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
567

      (4)
In subsection (1AB) for the words from “(after” to “total income” substitute
“an individual has no Step 3 income for a year of assessment or the
individual’s Step 3 income”.
      (5)
In subsection (1AC) for the words from “his total income” to the end
substitute “the individual’s Step 3 income”.
5
      (6)
In subsection (4) for the words from “his total income” to the end substitute
“the individual’s Step 3 income”.
      (7)
At the end insert—
“(5)
For the purposes of this section the “Step 3 income” of an individual
means the individual’s net income less allowances deducted at Step
10
3 of the calculation in section 23 of ITA 2007 for the purpose of
calculating the individual’s income tax liability.
(6)
Section 989 of ITA 2007 (the definitions) applies for the purposes of
this section as it applies for income tax purposes.”
296   (1)
Amend section 6 (rates of capital gains tax: special cases) as follows.
15
      (2)
In subsection (2)—
(a)
in paragraph (a) for the words from “a deduction” to “liability”
substitute “a person is entitled to relief by reference to the amount of
a deficiency”,
(b)
in paragraph (c) for “those purposes” substitute “the purposes of
20
extra liability”,
(c)
for “his income” substitute “the person’s Step 3 income”, and
(d)
for “that amount” substitute “the amount of the deficiency or (as the
case may be) the amount mentioned in paragraph (c)”.
      (3)
In subsection (3) for “his total income” substitute “the person’s Step 3
25
income”.
      (4)
Omit subsection (4).
297
For section 11 (visiting forces, agents-general etc) substitute—
“11
Visiting forces and official agents
(1)
If section 833 of ITA 2007 (visiting forces and staff of designated
30
allied headquarters) applies to an individual throughout a period,
the period is not treated for capital gains tax purposes as—
(a)
a period of residence in the United Kingdom, or
(b)
creating a change of the individual’s residence or domicile.
(2)
If an individual is entitled to immunity from income tax by virtue of
35
section 841 of ITA 2007 (which provides immunity from income tax
for official agents of Commonwealth countries or the Republic of
Ireland etc), the individual is entitled to the same immunity from
capital gains tax as that to which a member of the staff of a mission
is entitled under the Diplomatic Privileges Act 1964.
40
(3)
“A member of the staff of a mission” is to be read in accordance with
the Diplomatic Privileges Act 1964.”
298
In section 16(1) (computation of losses) for “section 72 of the Finance Act
1991” substitute “sections 261B, 261D and 263ZA”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
568

299
In section 37 (consideration chargeable to tax on income) at the end insert—
“(5)
If—
(a)
because section 759(4) or (6) of ITA 2007 applies, the person
charged to tax under Chapter 3 of Part 13 of that Act
(transactions in land) is a person other than the person (“A”)
5
by whom the gain was realised, and
(b)
the income tax has been paid,

for the purposes of this section the amount charged to that tax is
regarded as having been charged as the income of A.
(6)
If—
10
(a)
because section 777(5) of that Act applies, the person charged
to tax under Chapter 4 of Part 13 of that Act (sales of
occupation income) is a person other than the person (“B”)—
(i)
for whom the capital amount was obtained, or
(ii)
in the case of income treated as arising under section
15
779 of that Act, by whom the property or right was
sold or realised, and
(b)
the income tax has been paid,

for the purposes of this section the amount charged to that tax is
regarded as having been charged as the income of B.
20
(7)
In subsection (6) “capital amount” has the same meaning as in
Chapter 4 of Part 13 of that Act (sales of occupation income) (see
section 777(7) of that Act).”
300
In section 39 (exclusion of expenditure by reference to tax on income) after
subsection (3) insert—
25
“(4)
If—
(a)
because section 759(4) or (6) of ITA 2007 applies, the person
charged to tax under Chapter 3 of Part 13 of that Act
(transactions in land) is a person other than the person (“A”)
by whom the gain was realised, and
30
(b)
the income tax has been paid,

for the purposes of this section the amount charged to that tax is
regarded as having been charged as the income of A.”
301
In section 79(8) (charge on settlor with interest in settlement etc:
supplementary provisions) for “691(2) of the Taxes Act (certain income of
35
maintenance funds for historic buildings not to be income of settlor etc)”
substitute “508 of ITA 2007 (trustees’ election in respect of income arising
from heritage maintenance property)”.
302
In section 97(3) (settlements etc: supplementary provisions) for “section
740(2)(b) of the Taxes Act” substitute “section 733 of ITA 2007”.
40
303
In section 98(2) (power to obtain information for purposes of sections 87 to
90)—
(a)
for the words from the beginning to “745(1)” substitute “Sections
748(3) to (5), 749 and 750 of ITA 2007 shall have effect in relation to
subsection (1) above as they have effect in relation to section 748(1)
45
and (2) of that Act”, and
(b)
in paragraph (a) for “Chapter III of Part XVII of the Taxes Act”
substitute “Chapter 2 of Part 13 of that Act”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
569

304
In section 101B(1)(a) (transfer of a company’s assets to VCT), for “section
842AA of the Taxes Act” substitute “Part 6 of ITA 2007”.
305
In section 101C(7) (transfer within group to VCT), for “section 842AA of the
Taxes Act” substitute “Part 6 of ITA 2007”.
306   (1)
Amend section 105A (shares acquired on the same day: elections for
5
alternative treatment) as follows.
      (2)
In subsection (4)—
(a)
after “Chapter 3 of Part 7 of the Taxes Act” insert “, relief under Part
5 of ITA 2007”,
(b)
after “section 299 of the Taxes Act” insert “or section 246 of ITA
10
2007”,
(c)
for “of that Act” substitute “or subsection (3) of section 246”, and
(d)
for “that section” substitute “section 299 or subsection (4) of section
246”.
      (3)
In subsection (7)—
15
(a)
after “Chapter 3 of Part 7 of the Taxes Act” insert “or relief under Part
5 of ITA 2007”,
(b)
for “that Act” substitute “the Taxes Act or section 245 of ITA 2007”,
and
(c)
after “that Chapter” insert “or relief under that Part”.
20
      (4)
After subsection (8) insert—
“(9)
In this section references to Part 5 of ITA 2007 or any provision of that
Part are to a Part or provision that applies only in relation to shares
issued after 5 April 2007.”
307
In section 108(1)(a) (identification of relevant securities) for “section 710 of
25
the Taxes Act” substitute “Chapter 2 of Part 12 of ITA 2007 (accrued income
profits)”.
308   (1)
Amend section 119 (transfer of securities subject to the accrued income
scheme) as follows.
      (2)
For subsections (1) to (5) substitute—
30
“(1)
Where there is a transfer of securities within the meaning of Chapter
2 of Part 12 of ITA 2007 (accrued income profits)—
(a)
if a payment is treated as made to the transferor under section
632 of that Act or by the transferor under section 633 of that
Act, section 37 shall be disregarded in computing the gain
35
accruing on the disposal concerned;
(b)
if a payment is treated as made by the transferee under
section 632 of that Act or to the transferee under section 633
of that Act, section 39 shall be disregarded in computing the
gain accruing to the transferee if he disposes of the securities;
40

but subsections (2) and (3) below shall apply.
(2)
Where the securities are transferred with accrued interest (within the
meaning of that Chapter)—
(a)
if a payment is treated as made to the transferor under section
632 of ITA 2007, an amount equal to the amount of that
45

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
570

payment shall be excluded from the consideration mentioned
in subsection (8) below;
(b)
if a payment is treated as made by the transferee under that
section, an amount equal to the amount of that payment shall
be excluded from the sums mentioned in subsection (9)
5
below.
(3)
Where the securities are transferred without accrued interest (within
the meaning of that Chapter)—
(a)
if a payment is treated as made by the transferor under
section 633 of ITA 2007, an amount equal to the amount of
10
that payment shall be added to the consideration mentioned
in subsection (8) below;
(b)
if a payment is treated as made to the transferee under that
section, an amount equal to the amount of that payment shall
be added to the sums mentioned in subsection (9) below.
15
(3A)
Subsections (3B) and (3C) below apply where there is a transfer of
variable rate securities (within the meaning of that Chapter) and—
(a)
the transferor is treated as making accrued income profits
under section 630(2) of ITA 2007, or
(b)
a payment is treated as made to the transferor under section
20
635 of that Act.
(3B)
Section 37 shall be disregarded in computing the gain accruing on
the disposal concerned.
(3C)
An amount equal to the amount of the profits or payment shall be
excluded from the consideration mentioned in subsection (8) below.
25
(4)
Where there is a transfer of securities with unrealised interest (within
the meaning of Chapter 2 of Part 12 of ITA 2007)—
(a)
if section 630 of that Act applies or a payment is treated as
made to the transferor under section 634 of that Act, section
37 shall be disregarded in computing the gain accruing on the
30
disposal concerned, but the relevant amount shall be
excluded from the consideration mentioned in subsection (8)
below;
(b)
if section 681 of that Act applies, section 39 shall be
disregarded in computing the gain accruing on the disposal
35
concerned, but the relevant amount shall be excluded from
the sums mentioned in subsection (9) below.
(5)
In subsection (4) above “the relevant amount” means an amount
equal to—
(a)
if paragraph (b) below does not apply, the amount of the
40
unrealised interest in question (within the meaning of
Chapter 2 of Part 12 of ITA 2007);
(b)
if section 660 of that Act applies—
(i)
in a case falling within subsection (4)(a) above, the
amount taken, by virtue of section 660 or 661 of that
45
Act (as the case may be), to be the unrealised interest
value for the purposes of section 660(2) or (3) of that
Act;

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
571

(ii)
in a case falling within subsection (4)(b) above, the
amount of income that is exempt from liability to
income tax under section 681 of that Act.”
      (3)
In subsection (6) for the words from “as if” to the end substitute “as if for “is
treated as made”, in each place where it occurs, there were substituted
5
“would, if the disposal were a transfer, be treated as made”.
      (4)
For subsection (7) substitute—
“(7)
Where there is a disposal of securities for the purposes of this Act
which is not a transfer (within the meaning of Chapter 2 of Part 12 of
ITA 2007) but, if it were such a transfer, a payment would be treated
10
as made under section 632 or 633 of that Act, the securities shall be
treated—
(a)
for the purposes of subsection (6) above, as transferred on the
day of the disposal, and
(b)
for the purposes of subsections (2) and (3) above, as
15
transferred with accrued interest if, had the disposal been a
transfer within the meaning of that Chapter, it would have
been a transfer with accrued interest and as transferred
without accrued interest if, had the disposal been such a
transfer, it would have been a transfer without accrued
20
interest.
(7A)
In relation to any securities which by virtue of subsection (7B) below
are treated for the purposes of this subsection as having been
transferred, subsection (3A) above shall have effect as if—
(a)
for “is treated as making” there were substituted “would, if
25
the disposal were a transfer, be treated as making”, and
(b)
for “is treated as made” there were substituted “would, if the
disposal were a transfer, be treated as made”.
(7B)
Where there is a disposal of securities for the purposes of this Act
which is not a transfer (within the meaning of Chapter 2 of Part 12 of
30
ITA 2007) but, if it were such a transfer, the transferor would be
treated as making accrued income profits under section 630(2) of that
Act in respect of a transfer of variable rate securities or a payment
would be treated as made under section 635 of that Act—
(a)
the securities shall be treated, for the purposes of subsection
35
(7A) above, as transferred on the day of the disposal, and
(b)
the transfer shall be treated, for the purposes of subsection
(3A) above, as a transfer of variable rate securities.”
      (5)
In subsection (10) for the words from “a person is treated”, in the first place
where it occurs, to “(determined under that section)”, in the first place it
40
occurs, substitute “a payment is treated as made to a person under section
632 or 635 of ITA 2007, or a person is treated as making accrued income
profits under section 630(2) of that Act in respect of a transfer of variable rate
securities, an amount equal to the amount of the payment or profits”.
      (6)
In the full-out words of subsection (10) for the words from “a person is
45
treated” to “(determined under that section)” substitute “a payment is
treated as made by a person under section 633 of that Act an amount equal
to the amount of the payment”.
309
After section 125 insert—