House of Commons portcullis
House of Commons
Session 2006 - 07
Internet Publications
Other Bills before Parliament

Income Tax Bill


Income Tax Bill
Schedule 2 — Transitionals and savings
Part 8 — Venture capital trusts

671

 

Meaning of a company being “in administration”

89    (1)  

Sub-paragraph (2) applies in relation to—

(a)   

an administration order under Part 3 of the Insolvency (Northern

Ireland) Order 1989 the petition for which was presented before 6

April 2007, or

5

(b)   

any corresponding order under the law of a country or territory

outside the United Kingdom the proceedings for which were

instituted before that date.

      (2)  

Section 331 applies with the substitution for subsection (2) of—

“(2)   

A company is “in administration” if—

10

(a)   

it is in administration within the meaning of Schedule B1 to

the Insolvency Act 1986, or

(b)   

there is in force in relation to it—

(i)   

an administration order under Part 3 of the

Insolvency (Northern Ireland) Order 1989, or

15

(ii)   

any corresponding order under the law of a country

or territory outside the United Kingdom.”

      (3)  

In relation to an administration order under Part 2 of the Insolvency Act 1986

the petition for which was presented before 15 September 2003, section 331

applies with the substitution for subsection (2) of—

20

“(2)   

A company is “in administration” if there is in force in relation to it—

(a)   

an administration order under Part 2 of the Insolvency Act

1986 or Part 3 of the Insolvency (Northern Ireland) Order

1989, or

(b)   

any corresponding order under the law of a country or

25

territory outside the United Kingdom.”

Meaning of “company”, “shares” and “research and development” in Part 6

90    (1)  

This paragraph applies in relation to the meaning of “company”, “shares”

and “research and development” in Part 6 (see section 332).

      (2)  

If—

30

(a)   

a company holds investments of any description in an entity

immediately before 6 April 2007, and

(b)   

the entity is a company for any purposes of the Part 6 provisions but

not for the corresponding purposes of the ICTA provisions,

           

any question whether the entity is a company for those purposes of the Part

35

6 provisions is to be determined in accordance with the ICTA provisions

until such time as the company ceases to hold investments of that

description.

      (3)  

If—

(a)   

a company holds investments of any description in an entity

40

immediately before 6 April 2007, and

(b)   

the investments are shares for any purposes of either of the

following—

(i)   

the Part 6 provisions, and

(ii)   

the ICTA provisions,

45

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 9 — Other reliefs

672

 

   

but not for the corresponding purposes of the other set of provisions,

           

any question whether the investments are shares for those purposes of the

Part 6 provisions is to be determined in accordance with the ICTA

provisions until such time as the company ceases to hold investments of that

description.

5

      (4)  

In sub-paragraphs (2) and (3)—

“the ICTA provisions” means section 842AA of ICTA (VCT approvals)

and Schedule 28B to that Act (qualifying holdings),

“the Part 6 provisions” means Chapter 3 of Part 6 (VCT approvals) and

Chapter 4 of that Part (qualifying holdings).

10

      (5)  

For the purpose of determining whether any shares or securities are to be

regarded as comprised in a company’s qualifying holdings, section 332

applies in relation to shares issued before 6 April 2000 with the substitution

for the definition of “research and development” of—

““research and development” means any activity which is

15

intended to result in a patentable invention (within the

meaning of the Patents Act 1977) or in a computer program.”

Part 9

Other reliefs

Interest: loans for interests in close companies

20

91         

Section 392(3)(a) does not apply if the shares were acquired before 14 March

1989.

92         

Section 392(3)(b) does not apply if the shares were acquired before 6 April

1989.

93    (1)  

In relation to a loan made before 14 November 1986—

25

(a)   

section 395(1)(c) applies with the substitution for “the trustees of” of

“any person (other than the individual) interested in”, and

(b)   

section 395(1)(d) applies with the substitution for “the personal

representatives” of “any person (other than the individual)

interested in the estate”.

30

      (2)  

No individual is an associate because of sub-paragraph (1)(a) if the trust

relates exclusively to a registered pension scheme.

      (3)  

No individual is an associate because of sub-paragraph (1)(a) if —

(a)   

the trust—

(i)   

is exclusively for the benefit of the employees, or the

35

employees and directors, of the company or their

dependants, and

(ii)   

is not wholly or mainly for the benefit of the directors or their

relatives, and

(b)   

the individual—

40

(i)   

is not (either alone or with relatives) the beneficial owner of

more than 5% of the company’s ordinary share capital, and

(ii)   

could not become so as a result of the operation of the trust.

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 9 — Other reliefs

673

 

      (4)  

For the purposes of sub-paragraph (3)(b), charitable trusts that may arise on

the failure or determination of other trusts are ignored.

      (5)  

In relation to any time before 6 April 2006, sub-paragraph (2) applies as if the

reference to a registered pension scheme were a reference to an exempt

approved scheme, as defined in section 592 of ICTA.

5

94         

Section 395(2) does not apply in relation to a loan made before 26 July 1989,

and, for the purposes of that section, section 550 of ITEPA 2003 (which

defines “employee benefit trust” and is applied for the purposes of section

395 by section 395(6)) has effect as if section 550 of ITEPA 2003 referred to

that day instead of 13 March 1989.

10

Interest: loans for interests in employee-controlled companies

95    (1)  

In relation to a loan used before 6 April 1990 in one or more of the ways

specified in section 396(2)—

(a)   

section 396 applies as if—

(i)   

the reference in subsection (3) to full-time employees

15

included a reference to full-time employees’ spouses,

(ii)   

the references in subsection (4) to an individual included a

reference to an individual’s spouse, unless the individual and

the individual’s spouse are both full-time employees of the

company within the meaning of section 396(5), and

20

(b)   

section 397(4) applies as if references to the individual included

references to the individual’s spouse.

      (2)  

If a loan within section 396(2)(b) was made on or after that date, interest on

the loan is eligible for relief under section 383 only if interest on the original

loan would have been allowable under section 353 of ICTA after that date.

25

Interest relief: film partnerships

96         

Section 399(4) (restriction on relief for interest on loans for purchasing

interest in some film partnerships) only applies if the interest accrued on or

after 10 March 2006.

Interest: loans for investing in co-operatives

30

97         

Section 401 applies in relation to a loan used in one or more of the ways

specified in subsection (2)(a) or (b) of that section only if the loan was made

after 10 March 1981, but subsection (2)(c) of that section applies whenever

the original loan was made.

Gift aid: gifts of money for relief in poor countries

35

98         

Despite the amendments made by this Act to section 25 of FA 1990, that

section continues to apply for the purposes of section 48 of FA 1998 (gifts of

money for relief in poor countries) as if those amendments had not been

made.

Gift aid: restrictions on associated benefits

40

99    (1)  

This paragraph applies if—

(a)   

a gift is made on or after 6 April 2007, and

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 10 — Special rules about settlements and trustees

674

 

(b)   

a benefit associated with the gift is received before that date or relates

(wholly or partly) to a period falling before that date.

      (2)  

Step 2 of the calculation in section 419(8) is to be read as if the words “(and

neither condition C nor condition D is met in relation to it)” were omitted.

Gift aid: election to carry back relief

5

100   (1)  

This paragraph applies if in the tax year 2007-08 an individual makes a gift

to a charity that is a qualifying donation for the purposes of Chapter 2 of Part

8.

      (2)  

Section 426 has effect with the substitution for subsections (2) and (3) of—

“(2)   

The condition is that in year P the grossed up amount of the gift

10

would, if made in year P, be payable out of profits or gains brought

into charge to income tax or capital gains tax.

(3)   

If an election is made, section 25(6) to (9A) of FA 1990 have effect in

relation to the individual as if the gift were a qualifying donation

(within the meaning of section 25 of FA 1990) made in year P.”

15

      (3)  

Section 426 has effect with the omission of subsections (4) and (5).

Qualifying maintenance payments: maintenance assessments

101   (1)  

This paragraph applies for the purposes for which, on the day on which this

Act comes into force, the amendments to section 347B of ICTA made by

paragraph 8(1) and (2) of Schedule 3 to the Child Support, Pensions and

20

Social Security Act 2000 (c. 19) (maintenance assessments superseded by

maintenance calculations) do not have effect.

      (2)  

Until a day is appointed for any of those purposes under this paragraph,

section 454 and 455 have effect for that purpose as if—

(a)   

in section 454(7) and section 455(1)(a), (b), (c) and (3) for “calculation”

25

there were substituted “assessment”, and

(b)   

for section 454(8) there were substituted—

“(8)   

In this section “maintenance assessment” means a

maintenance assessment made under the Child Support Act

1991 or the Child Support (Northern Ireland) Order 1991.”

30

      (3)  

The power to appoint a day under this paragraph is exercisable by the

Secretary of State by order made by statutory instrument and different days

may be appointed for different purposes (including different days for

different areas).

Part 10

35

Special rules about settlements and trustees

Trustees’ expenses to be set against trustees’ trust rate income

102   (1)  

This paragraph applies if the trustees of a settlement incur an allowable

expense (see section 484) in a tax year prior to the tax year 2007-08.

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 10 — Special rules about settlements and trustees

675

 

      (2)  

So far as the trustees have not paid the expense, the expense cannot, under

Chapter 4 of Part 9, be set against the trustees’ trust rate income for any tax

year.

      (3)  

So far as the expense is paid by the trustees in a tax year (“the relevant tax

year”) after the tax year 2006-07, the expense is treated for the purposes of

5

sections 484(1) and 485(1) as if it were incurred in the relevant tax year.

      (4)  

So far as the expense is paid by the trustees in a tax year prior to the tax year

2007-08, section 485 applies in relation to the expense with the following

modifications.

      (5)  

It applies as if for subsection (3) there were substituted—

10

“(3)   

Condition A is—

(a)   

that section 686(2AA) of ICTA could not be applied in

relation to the allowable expense so as to reduce the trustees’

liability to tax for the tax year in which the trustees paid the

expense, and

15

(b)   

that was the case only because the trustees’ section 686

income for that year was insufficient or they had no section

686 income for that year.

   

“Section 686 income” means income to which section 686 of ICTA

applies.”

20

      (6)  

It applies as if for subsection (4) there were substituted—

“(4)   

Condition B is that—

(a)   

for no tax year prior to the tax year 2007-08 has the allowable

expense been used to reduce the trustees’ liability to tax, and

(b)   

the allowable expense has not been set against the trustees’

25

trust rate income for a tax year prior to the current tax year as

a result of this section.”

Share incentive plans: definition of “applicable period”

103   (1)  

This paragraph applies for the purposes of section 489 if the relevant shares

(see subsection (1) of that section) were acquired by the trustees before 11

30

May 2001.

      (2)  

That section applies in relation to those shares with the following

modifications.

      (3)  

It applies as if subsection (2) were omitted.

      (4)  

It applies as if in subsection (3) the words “If any were” were omitted.

35

      (5)  

It applies as if in subsection (4)—

(a)   

for “If none were” there were substituted “But if when the trustees

acquired the relevant shares none of the shares in the relevant

company were readily convertible assets”, and

(b)   

in paragraph (b) for “any shares in the relevant company” there were

40

substituted “the relevant shares”.

      (6)  

It applies as if in subsection (5) for “(2) to” there were substituted “(3) and”.

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 11 — Special rules about charitable trusts etc

676

 

Discretionary payments: trustees’ tax pool

104   (1)  

Section 497 applies with the following modifications in relation to the

trustees of a settlement established prior to the tax year 2007-08 if the current

tax year is the tax year 2007-08.

      (2)  

It also so applies if—

5

(a)   

the current tax year is a tax year subsequent to the tax year 2007-08,

and

(b)   

the trustees have been UK resident for no tax year prior to the current

tax year or the last tax year prior to the current tax year for which

they were UK resident is a tax year prior to the tax year 2007-08.

10

      (3)  

It applies as if in subsection (1) for Step 1 there were substituted—

   

Step 1

   

Take the amount of the trustees’ final section 687(3) tax pool and

deduct from that amount (but not so that it goes below nil) the total

of all tax (if any) treated under section 687(2)(a) of ICTA as being

15

paid as a result of payments made by the trustees in the tax year

2006-07.

   

“The amount of the trustees’ final section 687(3) tax pool” is the total

amount—

(a)   

available to the trustees under section 687(3) of ICTA for

20

setting against tax assessable on them under section 687(2)(b)

of that Act for the tax year 2006-07, or

(b)   

which would have been so available had tax been so

assessable.”

      (4)  

It applies as if subsections (2) and (3) were omitted.

25

Part 11

Special rules about charitable trusts etc

Transactions with substantial donors

105        

Section 543(1)(g) and (h) and sections 549 to 557 (non-charitable

expenditure: transactions with substantial donors) do not have effect in

30

relation to—

(a)   

a transaction occurring before 22 March 2006, or

(b)   

a transaction entered into in pursuance of a contract made before 22

March 2006 (otherwise than in pursuance of a variation on or after

that date).

35

106        

For the purposes of section 549 a person may meet the definition of

“substantial donor” by reference to gifts made at a time before this Act comes

into force.

Non-charitable expenditure

107   (1)  

This paragraph applies if, as a result of sections 562 to 564, an amount of

40

expenditure for the tax year 2007-2008 or any subsequent tax year (“the carry

back tax year”) is treated as non-charitable expenditure for the tax year 2005-

2006 or any earlier tax year.

 

 

Income Tax Bill
Schedule 2 — Transitionals and savings
Part 12 — Manufactured payments and repos

677

 

      (2)  

The amount of relief or exemption to be disallowed in respect of the tax year

2005-2006 or any earlier tax year is not to exceed the amount which would

have been disallowed in respect of that tax year if—

(a)   

sections 562 to 564 had not applied in relation to the carry back tax

year, and

5

(b)   

the amount of expenditure for the carry back tax year to be treated as

non-charitable expenditure for an earlier tax year had instead been

calculated in accordance with the provisions mentioned in sub-

paragraph (3).

      (3)  

Those provisions are—

10

(a)   

sections 505 and 506 of ICTA, and

(b)   

Part 3 of Schedule 20 to that Act,

           

as those provisions would have had effect in relation to the carry back tax

year if the amendments made to them by section 55 of FA 2006 had not been

made and the amendments made to them by this Act had not been made.

15

Part 12

Manufactured payments and repos

Tax credits: stock lending arrangements and repos

108        

Sections 592 and 593 do not apply if the qualifying distribution was made

before 8 April 1998.

20

109   (1)  

Section 592(3) does not apply if the qualifying distribution was received by

the borrower before the relevant date.

      (2)  

The relevant date is—

(a)   

if the borrower is an individual, 6 November 2003, and

(b)   

if the borrower is not an individual, 17 March 2004.

25

110   (1)  

Section 593(3) does not apply if the qualifying distribution was received by

the interim holder before the relevant date.

      (2)  

The relevant date is—

(a)   

if the interim holder is an individual, 6 November 2003, and

(b)   

if the interim holder is not an individual, 17 March 2004.

30

Deemed manufactured payments: stock lending arrangements

111        

Section 596 does not apply if the stock lending arrangement was made

before 1 July 1997.

112   (1)  

Section 597 does not apply if the stock lending arrangement was made

before 5 December 2005.

35

      (2)  

In relation to a stock lending arrangement made on or after 5 December 2005

but before 22 March 2006, section 597 has effect with the omission of

subsection (6).

      (3)  

If—

(a)   

a stock lending arrangement was made before 5 December 2005 in

40

respect of any securities (“the original securities”), and

 

 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2007
Revised 5 February 2007