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Income Tax Bill


Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

521

 

      (3)  

In subsection (6) omit the definition of “unit trust scheme” and the “and”

immediately before it.

86         

In section 468A(1) (open-ended investment companies) for “lower rate”

substitute “savings rate”.

87    (1)  

Amend section 469 (unauthorised unit trusts) as follows.

5

      (2)  

In subsection (2)—

(a)   

for “Tax Acts” substitute “Corporation Tax Acts”, and

(b)   

omit the words from “and, in the case of income” to the end.

      (3)  

Omit subsections (2A) to (4).

      (4)  

Before subsection (5) insert—

10

“(4A)   

For the purposes of the Corporation Tax Acts, the trustees are treated

as making an annual payment (under deduction of income tax) to

each unit holder if an amount is shown in the scheme’s accounts as

income available for payment to unit holders or for investment.

(4B)   

The amount of an annual payment to a unit holder for a distribution

15

period before the deduction of income tax is its gross amount.

(4C)   

Section 548(2) of ITTOIA 2005 applies for the purpose of calculating

the gross amount of an annual payment for a distribution period as

it applies for the purpose of calculating the gross amount of income

treated as received for a distribution period under Chapter 10 of Part

20

4 of that Act.

(4D)   

Section 941 of ITA 2007 deals with the deduction of income tax from

the gross amount so calculated.”

      (5)  

In subsection (5) for “payments are”, in both places where it occurs,

substitute “payment is”.

25

      (6)  

Omit subsections (5A) to (5D) and (7) to (10).

88    (1)  

Amend section 477A (building societies: regulations for deduction of tax) as

follows.

      (2)  

Omit subsections (1) to (2A).

      (3)  

In subsection (3)—

30

(a)   

omit the words from “For any” to “above apply,”, and

(b)   

in paragraph (b) omit the words “paid or credited in the year of

assessment”.

      (4)  

Omit subsection (7).

      (5)  

For subsection (9) substitute—

35

“(9)   

In this section “dividend” includes any distribution (whether or not

described as a dividend).”

      (6)  

In subsection (10) omit the definitions of “qualifying certificate of deposit”,

“qualifying deposit right” and “security”.

      (7)  

In the sidenote for “regulations for deduction of tax” substitute “loan

40

relationships”.

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

522

 

89         

Omit sections 480A to 482 (deduction of tax by deposit-takers).

90    (1)  

Amend section 486 (industrial and provident societies and co-operative

associations) as follows.

      (2)  

Omit subsections (2), (3) and (6).

      (3)  

In subsection (7) for “subsection (6)” substitute “section 887(2) of ITA 2007”.

5

91         

In section 487(2) (credit unions) for “section 486(6)” substitute “section 887(2)

of ITA 2007”.

92    (1)  

Amend section 492 (treatment of oil extraction activities etc for tax purposes)

as follows.

      (2)  

Omit subsection (2).

10

      (3)  

For subsection (4) substitute—

“(4)   

In any case where—

(a)   

in any accounting period a company incurs a loss in activities

(“separate activities”) which, for that or any subsequent

accounting period, are treated by virtue of subsection (1)

15

above as a separate trade for the purposes specified in that

subsection, and

(b)   

in any subsequent accounting period any of its trading

income is derived from activities (“related activities”) which

are not part of the separate activities but which, apart from

20

subsection (1) above, would together with those activities

constitute a single trade,

   

then, notwithstanding anything in subsection (1) above, the amount

of the loss may be set off, in accordance with section 393(1), against

so much of its trading income in any subsequent accounting period

25

as is derived from the related activities.”

93         

Omit section 504A (letting of furnished holiday accommodation treated as

trade for certain income tax purposes).

94    (1)  

Amend section 505 (charities: general) as follows.

      (2)  

In subsection (1)—

30

(a)   

in paragraph (a) omit “, or under Parts 2 and 3 of ITTOIA 2005,”,

(b)   

in paragraph (c)—

(i)   

in sub-paragraph (ii) omit the words from “or under Chapter

2, 7, 8 or 10” to the end of the sub-paragraph,

(ii)   

omit sub-paragraphs (iiaa) and (iii), and

35

(iii)   

for “charity” substitute “charitable company”,

(c)   

in paragraph (d) omit “or Chapter 2 of Part 4 of ITTOIA 2005

(interest)”,

(d)   

in paragraph (e)—

(i)   

omit “or Part 2 of ITTOIA 2005 (trading income)”, and

40

(ii)   

for “charity”, in each place where it occurs, substitute

“charitable company”, and

(e)   

in paragraph (f)—

(i)   

omit “or Part 2 or 5 of ITTOIA 2005 (trading and

miscellaneous income)”,

45

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

523

 

(ii)   

for “charity” substitute “charitable company”, and

(iii)   

in sub-paragraph (ii) for “charity’s” substitute “charitable

company’s”.

      (3)  

In subsection (1AA) for “(1)(c)(iiaa) and (iib)” substitute “(1)(c)(iib)”.

      (4)  

In subsection (1B) for “charity” substitute “charitable company”.

5

      (5)  

In subsection (2)—

(a)   

in paragraph (a), for “a charity” substitute “a charitable company”,

(b)   

in paragraph (c) for “tax” substitute “corporation tax”, and

(c)   

omit the words from “chargeable to income tax” to “and shall be”.

      (6)  

In subsection (4)—

10

(a)   

for “charity” substitute “charitable company”, and

(b)   

for “a chargeable” substitute “an accounting”.

      (7)  

In subsection (5)—

(a)   

for “a chargeable” substitute “an accounting”, and

(b)   

for “charity’s” substitute “charitable company’s”.

15

      (8)  

In subsection (6) for “a chargeable” in both places where it occurs substitute

“an accounting”.

      (9)  

In subsection (7)—

(a)   

for “charity’s” substitute “charitable company’s”, and

(b)   

for “charity” in each place where it occurs substitute “charitable

20

company”.

     (10)  

In the sidenote for “Charities” substitute “Charitable companies”.

95    (1)  

Amend section 506 (charitable and non-charitable expenditure) as follows.

      (2)  

In subsection (1) in the appropriate place insert—

““charitable company” means any body of persons established

25

for charitable purposes only;”.

      (3)  

In subsection (2)—

(a)   

for “chargeable”, in both places where it occurs, substitute

“accounting”, and

(b)   

for “charity” substitute “charitable company”.

30

      (4)  

In subsection (3) for “charity” substitute “charitable company”.

      (5)  

In subsection (4)—

(a)   

for “chargeable” substitute “accounting”, and

(b)   

for “charity”, in both places where it occurs, substitute “charitable

company”.

35

      (6)  

In subsection (5)—

(a)   

for “chargeable” substitute “accounting”, and

(b)   

for “charity” substitute “charitable company”.

96    (1)  

Amend section 506A (transactions with substantial donors) as follows.

      (2)  

For “charity” in each place where it occurs substitute “charitable company”.

40

      (3)  

In subsection (2)—

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

524

 

(a)   

for “a chargeable” in both places where it occurs substitute “an

accounting”,

(b)   

for “the chargeable” in both places where it occurs substitute “the

accounting”, and

(c)   

for “five chargeable” substitute “five accounting”.

5

97    (1)  

Amend section 506B (section 506A: exceptions) as follows.

      (2)  

In subsections (1) to (4), (7) and (9), for “charity” in each place where it occurs

substitute “charitable company”.

      (3)  

In subsection (5) for “to which section 587B applies” substitute “in respect of

which relief is available under section 587B of this Act or section 431 of ITA

10

2007 (gifts of shares, securities and real property to charities etc)”.

      (4)  

In subsection (7) for the words after “so far as” substitute “they relate to a

donation by the donor, and—

(a)   

if the donation is made by a company, the payments or

benefits do not prevent the donation being a qualifying

15

donation for the purposes of section 339 because of

subsection (3B)(b) of that section (restrictions on associated

benefits), or

(b)   

if the donation is made by an individual, the payments or

benefits do not prevent the donation being a qualifying

20

donation for the purposes of section 416 of ITA 2007 because

of subsection (7)(b) of that section (restrictions on associated

benefits).”

      (5)  

In subsection (8) for the words from “the charity” to the end substitute “a

charitable company which owns it (or any part of it)”.

25

98    (1)  

Amend section 506C (sections 506A and 506B: supplemental) as follows.

      (2)  

In subsection (1)—

(a)   

omit paragraph (d),

(b)   

omit the “or” at the end of paragraph (h),

(c)   

insert “or” at the end of paragraph (i), and

30

(d)   

after that paragraph insert—

“(j)   

Chapters 2 and 3 of Part 8 of ITA 2007 (gift aid and

gifts of shares, securities and real property).”

      (3)  

In subsections (2) and (4) for “charity” substitute “charitable company”.

      (4)  

In subsection (3) for “a chargeable” substitute “an accounting”.

35

      (5)  

In subsection (5) for the words from the beginning to “single charity”

substitute “A charitable company and any other charities with which it is

connected are to be treated as a single charitable company”.

99         

In section 507(1) (the National Heritage Memorial fund etc) for “charity”

substitute “charitable company”.

40

100        

In section 508(1) (scientific research organisations) for “charity” substitute

“charitable company”.

101   (1)  

Amend section 510A (tax treatment of European Economic Interest

Groupings) as follows.

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

525

 

      (2)  

In subsection (2) for “tax in respect of income and gains” substitute

“corporation tax”.

      (3)  

In subsection (3) omit paragraph (b) and the “and” immediately before it.

      (4)  

In subsection (6) for “tax in respect of income and gains” substitute

“corporation tax”.

5

102        

Omit section 515 (exemption for signatories to Operating Agreement for

INMARSAT).

103        

Omit section 516 (Government securities held by non-resident central

banks).

104        

In section 517 (exemption for Reserve Bank of India and State Bank of

10

Pakistan) after “exempt from” insert “corporation”.

105        

In section 519 (exemption for local authorities and local authority

associations) for subsection (1) substitute—

“(1)   

A local authority in the United Kingdom shall be exempt from

corporation tax.”

15

106   (1)  

Amend section 519A (exemption for Health Service bodies) as follows.

      (2)  

For subsection (1) substitute—

“(1)   

A health service body shall be exempt from corporation tax.”

      (3)  

In subsections (3) and (4) for “subsection (1)(b)” substitute “subsection (1)”.

107   (1)  

Amend section 524 (taxation of receipts from sale of patent rights) as follows.

20

      (2)  

In subsection (3)—

(a)   

omit the “and” immediately after paragraph (a), and

(b)   

omit paragraphs (b) and (c).

      (3)  

For subsection (9) substitute—

“(9)   

If a company is chargeable to corporation tax under subsection (3)

25

above, nothing in subsections (7) and (8) above shall affect the sum

representing income tax which is to be deducted under section 910 of

ITA 2007 (payments to non-UK residents) from payments of, or of

instalments of, the proceeds of the sale.

(9A)   

If any sum representing income tax is deducted under section 910 of

30

ITA 2007, any adjustment necessary to give effect to the provisions of

subsection (9) above shall be made by way of repayment of tax.”

108   (1)  

Amend section 527 (spreading of royalties over several years) as follows.

      (2)  

For subsection (1) substitute—

“(1)   

Where—

35

(a)   

a royalty or other sum is paid to a company in respect of the

user of a patent,

(b)   

the user extended over a period of six complete years or

more, and

(c)   

the payment is one from which a sum representing income

40

tax must be deducted under section 903 of ITA 2007,

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

526

 

   

the company may on the making of a claim require that the

corporation tax payable by it by reason of the receipt of that sum

shall be reduced so as not to exceed the total amount of corporation

tax which would have been payable by it if that royalty or sum had

been paid in six equal instalments at yearly intervals, the last of

5

which was paid on the date on which the payment was in fact made.”

      (3)  

Omit subsection (4).

109        

In section 532 (application of Capital Allowances Act) for “Tax Acts”

substitute “Corporation Tax Acts”.

110        

Omit sections 536 (taxation of royalties where owner abroad), 537 (public

10

lending right) and 537B (taxation of design royalties where owner abroad).

111        

In section 539A(8) (conditions for being an excepted group life policy) for

paragraph (ii) substitute—

“(ii)   

“tax advantage” has the meaning given by section 840ZA”.

112        

In section 552(5)(f)(i) (information: duty of insurers) for “lower rate”

15

substitute “savings rate”.

113        

Omit section 555 (entertainers and sportsmen: payment of tax).

114   (1)  

Amend section 556 (activity treated as trade etc and attribution of income)

as follows.

      (2)  

After subsection (4) insert—

20

“(4A)   

In this section “payment” and “transfer” have the same meanings as

in section 13 of ITTOIA 2005.”

      (3)  

In subsection (5) omit the words from the beginning to “, and”.

115        

In section 558 (supplementary provisions) omit subsections (1) to (4).

116        

In section 571 (schemes for rationalising industry: cancellation of

25

certificates) after subsection (1) insert—

“(1A)   

An amount charged to income tax under subsection (1) above is

treated for income tax purposes as an amount of income.”

117   (1)  

Amend section 573 (relief for companies) as follows.

      (2)  

In subsection (4) omit the words from “and where” to “chargeable gains”.

30

      (3)  

Transpose section 573 as so amended to the beginning of a new Chapter of

Part 13 that follows Chapter 5 as Chapter 5A and is entitled “Share loss

relief”.

118        

Omit section 574 (share loss relief for individuals).

119   (1)  

Amend section 575 (exclusion of relief under section 573 or 574 in certain

35

cases) as follows.

      (2)  

In the sidenote omit “or 574”.

      (3)  

In subsection (1) for “Sections 573 and 574 do” substitute “Section 573 does”.

      (4)  

In subsection (2)—

(a)   

for “person” substitute “company”,

40

(b)   

for “him” and, in both places where it occurs, “he” substitute “it”, and

 

 

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 1 — Income and Corporation Taxes Act 1988

527

 

(c)   

omit “or 574”, in each place where it occurs.

      (5)  

In subsection (3) omit “or 574”.

      (6)  

After subsection (3) insert—

“(4)   

In this section “new consideration” means consideration in money or

money’s worth other than consideration of the kind excluded by

5

paragraph (a) or (b) of section 128(2) of the 1992 Act.”

      (7)  

Transpose section 575 as so amended to after section 573.

120   (1)  

Amend section 576 (provisions supplementary to sections 573 to 575) as

follows.

      (2)  

In the sidenote for “sections 573 to 575” substitute “sections 573 and 575”.

10

      (3)  

In subsection (1)—

(a)   

for “subsections (1A) to (1C)” substitute “subsection (1C)”,

(b)   

for “a person” substitute “a company”,

(c)   

for “a company” substitute “another company”,

(d)   

for “he” and “him”, in each place where they occur, substitute “it”,

15

and

(e)   

omit “or 574”.

      (4)  

Omit subsections (1A) and (1B).

      (5)  

After subsection (1C) insert—

“(1D)   

In this section “holding” means any number of shares of the same

20

class held by one company in one capacity, growing or diminishing

as shares of that class are acquired or disposed of.

   

For this purpose—

(a)   

shares are not to be treated as being of the same class unless

they are so treated by the practice of a recognised stock

25

exchange or would be so treated if dealt in on such an

exchange, and

(b)   

subsection (4) of section 104 of the 1992 Act applies as it

applies for the purposes of subsection (1) of that section.”

      (6)  

Omit subsections (2) to (5).

30

      (7)  

Transpose section 576 as so amended to after section 575.

121        

After section 576 insert—

“576A   

Qualifying trading companies

(1)   

For the purposes of this Chapter a qualifying trading company is a

company which meets each of conditions A to D.

35

(2)   

Condition A is that the company either—

(a)   

meets each of the following requirements on the date of the

disposal—

(i)   

the trading requirement (see section 576B),

(ii)   

the control and independence requirement (see

40

section 576D),

 

 

 
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