House of Commons portcullis
House of Commons
Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill


Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

232

 

435     

Incidental costs of making disposal

References in section 434 to the incidental costs of making the disposal to the

individual making it are to—

(a)   

fees, commission or remuneration paid for the professional services of

a surveyor, valuer, auctioneer, accountant, agent or legal adviser which

5

are wholly and exclusively incurred by the individual for the purposes

of the disposal,

(b)   

costs of transfer or conveyance wholly and exclusively incurred by the

individual for the purposes of the disposal,

(c)   

costs of advertising to find a buyer, and

10

(d)   

costs reasonably incurred in making any valuation or apportionment

required for the purposes of this Chapter.

436     

Consideration

(1)   

For the purposes of the formula in section 434(2) consideration for the disposal

is brought into account—

15

(a)   

without any discount for postponement of the right to receive any part

of it,

(b)   

in the first instance, without regard to a risk of any part of it being

irrecoverable, and

(c)   

in the first instance, without regard to the right to receive any part of it

20

being contingent.

(2)   

If—

(a)   

any part of the consideration so brought into account subsequently

proves to be irrecoverable, and

(b)   

a claim is made,

25

   

such adjustment as is required in consequence must be made.

(3)   

An adjustment under subsection (2) may be made by way of discharge or

repayment of tax or otherwise.

Value of net benefit to charity

437     

Value of net benefit to charity

30

(1)   

For the purposes of this Chapter the value of the net benefit to a charity is—

(a)   

the market value of the qualifying investment, or

(b)   

if the charity is, or becomes, subject to a disposal-related obligation, the

market value of the qualifying investment reduced by the total amount

of the disposal-related liabilities of the charity.

35

(2)   

This section is supplemented by—

section 438 (market value of qualifying investments),

section 439 (meaning of “disposal-related obligation”), and

section 440 (meaning and amount of “disposal-related liability”).

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

233

 

438     

Market value of qualifying investments

(1)   

The market value of a qualifying investment for the purposes of this Chapter

is determined in accordance with sections 272 to 274 of TCGA 1992 (subject to

Part 1 of Schedule 11 to that Act).

(2)   

But, in the case of an interest in an offshore fund for which separate buying and

5

selling prices are published regularly by the managers of the fund, the market

value for the purposes of this Chapter is equal to the buying price (that is the

lower price) published on—

(a)   

the day of the disposal, or

(b)   

if none were published on that day, on the latest day on which the

10

prices were published before that day.

439     

Meaning of “disposal-related obligation”

(1)   

In this Chapter an obligation is a “disposal-related obligation”, in relation to a

qualifying investment, if condition A or condition B is met in relation to it.

(2)   

The obligation may be to any person (whether or not the individual making the

15

disposal or a person connected with the individual).

(3)   

Condition A is that it is reasonable to suppose that the disposal of the

qualifying investment to the charity would not have been made in the absence

of the obligation.

(4)   

Condition B is that the obligation (whether in whole or in part) relates to, is

20

framed by reference to, or is conditional on the charity receiving, the qualifying

investment or a disposal-related investment.

(5)   

In applying condition A, all the circumstances must be taken into account

(including, in particular, the difference in the value of the net benefit to the

charity calculated under section 437(1)(a) and that value calculated under

25

section 437(1)(b)).

(6)   

In subsection (4) “disposal-related investment” means any of the following—

(a)   

an asset of the same class or description as the qualifying investment

(irrespective of size, quantity or amount),

(b)   

an asset derived from, or representing, the qualifying investment,

30

whether in whole or in part and whether directly or indirectly, and

(c)   

an asset from which the qualifying investment is derived, or which the

qualifying investment represents, whether in whole or in part and

whether directly or indirectly.

(7)   

In this Chapter “obligation” includes a reference to each of the following—

35

(a)   

a scheme, arrangement or understanding of any kind, whether or not

legally enforceable, and

(b)   

a series of obligations (whether or not between the same parties).

440     

Meaning and amount of “disposal-related liability”

(1)   

In this Chapter a liability is a “disposal-related liability” in the case of a

40

qualifying investment if it is a liability of the charity under a disposal-related

obligation in relation to the qualifying investment.

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

234

 

(2)   

If the disposal-related obligation is contingent, the amount to be brought into

account for the purposes of section 437 at any time in respect of the disposal-

related liability, so far as contingent, is—

(a)   

if the contingency occurs, the amount or value of the liability actually

incurred in consequence of the occurrence of the contingency, or

5

(b)   

if the contingency does not occur, nil.

Special provisions about qualifying interests in land

441     

Certificate required from charity

(1)   

This section applies if the qualifying investment is a qualifying interest in land.

(2)   

No individual may make a claim for relief under this Chapter unless the

10

individual has received a certificate given by or on behalf of the charity.

(3)   

The certificate must—

(a)   

describe the qualifying interest in land,

(b)   

specify the date of the disposal, and

(c)   

state that the charity has acquired the qualifying interest in land.

15

442     

Qualifying interests in land held jointly

(1)   

This section applies if the qualifying investment is a qualifying interest in land.

(2)   

It applies if two or more persons (“the owners”)—

(a)   

are jointly beneficially entitled to the qualifying interest in land, or

(b)   

are, taken together, beneficially entitled in common to the qualifying

20

interest in land.

(3)   

Relief under this Chapter is available if—

(a)   

at least one of the owners is an individual, and

(b)   

all the owners dispose of the whole of their beneficial interests in the

qualifying interest in land to the charity.

25

(4)   

Relief under this Chapter is available to each of the owners who is an

individual.

(5)   

The amount of relief under this Chapter to be given to an individual is such

share of the relievable amount as is allocated to the individual by an agreement

made between those owners who are—

30

(a)   

individuals, or

(b)   

qualifying companies.

(6)   

A company is a qualifying company if—

(a)   

it is not itself a charity, and

(b)   

it is not within section 587B(8)(a) of ICTA.

35

(7)   

If one or more of the owners is not an individual—

(a)   

for the purpose of determining whether the owners’ beneficial interests

are disposed of as mentioned in subsection (3)(b) of this section,

subsections (2) to (4) of section 433 apply as if references to an

individual included a reference to a person who is not an individual,

40

and

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 3 — Gifts of shares, securities and real property to charities etc

235

 

(b)   

the total amount of relief given under this Chapter and section 587B of

ICTA as a result of the disposal of the qualifying interest in land is not

to exceed the relievable amount.

443     

Calculation of relievable amount where joint disposal of interest in land

(1)   

This section applies for the purpose of calculating the relievable amount in a

5

case where relief under this Chapter is available as a result of section 442(3).

(2)   

Calculate the relievable amount as if—

(a)   

the owners were a single individual, and

(b)   

the disposals of the owners’ beneficial interests were a single disposal

by that single individual of the whole of the beneficial interest in the

10

qualifying interest in land.

(3)   

In particular, calculate the consideration mentioned at Step 1 in section 434(4)

by—

(a)   

calculating, for each owner, the consideration for which the disposal of

the owner’s beneficial interest is treated as made for the purposes of

15

TCGA 1992 as a result of section 257(2)(a) of that Act, and

(b)   

adding together all the consideration calculated under paragraph (a).

(4)   

Subsection (5) applies if one or more of the owners is neither—

(a)   

an individual, nor

(b)   

a qualifying company (see section 442(6)).

20

(5)   

In calculating the relievable amount make just and reasonable adjustments to

reduce the relievable amount to reflect the fact that relief under this Chapter or

section 587B of ICTA is not available to that owner or to those owners.

(6)   

If one or more of the owners is a company within paragraph (b) of section

587B(8) of ICTA, in calculating the relievable amount make just and reasonable

25

adjustments to reduce the relievable amount to reflect the requirements of sub-

paragraph (ii) of that paragraph.

444     

Disqualifying events

(1)   

This section applies if the qualifying investment is a qualifying interest in land.

(2)   

If a disqualifying event occurs at any time in the provisional period, the

30

following are treated as never having been entitled to relief under this Chapter

in respect of the disposal of the qualifying interest in land—

(a)   

in a case to which section 442 does not apply, the individual who made

the disposal, or

(b)   

in a case to which section 442 applies, each individual who is an owner.

35

(3)   

All such assessments and adjustments of assessments are to be made as are

necessary to give effect to subsection (2).

(4)   

A disqualifying event occurs if a person mentioned in subsection (5) becomes,

otherwise than for full consideration in money or money’s worth—

(a)   

entitled to an interest or right in relation to all or part of the land to

40

which the disposal relates, or

(b)   

party to an arrangement under which the person enjoys some right in

relation to all or part of that land.

 
 

Income Tax Bill
Part 8 — Other reliefs
Chapter 4 — Annual payments and patent royalties

236

 

(5)   

The persons are—

(a)   

in a case to which section 442 does not apply—

(i)   

the individual who made the disposal, or

(ii)   

a person connected with that individual, and

(b)   

in a case to which section 442 applies—

5

(i)   

a person who is an owner, or

(ii)   

a person connected with such a person.

(6)   

A disqualifying event does not occur if a person becomes entitled to an interest

or right as mentioned in subsection (4)(a) as a result of a disposition of property

on death (whether the disposition is effected by will, under the law relating to

10

intestacy or otherwise).

(7)   

“The provisional period” is the period beginning with the date of the disposal

of the qualifying interest in land and ending with the fifth anniversary of the

normal self-assessment filing date for the tax year in which the disposal was

made.

15

Supplementary

445     

Prohibition against double relief

(1)   

If a claim is made for relief under this Chapter in respect of a disposal—

(a)   

section 108 of ITTOIA 2005 (gifts of trading stock to charities etc) does

not apply in relation to the disposal, and

20

(b)   

no relief in respect of the disposal is allowable under any other

provision of the Income Tax Acts.

(2)   

For the effect on capital gains tax or corporation tax on chargeable gains where

an individual is entitled to relief under this Chapter, see section 257(2A) to (2C)

of TCGA 1992 (gifts to charities etc).

25

446     

“Charity” to include exempt bodies

In this Chapter “charity” includes—

(a)   

the Trustees of the National Heritage Memorial Fund,

(b)   

the Historic Buildings and Monuments Commission for England, and

(c)   

the National Endowment for Science, Technology and the Arts.

30

Chapter 4

Annual payments and patent royalties

447     

Overview of Chapter

(1)   

This Chapter gives relief for some of the payments from which sums

representing income tax must be deducted under Chapter 6 of Part 15

35

(deduction from annual payments and patent royalties).

(2)   

For the payments which attract relief, see sections 448 and 449.

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2007
Revised 5 February 2007