|
| |
|
(7) | For the purposes of the words in brackets in subsection (6)(a) use the exchange |
| |
rate prevailing in the United Kingdom at the close of business on the last |
| |
business day before the investment day. |
| |
(8) | For the purposes of subsection (6)(b) a company formed— |
| |
(a) | to take over the business of another company or other companies, or |
| 5 |
(b) | to acquire the securities of, or control of, another company or other |
| |
| |
| is treated as having paid a dividend in any year in which a dividend has been |
| |
paid by the other company or all of the other companies (as the case may be). |
| |
(9) | It is irrelevant that the company is formed for other purposes in addition to |
| 10 |
those mentioned in paragraph (a) or (b) of subsection (8). |
| |
| |
“business day” means, in relation to an investment, a business day in the |
| |
place where the investment is made, and |
| |
“the investment day” means, in relation to an investment, the day on |
| 15 |
which the investment is made. |
| |
561 | Approved charitable loans |
| |
(1) | A loan is an approved charitable loan for the purposes of section 543 (meaning |
| |
of “non-charitable expenditure”) if it meets conditions A and B. |
| |
(2) | Condition A is that the loan is not made by way of investment. |
| 20 |
(3) | Condition B is that either— |
| |
(a) | the loan is made to another charity for charitable purposes only, |
| |
(b) | it is made to a beneficiary of the charitable trust in the course of |
| |
carrying out the purposes of the charitable trust, |
| |
(c) | it consists of money placed on current account with a bank otherwise |
| 25 |
than as part of an arrangement under which a loan is made by a bank |
| |
| |
(d) | an officer of Revenue and Customs is satisfied, on a claim, that the loan |
| |
is made for the benefit of the charitable trust and not for the avoidance |
| |
of tax (whether by the charitable trust or by some other person). |
| 30 |
(4) | In this section “bank” has the meaning given by section 991. |
| |
Carry back of excess non-charitable expenditure |
| |
562 | Excess expenditure treated as non-charitable expenditure of earlier years |
| |
(1) | This section applies if a charitable trust’s non-charitable expenditure for a tax |
| |
year exceeds its available income and gains for the tax year. |
| 35 |
(2) | The excess is the charitable trust’s “excess expenditure” for the tax year. |
| |
(3) | The charitable trust’s excess expenditure for the tax year is treated for the |
| |
purposes of this Part as non-charitable expenditure for earlier tax years so far |
| |
as it can be attributed to earlier tax years under section 563. |
| |
(4) | For the purposes of this Part a charitable trust’s “available income and gains” |
| 40 |
for a tax year is the sum of— |
| |
|
| |
|
| |
|
(a) | the charitable trust’s total income for the tax year (ignoring any |
| |
restrictions on the exemptions under this Part which result from |
| |
| |
(b) | any chargeable gains accruing to the charitable trust in the tax year |
| |
(ignoring any restriction on the exemption under section 256(1) of |
| 5 |
TCGA 1992 which results from section 256(4) of that Act), |
| |
(c) | the charitable trust’s attributable income and gains for the tax year (see |
| |
| |
(d) | any non-taxable sums received by the charitable trust in the tax year. |
| |
(5) | In subsection (4) “non-taxable sums” means donations, legacies and other |
| 10 |
sums of a similar nature which, ignoring exemptions from income tax under |
| |
this Part and from capital gains tax under section 256 of TCGA 1992, are not |
| |
liable to income tax or capital gains tax. |
| |
563 | Rules for attributing excess expenditure to earlier years |
| |
(1) | The rules in this section apply for attributing a charitable trust’s excess |
| 15 |
expenditure for a tax year to earlier tax years under section 562. |
| |
(2) | The excess expenditure for a tax year may be attributed to an earlier tax year |
| |
| |
(a) | the earlier tax year ends not more than 6 years before the end of the tax |
| |
| 20 |
(b) | the charitable trust’s available income and gains for the earlier tax year |
| |
exceed its non-charitable expenditure for the earlier tax year. |
| |
(3) | If the conditions in subsection (2) are met in the case of more than one earlier |
| |
tax year, the excess expenditure is to be attributed to a later tax year in priority |
| |
| 25 |
(4) | The amount of excess expenditure that is to be attributed to an earlier tax year |
| |
must not be greater than the amount by which the charitable trust’s available |
| |
income and gains for the earlier tax year exceed its non-charitable expenditure |
| |
for the earlier tax year. |
| |
(5) | For the purposes of subsections (2)(b) and (4) the charitable trust’s non- |
| 30 |
charitable expenditure for the earlier tax year includes any excess expenditure |
| |
attributed to the earlier tax year as a result of a previous operation of this |
| |
section, but ignores the attribution in question. |
| |
564 | Adjustments in consequence of section 562 |
| |
Such adjustments must be made (whether by way of the making of |
| 35 |
assessments or otherwise) as may be required in consequence of section 562. |
| |
|
| |
|
| |
|
| |
Manufactured payments and repos |
| |
| |
| |
| 5 |
(1) | This Part is about the income tax treatment of some arrangements for the |
| |
| |
(2) | Chapter 2 deals with arrangements for the transfer of securities under which |
| |
provision is made for the payment of amounts representative of dividends or |
| |
interest in respect of the securities. |
| 10 |
(3) | Chapter 3 prevents parties to stock lending arrangements (see section 568) and |
| |
repos (see section 569) from being entitled to tax credits in some circumstances. |
| |
(4) | Chapter 4 brings within the rules in Chapters 2 and 3— |
| |
(a) | some stock lending arrangements under which the dividends or |
| |
interest in respect of the transferred securities are paid to a person other |
| 15 |
| |
(b) | some repos where the original owner is not entitled to the dividends or |
| |
interest in respect of the transferred securities. |
| |
(5) | Chapter 5 deals with differences between the sale and repurchase price under |
| |
| 20 |
(6) | Chapter 6 contains powers to modify some of the provisions about repos. |
| |
566 | Meaning of “UK shares” and “UK securities” |
| |
(1) | This section applies for the purposes of this Part. |
| |
(2) | “UK shares” means shares in a UK resident company. |
| |
(3) | “UK securities” means securities of— |
| 25 |
(a) | the government of the United Kingdom, |
| |
(b) | a local authority in the United Kingdom, |
| |
(c) | another public authority in the United Kingdom, or |
| |
(d) | a UK resident company or other UK resident body. |
| |
(4) | But “UK securities” does not include UK shares. |
| 30 |
(5) | In this section “securities” includes loan stock or any similar security. |
| |
567 | Meaning of “overseas securities” and “overseas dividend” |
| |
(1) | This section applies for the purposes of this Part. |
| |
(2) | “Overseas securities” means shares, stock or other securities issued by— |
| |
(a) | a government, local authority or other public authority of a territory |
| 35 |
outside the United Kingdom, or |
| |
(b) | another non-UK resident body of persons. |
| |
|
| |
|
| |
|
(3) | “Overseas dividend” means any interest, dividend or other annual payment |
| |
payable in respect of overseas securities. |
| |
(4) | In this section “securities” includes loan stock or any similar security. |
| |
568 | Meaning of “stock lending arrangement” |
| |
(1) | For the purposes of this Part there is a stock lending arrangement in respect of |
| 5 |
| |
(a) | a person (“the lender”) has transferred the securities to another person |
| |
(“the borrower”) otherwise than by way of sale, |
| |
(b) | the securities are UK shares, UK securities or overseas securities, |
| |
(c) | the transfer is under an arrangement between the lender and the |
| 10 |
| |
(d) | under the arrangement, the borrower is required to transfer the |
| |
securities back to the lender otherwise than by way of sale. |
| |
(2) | The reference in subsection (1)(d) to the transfer of the securities back to the |
| |
lender includes a reference to— |
| 15 |
(a) | a transfer within subsection (3), and |
| |
(b) | a payment within subsection (5). |
| |
(3) | A transfer is within this subsection if it is a transfer to the lender of securities |
| |
of the same description as the securities— |
| |
(a) | in accordance with a requirement to do so, or |
| 20 |
(b) | in exercise of a power to substitute securities of the same description for |
| |
the securities that are required to be transferred back. |
| |
(4) | For the purposes of subsection (3), securities are taken to be of the same |
| |
description as other securities if (and only if) they— |
| |
(a) | are in the same quantities, |
| 25 |
(b) | give the same rights against the same persons, and |
| |
(c) | are of the same type and nominal value, |
| |
| |
(5) | A payment is within this subsection if it is a payment to the lender, in |
| |
pursuance of a redemption obligation, of an amount equal to the amount of the |
| 30 |
entitlement under the redemption obligation. |
| |
(6) | A redemption obligation is an obligation that arises on a person’s becoming |
| |
entitled to receive an amount in respect of the redemption of the securities. |
| |
| |
(1) | For the purposes of this Part there is a repo in respect of securities if conditions |
| 35 |
| |
(2) | Condition A is that a person (“the original owner”) has agreed to sell the |
| |
securities to another person (“the interim holder”). |
| |
(3) | Condition B is that the securities are UK shares, UK securities or overseas |
| |
| 40 |
(4) | Condition C is that the original owner or a person connected with the original |
| |
| |
|
| |
|
| |
|
(a) | is required to buy back the securities by the agreement or a related |
| |
| |
(b) | is required to buy back the securities as a result of the exercise of an |
| |
option acquired under the agreement or a related agreement, or |
| |
(c) | exercises an option to buy back the securities which was acquired |
| 5 |
under the agreement or a related agreement. |
| |
570 | Meaning of “buying back” securities etc |
| |
(1) | This section applies for the purposes of this Part, in the context of a repo. |
| |
(2) | References to buying back securities include references to— |
| |
(a) | buying similar securities, and |
| 10 |
(b) | in the case of a person connected with the person who is the original |
| |
owner under the repo, buying the securities sold by the original owner |
| |
| |
(3) | Subsection (2) applies even if the person buying the securities has not held |
| |
| 15 |
(4) | References to repurchase or a repurchaser are to be read accordingly. |
| |
(5) | For the purposes of subsection (2) securities are similar if they give their |
| |
| |
(a) | the same rights against the same persons as to capital and distributions, |
| |
interest and dividends, and |
| 20 |
(b) | the same remedies to enforce those rights. |
| |
(6) | Subsection (5) applies even if there is a difference in— |
| |
(a) | the total nominal amounts of the securities, |
| |
(b) | the form in which they are held, or |
| |
(c) | the manner in which they can be transferred. |
| 25 |
571 | Meaning of “related” agreements |
| |
Agreements are related for the purposes of this Part if they are entered into in |
| |
pursuance of the same arrangement (regardless of the date on which either |
| |
agreement is entered into). |
| |
| 30 |
| |
| |
| |
This Chapter is about the situation where a person— |
| |
(a) | pays another person an amount which is representative of— |
| 35 |
(i) | dividends on UK shares, |
| |
(ii) | periodical payments of interest on UK securities, or |
| |
(iii) | overseas dividends on overseas securities, and |
| |
|
| |
|
| |
|
(b) | does so under a requirement of an arrangement between them for the |
| |
transfer of the UK shares, UK securities or overseas securities |
| |
| |
Manufactured dividends on UK shares |
| |
573 | Manufactured dividends on UK shares |
| 5 |
(1) | This section applies if a person— |
| |
(a) | pays another person an amount (a “manufactured dividend”) which is |
| |
representative of a dividend on UK shares, and |
| |
(b) | does so under a requirement of an arrangement between them for the |
| |
| 10 |
(2) | The Income Tax Acts apply in relation to the recipient, and persons claiming |
| |
title through or under the recipient, as if the manufactured dividend were a |
| |
| |
(3) | If the payer is a UK resident company, the Income Tax Acts apply in relation |
| |
to the payer as if the manufactured dividend were a dividend of the company. |
| 15 |
(4) | If the payer is UK resident and is not a company, the Income Tax Acts apply in |
| |
relation to the payer subject to sections 574 and 575 (allowable deductions). |
| |
(5) | This section is subject to— |
| |
(a) | section 576 (manufactured dividends on UK shares: Real Estate |
| |
| 20 |
(b) | section 583 (manufactured payments exceeding underlying payments), |
| |
| |
(c) | section 585 (power to deal with other special cases). |
| |
574 | Allowable deductions: matching |
| |
(1) | This section applies if a person who pays a manufactured dividend as |
| 25 |
mentioned in section 573(1) is UK resident and is not a company. |
| |
(2) | An amount equal to the lesser of— |
| |
(a) | the amount of the manufactured dividend, and |
| |
(b) | the amount of the dividend of which the manufactured dividend is |
| |
| 30 |
| is allowable as a deduction for income tax purposes, subject to subsection (3). |
| |
(3) | It is allowable only so far as— |
| |
(a) | it is not otherwise deductible, and |
| |
(b) | it falls within subsection (4) or (7). |
| |
(4) | An amount falls within this subsection so far as the payer— |
| 35 |
(a) | receives either the dividend which is represented by the manufactured |
| |
dividend or a payment which is representative of that dividend, and |
| |
(b) | is chargeable to income tax on the dividend or payment received. |
| |
(5) | An amount falls within subsection (4) only if the amount of the dividend or |
| |
payment received is received by the payer in— |
| 40 |
(a) | the tax year in which the payer pays the manufactured dividend, or |
| |
(b) | the tax year immediately before, or immediately after, that year. |
| |
|
| |
|
| |
|
(6) | An amount which falls within subsection (4) is allowable as a deduction only |
| |
from the amount of the dividend or payment received on which the payer is |
| |
chargeable to income tax. |
| |
(7) | An amount falls within this subsection so far as the payer— |
| |
(a) | is treated under section 607 (treatment of price differences under repos) |
| 5 |
as receiving a payment of interest in respect of the shares, and |
| |
(b) | is chargeable to income tax on the payment. |
| |
(8) | An amount which falls within subsection (7) is allowable as a deduction in |
| |
calculating the net income of the payer (see Step 2 of the calculation in section |
| |
| 10 |
(9) | See section 575 for a further qualification to the rule in subsection (2). |
| |
(10) | For the purposes of subsection (3)(a) an amount is deductible if it is— |
| |
(a) | deductible in calculating any of the payer’s profits or gains for income |
| |
| |
(b) | deductible for those purposes in calculating the net income of the |
| 15 |
| |
575 | Allowable deductions: restriction on double-counting |
| |
(1) | This section applies if an amount has been allowed as a deduction under |
| |
section 574(2) by reference to the whole or part of— |
| |
(a) | the dividend or payment mentioned in section 574(4)(a), or |
| 20 |
(b) | the deemed payment of interest mentioned in section 574(7)(a). |
| |
(2) | No further deduction is allowable by reference to all or part of the matched |
| |
portion of the dividend, payment or deemed payment. |
| |
(3) | The “matched portion” of the dividend, payment or deemed payment means— |
| |
(a) | the whole of it, if the amount has been allowed as a deduction by |
| 25 |
reference to the whole of it, or |
| |
(b) | the part of it by reference to which the amount has been allowed as a |
| |
deduction, in any other case. |
| |
576 | Manufactured dividends on UK shares: Real Estate Investment Trusts |
| |
(1) | This section applies (instead of section 573(2) and (3)) if— |
| 30 |
(a) | a person pays a manufactured dividend as mentioned in section 573(1), |
| |
| |
(b) | the manufactured dividend is representative of a dividend which is— |
| |
(i) | paid by a company to which Part 4 of FA 2006 applies (Real |
| |
Estate Investment Trusts) in respect of profits of C (tax-exempt), |
| 35 |
| |
(ii) | paid by the principal company of a group to which that Part |
| |
applies in respect of profits of G (property rental business). |
| |
(2) | This section applies only so far as the manufactured dividend is representative |
| |
| 40 |
(3) | The Income Tax Acts apply in relation to the recipient, and persons claiming |
| |
title through or under the recipient, as if the manufactured dividend were a |
| |
|
| |
|