Income Tax Bill

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Income Tax Bill

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
600

      (2)
In paragraph (a) for “section 505(1) of ICTA (exemption from income tax for
certain income forming part of the income of a charity)” substitute “any of
sections 521(4), 522(5), 523(5), 524, 529 to 533, 536 and 537 of ITA 2007
(certain exemptions: special rules about charitable trusts)”.
      (3)
In paragraph (b) for the words from “505(3)” to the end substitute “541 of
5
that Act (restrictions on exemptions: attributing items of income to the non-
exempt amount)”.
584
In paragraph 109(4) of Schedule 2 (transitional provision: contracts in
accounting periods beginning before 1st January 1992) for the words from
“Section 539(3)” to the end substitute “Section 539 (relief for deficiencies) has
10
effect as if for subsections (1) to (6) there were substituted—
“(1)
A deficiency from a policy or contract arising on a chargeable event
is allowable as a deduction in calculating an individual’s net income
for a tax year if, had a gain arisen instead on the chargeable event—
(a)
the individual would have been liable to income tax on the
15
gain for that year, or
(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.
(2)
See section 540 for the cases in which a deficiency is treated as arising
20
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
a policy or contract.””
585
In Part 1 of Schedule 4 (abbreviations) in the appropriate place insert—
25

“ITA 2007
The Income Tax Act 2007”

586   (1)
Amend Part 2 of Schedule 4 (index of defined expressions) as follows.
      (2)
In the entry for “assignment (in the application of the Act to Scotland)”, in
the second column, for “section 879(1)” substitute “section 942(1) of ITA
2007”.
30
      (3)
In the entry for “authorised unit trust”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”.
      (4)
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)”.
35
      (5)
In the entry for “body of persons”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
      (6)
In the entry for “building society”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
      (7)
In the entry for “capital allowance”, in the second column, for “section 832(1)
40
of ICTA” substitute “section 923 of ITA 2007”.
      (8)
Omit the entry for “chargeable period”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
601

      (9)
In the entry for “charity”, in the second column, for “section 878(1)”
substitute “section 923 of ITA 2007”.
     (10)
Omit the entry for “child”.
     (11)
In the entry for “company”, in the second column, for “section 832(1) of
ICTA” substitute “section 926 of ITA 2007”.
5
     (12)
In the entry for “connected”, in the second column, for “section 839 of ICTA”
substitute “section 927 of ITA 2007”.
     (13)
In the entry for “control”—
(a)
in the first column, omit “(in relation to a body corporate)”, and
(b)
in the second column, for “section 840 of ICTA” substitute “section
10
929 of ITA 2007”.
     (14)
In the entry for “distribution”, in the second column, for “section 832(1) of
ICTA” substitute “section 923 of ITA 2007”.
     (15)
In the entry for “the dividend ordinary rate”, in the second column, for
“section 832(1) of ICTA” substitute “section 8(1) of ITA 2007 (as applied by
15
section 923 of that Act)”.
     (16)
In the entry for “the dividend trust rate”, in the second column, for “section
832(1) of ICTA” substitute “section 9(2) of ITA 2007 (as applied by section
923 of that Act)”.
     (17)
In the entry for “the dividend upper rate”, in the second column, for “section
20
832(1) of ICTA” substitute “section 8(2) of ITA 2007 (as applied by section
923 of that Act)”.
     (18)
In the entry for “estate in land (in relation to any land in Scotland)”, in the
second column, for “section 832(1) of ICTA” substitute “section 942(1) of ITA
2007”.
25
     (19)
In the entry for “farming”, in the second column, for “section 876” substitute
“section 930 of ITA 2007”.
     (20)
In the entry for “for accounting purposes”, in the second column, for “section
832(1) of ICTA” substitute “section 931 of ITA 2007”.
     (21)
In the entry for “forestry”, in the second column, for “section 876(3)”
30
substitute “section 930(3) of ITA 2007”.
     (22)
In the entry for “generally accepted accounting practice”, in the second
column, for “section 832(1) of ICTA and section 50 of FA 2004” substitute
“section 931 of ITA 2007”.
     (23)
In the entry for “grossing up”, in the second column, for “section 877”
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substitute “section 932 of ITA 2007”.
     (24)
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)”.
     (25)
Omit the entry for “interest”.
40
     (26)
In the entry for “international accounting standards”, in the second column,
for “section 832(1) of ICTA and section 50(2) of FA 2004” substitute “section
931 of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
602

     (27)
Omit the entry for “investment trust”.
     (28)
In the entry for “local authority”, in the second column, for “section 842A of
ICTA” substitute “section 933 of ITA 2007”.
     (29)
Omit the entry for “lower rate”.
     (30)
In the entry for “market gardening”, in the second column, for “section
5
876(5)” substitute “section 930(5) of ITA 2007”.
     (31)
In the entry for “non-UK resident”, in the second column, for “section 878(1)”
substitute “section 923 of ITA 2007”.
     (32)
In the entry for “normal self-assessment filing date”, in the second column,
for “section 878(1)” substitute “section 923 of ITA 2007”.
10
     (33)
In the entry for “notice”, in the second column, for “section 832(1) of ICTA”
substitute “section 923 of ITA 2007”.
     (34)
In the entry for “oil and gas exploration and appraisal”, in the second
column, for “section 837B of ICTA” substitute “section 937 of ITA 2007”.
     (35)
In the entry for “ordinary share capital”, in the second column, for “section
15
832(1) of ICTA” substitute “section 923 of ITA 2007”.
     (36)
In the entry for “period of account”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
     (37)
In the entry for “permanent establishment”, in the second column, for
“section 832(1) of ICTA and section 148 of FA 2003” substitute “section 148
20
of FA 2003 (as applied by section 923 of ITA 2007)”.
     (38)
In the entry for “personal representatives”, in the second column, for
“section 878(1)” substitute “section 923 of ITA 2007”.
     (39)
In the entry for “profits or gains”, in the second column, for “section 833(1)
of ICTA” substitute “section 923 of ITA 2007”.
25
     (40)
In the entry for “property or rights held on trust or on trusts (in the
application of the Act to Scotland)”, in the second column, for “section
879(2)” substitute “section 942(2) of ITA 2007”.
     (41)
In the entry for “qualifying distribution”, in the second column, for “section
832(1) of ICTA” substitute “section 923 of ITA 2007”.
30
     (42)
In the entry for “qualifying policy”, in the second column, for “section 832(1)
of ICTA” substitute “section 923 of ITA 2007”.
     (43)
Omit the entry for “the rate applicable to trusts”.
     (44)
In the entry for “recognised stock exchange”, in the second column, for
“section 841(1) of ICTA” substitute “section 939 of ITA 2007”.
35
     (45)
In the entry for “registered pension scheme”, in the second column, for
“section 832(1) of ICTA and section 150(2) of FA 2004” substitute “section
150(2) of FA 2004 (as applied by section 923 of ITA 2007)”.
     (46)
In the entry for “retail prices index”, in the second column, for “section 833(2)
of ICTA” substitute “section 923 of ITA 2007”.
40

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
603

     (47)
After the entry for “sale proceeds of an animal” insert—

“savings rate
section 18 of ITA 2007

(as applied by section

923 of that Act)”

     (48)
In the entry for “Schedule A business”, in the second column, for “section
5
832(1) of ICTA” substitute “section 923 of ITA 2007”.
     (49)
In the entry for “starting 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)”.
     (50)
In the entry for “stepchild”, in the second column, for “section 832(1) of
10
ICTA” substitute “section 246 of the Civil Partnership Act 2004 (as applied
by section 923 of ITA 2007)”.
     (51)
In the entry for “surrender (in the application of the Act to Scotland)”, in the
second column, for “section 879(1)” substitute “section 942(1) of ITA 2007”.
     (52)
In the entry for “tax year”, in the second column, for “section 878(1)”
15
substitute “section 4(2) of ITA 2007 (as applied by section 923 of that Act)”.
     (53)
In the entry for “the tax year 2005-06 etc”, in the second column, for “section
878(1)” substitute “section 4(4) of ITA 2007 (as applied by section 923 of that
Act)”.
     (54)
In the entry for “total income” for “section 835(1) of ICTA” substitute
20
“section 23 of ITA 2007 (as applied by section 923 of that Act)”.
     (55)
In the entry for “trade”, in the second column, for “section 832(1) of ICTA”
substitute “section 923 of ITA 2007”.
     (56)
After the entry for “transfer of work in progress” insert—

“trust rate
section 9(1) of ITA

25

2007 (as applied by

section 923 of that

Act)”

     (57)
In the entry for “UK resident”, in the second column, for “section 878(1)”
substitute “section 923 of ITA 2007”.
30
     (58)
In the entry for “unit holder”, in the second column, for “section 832(1) of
ICTA” substitute “section 923 of ITA 2007”.
     (59)
In the entry for “unit trust scheme”, in the second column, for “section 832(1)
of ICTA” substitute “section 941 of ITA 2007”.
     (60)
In the entry for “United Kingdom”, in the second column, for “section 830(1)
35
of ICTA” substitute “section 947 of ITA 2007”.
     (61)
In the entry for “venture capital trust”, in the second column, for “section
842AA(1) of ICTA” substitute “section 923 of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
604

     (62)
In the entry for “within the charge to tax”, in the second column, for “section
832(1) of ICTA” substitute “section 943 of ITA 2007”.
     (63)
In the entry for “woodlands”, in the second column, for “section 876(4)”
substitute “section 930(4) of ITA 2007”.
Finance Act 2005 (c. 7)
5
587
The Finance Act 2005 is amended as follows.
588
In section 26 (amount of relief for trustees of property held on trust for
vulnerable persons) at the beginning insert “(1)” and at the end insert—
“(2)
The tax reduction is given effect at Step 6 of the calculation in section
23 of ITA 2007.”
10
589   (1)
Amend section 27 (tax liability of trustees of property held on trust for
vulnerable persons) as follows.
      (2)
In subsection (2)—
(a)
in paragraph (b) for the words from “any expenses” to the end
substitute “allowable expenses”, and
15
(b)
for “management” substitute “allowable”.
      (3)
After that subsection insert—
“(2A)
References in subsection (2) to allowable expenses are to expenses
which can be set against the trustees’ income for the tax year in
accordance with Chapter 4 of Part 9 of ITA 2007.”
20
590
In section 41(1) (interpretation of Chapter 4 of Part 2) in the definition of “tax
year” omit paragraph (a) and the “and” immediately after it.
591   (1)
Amend section 47A (alternative finance arrangements: diminishing share
ownership) as follows.
      (2)
In subsection (3)—
25
(a)
in paragraph (b) omit “within the meaning of section 840 of ICTA”,
and
(b)
in paragraph (c) omit “, in each case within the meaning of section
840 of ICTA”.
      (3)
After that subsection insert—
30
“(3A)
For the purposes of subsection (3) whether a person is controlled by
another person is determined in accordance with section 840 of
ICTA.”
592
In section 51(2) (treatment of alternative finance arrangements)—
(a)
for “368 of ICTA” substitute “367 of ICTA and Chapter 1 of Part 8 of
35
ITA 2007 (interest payments)”, and
(b)
after “366” insert “of ICTA and section 412 of ITA 2007”.
593   (1)
Amend section 52 (alternative finance arrangements: provision not at arm’s
length) as follows.
      (2)
In subsection (4)(b) for “against total income or, as the case may be,”
40
substitute “in calculating net income or, as the case may be, against”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
605

      (3)
In subsection (5)(b) for “against total income or, as the case may be,”
substitute “in calculating net income or, as the case may be, against”.
594
Omit sections 74 to 78 (partners: recovery of excess relief).
595
In section 105 (interpretation) after the definition “IHTA 1984” insert—
““ITA 2007” means the Income Tax Act 2007;”.
5
596   (1)
Amend Schedule 2 (alternative finance arrangements: further provisions) as
follows.
      (2)
Omit paragraphs 3, 5 and 6.
      (3)
After paragraph 10 insert—
“Income Tax Act 2007
10
11
Chapter 2 of Part 14 of ITA 2007 (deduction of income tax at
source: deduction by deposit-takers and building societies) (and
Chapter 19 of that Part so far as it has effect for the purposes of
Chapter 2) have effect as if—
(a)
relevant arrangements were a deposit,
15
(b)
for the purposes of section 799(2)(a) of that Act, relevant
arrangements were a deposit consisting of a loan, and
(c)
alternative finance return or profit share return payable
under relevant arrangements were interest.
12
Chapters 3 to 5 of Part 14 of ITA 2007 (and Chapter 19 of that Part
20
so far as it has effect for the purposes of those Chapters) have effect
in relation to alternative finance return or profit share return as
they have effect in relation to interest.
13
In Chapter 12 of Part 14 of ITA 2007 (funding bonds) references to
interest include references to alternative finance return or profit
25
share return.”
Finance (No. 2) Act 2005 (c. 22)
597
The Finance (No. 2) Act 2005 is amended as follows.
598   (1)
Amend section 7 (charge to income tax on social security pension lump sum)
as follows.
30
      (2)
In subsection (5) for “total income” in each place substitute “Step 3 income”.
      (3)
At the end insert—
“(9)
For the purposes of this section P’s “Step 3 income” means P’s net
income less allowances deducted at Step 3 of the calculation in
section 23 of ITA 2007 (calculation of income tax liability).”
35
599
In section 18(3)(b)(i) (authorised investment funds etc: section 17(3): specific
powers) for “506(1) of ICTA” substitute “923 of ITA 2007”.
600
In section 71 (interpretation) after the definition of “ICTA” insert—
““ITA 2007” means the Income Tax Act 2007;”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
606

Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1))
601
The Pensions (Northern Ireland) Order 2005 is amended as follows.
602
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, in the second
5
column—
(a)
omit the “or” immediately after paragraph (f), and
(b)
after paragraph (g) insert “, or
(h)
the Income Tax Act 2007 (so far as relating to
functions previously exercised under the Income and
10
Corporation Taxes Act 1988).”
603
In Schedule 7 (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, in the second column—
(a)
omit the “or” immediately after paragraph (e), and
15
(b)
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).”
Finance Act 2006 (c. 25)
20
604
The Finance Act 2006 is amended as follows.
605
In section 34 (meaning of certain expressions for the purposes of Chapter 3
of Part 3) for subsection (4) substitute—
“(4)
For the purposes of subsection (3) whether a person is connected
with another person is determined in accordance with section 839 of
25
ICTA (connected persons).”
606
In section 65(3) (London Organising Committee) for “Section 349(1) of ICTA
(annual payments: deductions of tax)” substitute “The duties to deduct
under Chapters 6, 7, 10 and 14 of Part 14 of ITA 2007 (deduction of income
tax at source)”.
30
607
In section 67 (International Olympic Committee)—
(a)
in subsection (1)(c), for “section 349(1) and (2) of ICTA (annual
payments: deductions of tax)” substitute “the duties to deduct under
Chapters 3, 6, 7, 10 and 14 of Part 14 of ITA 2007 (deduction of income
tax at source)”, and
35
(b)
in subsection (2)(c), for “section 349(1) and (2) of ICTA” substitute
“the duties to deduct under Chapters 3, 6, 7, 10 and 14 of Part 14 of
ITA 2007 (deduction of income tax at source)”.
608
In section 68(1)(d) (competitors and staff) for “section 349(1) of ICTA (annual
payments: deductions of tax)” substitute “the duties to deduct under
40
Chapters 6, 7, 10 and 14 of Part 14 of ITA 2007 (deduction of income tax at
source)”.
609
Omit section 75 (tax avoidance: interest relief and film partnerships).
610
In 103(1)(b) (Real Estate Investment Trusts) for “, 121 and 122” substitute
“and 121 and regulations made under section 906 of ITA 2007”.
45