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
579

(4)
Subsection (6) applies if—
(a)
an officer of Revenue and Customs requires the trustees of a
charitable trust to make a specification under this section,
and
(b)
the trustees have not given notice under subsection (3) of the
5
specification before the end of the required period.
(5)
The required period is 30 days beginning with the day on which the
officer made the requirement.
(6)
An officer of Revenue and Customs may determine the attributable
gains that are to be attributed to the non-exempt amount.”
10
328
In section 257 (gifts to charities etc) after subsection (2) insert—
“(2A)
Subsection (2B) applies if relief is available under Chapter 3 of Part 8
of ITA 2007 or section 587B of the Taxes Act (gifts of shares, securities
and real property to charities) in relation to the disposal of a
qualifying investment to a charity (whether or not a claim for relief
15
is actually made).
(2B)
The consideration for which the charity’s acquisition of the
qualifying investment is treated by virtue of subsection (2) above as
having been made—
(a)
is reduced by the relievable amount if relief in relation to the
20
disposal is available only under Chapter 3 of Part 8 of ITA
2007,
(b)
is reduced by the relevant amount if relief in relation to the
disposal is available only under section 587B of the Taxes Act,
(c)
is reduced by the relievable amount if relief in relation to the
25
disposal is available both under that Chapter and that section
as a result of section 442 of ITA 2007 and section 587BA of the
Taxes Act, or
(d)
is reduced to nil if that consideration is less than the amount
referred to in paragraph (a), (b) or (c) (as the case may be).
30
(2C)
In subsections (2A) and (2B)—
“qualifying investment” has the same meaning as in Chapter 3
of Part 8 of ITA 2007 (see section 432 of that Act),
“relevant amount” has the same meaning as in section 587B of
the Taxes Act, and
35
“relievable amount” has the same meaning as in Chapter 3 of
Part 8 of ITA 2007 (see section 434 of that Act).”
329
After section 261A insert—
“Deduction of trading losses or post-cessation expenditure etc
“261B
Treating trade loss etc as CGT loss
40
(1)
A person may make a claim under this section if—
(a)
relief is available to the person under section 64 or 128 of ITA
2007 (trade or employment loss relief against general income)
for a tax year in relation to an amount of loss, and

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
580

(b)
the person makes a claim under that section for the amount
to be deducted in calculating the person’s net income for the
tax year.
(2)
A person may also make a claim under this section if—
(a)
relief is available to the person as mentioned in subsection
5
(1)(a) for a tax year in relation to an amount of loss, but
(b)
the person’s total income for the tax year is nil or does not
include any income from which the amount can be deducted.
(3)
A claim under this section is for determining so much of the amount
of the loss (“the relevant amount”) as—
10
(a)
is not deducted in calculating the person’s net income for the
tax year, and
(b)
has not already been taken into account for the purposes of
any relief for any other tax year or any year of assessment
(whether under ITA 2007, this section or otherwise).
15
(4)
When the relevant amount can no longer be varied—
(a)
by the Commissioners on appeal, or
(b)
on the order of a court,

it is treated for the purposes of capital gains tax as an allowable loss
accruing to the person in the year of assessment corresponding to the
20
tax year.
(5)
But so much of the relevant amount as exceeds the maximum
amount (see section 261C) is not to be treated for the purposes of
capital gains tax as an allowable loss.
(6)
The excess may, however, be used in giving effect to any other loss
25
relief under Part 4 of ITA 2007 (depending on the terms of the relief).
(7)
The amount treated as an allowable loss under this section—
(a)
is no longer to be regarded as an amount available for income
tax relief, and
(b)
is not to be deductible from chargeable gains accruing to a
30
person in any year of assessment that begins after the person
has permanently ceased to carry on the trade, profession,
vocation, employment or office in which the loss was made.
(8)
A claim under this section must be made on or before the first
anniversary of the normal self-assessment filing date for the tax year
35
in which the loss was made in the trade, profession, vocation,
employment or office.
(9)
In this section “normal self-assessment filing date”, “tax year” and
“total income” have the same meaning as in the Income Tax Acts (see
section 989 of ITA 2007).
40
261C
Meaning of “the maximum amount” for purposes of section 261B
(1)
For the purposes of section 261B “the maximum amount” is the
amount on which the person would be chargeable to capital gains tax
for the year of assessment if—
(a)
the provisions mentioned below were ignored, and
45
(b)
no account were taken of the event mentioned below.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
581

(2)
The provisions are—
(a)
section 2A (taper relief),
(b)
section 3(1) (annual exempt amount), and
(c)
section 261B.
(3)
The event is any event—
5
(a)
which occurs after the date on which the relevant amount
(see section 261B(3)) can no longer be varied by the
Commissioners on appeal or on the order of a court, and
(b)
in consequence of which the amount chargeable to capital
gains tax is reduced as a result of an enactment relating to
10
capital gains tax.
261D
Treating excess post-cessation trade or property relief as CGT loss
(1)
A person may make a claim under this section if—
(a)
relief is available to the person under section 96 or 125 of ITA
2007 (post-cessation trade or property relief) for a tax year in
15
relation to an amount, and
(b)
the person makes a claim under that section to deduct the
amount in calculating the person’s net income for the tax
year.
(2)
A person may also make a claim under this section if—
20
(a)
relief is available to the person as mentioned in subsection
(1)(a) for a tax year in relation to an amount, but
(b)
the person’s total income for the tax year is nil.
(3)
A claim under this section is for treating for the purposes of capital
gains tax so much of the amount as is not deducted in calculating the
25
person’s net income for the tax year (“the relevant amount”) as an
allowable loss accruing to the person in the year of assessment
corresponding to the tax year.
(4)
But so much of the relevant amount as exceeds the maximum
amount (see section 261E) is not to be treated for the purposes of
30
capital gains tax as an allowable loss.
(5)
The relevant amount is no longer to be regarded as an amount
available for income tax relief.
(6)
A claim under this section must be made on or before the first
anniversary of the normal self-assessment filing date for the tax year
35
mentioned in subsection (1) or (2) (as the case may be).
(7)
In this section “normal self-assessment filing date”, “tax year” and
“total income” have the same meaning as in the Income Tax Acts (see
section 989 of ITA 2007).
261E
Meaning of “the maximum amount” for purposes of section 261D
40
(1)
For the purposes of section 261D “the maximum amount” is the
amount on which the person would be chargeable to capital gains tax
for the year of assessment if the following were ignored.
(2)
The matters to be ignored are—

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
582

(a)
any allowable losses falling to be carried forward to that year
from a previous year for the purposes of section 2(2),
(b)
section 3(1) (annual exempt amount), and
(c)
any relief under section 261B or 261D.”
330
After section 261E insert—
5
“Repurchase price under repos
261F
Deemed manufactured payments: effect on repurchase price
(1)
This section applies if —
(a)
the repurchase price of UK shares, UK securities or overseas
securities is treated by section 604(2), (4) or (5) of ITA 2007
10
(deemed increase in repurchase price: repos and options) as
increased for the purposes of section 607 of that Act
(treatment of price differences under repos),
(b)
condition A or B is met, and
(c)
section 263A does not apply.
15
(2)
Condition A is that, as a result of the increase, there is no difference
for the purposes of section 607 of that Act between the sale price and
the repurchase price.
(3)
Condition B is that, as a result of an exception in section 608 of that
Act, section 607 of that Act does not apply.
20
(4)
The deemed increase of the repurchase price also has effect for
capital gains tax purposes.
(5)
Expressions used in this section and in section 605 of ITA 2007
(deemed increase in repurchase price: other income tax purposes)
have the same meanings in this section as in that section.
25
331
After section 261F insert—
261G
Price differences under repos: effect on repurchase price
(1)
Subsections (2) and (3) apply if—
(a)
section 607 of ITA 2007 (treatment of price differences under
repos) applies,
30
(b)
an amount is treated under that section as a payment of
interest, and
(c)
section 263A does not apply.
(2)
If the repurchase price is more than the sale price, the repurchase
price is treated for capital gains tax purposes as reduced by the
35
amount of the payment of interest.
(3)
If the sale price is more than the repurchase price, the repurchase
price is treated for capital gains tax purposes as increased by the
amount of the payment of interest.
(4)
Expressions used in this section and in section 609 of ITA 2007
40
(additional income tax consequences of price differences under
repos) have the same meanings in this section as in that section.
332
After section 261G insert—