Finance Act 1988

Section 130

3009.     Section 130(7)(a) of FA 1988 has been amended to refer to section 684 of ITEPA 2003 and a specific provision has been included in section 130(9A) of FA 1988 to cover PAYE regulations made under ICTA. (When section 203 of ICTA was repealed by section 722 of, and paragraph 30 of Schedule 6 to, ITEPA, section 130(7)(a) of FA 1988 should have been amended.)

3010.     Section 130(7)(b) of FA 1988 has been amended to refer to clause 879 of this Bill. And now that section 130(7)(b) covers tax which a company is liable to pay in respect of payments to which Chapter 15 of Part 14 of this Bill applies, section 130(7)(c)(i) and (ii) will be repealed.

3011.     Section 130(7)(c)(i) and (ii) referred to sections 476(1) and 479 of ICTA. But these references should have been replaced with references to sections 477A and 480A of ICTA (rewritten in Chapter 15 of Part 14 of this Bill) when sections 476 and 479 were repealed. The amendments made by this Bill update the legislation accordingly.

Finance Act 1989

Section 151

3012.     As a result of the amendment made by this Schedule to section 467 of ITTOIA, any gain arising to trustees under Chapter 9 of Part 4 of ITTOIA is treated as income of the trustees. It follows that it is not necessary to provide separately for such gains in section 151(2)(b) of FA 1989. Accordingly section 151(2)(a) is amended and section 151(2)(b) is omitted.

Finance Act 1991

Section 53

3013.     Section 53 has not been rewritten as it is redundant. It was originally enacted to validate an ultra vires transitional provision in the Income Tax (Building Societies) Regulations 1986 (SI 1986/482). This provision purported to require deduction in respect of sums paid or credited before 6 April 1986, the date of commencement of the regulations. SI 1986/482 was revoked with effect from 1991-92 following the repeal of section 476 ICTA by FA 1990. So section 53 is no longer necessary.

Taxation of Chargeable Gains Act 1992

Sections 4 and 6

3014.     The amendments to references to "total income" operate by reference to "Step 3 income", defined by reference to clause 23 of this Bill, to reflect the standardised meaning of the phrase "total income". See the commentary on that clause.

Section 11

3015.     This new section replaces the former section 11 of TCGA.

3016.     New subsection (1) replaces section 11(1) of TCGA and corresponds to clause 766 of this Bill relating to the residence status of visiting forces and others for income tax purposes.

3017.     Clause 766 is based on section 323(2) of ICTA which refers to "a period during which a member of a visiting force to whom section 303(1) of ITEPA 2003..applies". Section 11(1) of TCGA makes the same reference. Clause 766 avoids the reference to section 303(1) of ITEPA and includes a full description of the persons to whom it applies.

3018.     The new section 11(1) of TCGA, accordingly, links directly to clause 766 of this Bill and applies to the persons to whom clause 766 applies.

3019.     New subsections (2) and (3) replace section 11(3) and (4) of TCGA and correspond to the income tax exemption in clause 774 of this Bill. As explained in the commentary on clause 774, the income tax exemption for Agents-General in section 320(1) of ICTA is repealed as it duplicates an exemption given elsewhere. For the same reason, the capital gains tax exemption in section 11(2) of TCGA is omitted.

Section 105A

3020.     Under section 967(3), Part 5 of this Bill which deals with the enterprise investment scheme (EIS) does not have effect in relation to shares issued before 6 April 2007. Instead the EIS provisions in ICTA continue to have effect for these shares.

3021.     The consequential amendments which relate to the EIS scheme in TCGA provide that there are alternative references to the applicable provisions in ICTA and to the applicable provisions in Part 5 of this Bill.

3022.     Where it may not be clear which of the provisions apply, the amendment includes an explanation that references to Part 5 of this Bill or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007. In the case of the amendment to section 105A, this explanation is included in a new subsection (9).

Section 125A

3023.     This new section of TCGA is based on the provisions of sections 573(4), 574(1) and 576(2) and (3) of ICTA which have effect for the purposes only of capital gains tax or corporation tax on chargeable gains.

3024.     Subsections (1) and (3) make clear that relief can only be obtained once for the loss, either by way of share loss relief or as a deduction in computing chargeable gains.

Sections 150A and 150B

3025.     See the commentary on section 105A of TCGA about the consequential amendments which relate to the EIS scheme in TCGA. The amendment to section 150A inserts a new subsection (13) which explains the references to Part 5 of this Bill. This is applied to section 150B by the amendment to section 150B(6).

Sections 151BA to 151BC

3026.     These three new sections of TCGA are based on those provisions of Schedule 16 to FA 2002 (community investment tax relief - CITR) which have effect for the purposes of capital gains tax or corporation tax on chargeable gains.

Section 151BA

3027.     This new section of TCGA sets out the special rules for identifying securities and shares disposed of where a holding includes securities or shares to which CITR is attributable. It is based on paragraph 47 of Schedule 16 to FA 2002.

3028.     Subsections (1) to (5), (8) and (9) replace sub-paragraphs (1) to (4), (7) and (8) of that paragraph so far as they have effect for the purposes capital gains tax or corporation tax on chargeable gains. Those sub-paragraphs continue to apply for the purposes of relief against corporation tax for companies. Clause 377 of this Bill, based on those sub-paragraphs, applies for the purposes of relief against income tax for individuals.

3029.     Subsections (6) and (7) replace sub-paragraphs (5) and (6) of paragraph 47 of Schedule 16 to FA 2002, which have effect only for the purposes of capital gains tax or corporation tax on chargeable gains.

Section 151BB

3030.     This new section of TCGA disapplies the no disposal treatment in sections 116(10) and 127 to 130 of that Act in the case of rights issues and other reorganisations in respect of shares to which CITR is attributable. It is based on paragraph 40 of Schedule 16 to FA 2002.

Section 151BC

3031.     This new section of TCGA disapplies the no disposal treatment in sections 135 and 136 of that Act in relation to a reconstruction or amalgamation affecting a holding of shares or debentures to which CITR is attributable. It is based on paragraphs 41 and 48(2) of Schedule 16 to FA 2002.

3032.     Subsections (1) to (4) correspond to and replace each of the sub-paragraphs of paragraph 41 of Schedule 16 to FA 2002 which has effect only for the purposes of capital gains tax or corporation tax on chargeable gains.

3033.     Subsection (5) is based on paragraph 48(2) of Schedule 16 to FA 2002 and replaces it so far as it has effect for the purposes of capital gains tax or corporation tax on chargeable gains. That sub-paragraph continues to apply for the purposes of relief against corporation tax for companies. Clause 379(2) of this Bill, based on that sub-paragraph, applies for the purposes of relief against income tax for individuals.

Section 231

3034.     The amendments to section 231(1) and (3) of TCGA add a reference to Part 5 of this Bill (EIS). Although relief under section 229 of TCGA is not available for disposals after 5 April 2001 (section 54 of FA 2000), section 231 of TCGA could still have some application where there is an unconditional contract to acquire a replacement asset under section 227(5) of TCGA.

Sections 256 to 256B

3035.     The amendment to section 256 and new sections 256A and 256B are based on section 505(4) and (7) of ICTA and result from the need to separate the capital gains tax aspects of those provisions from the income tax aspects rewritten in this Bill in clauses 541 and 542. In the same way as in clause 542 of this Bill, new section 256B of TCGA refers to officers of Revenue and Customs, rather than the Board. See Change 5 and the commentary on clause 542.

Section 257

3036.     The amendment to section 257 of TCGA is based on section 587B(3) of ICTA. This material is located within section 257 of TCGA because section 587B(3) of ICTA deals only with the capital gains base cost to the charity receiving the gift; it does not apply to the relief available to the person making the gift. The amendment applies only if relief is available to a company under section 587B or to an individual under Chapter 3 of Part 8 of this Bill. See also the commentary on clause 434.

3037.     New subsection (2B)(c) deals with the case where a qualifying interest in land is disposed of by persons with a joint tenancy or with tenancies in common. See the commentary on clause 442.

Sections 261B and 261C

3038.     These sections replace section 72 of FA 1991 with a rewritten version of the rules for claiming to treat losses of a trade etc as allowable losses for the purposes of capital gains tax.

3039.     The unused part of the loss (which extends to the whole of it if none of it has been used) may be used for capital gains tax purposes even if no claim for trade loss relief has been made. This could arise in circumstances where the person has no income in respect of which to make a claim. This reflects HMRC practice. See Change 153 in Annex 1 and the commentary on clause 71.

Sections 261D to 261E

3040.     These sections replace section 90(4) and (5) of FA 1995 with a rewritten version of the rules for claiming to treat post-cessation expenditure of a trade etc as allowable losses for the purposes of capital gains tax.

3041.     The unused part of the expenditure (which extends to the whole of it if none of it has been used) may be used for capital gains tax purposes even if no claim for trade loss relief has been made. This could arise in circumstances where the person has no income in respect of which to make a claim. This reflects HMRC practice. See Change 153 in Annex 1 and the commentary on clause 101.

Section 263ZA

3042.     This section concerns a claim made to treat a deduction which cannot be allowed under section 555 of ITEPA because of an insufficiency of income as an allowable loss for capital gains tax purposes. The amendments clarify the meaning of "total income" in section 263ZA(1) and (2) and explain how the excess deduction is calculated when there are other deductions which may be due under Step 2 of the calculation in clause 23.

Section 271

3043.     New subsections (7A), (7B) and (7C) rewrite the exemption in section 516 of ICTA to the extent that it relates to capital gains tax.

Section 285A

3044.     This new section rewrites section 510A of ICTA to the extent that it relates to capital gains tax.

Schedule 5B

Paragraph 13C

3045.     The substituted sub-paragraph (4) has the effect of combining part of the provision in this paragraph with material from section 300A(10) of ICTA. This is also noted in the commentary on clause 223.

Paragraph 19

3046.     See the commentary on section 105A of TCGA about the consequential amendments which relate to the enterprise investment scheme (EIS) in TCGA. The amendment to paragraph 19(3) inserts a new paragraph (d) which explains the references to Part 5 of this Bill in Schedule 5B.

Schedule 5C

Paragraph 3

3047.     Part 2 of Schedule 19 to FA 2004 provides that postponement of chargeable gains cannot be made under Schedule 5C (venture capital trusts: deferred charge on re-investment) by reference to shares issued after 5 April 2004. There is therefore no need to make a consequential amendment to the reference in paragraph 3(1)(g) to relief having been given under Part 1 of Schedule 15B to ICTA.

3048.     But, as withdrawal of approval of a venture capital trust may take place after 5 April 2007, the reference in paragraph 3(1)(f) to "section 842AA(8) of the Taxes Act" is replaced with a reference to the corresponding provision in this Bill.

Finance Act 1994

Schedule 20

Paragraph 11

3049.     This provision has been amended so that the clawback of excess double taxation relief operates in terms of tax rather than by reference to an amount of income. See Change 151 in Annex 1.

Finance Act 2000

Section 44

3050.     This section requires the apportionment of trustees' expenses in a case where any income of a trust would be treated as the income of a settlor but for the fact that it is given to or arises to a charity. The amended section 44 of FA 2000 applies to the calculation of a beneficiary's income for corporation tax purposes. New section 646A of ITTOIA makes corresponding provision for income tax.

Schedule 15

3051.     Under clause 967(3), Part 5 of this Bill which deals with the enterprise investment scheme (EIS) does not have effect in relation to shares issued before 6 April 2007. Instead the EIS provisions in ICTA continue to have effect for these shares.

3052.     The consequential amendments to the corporate venturing scheme provide that there are alternative references to the applicable provisions in ICTA and to the applicable provisions in Part 5 of this Bill.

3053.     In case it is not clear which of the provisions apply, the amendment inserts a new sub-paragraph (9) in paragraph 102 of Schedule 15 explaining that references to Part 5 of this Bill or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.

Capital Allowances Act 2001

Section 570B

3054.     This section is inserted as a consequence of clause 948.

Sections 575 and 575A

3055.     These sections set out the definition of "connected" in full in place of the cross-reference to section 839 of ICTA. See the commentary on clause 927.

Finance Act 2002

Schedule 16

3056.     Part 7 of this Bill, based on Schedule 16 to FA 2002, provides for individuals to obtain income tax reductions for investments in community development finance institutions (CDFIs). That Schedule continues in force so far as it provides for companies to obtain relief against corporation tax for such investments. The relief is referred to as "CITR".

Paragraphs 4 to 7

3057.     This amendment substitutes for paragraphs 4 to 7 a new paragraph 4 applying Chapter 2 (accredited community development finance institutions) of Part 7 of this Bill for the purposes of Schedule 16 to FA 2002. This amendment ensures that accreditation in accordance with that Chapter applies for the purposes of both CITR for individuals under Part 7 of this Bill and CITR for companies under Schedule 16 to FA 2002.

Paragraph 12

3058.     This amendment substitutes for paragraph 12(2) new sub-paragraphs (2), (2A) and (2B). These new sub-paragraphs ensure that the limit on the value of investments made in the CDFI in any accreditation period in respect of which it may issue tax relief certificates applies to the aggregate value of investments made by companies under Schedule 16 to FA 2002 and of investments made by individuals under Part 7 of this Bill.

Paragraphs 40 and 41

3059.     This amendment omits paragraphs 40 and 41 which have effect only for the purposes of capital gains tax or corporation tax on chargeable gains. Sections 151BB and 151BC(1) to (4) of TCGA, introduced by this Schedule, are based on those paragraphs. See the commentary on those new sections of TCGA.

Paragraph 47

3060.     There are two amendments to paragraph 47.

3061.     The first omits the references to capital gains tax and corporation tax on chargeable gains in paragraph 47(3) and (4). Section 151BA(2) and (3) of TCGA, introduced by this Schedule, are based on those sub-paragraphs so far as they have effect for those purposes (see the commentary on that new section of TCGA). Those sub-paragraphs continue to apply for the purposes of CITR for companies. Clause 377(2) and (3), based on those sub-paragraphs, apply for the purposes of CITR for individuals.

3062.     The second omits paragraph 47(5) and (6). Those sub-paragraphs have effect only for the purposes of capital gains tax or corporation tax on chargeable gains. Section 151BA(6) and (7) of TCGA, introduced by this Schedule, are based on those sub-paragraphs. See the commentary on that new section of TCGA.

Paragraph 48

3063.     This amendment omits the reference to capital gains tax and corporation tax on chargeable gains in paragraph 48(2). Section 151BC(5) of TCGA, introduced by this Schedule, is based on that sub-paragraph so far as it has effect for those purposes (see the commentary on that new section of TCGA). That sub-paragraph continues to apply for the purposes of CITR for companies. Clause 379(2), based on that sub-paragraph, applies for the purposes of CITR for individuals.

Income Tax (Earnings and Pensions) Act 2003

Section 48

3064.     Section 48(2)(b) of ITEPA excludes payments subject to deduction under section 555 of ICTA (payments to non-resident entertainers and sportsmen) from the scope of Chapter 8 of Part 2 of ITEPA. This section has been extended to exclude transfers as well as payments. See Change 154 in Annex 1.

Section 404A

3065.     This new section in ITEPA specifies that an amount counting as employment income under section 403 of that Act is treated as the highest part of total income. It is based on section 833(3) of ICTA. See also the commentary on clause 946.

Section 476

3066.     New subsection (5A) ensures that the amount charged forms part of "total income" in Step 1 of clause 23.

Schedule 5

Paragraph 11(10)

3067.     From 2007-08 it is the definition of a company in administration or receivership in Part 5 of this Bill rather than the definition in section 312(2A) of ICTA which applies in relation to enterprise management incentives (EMI). This includes the reference to the Northern Ireland legislation as amended by the Insolvency (Northern Ireland) Order 2005. See Change 56 in Annex 1.

3068.     Unlike other consequential amendments that stem from the rewrite of the enterprise investment scheme (EIS), the impact of this amendment is not affected by when the EIS shares in question are issued.

Finance Act 2004

Section 102

3069.     Section 102 of FA 2004 provides that where a payee has suffered deduction on a payment that was in fact exempt under section 758 of ITTOIA, a claim for relief can be made to the Board. This provision has not been rewritten. As a result such claims will be made to an officer of Revenue and Customs. See Change 5 in Annex 1.

Section 189

3070.     Section 189(2) of FA 2004 defines "relevant UK earnings" for the purpose of determining the maximum amount of relief for certain pension contributions. The source definition includes income within section 833(5B) of ICTA (certain patent income). As section 833 is being repealed, this amendment expressly includes patent income in section 189(2) through a new subsection (2A). Furthermore, as a simplification measure, the revised provision does not reproduce the restrictions to section 833(5B) in section 833(5C) and (5E) of ICTA. See Change 118 in Annex 1.

3071.     The amendment also directly incorporates income from a UK furnished holiday lettings business in the definition of UK relevant earnings. That part of the amendment is based on section 504A(2)(c) of ICTA.

Income Tax (Trading and Other Income) Act 2005

Section 13

3072.     Following the House of Lords decision in Agassi v Robinson, section 13 of ITTOIA has been amended to make clear that when a payment or transfer of the type referred to in section 555 of ICTA is made, a liability to income tax will arise regardless of whether there is a duty to deduct income tax under section 555 of ICTA. See Change 149 in Annex 1.

Section 51

3073.     Section 51 of ITTOIA is repealed under the new approach to charges on income and patent royalties. See Change 81 in Annex 1.

Section 108

3074.     This amendment removes redundant references to the British Museum and the Natural History Museum. See Change 79 in Annex 1 and the commentary on clause 430.

Section 272

3075.     This section is consequentially amended as a result of the repeal of section 51 of ITTOIA. See Change 81 in Annex 1.

Section 457

3076.     Subsection (3) is repealed as it is no longer necessary. It deemed the profit on the disposal of deeply discounted securities to be income of the trustees for the purposes of applying the trust rate. It is already income of the trustees for other purposes by virtue of sections 429 and 437 of ITTOIA. And the liability of the trustees at the trust rate is now provided for directly by clauses 481 and 482 of this Bill (see Type 6).

3077.     The substituted subsection (5) makes more explicit the requirement that the scheme's accounts show the amount as income available for payment to unit holders or for investment. It also continues to ensure that the effect of section 3 of ICTA is preserved in the case of unauthorised unit trusts (UUTs). If the income referred to in subsection (1) is treated as income in the trust's accounts, it is then treated as being paid out to unit holders (see section 469(3) of ICTA and section 547(2) of ITTOIA). So the trustees of the UUT are charged at the basic rate of income tax rather than the trust rate. See the commentary on clause 504.

Section 465A

3078.     This new section specifies that an amount taxed under Chapter 9 of Part 4 of ITTOIA is treated as the highest part of total income. It is based on section 833(3) of ICTA. See also the commentary on clause 946.

Section 467

3079.     New subsection (1A) ensures that the amount charged forms part of "total income" of trustees in Step 1 of clause 23. This was expressly stated to be the case prior to ITTOIA (see section 547(9) of ICTA as it applied until 5 April 2005) and the position is now made explicit in line with the similar rule for individuals (section 465(5) of ITTOIA) and personal representatives (section 466(1) of ITTOIA).

3080.     The amendment to subsection (7) omits the rule that the amount is charged at the trust rate (except for charitable trusts). It is unnecessary because gains within section 467 of ITTOIA are included in the list in clause 482 (see Type 7).

Section 535

3081.     This amendment addresses the provisions relating to chargeable event gains within Chapter 9 of Part 4 of ITTOIA. Relief under Chapters 2 (gift aid) and 3 (gifts of shares etc to charities) of Part 8 of this Bill is not taken into account in computing top slicing relief. In the source legislation these provisions were in section 25(6) of FA 1990 (gift aid) and section 587B(2) of ICTA (gifts of assets etc). They are now located with the top slicing provisions themselves.

Section 539

3082.     This section has been completely rewritten to clarify that relief for a deficiency is given as a tax reduction. A formal claims requirement has also been introduced. See Change 3 in Annex 1.

Section 619A

3083.     This new section in ITTOIA replaces section 660C(3) of ICTA. It ensures that income under section 619(1)(a) and (b) of ITTOIA is treated as the highest part of the settlor's income for the purposes of Chapter 2 of Part 2 of this Bill.