Finance Bill

House of Commons

Session 2007 - 08
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Other Bills before Parliament

Finance Bill

Finance Bill
Part 2 — Income tax, corporation tax and capital gains tax - general
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(a)
an umbrella fund (within the meaning of section 756B of ICTA), and
(b)
an offshore fund which comprises a class of interest in another fund
(within the meaning of section 756C of ICTA).
(3)
Regulations under section 38 may include provision consequential on the
repeals made by that section.
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(4)
Regulations under section 38 may, in particular—
(a)
provide for Her Majesty’s Revenue and Customs to exercise a
discretion in dealing with any matter,
(b)
make provision by reference to standards or other documents issued by
any person,
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(c)
modify an enactment (whenever passed or made),
(d)
make different provision for different cases or different purposes, and
(e)
make incidental, consequential, supplementary or transitional
provision.
(5)
Regulations under section 38 may, in particular, make provision having
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effect—
(a)
in the case of provision relating to income tax or capital gains tax, in
relation to the tax year current on the day on which the regulations are
made, and
(b)
in the case of provision relating to corporation tax, in relation to
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accounting periods current on that day.
(6)
In this section—
“enactment” and “offshore fund” have the same meaning as in section 38,
and
“modify” includes amend, repeal or revoke.
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Insurance companies and friendly societies
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Insurance companies etc
Schedule 17 contains provisions relating to insurance companies etc.
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Friendly societies
Schedule 18 contains provision relating to friendly societies.
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Employment matters
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Homes outside UK owned through company etc
(1)
In ITEPA 2003, after section 100 insert—
“100A
  Homes outside UK owned through company etc
(1)
This Chapter does not apply to living accommodation outside the
35
United Kingdom provided by a company for a director or other officer
of the company (“D”) or a member of D’s family or household if—
(a)
the company is wholly owned by D or D and other individuals
(and no interest in the company is partnership property), and

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Part 2 — Income tax, corporation tax and capital gains tax - general
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(b)
the company has been the holding company of the property at
all times after the relevant time.
(2)
The company is “the holding company of the property” when—
(a)
it owns a relevant interest in the property,
(b)
its main or only asset is that interest, and
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(c)
the only activities undertaken by it are ones that are incidental
to its ownership of that interest.
(3)
The company is also “the holding company of the property” when—
(a)
a company (“the subsidiary”) which is wholly owned by the
company meets the conditions in paragraphs (a) to (c) of
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subsection (2),
(b)
the company’s main or only asset is its interest in the
subsidiary, and
(c)
the only activities undertaken by the company are ones that are
incidental to its ownership of that interest.
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(4)
“Relevant interest in the property” means an interest under the law of
any territory that confers (or would but for any inferior interest confer)
a right to exclusive possession of the property at all times or at certain
times.
(5)
“The relevant time” is the time the company first owned a relevant
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interest in the property; but this is subject to subsection (6).
(6)
If—
(a)
none of D’s interest in the company was acquired directly or
indirectly from a person connected with D, and
(b)
the company owned a relevant interest in the property at the
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time D first acquired an interest in the company,

“the relevant time” is the time D first acquired such an interest.
100B
Section 100A(1): exceptions
(1)
Section 100A(1) does not apply if subsection (2), (3) or (4) applies.
(2)
This subsection applies if—
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(a)
the company’s interest in the property was acquired directly or
indirectly from a connected company at an undervalue, or
(b)
the company’s interest in the property derives from an interest
that was so acquired.
(3)
This subsection applies if, at any time after the relevant time—
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(a)
expenditure in respect of the property has been incurred
directly or indirectly by a connected company, or
(b)
any borrowing of the company directly or indirectly from a
connected company has been outstanding (but see subsection
(7)).
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(4)
This subsection applies if the living accommodation is provided in
pursuance of an arrangement the main purpose, or one of the main
purposes, of which is the avoidance of tax or national insurance
contributions.
(5)
In subsection (2) references to the acquisition of an interest include the
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grant of an interest.

Finance Bill
Part 2 — Income tax, corporation tax and capital gains tax - general
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(6)
For the purposes of that subsection, an interest is acquired at an
undervalue if the total consideration for it is less than that which might
reasonably have been expected to be obtained on a disposal of the
interest on the open market; and “consideration” here means
consideration provided at any time (and, for example, includes
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payments by way of rent).
(7)
For the purposes of subsection (3)(b), no account is to be taken of—
(a)
any borrowing at a commercial rate, or
(b)
any borrowing which results in D being treated under Chapter
7 (taxable benefits: loans) as receiving earnings.
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(8)
In subsection (4) “arrangement” includes any scheme, agreement or
understanding, whether or not enforceable.
(9)
In this section “connected company” means—
(a)
a company connected with D, with a member of D’s family or
with an employer of D, or
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(b)
a company connected with such a company.”
(2)
The amendment made by subsection (1) is treated as always having had effect.
(3)
Section 145 of ICTA (living accommodation provided for employee) is to be
treated as never having applied to living accommodation outside the United
Kingdom provided in circumstances in which, had it been provided on or after
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6 April 2003, section 100A(1) of ITEPA 2003 would cause Chapter 5 of Part 3 of
ITEPA 2003 (taxable benefits: living accommodation) not to apply.
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In-work and return to work credits and payments
(1)
In section 677(1) of ITEPA 2003 (UK social security benefits wholly exempt
from tax), in Part 1 of Table B (benefits payable under primary legislation),
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insert at the appropriate places—

“In-work credit
ETA 1973           Section 2

ETA(NI) 1950    Section 1

In-work emergency
ETA 1973           Section 2

discretion fund payment

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In-work emergency fund
ETA(NI) 1950    Section 1”, and

payment

“Return to work credit
ETA 1973           Section 2

ETA(NI) 1950    Section 1”.

(2)
In Part 1 of Schedule 1 to that Act (abbreviations of Acts etc), insert at the
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appropriate places—

“ETA(NI) 1950
The Employment and Training Act

(Northern Ireland) 1950 (c. 29 (N.I.))”,

and

“ETA 1973
The Employment and Training Act

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1973 (c. 50)”.

(3)
The amendments made by this section have effect for the tax year 2008-09 and
subsequent tax years.
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Company cars: lower threshold for CO2 emissions figure
(1)
In section 139(4) of ITEPA 2003 (car with a CO2 emissions figure: the
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appropriate percentage), for the table substitute—

“Tax year
Lower threshold (in g/km)

2008-09 or 2009-10
135

2010-11 and subsequent tax years
130”.

(2)
In consequence of the amendment made by subsection (1), omit—
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(a)
in FA 2003, section 138(3), and
(b)
in FA 2006, section 59(6).
(3)
The amendments made by this section have effect for the tax year 2008-09 and
subsequent tax years.
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Van fuel benefit
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(1)
In section 239(3) of ITEPA 2003 (exemption in respect of payments and benefits
connected with taxable cars and vans subject to section 149), insert at the end
“or section 160 (benefit of van fuel treated as earnings).”
(2)
In section 269(2) of that Act (exemption in respect of non-cash vouchers and
credit-tokens where benefits or money obtained in connection with taxable car
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or subject to section 149)—
(a)
for “, but see section 149(3)” substitute “or van, but see section 149(3) or
section 160(3)”, and
(b)
after “earnings)” insert “or section 160 (benefit of van fuel treated as
earnings)”.
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Employment-related securities etc: deductible amounts etc
(1)
In section 149AA of TCGA 1992 (restricted and convertible employment-

Finance Bill
Part 2 — Income tax, corporation tax and capital gains tax - general
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related securities), after subsection (6) insert—
“(7)
In subsection (1) the reference to any amount that constituted earnings
under Chapter 1 of Part 3 of ITEPA 2003 does not include any amount
of exempt income (within the meaning of section 8 of that Act).”
(2)
ITEPA 2003 is amended as follows.
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(3)
In section 428(2)(b) as originally enacted (conditional interests in shares:
amount of charge), insert at the end “(other than an amount of exempt
income)”.
(4)
In section 428(7)(b) (restricted securities: amount of charge), insert at the end
“(other than an amount of exempt income)”.
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(5)
In section 446T(3)(b) (securities acquired for less than market value: amount of
charge), insert at the end “(other than an amount of exempt income)”.
(6)
In section 480(5)(a) (securities options: deductible amounts), insert at the end
“(other than an amount of exempt income)”.
(7)
In paragraph 21(3) of Schedule 23 to FA 2003 (corporation tax relief for
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employee share acquisition: amount of relief in case of restricted shares), insert
at the end—

“For this purpose the amount that constitutes such earnings does not
include any amount of exempt income (within the meaning of section 8
of that Act).”
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(8)
In paragraph 22C(3) of that Schedule (corporation tax relief for employee share
acquisition: amount of relief in case of convertible shares), insert at the end—

“For this purpose the amount that constitutes such earnings does not
include any amount of exempt income (within the meaning of section 8
of that Act).”
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(9)
The amendment made by subsection (1) has effect in relation to disposals made
on or after 12 March 2008.
(10)
The amendment made by subsection (3) has effect in relation to events within
section 427(1)(a) or (b) of ITEPA 2003 (as originally enacted) occurring on or
after that date.
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(11)
The amendments made by subsections (4) and (6) have effect in relation to
chargeable events occurring on or after that date.
(12)
The amendment made by subsection (5) has effect in relation to employment-
related securities acquired (or treated as acquired) on or after that date.
(13)
The amendments made by subsections (7) and (8) have effect in relation to
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awards of shares made on or after that date.
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Employment-related securities: repeal of obsolete provisions
(1)
In ICTA, omit sections 138 and 139 (share acquisitions by directors and
employees: shares acquired before 26 October 1987).
(2)
In ITEPA 2003—
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(a)
in section 418 (other related provisions), omit subsection (4), and
(b)
in Schedule 7 (transitionals and savings), omit paragraph 57.

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Part 2 — Income tax, corporation tax and capital gains tax - general
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(3)
The amendments made by this section have effect for the tax year 2008-09 and
subsequent tax years.
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Armed forces: the Council Tax Relief
(1)
In ITEPA 2003, after section 297A insert—
“297B
Armed forces: the Council Tax Relief
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(1)
No liability to income tax arises in respect of payments of the Council
Tax Relief to members of the armed forces of the Crown.
(2)
Payments of the Council Tax Relief are payments designated as such by
the Secretary of State.”
(2)
The amendment made by subsection (1) has effect in relation to payments
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made on or after 1 April 2008.
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Greater London Authority: severance payments
(1)
Section 291(2) of ITEPA 2003 (termination payments to MPs and others ceasing
to hold office) is amended as follows.
(2)
In paragraph (ea), omit “or”.
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(3)
At the end of paragraph (f) insert “, or
(g)
made under section 26A of the Greater London Authority Act
1999 (payments on ceasing to hold office as Mayor of London or
as a member of the Greater London Assembly).”
(4)
The amendments made by this section have effect in relation to payments
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made on or after 6 April 2008.
Charities etc
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Gift aid: payments to charities
Schedule 19 contains provision for the Commissioners for Her Majesty’s
Revenue and Customs to make payments to charities which receive donations
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under the gift aid scheme.
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Community investment tax relief
(1)
Paragraph 35 of Schedule 16 to FA 2002 (community investment tax relief) is
amended as follows.
(2)
After sub-paragraph (1) insert—
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   “(1A)
But if the investor is a bank, the investor does not receive value from
the CDFI when the CDFI makes a deposit with the investor in the
course of its ordinary banking arrangements.”
(3)
In subsection (5), after “paragraph—” insert—
““bank” has the meaning given by section 840A of the Taxes Act
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1988;”.
(4)
The amendments made by this section are treated as always having had effect.