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Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

38

 

applies (whenever entered into) that section and new section 48B shall

be treated as always having had effect, and

(b)   

an order made after the passing of this Act under section 1005 of ITA

2007 (recognised stock exchanges: designation) and by virtue of new

section 48A(3) may be expressed—

5

(i)   

to have effect as from 1st April 2007 for the purposes of

arrangements entered into on or after that date, and

(ii)   

for the purposes mentioned in paragraph (a), as always having

had effect.

53      

Profit share agency

10

In section 49A(3) of FA 2005 (profit share agency: principal not treated as

entitled to agent’s share of profits), insert at the end “(and the agent is treated

as entitled to the profits specified in subsection (1)(c) and (d))”.

Trusts

54      

Trust income

15

(1)   

In section 686A(2)(a) of ICTA (receipts to be treated as income subject to special

rate of tax: payment by company), after “made” insert “by way of qualifying

distribution”.

(2)   

In Type 1(b) in section 482 of ITA 2007 (types of amount to be charged at special

rates for trustees), after “made” insert “by way of qualifying distribution”.

20

(3)   

The amendments made by this section have effect in respect of payments made

to the trustees of a settlement on or after 6th April 2006.

55      

Trust gains on contracts for life insurance

(1)   

Section 498 of ITA 2007 (trustees’ tax pool) is amended as follows.

(2)   

In subsection (1)—

25

(a)   

in Type 1, for “2 or 3” substitute “2, 3 or 3A”, and

(b)   

after Type 3 insert—

   

“Type 3A

   

The amount of tax at the nominal rate on any amount in respect of

which—

30

(a)   

the trustees are liable to income tax under section 467 of ITTOIA

2005 (gains from contracts for life insurance etc),

(b)   

the trustees are liable to income tax at the trust rate by virtue of

section 482 above, and

(c)   

tax at the savings rate is treated as having been paid by virtue

35

of section 530 of ITTOIA 2005 (life insurance).”

(3)   

After subsection (2) insert—

“(2A)   

In relation to Type 3A, the reference to the nominal rate is a reference

to a rate equal to the difference between the trust rate and the savings

rate.”

40

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

39

 

(4)   

The amendments made by this section have effect in relation to gains arising to

the trustees of a settlement on or after 6th April 2007.

Other corporation tax measures

56      

Offshore funds

(1)   

In section 396 of ICTA (corporation tax: setting off of Case VI losses), in

5

subsection (2) (losses to which subsection (1) does not apply), insert at the end

“or on a disposal to which Chapter 5 of Part 17 applies.”

(2)   

In section 756A of ICTA (definition of “offshore fund”), for subsection (3)

substitute—

“(3)   

In this section “collective investment scheme” means any arrangements

10

which are a collective investment scheme for the purposes of Part 17 of

the Financial Services and Markets Act 2000 (see section 235 of that Act

and orders made under subsection (5) of that section) or would be if the

words “, within a period appearing to him to be reasonable,” were

omitted from section 236(3)(a) of that Act.

15

(4)   

But the reference to offshore funds in section 760(3)(a) does not include

any arrangements which are not a collective investment scheme for the

purposes of that Part of that Act.”

(3)   

In section 842 of ICTA (investment trusts), after subsection (3) insert—

“(3A)   

References in this section to income do not include income treated as

20

arising under section 761(1)(a).”

(4)   

In Schedule 27 to ICTA (distributing funds), in sub-paragraph (1)(c) of

paragraph 6 (investments of offshore fund in other offshore funds which could,

apart from that paragraph, be certified as distributing funds not to count

towards limit in section 760(3)(a)), omit “without regard to the provisions of

25

this paragraph,”.

(5)   

In section 152 of ITA 2007 (losses from miscellaneous transactions), in

subsection (8), insert at the end “except that income on which income tax is

charged under section 761(1)(b)(i) of ICTA is not “section 1016 income” for the

purposes of subsection (2)(a)”.

30

(6)   

The amendment made by subsection (1) has effect in relation to disposals on or

after 1st April 2007.

(7)   

The amendment made by subsection (3) has effect in relation to accounting

periods beginning on or after the day on which this Act is passed.

(8)   

The amendment made by subsection (4) has effect in relation to account

35

periods (within the meaning of Chapter 5 of Part 17 of ICTA) beginning on or

after 1st January 2007.

(9)   

The amendment made by subsection (5) has effect in relation to transactions on

or after 6th April 2007.

57      

Election out of special film rules for film production companies

40

(1)   

In section 32 of FA 2006 (meaning of “film production company”), insert at the

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

40

 

end—

“(7)   

A company may elect to be regarded as a company which does not

meet the description in subsection (3) or (4).

(8)   

The election—

(a)   

must be made by the company by being included in its

5

company tax return for an accounting period (and may be

included in the return originally made or by amendment), and

(b)   

may be withdrawn by the company only by amending its

company tax return for that accounting period.

(9)   

The election has effect in relation to films which commence principal

10

photography in that or any subsequent accounting period.

(10)   

“Company tax return” has the same meaning as in Schedule 18 to FA

1998 (see paragraph 3(1)).”

(2)   

In paragraph 10 of Schedule 18 to FA 1998 (other claims and elections to be

included in company tax return), insert at the end—

15

    “(5)  

An election under section 32(7) of the Finance Act 2006 (election not

to be a film production company) can only be made by being

included in a company tax return (see section 32(8)(a) of that Act).”

58      

Securitisation companies

(1)   

Section 83 of FA 2005 (continued application of old UK GAAP to securitisation

20

companies during transitional period) is amended as follows.

(2)   

In subsection (1)(b) (old UK GAAP to apply to periods of account ending

before 1st January 2008), insert at the beginning “(subject to subsection

(7A)(a))”.

(3)   

After subsection (7) insert—

25

“(7A)   

The Treasury may by regulations—

(a)   

make provision for subsection (1) to apply in relation to periods

of account ending on or after 1st January 2008 but before a date

specified by the regulations, and

(b)   

make provision modifying any provision of, or made under, the

30

Corporation Tax Acts in relation to the first period of account of

securitisation companies in the case of which subsection (1)

does not apply (whether by virtue of that subsection itself or

regulations under paragraph (a)).

(7B)   

Regulations under subsection (7A)(a) may, in particular—

35

(a)   

specify a date only in relation to specified descriptions of

company,

(b)   

specify different dates in relation to different descriptions of

company, and

(c)   

include provision for a company to elect that the regulations are

40

to apply to it or provision for a company to elect that they are

not to apply to it.”

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

41

 

(4)   

Section 84 of FA 2005 (power to make provision as to application of

Corporation Tax Acts in relation to securitisation companies) is amended as

follows.

(5)   

In subsection (3)(d), for “to that effect is made,” substitute “that they are to

apply is made or that the regulations do not apply to a company if an election

5

that they are not to apply is made,”.

(6)   

For subsection (5) substitute—

“(5)   

The regulations—

(a)   

may make incidental, supplementary, consequential or

transitional provision or savings (including provision

10

amending any provision of, or made under, the Taxes Acts

(within the meaning of section 118(1) of TMA 1970)), and

(b)   

may include provision having effect (in the case of provision

relating to corporation tax) from the beginning of periods of

account current when the regulations are made or (in the case of

15

provision relating to income tax or capital gains tax) in relation

to times before the regulations are made.”

Other income tax measures

59      

Gift aid: limits

(1)   

In section 418 of ITA 2007 (donations to charity by individuals: limits)—

20

(a)   

in subsection (2)(c), for “2.5%” substitute “5%”, and

(b)   

in subsection (3), for “£250” substitute “£500”.

(2)   

In section 339 of ICTA (donations to charity)—

(a)   

in subsection (3B)(b), for “£250” substitute “£500”, and

(b)   

in subsection (3DA)(c), for “2.5 per cent” substitute “5 per cent”.

25

(3)   

The amendment made by subsection (1) has effect in relation to gifts made on

or after 6th April 2007.

(4)   

The amendment made by subsection (2) has effect in relation to gifts made in

an accounting period ending on or after 6th April 2007.

60      

Enterprise management incentives: excluded activities

30

(1)   

In Part 3 of Schedule 5 to ITEPA 2003 (enterprise management incentives:

qualifying companies), in paragraph 19 (excluded activities: receipt of royalties

or licence fees)—

(a)   

in sub-paragraph (4), for paragraphs (a) and (b) substitute—

“(a)   

by the relevant company, or

35

(b)   

by a company which was a qualifying subsidiary of

the relevant company throughout a period during

which it created the whole or greater part (in terms of

value) of the intangible asset.”, and

(b)   

after sub-paragraph (7) insert—

40

    “(8)  

If—

(a)   

the relevant company acquired all the shares (“old

shares”) in another company (“the old company”) at a

 
 

Finance Bill
Part 3 — Income tax, corporation tax and capital gains tax

42

 

time when the only shares issued in the relevant

company were subscriber shares, and

(b)   

the consideration for the old shares consisted wholly

of the issue of shares in the relevant company,

           

references in sub-paragraph (4) to the relevant company

5

include the old company.”

(2)   

The amendments made by subsection (1) have effect in relation to options

granted on or after 6th April 2007.

(3)   

They also have effect in relation to a qualifying option within subsection (4), for

the purpose of determining at any time on or after that date whether an activity

10

is an excluded activity.

(4)   

An option is within this subsection if it was granted before 6th April 2007 and,

immediately before that date—

(a)   

it had not been exercised, and

(b)   

no disqualifying event had occurred in relation to it.

15

(5)   

Subsection (6) applies in respect of an option within subsection (4) if—

(a)   

immediately before 6th April 2007—

(i)   

the right to exploit an intangible asset (“the asset”) was vested

in the relevant company or a subsidiary of it (in either case,

alone or jointly with others), and

20

(ii)   

the asset was a relevant intangible asset,

(b)   

at any time on or after that date, an activity carried on by the relevant

company or a subsidiary of it would be an excluded activity by reason

only of the receipt of royalties or licence fees attributable to the

exploitation of the asset, and

25

(c)   

the activity would not be an excluded activity if the amendments made

by subsection (1) had not been made.

(6)   

The activity is to be treated, in relation to the option, as not being an excluded

activity at that time.

61      

Benefits code: whether employment is “lower-paid employment”

30

(1)   

In section 219 of ITEPA 2003 (exclusion of lower-paid employments from parts

of benefits code: extra amounts to be added in connection with a car), omit

subsections (5) and (6).

(2)   

The repeal made by subsection (1) has effect for the tax year 2007-08 and

subsequent tax years.

35

62      

Armed forces redundancy schemes

(1)   

In section 411 of ITEPA 2003 (exception for payments and benefits for forces),

the existing provision becomes subsection (1) and after that subsection insert—

“(2)   

This Chapter does not apply to a payment or other benefit provided

under a scheme established by an order under section 1(1) of the Armed

40

Forces (Pensions and Compensation) Act 2004.”

(2)   

The amendments made by subsection (1) have effect for the tax year 2006-07

and subsequent tax years.

 
 

 
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