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
607

611
In section 107 (conditions for tax-exempt business)—
(a)
in subsection (7)(a) omit “(within the meaning given by section 839
of ICTA)”, and
(b)
after subsection (7) insert—
“(7A)
For the purposes of subsection (7)(a) whether a person is
5
connected with another person is determined in accordance
with section 839 of ICTA (connected persons).”
612
In section 117(4) (cancellation of tax advantage) for “section 709” substitute
“section 840ZA”.
613
In section 121(2)(c) (distributions: liability to tax) for “chargeable to tax by
10
virtue of section 42A of ICTA (non-resident landlords)” substitute “non-
resident landlord income for the purposes of regulations under section 904
of ITA 2007 (income tax due in respect of income of non-resident
landlords)”.
614
Omit section 122 (distributions: deduction of tax).
15
615   (1)
Amend section 139 (manufactured dividends) as follows.
      (2)
In subsection (1) after “manufactured dividend” insert “for the purposes of
the Corporation Tax Acts”.
      (3)
In subsection (2)—
(a)
in the new paragraph 2(2) of Schedule 23A to ICTA for “(2A) to (2C)”
20
substitute “(2A) and (2B)”,
(b)
in the new paragraph 2(2A) of that Schedule insert “Corporation”
before “Tax Acts”,
(c)
in the new paragraph 2(2B) of that Schedule omit paragraph (d),
(d)
omit the new sub-paragraphs (2C) to (2E) of paragraph 2 of that
25
Schedule.
      (4)
Omit subsections (3) and (4).
616
In section 179 (interpretation) after the definition of “IHTA 1984” insert—
““ITA 2007” means the Income Tax Act 2007;”.
617
In Schedule 5 (film tax relief: further provisions) in paragraph 9(4)(b) for
30
“555 of ICTA (foreign entertainers)” substitute “899 of ITA 2007 (visiting
performers)”.
618
In paragraph 27(1) of Schedule 8 (long funding leases of plant and
machinery) for “section 840 of ICTA” in both places where it occurs
substitute “section 574 of CAA 2001”.
35
619
In Schedule 13 (settlements) omit paragraph 37.
620   (1)
Amend Schedule 17 (Group Real Estate Investment Trusts: modifications) as
follows.
      (2)
Omit paragraph 19.
      (3)
Omit paragraph 30(b) and the “and” immediately before it.
40
      (4)
Omit paragraph 32(8)(c).

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 1 — General provisions
608

Part 3
Amendment having effect in relation to shares issued after 5 April 2007
Income and Corporation Taxes Act 1988 (c. 1)
621
Omit Chapter 3 of Part 7 of the Income and Corporation Taxes Act 1988
(Enterprise Investment Scheme), except section 305A.
5
Schedule 2
Section 967

Transitionals and savings
Part 1
General provisions
Continuity of the law: general
10
1
The repeal of provisions and their enactment in a rewritten form by this Act
does not affect the continuity of the law.
2
Paragraph 1 does not apply to any change made by this Act in the effect of
the law.
3
Any subordinate legislation or other thing which—
15
(a)
has been made or done, or has effect as if made or done, under or for
the purposes of a superseded enactment so far as it applied for
relevant tax purposes, and
(b)
is in force or effective immediately before the commencement of the
corresponding rewritten provision,
20

has effect after that commencement as if made or done under or for the
purposes of the rewritten provision.
4     (1)
Any reference (express or implied) in this Act, another enactment or an
instrument or document to a rewritten provision is to be read as including,
in relation to times, circumstances or purposes in relation to which any
25
corresponding superseded enactment had effect for relevant tax purposes, a
reference to the superseded enactment so far as applying for those relevant
tax purposes.
      (2)
Any reference (express or implied) in this Act, another enactment or an
instrument or document to—
30
(a)
things done under or for the purposes of a rewritten provision, or
(b)
things falling to be done under or for the purposes of a rewritten
provision,

is to be read as including, in relation to times, circumstances or purposes in
relation to which any corresponding superseded enactment had effect for
35
relevant tax purposes, a reference to things done or falling to be done under
or for the purposes of the superseded enactment so far as applying for those
relevant tax purposes.
5     (1)
Any reference (express or implied) in any enactment, instrument or
document to a superseded enactment in its application for relevant tax
40

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 1 — General provisions
609

purposes is to be read, so far as is required for those relevant tax purposes,
as including, in relation to times, circumstances or purposes in relation to
which any corresponding rewritten provision has effect, a reference to the
rewritten provision.
      (2)
Any reference (express or implied) in any enactment, instrument or
5
document to—
(a)
things done under or for the purposes of a superseded enactment in
its application for relevant tax purposes, or
(b)
things falling to be done under or for the purposes of a superseded
enactment in its application for relevant tax purposes,
10

is to be read, so far as is required for those relevant tax purposes, as
including, in relation to times, circumstances or purposes in relation to
which any corresponding rewritten provision has effect, a reference to
things done or falling to be done under or for the purposes of the rewritten
provision.
15
6     (1)
Paragraphs 1 to 5 have effect instead of section 17(2) of the Interpretation Act
1978 (c. 30) (but are without prejudice to any other provision of that Act).
      (2)
Paragraphs 4 and 5 apply only so far as the context permits.
General saving for old transitional provisions and savings
7     (1)
The repeal by this Act of a transitional or saving provision relating to the
20
coming into force of a provision rewritten in this Act does not affect the
operation of the transitional or saving provision, so far as it is not specifically
rewritten in this Act but remains capable of having effect in relation to the
corresponding provision of this Act.
      (2)
The repeal by this Act of an enactment previously repealed subject to
25
savings does not affect the continued operation of those savings.
      (3)
The repeal by this Act of a saving on the previous repeal of an enactment
does not affect the operation of the saving so far as it is not specifically
rewritten in this Act but remains capable of having effect.
Partnerships involving companies
30
8     (1)
References in this Act to any person are to be read, in the case of a person
acting in partnership with other persons of whom at least one is a company
chargeable to corporation tax, as references to all the partners so far as is
required for the purposes of preserving the continuity of the law.
      (2)
References to a company or other person in any provision amended in its
35
application for corporation tax purposes by this Act are to be read, in the
case of a company acting in partnership with other persons of whom at least
one is not a company, as references to all the partners so far as is required for
the purposes of preserving the continuity of the law.
Interpretation
40
9     (1)
In this Part—
“enactment” includes subordinate legislation (within the meaning of
the Interpretation Act 1978),

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 3 — Rates at which income tax is charged
610

“relevant tax purposes” means, in relation to a superseded enactment,
tax purposes for which the enactment has been rewritten by this Act,
and
“superseded enactment” means an earlier enactment which has been
rewritten by this Act for certain tax purposes (whether it applied
5
only for those purposes or for those and other tax purposes).
      (2)
References in this Part to the repeal of a provision include references to its
revocation and to its express or implied disapplication for income tax
purposes of this Act.
      (3)
References in this Part to tax purposes are not limited to income tax
10
purposes.
Part 2
Changes in the law
10    (1)
This paragraph applies if, in the case of any person—
(a)
a thing is done or an event occurs before 6 April 2007, and
15
(b)
because of a change in the law made by this Act, the tax
consequences of that thing or event for the relevant period are
different from what they would otherwise have been.
      (2)
If that person so elects, this Act applies with such modifications as may be
necessary to secure that the tax consequences for the relevant period are the
20
same as they would have been if the change in the law had not been made.
      (3)
In sub-paragraphs (1) and (2) “the relevant period” means—
(a)
for income tax purposes, any period of account beginning before and
ending on or after 6 April 2007, and
(b)
for corporation tax purposes, any accounting period beginning
25
before and ending on or after 6 April 2007.
      (4)
If this paragraph applies in the case of two or more persons in relation to the
same thing or event, an election made under this paragraph by any one of
those persons is of no effect unless a corresponding election is made by the
other or each of the others.
30
      (5)
An election under this paragraph must be made—
(a)
for income tax purposes, on or before the first anniversary of the
normal self-assessment filing date for the tax year in which the
period of account ends, and
(b)
for corporation tax purposes, not later than two years after the end of
35
the accounting period.
Part 3
Rates at which income tax is charged
11
In relation to a tax year before 2007-08—
(a)
references in this Act, another enactment or an instrument or
40
document to the savings rate are to be read as references to the lower
rate, and

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 4 — Personal reliefs
611

(b)
references in this Act, another enactment or an instrument or
document to the trust rate are to be read as references to the rate
applicable to trusts.
12
In relation to the tax year 2007-08 or any subsequent tax year—
(a)
references in an enactment, instrument or document to the lower rate
5
are to be read as references to the savings rate, and
(b)
references in an enactment, instrument or document to the rate
applicable to trusts are to be read as references to the trust rate.
13
In this Part “enactment” includes subordinate legislation (within the
meaning of the Interpretation Act 1978 (c. 30)).
10
Part 4
Personal reliefs
14
Paragraphs 15 to 17 do not apply after 5 April 2009.
15    (1)
Sub-paragraphs (2) and (3) apply in relation to an individual who,
immediately before 6 April 2007, is entitled to a blind person’s allowance
15
under section 265 of ICTA.
      (2)
Section 39 has effect with the insertion in subsection (1) after “section 38” of
“of this Act or section 265 of ICTA”.
      (3)
Section 265 of ICTA (as amended by Schedule 1) has effect—
(a)
with the insertion in subsection (2)(a) after “subsection (1) above” of
20
“or section 38 of ITA 2007”,
(b)
with the insertion in subsection (5) after “subsection (1)” of “or
section 38 of ITA 2007”.
16    (1)
Sub-paragraphs (2) to (5) apply in relation to an individual if, immediately
before 6 April 2007, the individual’s spouse or civil partner is entitled to a
25
tax reduction under section 257A or 257AB of ICTA.
      (2)
Sections 47 and 48 have effect—
(a)
with the insertion in subsections (1)(a) and (3) after “section 45 or 46”
of “of this Act or section 257A or 257AB of ICTA”,
(b)
with the insertion in subsection (4) after paragraph (b) of “, or
30
(c)
if the individual’s spouse or civil partner is entitled to
a tax reduction under section 257A or 257AB of ICTA,
the amount by reference to which the calculation of
the tax reduction is to be made.”
      (3)
Section 51 has effect—
35
(a)
with the insertion in subsections (1)(a) and (2)(a) after “section 45 or
46” of “of this Act or section 257A or 257AB of ICTA”,
(b)
with the insertion in subsection (2)(b) after “section 49” of “of this Act
or section 257BA(3) of ICTA”.
      (4)
Section 257BA of ICTA (as amended by Schedule 1) has effect with the
40
insertion in subsection (1) after “section 257A or 257AB” of “of this Act or
section 45 or 46 of ITA 2007”.

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 5 — Losses (except losses on disposal of shares)
612

      (5)
Section 257BB of ICTA (as amended by Schedule 1) has effect with the
insertion in subsection (3) after ““section 257A or 257AB” of “of this Act or
section 45 or 46 of ITA 2007”.
17    (1)
Sub-paragraphs (2) to (5) apply in relation to an individual who,
immediately before 6 April 2007, is entitled to a tax reduction under section
5
257A or 257AB of ICTA.
      (2)
Section 49 has effect with the insertion in subsection (1) after “section 45 or
46 of “of this Act or section 257A or 257AB of ICTA”.
      (3)
Section 52 has effect with the insertion in subsection (4) after “section 45, 46
or 49” of “of this Act or section 257A, 257AB or 257BA(3) of ICTA”.
10
      (4)
Section 53 has effect with the insertion in subsection (3) after “this Chapter”
of “or section 257A, 257AB, 257BA or 257BB of ICTA”.
      (5)
Section 257BA of ICTA (as amended by Schedule 1) has effect—
(a)
with the insertion in subsections (2) and (3)(a) after “section 257A or
257AB” of “of this Act or section 45 or 46 of ITA 2007”,
15
(b)
with the substitution for subsection (3A) of—
“(3A)
In this section “the appropriate amount” means—
(a)
if the individual, or the individual’s spouse or civil
partner, is entitled to a tax reduction under section
257A or 257AB, the amount by reference to which the
20
calculation of the tax reduction is to be made,
(b)
if the individual, or the individual’s spouse, is
entitled to a tax reduction under section 45 of ITA
2007, the amount specified in section 45(3)(a) or (b) of
that Act (as applicable), after any reductions under
25
section 45(4) and 54(2) of that Act, or
(c)
if the individual, or the individual’s spouse or civil
partner, is entitled to a tax reduction under section 46
of ITA 2007, the amount specified in section 46(3)(a)
or (b) of that Act (as applicable), after any reductions
30
under section 46(4) and 54(2) of that Act.”
      (6)
Section 257BB of ICTA (as amended by Schedule 1) has effect—
(a)
with the insertion in subsections (1)(a) and (1A)(a) after “section
257A or 257AB” of “of this Act or section 45 or 46 of ITA 2007”,
(b)
with the insertion in subsection (1A)(b) after “section 257BA(3)” of
35
“of this Act or section 49 of ITA 2007”,
(c)
with the insertion in subsection (5C) after “this section” of “, or
Chapter 3 of Part 3 of ITA 2007,”.
Part 5
Losses (except losses on disposal of shares)
40
General: carry forward loss reliefs
18    (1)
The repeal by this Act of the superseded carry forward provisions does not
alter the effect of those provisions so far as they determine—
(a)
whether, and
(b)
to what extent,
45

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 5 — Losses (except losses on disposal of shares)
613


relief for any loss made (or treated as made) in a tax year before the tax year
2007-08 is to be given for the tax year 2007-08 or any subsequent tax year.
      (2)
But any relief for the loss (or any part of the loss) which is given for the tax
year 2007-08 or any subsequent tax year is to be given in accordance with the
relevant provisions of Part 4 of this Act.
5
      (3)
In this paragraph “the superseded carry forward provisions” means—
(a)
sections 379A and 379B of ICTA (carry forward of loss in Schedule A
business or overseas property business),
(b)
sections 385, 387, 390 and 391 (so far as applying to section 385) of
ICTA (carry forward of loss in trade, profession or vocation),
10
(c)
section 392(2)(b) and (5) of ICTA (carry forward of miscellaneous
loss), and
(d)
any provision inserting or amending, or affecting the application of,
any of the above provisions.
Trade loss relief against general income
15
19    (1)
This paragraph applies for the purposes of section 64 if the loss is made in
the tax year 2007-08.
      (2)
Relief for the loss can be given for the tax year 2006-07.
      (3)
Sub-paragraphs (4) and (5) apply if relief for the loss is claimed for the tax
year 2006-07.
20
      (4)
If relief is to be given, the relief is given in the way it would have been given
had it been given under section 380(1)(b) of ICTA ignoring this Act (and
section 65 of this Act is to be read accordingly).
      (5)
Section 72 of FA 1991 applies as if the relief had been claimed under section
380(1)(b) of ICTA.
25
20    (1)
This paragraph applies if—
(a)
a person makes a loss (“the 2006-07 loss”) in a trade in the tax year
2006-07,
(b)
relief under section 380 of ICTA is not available for the 2006-07 loss
because of section 384(1) of that Act,
30
(c)
the person makes a loss (“the 2007-08 loss”) in the trade in the tax
year 2007-08,
(d)
(apart from this paragraph) relief under section 64 of this Act is not
available for the 2007-08 loss because of section 66 of this Act,
(e)
the basis period for the tax year 2007-08 overlaps with the tax year
35
2006-07, and
(f)
ignoring this Act, section 384(1) of ICTA would not have prevented
relief under section 380 of that Act being available for the 2007-08
loss.
      (2)
Section 66 of this Act is not to apply in relation to the 2007-08 loss.
40
      (3)
This paragraph applies to professions and vocations as it applies to trades.