Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill (Volume I)
Part 2 — Income tax, corporation tax and capital gains tax - general
22

Employment matters
43
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
5
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
(b)
the company has been the holding company of the property at
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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
(c)
the only activities undertaken by it are ones that are incidental
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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
subsection (2),
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(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.
(4)
“Relevant interest in the property” means an interest under the law of
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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
interest in the property; but this is subject to subsection (6).
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(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
time D first acquired an interest in the company,
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“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—
(a)
the company’s interest in the property was acquired directly or
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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.

Finance Bill (Volume I)
Part 2 — Income tax, corporation tax and capital gains tax - general
23

(3)
This subsection applies if, at any time after the relevant time—
(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
5
(7)).
(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.
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(5)
In subsection (2) references to the acquisition of an interest include the
grant of an interest.
(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
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interest on the open market; and “consideration” here means
consideration provided at any time (and, for example, includes
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
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(b)
any borrowing which results in D being treated under Chapter
7 (taxable benefits: loans) as receiving earnings.
(8)
In subsection (4) “arrangement” includes any scheme, agreement or
understanding, whether or not enforceable.
(9)
In this section “connected company” means—
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(a)
a company connected with D, with a member of D’s family or
with an employer of D, or
(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
30
treated as never having applied to living accommodation outside the United
Kingdom provided in circumstances in which, had it been provided on or after
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
35
(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),
insert at the appropriate places—

“In-work credit
ETA 1973           Section 2

ETA(NI) 1950    Section 1

40

In-work emergency
ETA 1973           Section 2

discretion fund payment

Finance Bill (Volume I)
Part 2 — Income tax, corporation tax and capital gains tax - general
24

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
5
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.
45
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)—

Finance Bill (Volume I)
Part 2 — Income tax, corporation tax and capital gains tax - general
25

(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
5
(1)
In section 149AA of TCGA 1992 (restricted and convertible employment-
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).”
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(2)
ITEPA 2003 is amended as follows.
(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
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“(other than an amount of exempt income)”.
(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)”.
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(7)
In paragraph 21(3) of Schedule 23 to FA 2003 (corporation tax relief for
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
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of that Act).”
(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
30
of that Act).”
(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
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after that date.
(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.
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(13)
The amendments made by subsections (7) and (8) have effect in relation to
awards of shares made on or after that date.