adjustment income is similarly relevant UK earnings.” |
| |
499 | In section 248(3) (debts paid after cessation) for “under section 109A(4) or |
| |
(4A) of ICTA” substitute “as a result of section 98 of ITA 2007”. |
| 20 |
500 (1) | Amend section 250 (receipts relating to post-cessation expenditure) as |
| |
| |
(2) | In subsection (1) for “section 109A of ICTA” substitute “section 96 of ITA |
| |
| |
| 25 |
(a) | in paragraph (a) for “section 109A(2)(a) or (b) of ICTA” substitute |
| |
“section 97(2) or (3) of ITA 2007”, |
| |
(b) | in paragraph (b) for “section 109A(2)(c) of ICTA” substitute “section |
| |
| |
(c) | in paragraph (c) for “section 109A(2)(d) of ICTA” substitute “section |
| 30 |
| |
501 | In section 254(3)(b) (allowable deductions) for “section 90(4) of FA 1995” |
| |
substitute “section 261D of TCGA 1992”. |
| |
502 (1) | Amend section 256 (treatment of post-cessation receipts) as follows. |
| |
(2) | In subsection (1)(b) omit “earned income within section 833(4)(c) of ICTA |
| 35 |
| |
(3) | In subsection (2) omit “earned income or”. |
| |
503 | In section 272(2) (profits of a property business: application of trading |
| |
income rules), omit the entry in the table relating to section 51. |
| |
504 | In section 322(2) (commercial letting of furnished holiday |
| 40 |
| |
(a) | omit paragraphs (b) and (c), and |
| |
|
| |
|
| |
|
(b) | for paragraph (f) and the “and” immediately before that paragraph |
| |
| |
“(f) | section 189(2)(ba) of FA 2004 (meaning of “relevant |
| |
UK earnings” for pension purposes), |
| |
(g) | Part 4 of ITA 2007 ( loss relief: see section 127 of that |
| 5 |
| |
(h) | section 769(3) of ITA 2007 (jointly held property: see |
| |
| |
505 | In section 327(2)(b) (capital allowances and loss relief) for “Chapter 1 of Part |
| |
10 of ICTA” substitute “Part 4 of ITA 2007”. |
| 10 |
506 (1) | Amend section 328 (earned income and relevant UK earnings for pension |
| |
| |
(2) | In subsection (2) for “treated as” to the end substitute “relevant UK earnings |
| |
within section 189(2)(ba) of FA 2004.” |
| |
(3) | In the sidenote omit “Earned income and”. |
| 15 |
507 | In section 333(3) (treatment of property business adjustment income) for |
| |
“Chapter 1 of Part 10 of ICTA” substitute “Part 4 of ITA 2007”. |
| |
508 | In section 354(2) (other rules about what counts as a “post-cessation receipt”) |
| |
after “section 250 (receipts relating to post-cessation expenditure)” insert |
| |
“(reading the reference in subsection (1) to section 96 of ITA 2007 as a |
| 20 |
reference to section 125 of that Act)”. |
| |
509 | In section 372(2) (building society dividends) for the words from “has” to the |
| |
end substitute “includes any distribution (whether or not described as a |
| |
| |
510 (1) | Amend section 397 (tax credits for qualifying distributions: UK residents |
| 25 |
and eligible non-UK residents) as follows. |
| |
(2) | In subsection (2) omit paragraph (b) and the “or” immediately before it. |
| |
(3) | In subsection (4) after “ICTA” insert “or section 56(3) of ITA 2007”. |
| |
(4) | In subsection (6) for the words from “section 231AA” to “umbrella scheme),” |
| |
| 30 |
“section 504(4) of ITA 2007 (disapplication of certain provisions |
| |
for income of unauthorised unit trusts), |
| |
section 592 of ITA 2007 (no tax credits for borrower under stock |
| |
| |
section 593 of ITA 2007 (no tax credits for interim holder under |
| 35 |
| |
section 594 of ITA 2007 (no tax credits for original owner under |
| |
| |
511 (1) | Amend section 399 (qualifying distributions received by persons not entitled |
| |
to tax credits) as follows. |
| 40 |
(2) | In subsection (4) for the words from “and the distribution” to “treated” |
| |
substitute “, the amount or value of the distribution is treated for the |
| |
purposes of Chapters 3, 4 and 6 of Part 9 of ITA 2007 (special rates for |
| |
| |
(3) | In subsection (7) for the words from “section 231AA(1A)” to the end |
| 45 |
|
| |
|
| |
|
| |
“section 504(4) of ITA 2007 (disapplication of certain provisions |
| |
for income of unauthorised unit trusts), |
| |
section 592 of ITA 2007 (no tax credits for borrower under stock |
| |
| 5 |
section 593 of ITA 2007 (no tax credits for interim holder under |
| |
| |
section 594 of ITA 2007 (no tax credits for original owner under |
| |
| |
512 (1) | Amend section 400 (non-qualifying distributions) as follows. |
| 10 |
(2) | In subsection (4) for the words from “income to which” to the end substitute |
| |
“assessed (in whole or in part) at the dividend trust rate by virtue of Chapter |
| |
3 of Part 9 of ITA 2007 (trustees’ accumulated or discretionary income to be |
| |
charged at special rates), the trustees’ liability for income tax at that rate is |
| |
| 15 |
(3) | After subsection (6) insert— |
| |
“(7) | Subsection (2) is subject to section 504(4) of ITA 2007 (disapplication |
| |
of certain provisions for income of unauthorised unit trusts).” |
| |
513 | In section 401 (relief: qualifying distribution after linked non-qualifying |
| |
distribution) after subsection (6) insert— |
| 20 |
“(6A) | The reduction under this section is given effect at Step 6 of the |
| |
calculation in section 23 of ITA 2007.” |
| |
514 | In section 410(3)(b) (stock dividend income arising to trustees) for the words |
| |
from “income” to the end substitute “accumulated or discretionary income |
| |
(as defined in section 480 of ITA 2007 but excluding income arising under a |
| 25 |
trust established for charitable purposes only or an unauthorised unit trust |
| |
in relation to which section 504 of that Act applies)”. |
| |
515 (1) | Amend section 414 (stock dividends from UK resident companies: income |
| |
tax to be treated as paid) as follows. |
| |
(2) | In subsection (1) for “income to which section 686 of ICTA applies” |
| 30 |
substitute “accumulated or discretionary income (as defined in section 480 |
| |
| |
(3) | In subsection (4) after “fall to be made” insert “at Step 2 or 3 of the calculation |
| |
in section 23 of ITA 2007 (calculation of income tax liability)”. |
| |
516 | In section 418(5) (loans to participator in close company: relief where |
| 35 |
borrowers liable as settlors) for “rate applicable to trusts” substitute “trust |
| |
| |
517 | In section 421(4) (loans to participator in close company: income tax treated |
| |
as paid) after “fall to be made” insert “at Step 2 or 3 of the calculation in |
| |
section 23 of ITA 2007 (calculation of income tax liability)”. |
| 40 |
518 (1) | Amend section 426 (annuity payments received after deduction of tax) as |
| |
| |
(2) | For “Income tax deducted under either of the following sections” substitute |
| |
“In accordance with section 781 of ITA 2007 a sum representing income tax |
| |
deducted under section 834 of that Act”. |
| 45 |
|
| |
|
| |
|
(3) | Omit the words after “recipient”. |
| |
519 | In section 446 (strips of government securities: relief for losses) for |
| |
subsection (2) substitute— |
| |
“(2) | If a person makes a claim under this section, the relief is given by |
| |
deducting the loss in calculating the person’s net income for the tax |
| 5 |
year in which the disposal occurs (see Step 2 of the calculation in |
| |
section 23 of ITA 2007).” |
| |
520 | In section 454 (listed securities held since 26th March 2003: relief for losses) |
| |
for subsection (4) substitute— |
| |
“(4) | If a claim under this section is made by a person other than a trustee, |
| 10 |
the relief is given by deducting the loss in calculating the person’s net |
| |
income for the tax year in which the disposal occurs (see Step 2 of the |
| |
calculation in section 23 of ITA 2007).” |
| |
521 (1) | Amend section 457 (disposal of deeply discounted securities by trustees) as |
| |
| 15 |
| |
(3) | For subsection (5) substitute— |
| |
“(5) | If the trustees are trustees of a scheme in relation to which section 504 |
| |
of ITA 2007 applies, subsection (2) does not apply to profits which |
| |
are shown in the scheme’s accounts as income available for payment |
| 20 |
to unit holders or for investment.” |
| |
522 | In section 459(2) (profits from deeply discounted securities: transfer of assets |
| |
abroad) for “sections 739 and 740 of ICTA (transfer of assets abroad) have” |
| |
substitute “Chapter 2 of Part 12 of ITA 2007 (transfer of assets abroad) has”. |
| |
523 | In section 460(2) (profits from deeply discounted securities: minor |
| 25 |
definitions) for “section 709(1)” substitute “section 840ZA”. |
| |
524 | After section 465 insert— |
| |
“465A | Amounts for which individuals liable to be treated as highest part of |
| |
| |
(1) | This section applies if— |
| 30 |
(a) | an individual is liable for tax under this Chapter in respect of |
| |
| |
(b) | the individual is treated by section 530 as having paid income |
| |
tax at the savings rate on the amount. |
| |
(2) | The amount is treated as the highest part of the individual’s total |
| 35 |
| |
(3) | Subsection (2) has effect for all income tax purposes except the |
| |
purposes of sections 535 to 537 (gains from contracts for life |
| |
insurance etc: top slicing relief). |
| |
(4) | See section 946 of ITA 2007 (relationship between highest part rules) |
| 40 |
for the relationship between— |
| |
(a) | the rule in subsection (2), and |
| |
(b) | other rules requiring particular income to be treated as the |
| |
highest part of a person’s total income.” |
| |
|
| |
|
| |
|
525 | In section 466(2) (person liable: personal representatives) for “lower rate” |
| |
substitute “savings rate”. |
| |
526 (1) | Amend section 467 (liability of trustees for tax on gains from contracts for |
| |
life insurance etc) as follows. |
| |
(2) | After subsection (1) insert— |
| 5 |
“(1A) | If trustees are liable for tax under this Chapter, the gain is treated for |
| |
income tax purposes as income of the trustees.” |
| |
(3) | For subsection (7) substitute— |
| |
“(7) | If trustees are liable for tax under this Chapter, it is charged at the |
| |
| 10 |
(a) | condition A is met, or |
| |
(b) | condition D is met and the trustees are trustees of a charitable |
| |
| |
527 | In section 468 (gains from contracts for life insurance etc: non-UK resident |
| |
trustees and foreign institutions)— |
| 15 |
(a) | in subsection (2) for “Sections 739 and 740”, “prevent” and “apply” |
| |
substitute “Chapter 2 of Part 12 of ITA 2007”, “prevents” and |
| |
“applies” respectively, and |
| |
(b) | in subsections (3) and (4) for “sections 739 and 740 apply” substitute |
| |
“Chapter 2 of Part 12 of ITA 2007 applies”. |
| 20 |
528 | In section 482 (excepted group life policies: conditions about persons |
| |
| |
(a) | in subsection (6) omit the definition of “tax advantage”, and |
| |
(b) | after that subsection insert— |
| |
“(7) | In this section “tax advantage” has the meaning given by |
| 25 |
| |
529 | In section 520(4) (the property categories) after the definition of “internal |
| |
| |
““investment trust” has the meaning given by section 842 of |
| |
| 30 |
530 (1) | Amend section 530 (income tax treated as paid) as follows. |
| |
(2) | In subsection (1) for “lower rate” substitute “savings rate”. |
| |
(3) | In subsection (4) after “fall to be made” insert “at Step 2 or 3 of the calculation |
| |
in section 23 of ITA 2007 (calculation of income tax liability)”. |
| |
531 (1) | Amend section 535 (top slicing relief) as follows. |
| 35 |
(2) | After subsection (2) insert— |
| |
“(2A) | If the relief is given by a reduction in income tax, it is given effect at |
| |
Step 6 of the calculation in section 23 of ITA 2007.” |
| |
| |
(a) | for “LRL”, in both places where it occurs, substitute “SRL”, and |
| 40 |
(b) | for “lower rate” substitute “savings rate”. |
| |
|
| |
|
| |
|
(4) | After subsection (6) insert— |
| |
“(7) | For the purposes of the calculations mentioned in subsection (1) any |
| |
relief under Chapter 2 or 3 of Part 8 of ITA 2007 (which relate to gift |
| |
aid and other gifts to charities) is ignored.” |
| |
532 | In section 536(1) (top slicing relieved liability: one chargeable event) in |
| 5 |
paragraph (b) of Step 2 for “lower rate” substitute “savings rate”. |
| |
533 | In section 537 (top slicing relieved liability: two or more chargeable events) |
| |
in paragraph (b) of Step 2 for “lower rate” substitute “savings rate”. |
| |
534 | For section 539 (relief for deficiencies) substitute— |
| |
“539 | Relief for deficiencies |
| 10 |
(1) | An individual is entitled to a tax reduction for a tax year in which a |
| |
deficiency arises from a policy or contract on a chargeable event if— |
| |
(a) | the condition in subsection (2) is met, |
| |
(b) | the individual would (apart from this section) be liable to |
| |
income tax at the higher rate or the dividend upper rate (or |
| 15 |
both) for the tax year, and |
| |
(c) | the individual makes a claim. |
| |
(2) | The condition is that, if a gain had arisen instead on the chargeable |
| |
| |
(a) | the individual would have been liable to income tax on the |
| 20 |
| |
(b) | the individual would have been so liable apart from the |
| |
requirement in section 465(1) that the individual must be UK |
| |
resident in the tax year in which the gain arises. |
| |
(3) | The tax reduction is given effect at Step 6 of the calculation in section |
| 25 |
| |
(4) | See section 540 for the cases in which a deficiency is treated as arising |
| |
from a policy or contract on a chargeable event, section 541 for how |
| |
the deficiency is calculated and section 469(5) for the apportionment |
| |
of deficiencies in cases where two or more persons are interested in |
| 30 |
| |
(5) | The amount of the tax reduction is calculated as follows. |
| |
| |
| |
| Attribute to the amount of the deficiency an amount of the |
| 35 |
individual’s income for the tax year which is liable at the dividend |
| |
upper rate, so far as is possible. |
| |
| |
| |
| If there is an amount of the deficiency remaining after Step 1, |
| 40 |
attribute to the remaining amount of the deficiency an amount of the |
| |
individual’s savings income for the tax year which is liable at the |
| |
higher rate, so far as is possible. |
| |
| |
| 45 |
|
| |
|