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House of Commons

Session 2006 - 07 Internet Publications Other Bills before Parliament

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
Bill 48                                                                                                  54/2
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
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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 iv
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
Income Tax Bill v
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
Income Tax Bill vii
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

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