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
636

     (40)
In the entry for “property or rights held on trust or on trusts (in the
application of the Act to Scotland)”, in the second column, for “section
879(2)” substitute “section 1008(2) of ITA 2007”.
     (41)
In the entry for “qualifying distribution”, in the second column, for “section
832(1) of ICTA” substitute “section 989 of ITA 2007”.
5
     (42)
In the entry for “qualifying policy”, in the second column, for “section 832(1)
of ICTA” substitute “section 989 of ITA 2007”.
     (43)
Omit the entry for “the rate applicable to trusts”.
     (44)
In the entry for “recognised stock exchange”, in the second column, for
“section 841(1) of ICTA” substitute “section 1005 of ITA 2007”.
10
     (45)
In the entry for “registered pension scheme”, in the second column, for
“section 832(1) of ICTA and section 150(2) of FA 2004” substitute “section
150(2) of FA 2004 (as applied by section 989 of ITA 2007)”.
     (46)
In the entry for “retail prices index”, in the second column, for “section 833(2)
of ICTA” substitute “section 989 of ITA 2007”.
15
     (47)
After the entry for “sale proceeds of an animal” insert—

“savings rate
section 18 of ITA 2007

(as applied by section

989 of that Act)”

     (48)
In the entry for “Schedule A business”, in the second column, for “section
20
832(1) of ICTA” substitute “section 989 of ITA 2007”.
     (49)
In the entry for “starting rate”, in the second column, for “section 832(1) of
ICTA” substitute “section 6(2) of ITA 2007 (as applied by section 989 of that
Act)”.
     (50)
In the entry for “stepchild”, in the second column, for “section 832(1) of
25
ICTA” substitute “section 246 of the Civil Partnership Act 2004 (as applied
by section 989 of ITA 2007)”.
     (51)
In the entry for “surrender (in the application of the Act to Scotland)”, in the
second column, for “section 879(1)” substitute “section 1008(1) of ITA 2007”.
     (52)
In the entry for “tax year”, in the second column, for “section 878(1)”
30
substitute “section 4(2) of ITA 2007 (as applied by section 989 of that Act)”.
     (53)
In the entry for “the tax year 2005-06 etc”, in the second column, for “section
878(1)” substitute “section 4(4) of ITA 2007 (as applied by section 989 of that
Act)”.
     (54)
In the entry for “total income” for “section 835(1) of ICTA” substitute
35
“section 23 of ITA 2007 (as applied by section 989 of that Act)”.
     (55)
In the entry for “trade”, in the second column, for “section 832(1) of ICTA”
substitute “section 989 of ITA 2007”.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
637

     (56)
After the entry for “transfer of work in progress” insert—

“trust rate
section 9(1) of ITA

2007 (as applied by

section 989 of that

Act)”

5
     (57)
In the entry for “UK resident”, in the second column, for “section 878(1)”
substitute “section 989 of ITA 2007”.
     (58)
In the entry for “unit holder”, in the second column, for “section 832(1) of
ICTA” substitute “section 989 of ITA 2007”.
     (59)
In the entry for “unit trust scheme”, in the second column, for “section 832(1)
10
of ICTA” substitute “section 1007 of ITA 2007”.
     (60)
In the entry for “United Kingdom”, in the second column, for “section 830(1)
of ICTA” substitute “section 1013 of ITA 2007”.
     (61)
In the entry for “venture capital trust”, in the second column, for “section
842AA(1) of ICTA” substitute “section 989 of ITA 2007”.
15
     (62)
In the entry for “within the charge to tax”, in the second column, for “section
832(1) of ICTA” substitute “section 1009 of ITA 2007”.
     (63)
In the entry for “woodlands”, in the second column, for “section 876(4)”
substitute “section 996(4) of ITA 2007”.
Finance Act 2005 (c. 7)
20
593
The Finance Act 2005 is amended as follows.
594
In section 26 (amount of relief for trustees of property held on trust for
vulnerable persons) at the beginning insert “(1)” and at the end insert—
“(2)
The tax reduction is given effect at Step 6 of the calculation in section
23 of ITA 2007.”
25
595   (1)
Amend section 27 (tax liability of trustees of property held on trust for
vulnerable persons) as follows.
      (2)
In subsection (2)—
(a)
in paragraph (b) for the words from “any expenses” to the end
substitute “allowable expenses”, and
30
(b)
for “management” substitute “allowable”.
      (3)
After that subsection insert—
“(2A)
References in subsection (2) to allowable expenses are to expenses
which can be set against the total income in accordance with Chapter
4 of Part 9 of ITA 2007.”
35
596
In section 41(1) (interpretation of Chapter 4 of Part 2) in the definition of “tax
year” omit paragraph (a) and the “and” immediately after it.
597   (1)
Amend section 47A (alternative finance arrangements: diminishing share
ownership) as follows.

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
638

      (2)
In subsection (3)—
(a)
in paragraph (b) omit “within the meaning of section 840 of ICTA”,
and
(b)
in paragraph (c) omit “, in each case within the meaning of section
840 of ICTA”.
5
      (3)
After that subsection insert—
“(3A)
For the purposes of subsection (3) whether a person is controlled by
another person is determined in accordance with section 840 of
ICTA.”
598
In section 51(2) (treatment of alternative finance arrangements)—
10
(a)
for “368 of ICTA” substitute “367 of ICTA and Chapter 1 of Part 8 of
ITA 2007 (interest payments)”, and
(b)
after “366” insert “of ICTA and section 412 of ITA 2007”.
599   (1)
Amend section 52 (alternative finance arrangements: provision not at arm’s
length) as follows.
15
      (2)
In subsection (4)(b) for “against total income or, as the case may be,”
substitute “in calculating net income or, as the case may be, against”.
      (3)
In subsection (5)(b) for “against total income or, as the case may be,”
substitute “in calculating net income or, as the case may be, against”.
600
Omit sections 74 to 78 (partners: recovery of excess relief).
20
601
In section 105 (interpretation) after the definition of “IHTA 1984” insert—
““ITA 2007” means the Income Tax Act 2007;”.
602   (1)
Amend Schedule 2 (alternative finance arrangements: further provisions) as
follows.
      (2)
Omit paragraphs 3, 5 and 6.
25
      (3)
After paragraph 10 insert—
“Income Tax Act 2007
11
Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at
source: deduction by deposit-takers and building societies) (and
Chapter 19 of that Part so far as it has effect for the purposes of
30
Chapter 2) have effect as if—
(a)
relevant arrangements were a deposit,
(b)
for the purposes of section 866(2)(a) of that Act, relevant
arrangements were a deposit consisting of a loan, and
(c)
alternative finance return or profit share return payable
35
under relevant arrangements were interest.
12
Chapters 3 to 5 of Part 15 of ITA 2007 (and Chapter 19 of that Part
so far as it has effect for the purposes of those Chapters) have effect
in relation to alternative finance return or profit share return as
they have effect in relation to interest.
40
13
In Chapter 12 of Part 15 of ITA 2007 (funding bonds) references to
interest include references to alternative finance return or profit
share return.”

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
639

Finance (No. 2) Act 2005 (c. 22)
603
The Finance (No. 2) Act 2005 is amended as follows.
604   (1)
Amend section 7 (charge to income tax on social security pension lump sum)
as follows.
      (2)
In subsection (5) for “total income” in each place substitute “Step 3 income”.
5
      (3)
At the end insert—
“(9)
For the purposes of this section P’s “Step 3 income” means P’s net
income less allowances deducted at Step 3 of the calculation in
section 23 of ITA 2007 (calculation of income tax liability).”
605
In section 18(3)(b)(i) (authorised investment funds etc: section 17(3): specific
10
powers) for “506(1) of ICTA” substitute “989 of ITA 2007”.
606
In section 71 (interpretation) after the definition of “ICTA” insert—
““ITA 2007” means the Income Tax Act 2007;”.
Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1))
607
The Pensions (Northern Ireland) Order 2005 is amended as follows.
15
608
In Schedule 3 (restricted information held by the Regulator: certain
permitted disclosures to facilitate exercise of functions), in the entry relating
to the Commissioners of Inland Revenue or their officers, in the second
column—
(a)
omit the “or” immediately after paragraph (f), and
20
(b)
after paragraph (g) insert “, or
(h)
the Income Tax Act 2007 (so far as relating to
functions previously exercised under the Income and
Corporation Taxes Act 1988).”
609
In Schedule 7 (restricted information held by the Board: certain permitted
25
disclosures to facilitate exercise of functions), in the entry relating to the
Commissioners of Inland Revenue or their officers, in the second column—
(a)
omit the “or” immediately after paragraph (e), and
(b)
after paragraph (f) insert “, or
(g)
the Income Tax Act 2007 (so far as relating to
30
functions previously exercised under the Income and
Corporation Taxes Act 1988).”
Finance Act 2006 (c. 25)
610
The Finance Act 2006 is amended as follows.
611
In section 34 (meaning of certain expressions for the purposes of Chapter 3
35
of Part 3) for subsection (4) substitute—
“(4)
For the purposes of subsection (3) whether a person is connected
with another person is determined in accordance with section 839 of
ICTA (connected persons).”
612
In section 65(3) (London Organising Committee) for “Section 349(1) of ICTA
40
(annual payments: deductions of tax)” substitute “The duties to deduct

Income Tax Bill
Schedule 1 — Minor and consequential amendments
Part 2 — Other enactments
640

under Chapters 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income
tax at source)”.
613
In section 67 (International Olympic Committee)—
(a)
in subsection (1)(c), for “section 349(1) and (2) of ICTA (annual
payments: deductions of tax)” substitute “the duties to deduct under
5
Chapters 3, 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income
tax at source)”, and
(b)
in subsection (2)(c), for “section 349(1) and (2) of ICTA” substitute
“the duties to deduct under Chapters 3, 6, 7, 10 and 14 of Part 15 of
ITA 2007 (deduction of income tax at source)”.
10
614
In section 68(1)(d) (competitors and staff) for “section 349(1) of ICTA (annual
payments: deductions of tax)” substitute “the duties to deduct under
Chapters 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income tax at
source)”.
615
Omit section 75 (tax avoidance: interest relief and film partnerships).
15
616
In 103(1)(b) (Real Estate Investment Trusts) for “, 121 and 122” substitute
“and 121 and regulations made under section 973 of ITA 2007”.
617
In section 107 (conditions for tax-exempt business)—
(a)
in subsection (7)(a) omit “(within the meaning given by section 839
of ICTA)”, and
20
(b)
after subsection (7) insert—
“(7A)
For the purposes of subsection (7)(a) whether a person is
connected with another person is determined in accordance
with section 839 of ICTA (connected persons).”
618
In section 117(4) (cancellation of tax advantage) for “section 709” substitute
25
“section 840ZA”.
619
In section 121(2)(c) (distributions: liability to tax) for “chargeable to tax by
virtue of section 42A of ICTA (non-resident landlords)” substitute “non-
resident landlord income for the purposes of regulations under section 971
of ITA 2007 (income tax due in respect of income of non-resident
30
landlords)”.
620
Omit section 122 (distributions: deduction of tax).
621   (1)
Amend section 139 (manufactured dividends) as follows.
      (2)
In subsection (1) after “manufactured dividend” insert “for the purposes of
the Corporation Tax Acts”.
35
      (3)
In subsection (2)—
(a)
in the new paragraph 2(2) of Schedule 23A to ICTA for “(2A) to (2C)”
substitute “(2A) and (2B)”,
(b)
in the new paragraph 2(2A) of that Schedule insert “Corporation”
before “Tax Acts”,
40
(c)
in the new paragraph 2(2B) of that Schedule omit paragraph (d),
(d)
omit the new sub-paragraphs (2C) to (2E) of paragraph 2 of that
Schedule.
      (4)
Omit subsections (3) and (4).

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 1 — General provisions
641

622
In section 179 (interpretation) after the definition of “IHTA 1984” insert—
““ITA 2007” means the Income Tax Act 2007;”.
623
In Schedule 5 (film tax relief: further provisions) in paragraph 9(4)(b) for
“555 of ICTA (foreign entertainers)” substitute “966 of ITA 2007 (visiting
performers)”.
5
624
In paragraph 27(1) of Schedule 8 (long funding leases of plant and
machinery) for “section 840 of ICTA” in both places where it occurs
substitute “section 574 of CAA 2001”.
625
In Schedule 13 (settlements) omit paragraph 37.
626   (1)
Amend Schedule 17 (Group Real Estate Investment Trusts: modifications) as
10
follows.
      (2)
Omit paragraph 19.
      (3)
Omit paragraph 30(b) and the “and” immediately before it.
      (4)
Omit paragraph 32(8)(c).
Part 3
15
Amendment having effect in relation to shares issued after 5 April 2007
Income and Corporation Taxes Act 1988 (c. 1)
627
Omit Chapter 3 of Part 7 of the Income and Corporation Taxes Act 1988
(Enterprise Investment Scheme), except section 305A.
Schedule 2
20
Section 1034

Transitionals and savings
Part 1
General provisions
Continuity of the law: general
1
The repeal of provisions and their enactment in a rewritten form by this Act
25
does not affect the continuity of the law.
2
Paragraph 1 does not apply to any change made by this Act in the effect of
the law.
3
Any subordinate legislation or other thing which—
(a)
has been made or done, or has effect as if made or done, under or for
30
the purposes of a superseded enactment so far as it applied for
relevant tax purposes, and
(b)
is in force or effective immediately before the commencement of the
corresponding rewritten provision,

has effect after that commencement as if made or done under or for the
35
purposes of the rewritten provision.

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 1 — General provisions
642

4     (1)
Any reference (express or implied) in this Act, another enactment or an
instrument or document to a rewritten provision is to be read as including,
in relation to times, circumstances or purposes in relation to which any
corresponding superseded enactment had effect for relevant tax purposes, a
reference to the superseded enactment so far as applying for those relevant
5
tax purposes.
      (2)
Any reference (express or implied) in this Act, another enactment or an
instrument or document to—
(a)
things done under or for the purposes of a rewritten provision, or
(b)
things falling to be done under or for the purposes of a rewritten
10
provision,

is to be read as including, in relation to times, circumstances or purposes in
relation to which any corresponding superseded enactment had effect for
relevant tax purposes, a reference to things done or falling to be done under
or for the purposes of the superseded enactment so far as applying for those
15
relevant tax purposes.
5     (1)
Any reference (express or implied) in any enactment, instrument or
document to a superseded enactment in its application for relevant tax
purposes is to be read, so far as is required for those relevant tax purposes,
as including, in relation to times, circumstances or purposes in relation to
20
which any corresponding rewritten provision has effect, a reference to the
rewritten provision.
      (2)
Any reference (express or implied) in any enactment, instrument or
document to—
(a)
things done under or for the purposes of a superseded enactment in
25
its application for relevant tax purposes, or
(b)
things falling to be done under or for the purposes of a superseded
enactment in its application for relevant tax purposes,

is to be read, so far as is required for those relevant tax purposes, as
including, in relation to times, circumstances or purposes in relation to
30
which any corresponding rewritten provision has effect, a reference to
things done or falling to be done under or for the purposes of the rewritten
provision.
6     (1)
Paragraphs 1 to 5 have effect instead of section 17(2) of the Interpretation Act
1978 (c. 30) (but are without prejudice to any other provision of that Act).
35
      (2)
Paragraphs 4 and 5 apply only so far as the context permits.
General saving for old transitional provisions and savings
7     (1)
The repeal by this Act of a transitional or saving provision relating to the
coming into force of a provision rewritten in this Act does not affect the
operation of the transitional or saving provision, so far as it is not specifically
40
rewritten in this Act but remains capable of having effect in relation to the
corresponding provision of this Act.
      (2)
The repeal by this Act of an enactment previously repealed subject to
savings does not affect the continued operation of those savings.
      (3)
The repeal by this Act of a saving on the previous repeal of an enactment
45
does not affect the operation of the saving so far as it is not specifically
rewritten in this Act but remains capable of having effect.