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Income Tax Bill


 

Income Tax Bill

 

[AS AMENDED IN THE JOINT COMMITTEE]

 
 

The Bill is divided into three volumes. Volume I contains Clauses 1 to 461. Volume

II contains Clauses 462 to 1035. Volume III contains the Schedules to the Bill.

Contents

Part 1

Overview

1   

Overview of Income Tax Acts

2   

Overview of Act

Part 2

Basic provisions

Chapter 1

Charges to income tax

3   

Overview of charges to income tax

4   

Income tax an annual tax

5   

Income tax and companies

Chapter 2

Rates at which income tax is charged

The rates

6   

The starting rate, basic rate and higher rate

7   

The savings rate

8   

The dividend ordinary rate and dividend upper rate

9   

The trust rate and dividend trust rate

Income charged at particular rates

10   

Income charged at the starting, basic and higher rates: individuals

11   

Income charged at the basic rate: other persons

12   

Income charged at the savings rate

13   

Income charged at the dividend ordinary and dividend upper rates:

individuals

14   

Income charged at the dividend ordinary rate: other persons

 

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Income Tax Bill

ii

 

15   

Income charged at the trust rate and the dividend trust rate

16   

Savings and dividend income to be treated as highest part of total income

17   

Repayment: tax paid at basic rate instead of starting or savings rate

18   

Meaning of “savings income”

19   

Meaning of “dividend income”

Starting rate limit and basic rate limit

20   

The starting rate limit and the basic rate limit

21   

Indexation of the starting rate limit and the basic rate limit

Chapter 3

Calculation of income tax liability

22   

Overview of Chapter

23   

The calculation of income tax liability

24   

Reliefs deductible at Step 2

25   

Reliefs and allowances deductible at Steps 2 and 3: supplementary

26   

Tax reductions

27   

Order of deducting tax reductions: individuals

28   

Order of deducting tax reductions: other persons

29   

Tax reductions: supplementary

30   

Additional tax

31   

Total income: supplementary

32   

Liability not dealt with in the calculation

Part 3

Personal reliefs

Chapter 1

Introduction

33   

Overview of Part

Chapter 2

Personal allowance and blind person’s allowance

Introduction

34   

Allowances under Chapter

Personal allowances

35   

Personal allowance for those aged under 65

36   

Personal allowance for those aged 65 to 74

37   

Personal allowance for those aged 75 and over

Blind person’s allowance

38   

Blind person’s allowance

 
 

Income Tax Bill

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39   

Transfer of part of blind person’s allowance to a spouse or civil partner

40   

Election for transfer of allowance under section 39

Supplementary

41   

Allowances in year of death

Chapter 3

Tax reductions for married couples and civil partners

Introduction

42   

Tax reductions under Chapter

43   

Meaning of “the minimum amount”

44   

Election for new rules to apply

Married couple’s allowance

45   

Marriages before 5 December 2005

46   

Marriages and civil partnerships on or after 5 December 2005

Elections to transfer relief

47   

Election by individual to transfer relief under section 45 or 46

48   

Joint election to transfer relief under section 45 or 46

49   

Election for partial transfer back of relief

50   

Procedure for making and withdrawing elections under sections 47 to 49

Transfer of unused relief

51   

Transfer of unused relief

52   

Transfer back of unused relief

53   

Transfer of unused relief: general

Supplementary

54   

Tax reductions in the year of marriage or entry into civil partnership

55   

Sections 45 to 53: supplementary

Chapter 4

General

56   

Residence etc of claimants

57   

Indexation of allowances

58   

Meaning of “adjusted net income”

 
 

Income Tax Bill

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Part 4

Loss relief

Chapter 1

Introduction

59   

Overview of Part

Chapter 2

Trade losses

Introduction

60   

Overview of Chapter

61   

Non-partners: losses of a tax year

62   

Partners: losses of a tax year etc

63   

Prohibition against double counting

Trade loss relief against general income

64   

Deduction of losses from general income

65   

How relief works

Restriction on relief for uncommercial trades

66   

Restriction on relief unless trade is commercial

Restriction on relief for "hobby" farming or market gardening

67   

Restriction on relief in case of farming or market gardening

68   

Reasonable expectation of profit

69   

Whether trade is the same trade

70   

Determining losses in previous tax years

Use of trading loss as CGT loss

71   

Treating trade losses as CGT losses

Early trade losses relief

72   

Relief for individuals for losses in first 4 years of trade

73   

How relief works

74   

Restrictions on relief unless trade is commercial etc

Restrictions on sideways relief for certain capital allowances

75   

Trade leasing allowances given to individuals

76   

First-year allowances: introduction

77   

First-year allowances: partnerships with companies

78   

First-year allowances: arrangements to reduce tax liabilities

79   

Capital allowances restrictions: supplementary

 
 

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Restriction on sideways relief for specific trades

80   

Ring fence income

81   

Dealings in commodity futures

82   

Exploitation of films

Carry-forward trade loss relief

83   

Carry forward against subsequent trade profits

84   

How relief works

85   

Use of trade-related interest and dividends if trade profits insufficient

86   

Trade transferred to a company

87   

Ring fence trades

88   

Carry forward of certain interest as loss

Terminal trade loss relief

89   

Carry back of losses on a permanent cessation of a trade

90   

Losses that are “terminal losses”

91   

How relief works

92   

Use of trade-related interest and dividends if trade profits insufficient

93   

Mineral extraction trade and carry back of balancing allowances

94   

Carry back of certain interest as loss

Wholly foreign trades

95   

Foreign trades etc: reliefs only against foreign income

Post-cessation trade relief

96   

Post-cessation trade relief

97   

Meaning of “qualifying payment”

98   

Meaning of “qualifying event” etc

99   

Reduction of relief for unpaid trade expenses

100   

Prohibition against double counting

101   

Treating excess post-cessation trade relief as CGT loss

Chapter 3

Restrictions on trade loss relief for certain partners

Introduction

102   

Overview of Chapter

103   

Meaning of “sideways relief”, “capital gains relief” and “firm”

Limited partners

104   

Restriction on reliefs for limited partners

105   

Meaning of “contribution to the firm”

106   

Meaning of “limited partner”

Members of LLPs

107   

Restriction on reliefs for members of LLPs

 
 

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108   

Meaning of “contribution to the LLP”

109   

Unrelieved losses brought forward

Non-active members of LLPs or other partnerships (apart from limited partnerships)

110   

Restriction on reliefs for non-active partners in early tax years

111   

Meaning of “contribution to the firm”

112   

Meaning of “non-active partner” and “early tax year” etc

113   

Unrelieved losses brought forward

Regulations

114   

Exclusion of amounts in calculating contribution to the firm or LLP

Restrictions for film trades carried on in partnership

115   

Restrictions on reliefs for firms exploiting films

116   

Exclusion from restrictions under section 115: certain film expenditure

Chapter 4

Losses from property businesses

Introduction

117   

Overview of Chapter

Carry-forward property loss relief

118   

Carry forward against subsequent property business profits

119   

How relief works

Property loss relief against general income

120   

Deduction of property losses from general income

121   

How relief works

122   

Meaning of “the applicable amount of the loss”

123   

Meaning of “the loss has a capital allowances connection” and “the business

has a relevant agricultural connection”

124   

Supplementary

Post-cessation property relief

125   

Post-cessation property relief

126   

Treating excess post-cessation property relief as CGT loss

Furnished holiday accommodation

127   

UK furnished holiday lettings business treated as trade

 
 

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Chapter 5

Losses in an employment or office

128   

Employment loss relief against general income

129   

How relief works

130   

Treating loss in employment or office as CGT loss

Chapter 6

Losses on disposal of shares

Share loss relief against general income

131   

Share loss relief

132   

Entitlement to claim

133   

How relief works

Shares to which EIS relief is not attributable

134   

Qualifying trading companies

135   

Subscriptions for shares

136   

Disposals of new shares

Qualifying trading companies: the requirements

137   

The trading requirement

138   

Ceasing to meet trading requirement because of administration or

receivership

139   

The control and independence requirement

140   

The qualifying subsidiaries requirement

141   

The property managing subsidiaries requirement

142   

The gross assets requirement

143   

The unquoted status requirement

144   

Power to amend requirements by Treasury order

Qualifying trading companies: supplementary

145   

Relief after an exchange of shares for shares in another company

146   

Substitution of new shares for old shares

Limits on share loss relief and mixed holdings

147   

Limits on share loss relief

148   

Disposal of shares forming part of mixed holding

149   

Section 148: supplementary

Miscellaneous and supplementary

150   

Deemed time of issue for certain shares

151   

Interpretation of Chapter

 
 

 
contents continue
 
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Revised 5 February 2007