Finance Bill

House of Commons

Session 2006 - 07
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Finance Bill

Finance Bill
Part 2 — Environment
14

58C
Relief for new zero-carbon homes: supplemental
(1)
Regulations under section 58B—
(a)
shall include provision about the method of claiming relief
(including documents or information to be provided), and
(b)
in particular, shall include provision about the evidence to be
5
adduced to show that a building satisfies the definition of “zero-
carbon home”.
(2)
Regulations made by virtue of subsection (1)(b) may, in particular—
(a)
refer to a scheme or process established by or for the purposes
of an enactment about building;
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(b)
establish or provide for the establishment of a scheme or
process of certification;
(c)
specify, or provide for the approval of, one or more schemes or
processes for certifying energy efficiency.
(3)
In defining “zero-carbon home” regulations under section 58B may
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include requirements which may be satisfied in relation to a building
either—
(a)
by features of the building itself, or
(b)
by other installations or utilities.
(4)
Regulations under section 58B may modify the effect of section 108, or
20
another provision of this Part about linked transactions, in relation to a
set of transactions of which at least one is the first acquisition of a
dwelling which is a zero-carbon home.
(5)
In determining whether section 116(7) applies, and in the application of
section 116(7), a transaction shall be disregarded if or in so far as it
25
involves the first acquisition of a dwelling which is a zero-carbon home.
(6)
Regulations under section 58B—
(a)
may provide for relief to be wholly or partly withdrawn if a
dwelling ceases to be a zero-carbon home, and
(b)
may provide for the reduction or withholding of relief where a
30
person acquires more than one zero-carbon home within a
specified period.
(7)
Regulations under section 58B may include provision for relief to be
granted in respect of acquisitions occurring during a specified period
before the regulations come into force.”
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(2)
In section 114 of FA 2003 (stamp duty land tax: orders and regulations), insert
at the end—
“(5)
An order or regulations under this Part—
(a)
may make provision having effect generally or only in specified
cases or circumstances,
40
(b)
may make different provision for different cases or
circumstances, and
(c)
may include incidental, consequential or transitional provision
or savings.”

Finance Bill
Part 2 — Environment
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Domestic microgeneration
20
Income tax exemption for domestic microgeneration
(1)
In ITTOIA 2005, after section 782 insert—
“782A
Domestic microgeneration
(1)
No liability to income tax arises in respect of income arising to an
5
individual from the sale of electricity generated by a microgeneration
system if—
(a)
the system is installed at or near domestic premises occupied by
the individual, and
(b)
the individual intends that the amount of electricity generated
10
by it will not significantly exceed the amount of electricity
consumed in those premises.
(2)
In subsection (1)—
“domestic premises” means premises used wholly or mainly as a
separate private dwelling, and
15
“microgeneration system” has the same meaning as in section 4 of
the Climate Change and Sustainable Energy Act 2006.”
(2)
The amendment made by subsection (1) has effect for the tax year 2007-08 and
subsequent tax years.
21
Renewables obligation certificates for domestic microgeneration
20
(1)
In ITTOIA 2005, after section 782A (inserted by section 20) insert—
“782B
Renewables obligation certificates for domestic microgeneration
(1)
No liability to income tax arises in respect of the receipt by an
individual of a renewables obligation certificate if—
(a)
the individual receives the certificate in connection with the
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generation of electricity by a microgeneration system,
(b)
the system is installed at or near domestic premises occupied by
the individual, and
(c)
the individual intends that the amount of electricity generated
by it will not significantly exceed the amount of electricity
30
consumed in those premises.
(2)
In subsection (1)—
“domestic premises” and “microgeneration system” have the
same meaning as in section 782A, and
“renewables obligation certificate” means a certificate issued
35
under section 32B of the Electricity Act 1989 or Article 54 of the
Energy (Northern Ireland) Order 2003.”
(2)
In TCGA 1992, after section 263 insert—
“263AZA
  Renewables obligation certificates for domestic microgeneration
(1)
A gain accruing to an individual on a disposal of a renewables
40
obligation certificate is not a chargeable gain if—

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Part 2 — Environment
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(a)
the individual acquired the certificate in connection with the
generation of electricity by a microgeneration system,
(b)
the system is installed at or near domestic premises occupied by
the individual, and
(c)
the individual intends that the amount of electricity generated
5
by it will not significantly exceed the amount of electricity
consumed in those premises.
(2)
In subsection (1)—
“domestic premises” means premises used wholly or mainly as a
separate private dwelling,
10
“microgeneration system” has the same meaning as in section 4 of
the Climate Change and Sustainable Energy Act 2006, and
“renewables obligation certificate” means a certificate issued
under section 32B of the Electricity Act 1989 or Article 54 of the
Energy (Northern Ireland) Order 2003.”
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(3)
The amendment made by subsection (1) has effect for the tax year 2007-08 and
subsequent tax years.
(4)
The amendment made by subsection (2) has effect in relation to disposals on or
after 6th April 2007.
Other measures
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22
Aggregates levy: exemption for aggregate removed from railways etc
(1)
Section 17(3) of FA 2001 (exempt aggregate) is amended as follows.
(2)
Omit “or” at the end of paragraph (d).
(3)
After that paragraph insert—
“(da)
it consists wholly of aggregate won by being removed from the
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ground along the line or proposed line of any railway, tramway
or monorail or proposed railway, tramway or monorail and in
the course of excavations carried out—
(i)
for the purpose of improving or maintaining the
railway, tramway or monorail or of constructing the
30
proposed railway, tramway or monorail; and
(ii)
not for the purpose of extracting that aggregate;”.
(4)
Insert “or” at the end of paragraph (e).
(5)
The amendment made by subsection (3) comes into force on such day as the
Treasury may by order made by statutory instrument appoint.
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23
Climate change levy: reduced-rate supplies etc
Schedule 2 contains amendments of Schedule 6 to FA 2000 in relation to
reduced-rate supplies and other matters.
24
Landfill tax: bodies concerned with the environment
(1)
In section 53(4) of FA 1996 (credit: bodies concerned with the environment),
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Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax
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after paragraph (c) insert—
“(ca)
provision for an environmental body to be and remain
approved only if it complies with conditions imposed from time
to time by the regulatory body or for the regulatory body to be
and remain approved only if it complies with conditions
5
imposed from time to time by the Commissioners (including
provision for the variation or revocation of such conditions);”.
(2)
The amendment made by subsection (1) is deemed to have come into force on
22nd March 2007.
Part 3
10
Income tax, corporation tax and capital gains tax
Anti-avoidance
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Managed service companies
(1)
Schedule 3 contains provision about managed service companies.
(2)
That Schedule is deemed to have come into force on 6th April 2007.
15
26
Restrictions on trade loss relief for partners
Schedule 4 contains provision restricting reliefs for losses made by individuals
carrying on trades in partnership.
27
Extension of restrictions on allowable capital losses
(1)
TCGA 1992 is amended as follows.
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(2)
In section 8 (company’s total profits to include chargeable gains)—
(a)
in subsection (2), for the words from “does not include—” to the end
substitute “does not include a loss accruing to a company in such
circumstances that if a gain accrued the company would be exempt
from corporation tax in respect of it.”, and
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(b)
omit subsections (2A) to (2C).
(3)
After section 16 insert—
“16A
Restrictions on allowable losses
(1)
For the purposes of this Act, “allowable loss” does not include a loss
accruing to a person if—
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(a)
it accrues to the person directly or indirectly in consequence of,
or otherwise in connection with, any arrangements, and
(b)
the main purpose, or one of the main purposes, of the
arrangements is to secure a tax advantage.
(2)
For the purposes of subsection (1)—
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“arrangements” includes any agreement, understanding, scheme,
transaction or series of transactions (whether or not legally
enforceable), and
“tax advantage” means—

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(a)
relief or increased relief from tax,
(b)
repayment or increased repayment of tax,
(c)
the avoidance or reduction of a charge to tax or an
assessment to tax, or
(d)
the avoidance of a possible assessment to tax,
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and for the purposes of this definition “tax” means capital gains
tax, corporation tax or income tax.
(3)
For the purposes of subsection (1) it does not matter—
(a)
whether the loss accrues at a time when there are no chargeable
gains from which it could otherwise have been deducted, or
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(b)
whether the tax advantage is secured for the person to whom
the loss accrues or for any other person.”
(4)
In section 288(1) (interpretation), in the definition of “allowable loss”, after “16”
insert “, 16A”.
(5)
In section 834(1) of ICTA (interpretation of the Corporation Tax Acts), in the
15
definition of “allowable loss”, for the words from “or a loss” to the end
substitute “or a loss accruing to a company in the circumstances mentioned in
section 16A of the 1992 Act”.
(6)
The amendments made by this section have effect in relation to losses accruing
on disposals made on or after 6th December 2006.
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28
Life policies etc: effect of rebated or reinvested commission
(1)
In ICTA, after section 548 insert—
“548A
Effect of rebated or reinvested commission in certain cases
(1)
This section applies if—
(a)
a relevant chargeable event occurs in respect of a policy or
25
contract,
(b)
commission in respect of the policy or contract has at any time
been rebated or reinvested, and
(c)
condition A or B is met.
(2)
For the purposes of performing the calculation under section 541(1)(b)
30
or (c) or 543(1)(a) or (b) for the chargeable event, the total amount paid
under the policy or contract by way of premiums in any period is to be
reduced by the total amount of commission attributable to those
premiums that has been rebated or reinvested.
(3)
Condition A is that the total amount paid under the policy or contract
35
by way of premiums in a relevant period exceeds £100,000.
(4)
Condition B is that—
(a)
at a time when the policy or contract was the taxable person’s,
the taxable person’s policies and contracts exceeded the
relevant threshold as respects a relevant period, and
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(b)
payments under the policy or contract by way of premiums
were made in that relevant period.

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(5)
In subsection (4)(a) “taxable person” means the person whose policy or
contract the policy or contract is, immediately before the chargeable
event.
(6)
For the purposes of subsection (4)(a) a person’s policies and contracts
“exceed the relevant threshold” as respects a relevant period if the total
5
amount of payments under them by way of premiums in that relevant
period exceeds the sum specified in subsection (3).
(7)
In this section “relevant chargeable event” means a chargeable event
within—
(a)
any of sub-paragraphs (ii) to (iv) of section 540(1)(a) (including
10
those sub-paragraphs as they apply in relation to a qualifying
policy),
(b)
section 542(1)(a) or (b), or
(c)
section 545(1)(a) to (c).
(8)
In this section “relevant period” means—
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(a)
the period beginning with the beginning of the year of
assessment in which the chargeable event occurs and ending
with the chargeable event, or
(b)
any of the 3 preceding years of assessment.
(9)
References in this section to a premium include, in relation to a contract
20
for a life annuity, lump sum consideration.
(10)
The Treasury may by order—
(a)
substitute another sum for the sum for the time being specified
in subsection (3);
(b)
amend the definition of “relevant period”.
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548B
Section 548A: further definitions
(1)
This section supplements section 548A.
(2)
“Commission”, in relation to a policy or contract, includes any passing
of value to or for the benefit of an intermediary, or a person connected
with an intermediary, that can reasonably be taken to represent a
30
reward in respect of the policy or contract.
(3)
Commission in respect of a policy or contract is “reinvested” if, as a
result of a waiver of an entitlement to it, there is an increase in the total
value of a relevant person’s policies and contracts.
(4)
The amount of commission reinvested is the amount of the increase.
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(5)
Commission in respect of a policy or contract is “rebated” if—
(a)
value passes (directly or indirectly) from an intermediary, or a
person connected with an intermediary, to or for the benefit of
a relevant person (and the passing of value does not amount to
the reinvestment of the commission), and
40
(b)
the passing of value can reasonably be taken to be in respect of
the commission.
(6)
The amount of commission rebated is the amount of value passed.
(7)
A policy or contract is a person’s policy or contract if a gain arising in
connection with it would be—
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Finance Bill
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(a)
a gain for which the person, or (if the person is an individual)
the person’s spouse or civil partner, would be liable to tax
under Chapter 9 of Part 4 of ITTOIA 2005, or
(b)
treated by virtue of section 547(1) above as forming part of the
person’s income.
5
(8)
Any necessary apportionment is to be made (on a just and reasonable
basis) as regards—
(a)
commission which is attributable to two or more premiums,
and
(b)
any part of such commission that has been rebated or
10
reinvested.
(9)
Commission which is in respect of one or more policies or contracts
(but is not attributable to particular premiums) is to be attributed to
such premiums as is just and reasonable.
(10)
In subsections (3) and (5), “relevant person” means—
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(a)
any of the policyholders (including any of the persons who hold
the contract),
(b)
a person who beneficially owns the rights under the policy or
contract,
(c)
if those rights are held on trust, any of the trustees, or
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(d)
a person connected (within the meaning of section 839) with a
person within any of paragraphs (a) to (c).
(11)
In subsections (8) and (9), references to a premium include, in relation
to a contract for a life annuity, lump sum consideration.”
(2)
In section 552 of that Act (information: duty of insurers), after subsection (12)
25
insert—
“(13)
For the purposes of this section, no account is to be taken of the effect
of section 548A above or section 541A of ITTOIA 2005.”
(3)
In ITTOIA 2005, after section 541 insert—
“Rebated or reinvested commission
30
541A
Effect of rebated or reinvested commission in certain cases
(1)
This section applies if—
(a)
a chargeable event within section 484(1)(a)(i) to (iii), (c) or (e)
occurs in respect of a policy or contract,
(b)
commission in respect of the policy or contract has at any time
35
been rebated or reinvested, and
(c)
condition A or B is met.
(2)
For the purposes of performing the calculation in section 494 (total
allowable deductions) for the chargeable event, the total amount of
premiums under the policy or contract paid in the period mentioned in
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section 494(1) or (2)(b) is to be reduced by the total amount of
commission attributable to those premiums that has been rebated or
reinvested.
(3)
Condition A is that the total amount of premiums under the policy or
contract paid in a relevant period exceeds £100,000.
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