|
| |
|
(2) | In subsection (2) omit paragraph (b) and the “or” immediately before it. |
| |
(3) | In subsection (4) after “ICTA” insert “or section 56(3) of ITA 2007”. |
| |
(4) | In subsection (6) for the words from “section 231AA” to “umbrella scheme),” |
| |
| |
“section 504(4) of ITA 2007 (disapplication of certain provisions |
| 5 |
for income of unauthorised unit trusts), |
| |
section 592 of ITA 2007 (no tax credits for borrower under stock |
| |
| |
section 593 of ITA 2007 (no tax credits for interim holder under |
| |
| 10 |
section 594 of ITA 2007 (no tax credits for original owner under |
| |
| |
516 (1) | Amend section 399 (qualifying distributions received by persons not entitled |
| |
to tax credits) as follows. |
| |
(2) | In subsection (4) for the words from “and the distribution” to “treated” |
| 15 |
substitute “, the amount or value of the distribution is treated for the |
| |
purposes of Chapters 3, 4 and 6 of Part 9 of ITA 2007 (special rates for |
| |
| |
(3) | In subsection (7) for the words from “section 231AA(1A)” to the end |
| |
| 20 |
“section 504(4) of ITA 2007 (disapplication of certain provisions |
| |
for income of unauthorised unit trusts), |
| |
section 592 of ITA 2007 (no tax credits for borrower under stock |
| |
| |
section 593 of ITA 2007 (no tax credits for interim holder under |
| 25 |
| |
section 594 of ITA 2007 (no tax credits for original owner under |
| |
| |
517 (1) | Amend section 400 (non-qualifying distributions) as follows. |
| |
(2) | In subsection (4) for the words from “income to which” to the end substitute |
| 30 |
“assessed (in whole or in part) at the dividend trust rate by virtue of Chapter |
| |
3 of Part 9 of ITA 2007 (trustees’ accumulated or discretionary income to be |
| |
charged at special rates), the trustees’ liability for income tax at that rate is |
| |
| |
(3) | After subsection (6) insert— |
| 35 |
“(7) | Subsection (2) is subject to section 504(4) of ITA 2007 (disapplication |
| |
of certain provisions for income of unauthorised unit trusts).” |
| |
518 | In section 401 (relief: qualifying distribution after linked non-qualifying |
| |
distribution) after subsection (6) insert— |
| |
“(6A) | The reduction under this section is given effect at Step 6 of the |
| 40 |
calculation in section 23 of ITA 2007.” |
| |
519 | In section 410(3)(b) (stock dividend income arising to trustees) for the words |
| |
from “income” to the end substitute “accumulated or discretionary income |
| |
(as defined in section 480 of ITA 2007 but excluding income arising under a |
| |
trust established for charitable purposes only or an unauthorised unit trust |
| 45 |
in relation to which section 504 of that Act applies)”. |
| |
|
| |
|
| |
|
520 (1) | Amend section 414 (stock dividends from UK resident companies: income |
| |
tax to be treated as paid) as follows. |
| |
(2) | In subsection (1) for “income to which section 686 of ICTA applies” |
| |
substitute “accumulated or discretionary income (as defined in section 480 |
| |
| 5 |
(3) | In subsection (4) after “fall to be made” insert “at Step 2 or 3 of the calculation |
| |
in section 23 of ITA 2007 (calculation of income tax liability)”. |
| |
521 | In section 418(5) (loans to participator in close company: relief where |
| |
borrowers liable as settlors) for “rate applicable to trusts” substitute “trust |
| |
| 10 |
522 | In section 421(4) (loans to participator in close company: income tax treated |
| |
as paid) after “fall to be made” insert “at Step 2 or 3 of the calculation in |
| |
section 23 of ITA 2007 (calculation of income tax liability)”. |
| |
523 (1) | Amend section 426 (annuity payments received after deduction of tax) as |
| |
| 15 |
(2) | For “Income tax deducted under either of the following sections” substitute |
| |
“In accordance with section 848 of ITA 2007 a sum representing income tax |
| |
deducted under section 901 of that Act”. |
| |
(3) | Omit the words after “recipient”. |
| |
524 | In section 446 (strips of government securities: relief for losses) for |
| 20 |
subsection (2) substitute— |
| |
“(2) | If a person makes a claim under this section, the relief is given by |
| |
deducting the loss in calculating the person’s net income for the tax |
| |
year in which the disposal occurs (see Step 2 of the calculation in |
| |
section 23 of ITA 2007).” |
| 25 |
525 | In section 454 (listed securities held since 26th March 2003: relief for losses) |
| |
for subsection (4) substitute— |
| |
“(4) | If a claim under this section is made by a person other than a trustee, |
| |
the relief is given by deducting the loss in calculating the person’s net |
| |
income for the tax year in which the disposal occurs (see Step 2 of the |
| 30 |
calculation in section 23 of ITA 2007).” |
| |
526 (1) | Amend section 457 (disposal of deeply discounted securities by trustees) as |
| |
| |
| |
(3) | For subsection (5) substitute— |
| 35 |
“(5) | If the trustees are trustees of a scheme in relation to which section 504 |
| |
of ITA 2007 applies, subsection (2) does not apply to profits which |
| |
are shown in the scheme’s accounts as income available for payment |
| |
to unit holders or for investment.” |
| |
527 | In section 459(2) (profits from deeply discounted securities: transfer of assets |
| 40 |
abroad) for “sections 739 and 740 of ICTA (transfer of assets abroad) have” |
| |
substitute “Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) has”. |
| |
528 | In section 460(2) (profits from deeply discounted securities: minor |
| |
definitions) for “section 709(1)” substitute “section 840ZA”. |
| |
|
| |
|
| |
|
529 | After section 465 insert— |
| |
“465A | Amounts for which individuals liable to be treated as highest part of |
| |
| |
(1) | This section applies if— |
| |
(a) | an individual is liable for tax under this Chapter in respect of |
| 5 |
| |
(b) | the individual is treated by section 530 as having paid income |
| |
tax at the savings rate on the amount. |
| |
(2) | The amount is treated as the highest part of the individual’s total |
| |
| 10 |
(3) | Subsection (2) has effect for all income tax purposes except the |
| |
purposes of sections 535 to 537 (gains from contracts for life |
| |
insurance etc: top slicing relief). |
| |
(4) | See section 1012 of ITA 2007 (relationship between highest part rules) |
| |
for the relationship between— |
| 15 |
(a) | the rule in subsection (2), and |
| |
(b) | other rules requiring particular income to be treated as the |
| |
highest part of a person’s total income.” |
| |
530 | In section 466(2) (person liable: personal representatives) for “lower rate” |
| |
substitute “savings rate”. |
| 20 |
531 (1) | Amend section 467 (liability of trustees for tax on gains from contracts for |
| |
life insurance etc) as follows. |
| |
(2) | After subsection (1) insert— |
| |
“(1A) | If trustees are liable for tax under this Chapter, the gain is treated for |
| |
income tax purposes as income of the trustees.” |
| 25 |
(3) | For subsection (7) substitute— |
| |
“(7) | If trustees are liable for tax under this Chapter, it is charged at the |
| |
| |
(a) | condition A is met, or |
| |
(b) | condition D is met and the trustees are trustees of a charitable |
| 30 |
| |
532 | In section 468 (gains from contracts for life insurance etc: non-UK resident |
| |
trustees and foreign institutions)— |
| |
(a) | in subsection (2) for “Sections 739 and 740”, “prevent” and “apply” |
| |
substitute “Chapter 2 of Part 13 of ITA 2007”, “prevents” and |
| 35 |
“applies” respectively, and |
| |
(b) | in subsections (3) and (4) for “sections 739 and 740 apply” substitute |
| |
“Chapter 2 of Part 13 of ITA 2007 applies”. |
| |
533 | In section 482 (excepted group life policies: conditions about persons |
| |
| 40 |
(a) | in subsection (6) omit the definition of “tax advantage”, and |
| |
(b) | after that subsection insert— |
| |
“(7) | In this section “tax advantage” has the meaning given by |
| |
| |
|
| |
|
| |
|
534 | In section 520(4) (the property categories) after the definition of “internal |
| |
| |
““investment trust” has the meaning given by section 842 of |
| |
| |
535 (1) | Amend section 530 (income tax treated as paid) as follows. |
| 5 |
(2) | In subsection (1) for “lower rate” substitute “savings rate”. |
| |
(3) | In subsection (4) after “fall to be made” insert “at Step 2 or 3 of the calculation |
| |
in section 23 of ITA 2007 (calculation of income tax liability)”. |
| |
536 (1) | Amend section 535 (top slicing relief) as follows. |
| |
(2) | After subsection (2) insert— |
| 10 |
“(2A) | If the relief is given by a reduction in income tax, it is given effect at |
| |
Step 6 of the calculation in section 23 of ITA 2007.” |
| |
| |
(a) | for “LRL”, in both places where it occurs, substitute “SRL”, and |
| |
(b) | for “lower rate” substitute “savings rate”. |
| 15 |
(4) | After subsection (6) insert— |
| |
“(7) | For the purposes of the calculations mentioned in subsection (1) any |
| |
relief under Chapter 2 or 3 of Part 8 of ITA 2007 (which relate to gift |
| |
aid and other gifts to charities) is ignored.” |
| |
537 | In section 536(1) (top slicing relieved liability: one chargeable event) in |
| 20 |
paragraph (b) of Step 2 for “lower rate” substitute “savings rate”. |
| |
538 | In section 537 (top slicing relieved liability: two or more chargeable events) |
| |
in paragraph (b) of Step 2 for “lower rate” substitute “savings rate”. |
| |
539 | For section 539 (relief for deficiencies) substitute— |
| |
“539 | Relief for deficiencies |
| 25 |
(1) | An individual is entitled to a tax reduction for a tax year in which a |
| |
deficiency arises from a policy or contract on a chargeable event if— |
| |
(a) | the condition in subsection (2) is met, |
| |
(b) | the individual would (apart from this section) be liable to |
| |
income tax at the higher rate or the dividend upper rate (or |
| 30 |
both) for the tax year, and |
| |
(c) | the individual makes a claim. |
| |
(2) | The condition is that, if a gain had arisen instead on the chargeable |
| |
| |
(a) | the individual would have been liable to income tax on the |
| 35 |
| |
(b) | the individual would have been so liable apart from the |
| |
requirement in section 465(1) that the individual must be UK |
| |
resident in the tax year in which the gain arises. |
| |
(3) | The tax reduction is given effect at Step 6 of the calculation in section |
| 40 |
| |
|
| |
|
| |
|
(4) | See section 540 for the cases in which a deficiency is treated as arising |
| |
from a policy or contract on a chargeable event, section 541 for how |
| |
the deficiency is calculated and section 469(5) for the apportionment |
| |
of deficiencies in cases where two or more persons are interested in |
| |
| 5 |
(5) | The amount of the tax reduction is calculated as follows. |
| |
| |
| Attribute to the amount of the deficiency an amount of the |
| |
individual’s income for the tax year which is liable at the dividend |
| |
upper rate, so far as is possible. |
| 10 |
| |
| If there is an amount of the deficiency remaining after Step 1, |
| |
attribute to the remaining amount of the deficiency an amount of the |
| |
individual’s savings income for the tax year which is liable at the |
| |
higher rate, so far as is possible. |
| 15 |
| |
| If there is an amount of the deficiency remaining after Step 2, |
| |
attribute to the remaining amount of the deficiency an amount of the |
| |
individual’s other income for the tax year which is liable at the |
| |
higher rate, so far as is possible. |
| 20 |
| |
| Calculate the amount of the individual’s preliminary income tax |
| |
liability for the tax year (see subsection (6)). |
| |
| |
| Calculate the amount of the individual’s preliminary income tax |
| 25 |
liability for the tax year again, on these assumptions— |
| |
| Assume that any income attributed to the deficiency at Step 1 is liable |
| |
at the dividend ordinary rate. |
| |
| Assume that any income attributed to the deficiency at Step 2 is liable |
| |
| 30 |
| Assume that any income attributed to the deficiency at Step 3 is liable |
| |
| |
| |
| Deduct the amount found at Step 5 from the amount found at Step 4. |
| |
| The result is the amount of the tax reduction. |
| 35 |
(6) | The individual’s preliminary income tax liability is the amount |
| |
found by calculating the individual’s income tax liability in |
| |
accordance with section 23 of ITA 2007, ignoring Steps 6 and 7 of that |
| |
| |
540 | In section 546(4) (table of provisions subject to special rules for older policies |
| 40 |
and contracts), in the first column of the table, for “Section 539(3)” substitute |
| |
| |
541 (1) | Amend section 547 (income tax chargeable on income treated as received |
| |
from unauthorised unit trust) as follows. |
| |
(2) | In subsection (1) for the words from “scheme” to the end substitute “unit |
| 45 |
trust scheme to which this section applies”. |
| |
|
| |
|
| |
|
(3) | After subsection (2) insert— |
| |
“(3) | This section applies to a unit trust scheme if— |
| |
(a) | the scheme is an unauthorised unit trust, and |
| |
(b) | the trustees of the scheme are UK resident.” |
| |
542 | For section 550 substitute— |
| 5 |
“550 | Income tax treated as paid |
| |
In accordance with section 848 of ITA 2007, a sum representing |
| |
income tax treated as deducted from income within this Chapter as |
| |
a result of section 941 of that Act (deemed deduction from unit |
| |
holder’s income) is treated as income tax paid by the unit holder.” |
| 10 |
543 | In section 567(2) (disposals of futures and options involving guaranteed |
| |
returns: losses) for “section 392 of ICTA” substitute “section 152 of ITA |
| |
| |
544 | In section 569(2) (disposal of futures and options involving guaranteed |
| |
returns: anti-avoidance: transfer of assets abroad) for “sections 739 and 740 |
| 15 |
of ICTA (transfer of assets abroad) have” substitute “Chapter 2 of Part 13 of |
| |
ITA 2007 (transfer of assets abroad) has”. |
| |
545 | In section 570(5) (charge to tax under Chapter 13: sales of foreign dividend |
| |
coupons) for “section 840A of ICTA” substitute “section 991 of ITA 2007”. |
| |
546 (1) | Amend section 595 (deduction of tax from payments to non-UK residents) |
| 20 |
| |
(2) | In subsection (2) for the words after “which” substitute “is to be deducted |
| |
under section 910 of ITA 2007”. |
| |
(3) | In subsection (3) for the words after “which” substitute “is to be deducted |
| |
under section 910 of ITA 2007”. |
| 25 |
547 | In section 601 (how relief for patent expenses is given) after subsection (2) |
| |
| |
“(2A) | The deduction or set-off is given effect at Step 2 of the calculation in |
| |
| |
548 (1) | Amend section 602 (payments received after deduction of tax) as follows. |
| 30 |
(2) | For “Income tax deducted under either of the following sections” substitute |
| |
“In accordance with section 848 of ITA 2007, a sum representing income tax |
| |
deducted under either of the following Chapters”. |
| |
(3) | For the words after “recipient” substitute “— |
| |
Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and |
| 35 |
| |
Chapter 7 of that Part (deduction from other payments connected with |
| |
| |
549 (1) | Amend section 618 (payments received after deduction of tax) as follows. |
| |
(2) | For “Income tax deducted under either of the following sections” substitute |
| 40 |
“In accordance with section 848 of ITA 2007, a sum representing income tax |
| |
deducted under Chapter 6 of Part 15 of that Act”. |
| |
|
| |
|
| |
|
(3) | Omit the words after “recipient”. |
| |
550 | In section 619(2) (charge to tax on settlor)— |
| |
(a) | for “sections 1 to 1B of ICTA” substitute “Chapter 2 of Part 2 of ITA |
| |
2007 (rates at which income tax is charged)”, and |
| |
(b) | for “Tax Acts” substitute “Income Tax Acts”. |
| 5 |
551 | After section 619 insert— |
| |
“619A | Income treated as highest part of settlor’s total income |
| |
(1) | This section applies to income which is treated as income of a settlor |
| |
as a result of section 624 (income where settlor retains an interest) or |
| |
629 (income paid to unmarried minor children of settlor). |
| 10 |
(2) | The income is treated as the highest part of the settlor’s total income |
| |
for the purposes of section 619 (so far as it relates to the income). |
| |
(3) | See section 1012 of ITA 2007 (relationship between highest part rules) |
| |
for the relationship between— |
| |
(a) | the rule in subsection (2), and |
| 15 |
(b) | other rules requiring particular income to be treated as the |
| |
highest part of a person’s total income.” |
| |
552 | In section 620(5) (which contains various definitions) in the definition of |
| |
“charity” for the words from “each” to the end substitute— |
| |
“(a) | the Trustees of the National Heritage Memorial Fund, |
| 20 |
(b) | the Historic Buildings and Monuments Commission |
| |
| |
(c) | the National Endowment for Science, Technology |
| |
| |
553 | In section 624 (income where settlor retains an interest in the settlement) |
| 25 |
after subsection (1) insert— |
| |
“(1A) | If the settlement is a trust, expenses of the trustees are not to be used |
| |
to reduce the income of the settlor.” |
| |
554 | In section 627(2) (income where settlor retains an interest: exceptions), in |
| |
paragraph (b), for “section 25 of FA 1990 (donations to charity by |
| 30 |
individuals)” substitute “Chapter 2 of Part 8 of ITA 2007 (gift aid)”. |
| |
555 (1) | Amend section 628 (exception for gifts to charities) as follows. |
| |
| |
(a) | in paragraph (a) for “is to” substitute “must”, and |
| |
(b) | in paragraph (b) omit the words after “person”. |
| 35 |
(3) | After that subsection insert— |
| |
“(2A) | The cases covered by subsection (2)(b) include cases where the |
| |
trustees have, or any other person has, any discretion over one or |
| |
more of the following matters— |
| |
(a) | whether, or the extent to which, the income is to be |
| 40 |
| |
(b) | the persons to whom the income is to be paid, and |
| |
(c) | how much of the income is to be paid to any person.” |
| |
|
| |
|