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Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

219

 

(b)   

if only part of the capital payment is matched, the amount

of that part.

      (3)  

Section 87A applies for a tax year for the purposes of matching

capital payments received from the trustees of a relevant

settlement with section 2(2) amounts in the Schedule 4C pool as

5

if—

(a)   

references to section 2(2) amounts were to section 2(2)

amounts in the Schedule 4C pool,

(b)   

references to a capital payment received from the trustees

by a beneficiary were to a capital payment received from

10

the trustees of a relevant settlement by a beneficiary who is

chargeable to tax for that year, and

(c)   

for section 87A(3)(b) there were substituted—

“(b)   

all section 2(2) amounts in the Schedule 4C pool have

been reduced to nil.”

15

      (4)  

Section 87A applies for a tax year by virtue of this paragraph

before it applies for that year otherwise than by virtue of this

paragraph; but this is subject to sub-paragraph (5).

      (5)  

If section 87A applies for a tax year by virtue of section 762(3) of

the Taxes Act (offshore income gains), it applies for that year by

20

virtue of that provision before it applies for that year by virtue of

this paragraph.”

140        

After paragraph 8A insert—

“Attribution of gains: remittance basis

8AA        

Section 87B (remittance basis) applies in relation to chargeable

25

gains treated under paragraph 8 as accruing as it applies in

relation to chargeable gains treated under section 87 as accruing.”

141        

Omit paragraphs 8B and 8C (including the heading before paragraph 8B).

142        

For paragraph 9 (and the heading before it) substitute—

“Attribution of gains: disregard of certain capital payments

30

9     (1)  

For the purposes of paragraph 8 (and section 87A as it applies for

the purposes of that paragraph), no account is to be taken of a

capital payment to which any of sub-paragraphs (2) to (4) applies

(or a part of a capital payment to which sub-paragraph (4)

applies).

35

      (2)  

This sub-paragraph applies to a capital payment received before

the tax year preceding the tax year in which the original transfer is

made.

      (3)  

This sub-paragraph applies to a capital payment that—

(a)   

is received by a beneficiary of a settlement from the

40

trustees in a tax year during the whole of which the

trustees—

(i)   

are resident and ordinarily resident in the United

Kingdom, and

(ii)   

are not Treaty non-resident,

45

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

220

 

(b)   

was made before any transfer of value to which Schedule

4B applies was made, and

(c)   

was not made in anticipation of the making of any such

transfer of value or of chargeable gains accruing under that

Schedule.

5

      (4)  

This sub-paragraph applies to a capital payment if (and to the

extent that) it is received (or treated as received) in a tax year from

the trustees by a company that—

(a)   

is not resident in the United Kingdom in that year, and

(b)   

would be a close company if it were resident in the United

10

Kingdom,

           

(and is not treated under any of subsections (3) to (5) of section 96

as received by another person).”

143        

In paragraph 10 (residence of trustees from whom capital payment

received)—

15

(a)   

in sub-paragraph (1) for “sub-paragraph (2) below” substitute

“paragraph 9(3)”, and

(b)   

omit sub-paragraphs (2) and (3).

144   (1)  

Paragraph 12 (attribution of gains to settlor in section 10A cases) is amended

as follows.

20

      (2)  

For sub-paragraphs (1) to (3) substitute—

    “(1)  

This paragraph applies if—

(a)   

by virtue of section 10A, an amount of chargeable gains

within section 86(1)(e) that accrued in an intervening year

to the trustees of a settlement would be treated as accruing

25

to a person (“the settlor”) in the year of return, and

(b)   

after paragraph 8 has applied for the year of return, the

section 2(2) amount for the intervening year that is in the

Schedule 4C pool for the settlement is less than the amount

mentioned in paragraph (a).

30

      (2)  

The amount of chargeable gains treated as mentioned in sub-

paragraph (1)(a) as accruing to the settlor in the year of return is

limited to the section 2(2) amount referred to in sub-paragraph

(1)(b).”

145        

In paragraph 12A(3), for “87(4)” substitute “87(2)”.

35

146   (1)  

Paragraph 13 (increase in tax payable under this Schedule) is amended as

follows.

      (2)  

For sub-paragraph (1) substitute—

    “(1)  

This paragraph applies if—

(a)   

chargeable gains are treated under paragraph 8 as accruing

40

to a beneficiary by virtue of the matching (under section

87A) of all or part of a capital payment with the section 2(2)

amount for a tax year (“the relevant tax year”), and

(b)   

the beneficiary is charged to tax by virtue of the matching.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

221

 

     (1A)  

Where part of a capital payment is matched, references in sub-

paragraphs (2) and (3) to the capital payment are to the part

matched.”

      (3)  

In sub-paragraph (5)(a), for the words from “year of assessment” to the end

(excluding the “and”) substitute “tax year immediately after the relevant tax

5

year,”.

147        

Omit paragraph 3 and 6(2) and (3) of Schedule 29 to FA 2003.

Attribution of gains to beneficiaries in cases involving transfers of value: commencement etc

148        

The amendments made by paragraphs 129 to 147 have effect in relation to

transfers of value to which Schedule 4B to TCGA 1992 applies that are made

10

on or after 6 April 2008.

149        

For the purposes of paragraph 8 of Schedule 4C to TCGA 1992 (and section

87A of that Act as it applies for the purposes of that paragraph), no account

is to be taken of any capital payment received before 21 March 2000.

150        

A capital payment received before 6 April 2008 is not within paragraph 9(4)

15

of Schedule 4C to TCGA 1992 (if it otherwise would be).

151        

Paragraph 125 applies in relation to chargeable gains treated under

paragraph 8 of Schedule 4C to TCGA 1992 as accruing as it applies in

relation to chargeable gains treated under section 87 as accruing.

152   (1)  

This paragraph applies for the tax year 2008-09 or any subsequent tax year

20

(“the relevant tax year”) if—

(a)   

an individual who was resident or ordinarily resident, but not

domiciled, in the United Kingdom in the tax year 2007-08 received a

capital payment from the trustees of a settlement on or after 12

March 2008 but before 6 April 2008, and

25

(b)   

the individual is resident or ordinarily resident, but not domiciled, in

the United Kingdom in the relevant tax year.

      (2)  

For the purposes of paragraph 8 of Schedule 4C to TCGA 1992 as it applies

for the relevant tax year (and section 87A of that Act as it applies for those

purposes), no account is to be taken of the capital payment.

30

Attribution of gains to beneficiaries: existing Schedule 4C pools

153        

Schedule 4C to TCGA 1992 (as it has effect without the amendments made

by paragraphs 129 to 147) applies for the tax year 2008-09 and subsequent

tax years in relation to Schedule 4C pools created before 6 April 2008

(“existing Schedule 4C pools”) as if paragraphs 7B and 9(2) were omitted.

35

154        

Any reduction in the amount of a capital payment has effect for the purposes

of Schedule 4C to TCGA 1992 as it applies in relation to existing Schedule 4C

pools (as well as for other purposes).

155   (1)  

If all of a capital payment ceases (in the tax year 2008-09 or any subsequent

tax year) to be available, the amount of the capital payment is reduced to nil.

40

      (2)  

If part of a capital payment ceases (in the tax year 2008-09 or any subsequent

tax year) to be available, the amount of the capital payment is reduced by the

amount of that part.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

222

 

      (3)  

A capital payment “ceases to be available” in a tax year if and to the extent

that, by reason of the capital payment, chargeable gains are treated under

paragraph 8 of Schedule 4C to TCGA 1992 (as it has effect in relation to

existing Schedule 4C pools) as accruing in that year to the recipient.

      (4)  

If—

5

(a)   

chargeable gains are treated under paragraph 8 of Schedule 4C to

TCGA 1992 (as it has effect in relation to existing Schedule 4C pools)

as accruing in a tax year,

(b)   

more than one capital payment that the beneficiary has received is

taken into account for the purposes of determining the amount of

10

chargeable gains treated as accruing to the beneficiary, and

(c)   

the amount of the chargeable gains is less than the total amount of

capital payments taken into account,

           

sub-paragraph (3) applies in relation to earlier capital payments before later

ones.

15

156        

In any tax year—

(a)   

Schedule 4C to TCGA 1992 (as amended by paragraphs 129 to 147)

applies in relation to a settlement before that Schedule (as it has effect

without those amendments) applies in relation to the settlement, and

(b)   

that Schedule (as it has effect without those amendments) applies in

20

relation to the settlement before section 87 or 89(2) of that Act applies

in relation to the settlement.

Transfers of securities: accrued income profits

157        

In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”)—

(a)   

omit the “and” at the end of paragraph (f), and

25

(b)   

at the end of paragraph (g) insert—

“(h)   

section 670A of ITA 2007 (accrued income profits),”.

158        

In section 617 of ITA 2007 (accrued income profits: income charged), after

subsection (6) insert—

“(7)   

Subsection (1) is subject to section 832 of ITTOIA 2005 (relevant

30

foreign income charged on remittance basis).”

159        

Omit section 644 of that Act (accrued income profits: individuals to whom

remittance basis applies).

160        

After section 670 of that Act insert—

Individuals to whom remittance basis applies

35

670A    

Individuals to whom remittance basis applies

(1)   

This section applies if—

(a)   

accrued income profits are made by an individual as a result

of a transfer of foreign securities, and

(b)   

section 809B, 809D or 809E (remittance basis) applies to the

40

individual for the tax year in which the profits are made.

(2)   

Treat the accrued income profits as relevant foreign income of the

individual.

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

223

 

(3)   

For the purposes of sections 809L to 809R (meaning of “remitted to

the United Kingdom” etc)—

(a)   

if the individual is the transferor—

(i)   

treat any consideration for the transfer as deriving

from the accrued income profits, and

5

(ii)   

if on the transfer the individual does not receive

consideration of an amount equal to the market value

of the securities, treat the securities as deriving from

the accrued income profits, and

(b)   

if the individual is the transferee, treat the securities as

10

deriving from the accrued income profits.

(4)   

For the purposes of this section securities are “foreign” if income

from them would be relevant foreign income.”

161        

The amendments made by paragraphs 157 to 160 have effect in relation to

transfers of securities where the settlement day is on or after 6 April 2008.

15

Transfers of assets abroad

162        

In section 46B(4)(c) of TMA 1970 (questions to be determined by Special

Commissioners), for “sections 720, 727 and 731” substitute “any provision of

Chapter 2 of Part 13”.

163        

In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”),

20

after paragraph (h) insert “and

(i)   

sections 726, 730 and 735 of that Act (transfer of assets abroad:

foreign deemed income).”

164        

ITA 2007 is amended as follows.

165        

In section 720(4) (transfer of assets abroad: charge where power to enjoy

25

income), after “abroad)” insert “and section 726 (non-UK domiciled

individuals to whom remittance basis applies)”.

166        

For section 726 substitute—

“726    

Non-UK domiciled individuals to whom remittance basis applies

(1)   

This section applies in relation to income treated under section 721 as

30

arising to an individual in a tax year (“the deemed income”) if—

(a)   

section 809B, 809D or 809E (remittance basis) applies to the

individual for the year, and

(b)   

the individual is not domiciled in the United Kingdom in the

year.

35

(2)   

For the purposes of this section the deemed income is “foreign” if

(and to the extent that) the income mentioned in section 721(2) would

be relevant foreign income if it were the individual’s.

(3)   

Treat the foreign deemed income as relevant foreign income of the

individual.

40

(4)   

For the purposes of sections 809L to 809R (meaning of “remitted to

the United Kingdom” etc), treat so much of the income within section

721(2) as would be relevant foreign income if it were the individual’s

as deriving from the foreign deemed income.”

 
 

Finance Bill (Volume I)
Schedule 7 — Remittance basis
Part 2 — Non-resident companies and trusts etc

224

 

167        

In section 727 (transfer of assets abroad: charge where capital sums

received), after subsection (3) insert—

“(3A)   

But see section 730 (non-UK domiciled individuals to whom

remittance basis applies).”

168        

For section 730 substitute—

5

“730    

Non-UK domiciled individuals to whom remittance basis applies

(1)   

This section applies in relation to income treated under section 728 as

arising to an individual in a tax year (“the deemed income”) if—

(a)   

section 809B, 809D or 809E (remittance basis) applies to the

individual for the year, and

10

(b)   

the individual is not domiciled in the United Kingdom in the

year.

(2)   

For the purposes of this section the deemed income is “foreign” if

(and to the extent that) the income mentioned in section 728(1)(a)

would be relevant foreign income if it were the individual’s.

15

(3)   

Treat the foreign deemed income as relevant foreign income of the

individual.

(4)   

For the purposes of sections 809L to 809R (meaning of “remitted to

the United Kingdom” etc), treat so much of the income within section

728(1)(a) as would be relevant foreign income if it were the

20

individual’s as deriving from the foreign deemed income.”

169        

In section 731 (transfer of assets abroad: charge where benefit received), after

subsection (2) insert—

“(2A)   

But see section 735 (non-UK domiciled individuals to whom

remittance basis applies).”

25

170        

For section 735 substitute—

“735    

Non-UK domiciled individuals to whom remittance basis applies

(1)   

This section applies if—

(a)   

income is treated under section 732 as arising to an individual

in a tax year (“the deemed income”),

30

(b)   

section 809B, 809D or 809E (remittance basis) applies to the

individual for the year, and

(c)   

the individual is not domiciled in the United Kingdom in the

year.

(2)   

For the purposes of this section the deemed income is “foreign” if

35

(and to the extent that) the relevant income to which it relates would

be relevant foreign income if it were the individual’s.

(3)   

Treat the foreign deemed income as relevant foreign income of the

individual.

(4)   

For the purposes of sections 809L to 809R (meaning of “remitted to

40

the United Kingdom” etc), treat relevant income, or a benefit, that

relates to any part of the foreign deemed income as deriving from

that part of the foreign deemed income.

 
 

 
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