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Finance Bill

Finance Bill (Volume II)
Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 1 — Consequential amendments
346

Schedule 27
Section 82

Abolition of allowances: consequential amendments and savings
Part 1
Consequential amendments
CAA 2001
1
CAA 2001 is amended as follows.
2
In section 1 (capital allowances), omit—
(a)
subsection (2)(b) and (c) (entitlement to industrial and agricultural
buildings allowances), and
(b)
in subsection (3) “, industrial buildings or agricultural buildings,”.
3
In section 2(3) (general means of giving effect to capital allowances), omit—
(a)
“sections 352 to 355 (industrial buildings allowances);”, and
(b)
“sections 391 and 392 (agricultural buildings allowances);”.
4
In section 3 (claims for capital allowances), omit subsections (4)(b) and (5)(b).
5     (1)
Section 186 (fixture on which an industrial buildings allowance has been
made) is amended as follows.
      (2)
In subsection (1)(a) and (b), for “is” substitute “was”.
      (3)
In subsection (3)—
(a)
at the beginning insert “If the total consideration for the transfer by
the past owner exceeds R,”, and
(b)
in the definition of “R”—
(i)
after “expenditure” insert “which would have been”, and
(ii)
at the end insert “, had the time immediately after the transfer
fallen immediately before the repeal of Part 3 by section 82 of
the Finance Act 2008.”
      (4)
After that subsection insert—
“(3A)
Where subsection (3) does not apply, the maximum allowable
amount is the part of the consideration for the transfer by the past
owner that is attributable to the fixture.”
      (5)
In subsection (5), for “in Part 3” substitute “for the purposes of Part 3
immediately before its repeal by section 82 of the Finance Act 2008.”
6
In section 443(3) (disposal values and disposal events), omit “or 3” and “and
industrial building allowances”.
7
In section 448(3) (additional VAT rebate generates disposal value), in
subsection (3) omit “or 3” and “and industrial buildings allowances”.
8
In section 537 (contribution allowances), omit “, 3, 4” in—
(a)
subsection (1),
(b)
subsection (2)(b)(ii), and
(c)
the heading.
9
Omit section 539 (contribution allowances: industrial buildings).

Finance Bill (Volume II)
Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 1 — Consequential amendments
347

10
Omit section 540 (contribution allowances: agricultural buildings).
11
In section 542(1) (effect of transfers of trade on contribution allowances), for
“Parts 3, 4 and 5” substitute “Part 5”.
12
In section 546 (introduction to Chapter 2 of Part 12), omit paragraph (b).
13
In section 564 (application of procedure in section 563)—
(a)
in subsection (1), for “3” substitute “3A”, and
(b)
omit subsection (3).
14
In section 567(1) (sales treated as for alternative amounts), omit “3,” and “4,”.
15
In section 569 (election to treat sale as being for an alternative amount),
omit—
(a)
in subsections (3)(a) and (5)(a), “3 or”, and
(b)
in subsection (5), “319 (building not an industrial building, etc
throughout) or”.
16
In section 570 (elections: supplementary), omit—
(a)
in subsection (1), “, 4”, and
(b)
in subsection (3), “3,”.
17
In section 570A(1) (avoidance affecting proceeds of balancing event), omit
“3,” and “4,”.
18
In section 573(1) (transfers treated as sales), omit “3,” and “4,”.
19    (1)
Part 2 of Schedule 1 (index of defined expressions) is amended as follows.
      (2)
Omit the entries relating to the following defined expressions—
“adjusted net cost (in Chapter 7 of Part 3)”,
“agricultural building”,
“balancing adjustment (in Part 3)”,
“balancing adjustment (in Part 4)”,
“balancing event (in Part 3)”,
“balancing event (in Part 4)”,
“building (in Part 3 - includes structure)”,
“commercial building (in Part 3, in relation to qualifying enterprise
zone expenditure)”,
“developer, carrying on a trade as (in Chapter 4 of Part 3)”,
“enterprise zone (in Part 3)”,
“expenditure on the construction of a building (in Part 3)”,
“expenditure on the construction of a building (in Part 4)”,
“highway concession (in Chapter 9 of Part 3)”,
“husbandry (in Part 4)”,
“industrial building”,
“lease and related expressions (in Part 3)”,
“lease and related expressions (in Part 4)”,
“proceeds from a balancing event (in Part 3)”,
“proceeds from a balancing event (in Part 4)”,
“qualifying enterprise zone expenditure (in Part 3)”,
“qualifying hotel (in Part 3)”,
“qualifying trade (in Part 3)”,

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Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 1 — Consequential amendments
348

“related agricultural land (in Part 4)”,
“relevant interest (in Part 3)”,
“relevant interest (in Part 4)”,
“residue of qualifying expenditure (in Part 3)”,
“residue of qualifying expenditure (in Part 4)”, and
“writing-down period (in Part 4)”.
      (3)
In the entry relating to “sale, transfers under Parts 3, 3A, 4, 4A and 10 treated
as”, omit “3,” and “4,”.
20
In Schedule 3 (transitional provision and savings), omit—
(a)
paragraphs 56 to 83, and
(b)
paragraph 110.
ICTA
21
In section 495 of ICTA (regional development grants), omit—
(a)
in subsection (1)(b), “, 3” and “, industrial buildings”, and
(b)
in subsection (3)(b), “, 3”.
FA 2000
22
In Schedule 22 (tonnage tax), omit paragraphs 84 and 86.
FA 2001
23    (1)
FA 2001 is amended as follows.
      (2)
In Schedule 19 (insertion of Part 4A of CAA 2001: consequential
amendments), omit paragraph 4.
      (3)
In Schedule 21 (capital allowances: minor amendments), omit paragraphs 5
and 6.
Proceeds of Crime Act 2002 (c. 29)
24
In Schedule 10 to the Proceeds of Crime Act 2002 (tax consequences of
transfers under Part 5 of that Act), omit paragraphs 18 to 21.
Energy Act 2004 (c. 20)
25
In Schedule 4 to the Energy Act 2004 (tax exemption for NDA and NDA
companies), omit paragraphs 5 and 6.
ITTOIA 2005
26
In Schedule 1 to ITTOIA 2005 (consequential amendments), omit
paragraphs 552 to 558.
ITA 2007
27    (1)
ITA 2007 is amended as follows.
      (2)
In section 24(1)(b) (reliefs deductible at Step 2), omit the entry relating to Part
3 of CAA 2001.

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Schedule 27 — Abolition of allowances: consequential amendments and savings
Part 2 — Savings
349

      (3)
In section 25(3) (reliefs deductible at Steps 2 and 3: supplementary), omit the
entry relating to section 355 of that Act.
      (4)
In Schedule 1 (minor and consequential amendments), omit paragraph 406.
FA 2007
28
In FA 2007, omit section 36 (industrial and agricultural buildings
allowances: balancing adjustments).
FA 2008
29
In FA 2008, omit—
(a)
section 83 (phasing out of allowances before abolition),
(b)
section 84 (qualifying enterprise zone expenditure: transitional
provision), and
(c)
section 85 (which inserts section 313A of CAA 2001).
Commencement
30    (1)
Subject to sub-paragraph (2), this Part of this Schedule has effect in relation
to chargeable periods (within the meaning of CAA 2001) beginning on or
after—
(a)
for corporation tax purposes, 1 April 2011, and
(b)
for income tax purposes, 6 April 2011.
      (2)
The amendments made by paragraph 5 have effect in relation to a transfer
by the past owner (within the meaning of section 186 of CAA 2001) in such
a chargeable period.
Part 2
Savings
Enterprise zone expenditure
31    (1)
Sub-paragraph (2) applies if—
(a)
an initial allowance or a writing down allowance has been made
under Part 3 of CAA 2001 in respect of qualifying enterprise zone
expenditure, and
(b)
an event occurs in relation to the building on which the expenditure
was incurred which, if that Part of that Act remained in force, would
be a balancing event in respect of which a balancing charge would be
made.
      (2)
Unless the event occurs more than 7 years after the building was first used,
a balancing charge is to be made in respect of the event as if that Part of that
Act remained in force.
32    (1)
Sub-paragraph (2) applies if—
(a)
an initial allowance has been made under Part 3 of CAA 2001 in
respect of qualifying enterprise zone expenditure, and
(b)
an event occurs in relation to the building on which the expenditure
was incurred which, if section 307 of that Act (withdrawal of

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Schedule 28 — Inheritance of tax-relieved pension savings
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allowance if building not industrial building when first used etc)
remained in force, would result in the allowance being withdrawn.
      (2)
Unless the event occurs more than 7 years after the end of the chargeable
period for which the allowance was made, the allowance is to be withdrawn
as if that section remained in force.
Definition of structure
33
Despite the repeal of Part 3 of CAA 2001 by section 82, Chapter 2 of that Part
continues to have effect for the purposes of paragraph (a) of item 7 in List B
in section 22(1) of that Act (structures which are not plant and machinery).
Definition of qualifying trade
34
Despite the repeal of Part 3 of CAA 2001 by section 82, the following
provisions continue to have effect for the purposes of section 484 of that Act
(dredging allowances: definition of qualifying trade)—
(a)
section 274(1) (definition of qualifying trade), and
(b)
sections 276(3) and 341(4) of that Act (parts of trades and
undertakings; meaning of “highway concession”) so far as they relate
to the Tables in that section.
Commencement
35
This Part of this Schedule has effect in relation to chargeable periods (within
the meaning of CAA 2001) beginning on or after—
(a)
for corporation tax purposes, 1 April 2011, and
(b)
for income tax purposes, 6 April 2011.
Schedule 28
Section 89

Inheritance of tax-relieved pension savings
Amendments of Part 4 of FA 2004
1
Part 4 of FA 2004 (pensions schemes etc) is amended as follows.
2     (1)
Section 172 (assignment) is amended as follows.
      (2)
In subsection (3)—
(a)
in paragraph (a), for “an actual or” substitute “a”, and
(b)
in paragraph (b), for “the member” substitute “a member of the
pension scheme”.
      (3)
After subsection (6) insert—
“(6A)
References in this section to a benefit to which the member or a
person has an entitlement under the pension scheme includes rights
to payments under—
(a)
a scheme pension or dependants’ scheme pension provided
by the scheme administrator or as a result of the application
of sums or assets held for the purposes of the pension
scheme, or

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(b)
a lifetime annuity or dependants’ annuity purchased by the
application of sums or assets held for the purposes of the
pension scheme.”
3     (1)
Section 172A (surrender) is amended as follows.
      (2)
In subsection (1), at the end of paragraph (a) (but before the “or”) insert—
“(aa)
any rights to payments under a lifetime annuity or
dependants’ annuity purchased by the application of sums
or assets held for the purposes of the pension scheme,”.
      (3)
In subsection (3)(a), for “relating to” substitute “in respect of”.
      (4)
In subsection (5), after paragraph (c) insert—
“(ca)
a surrender of (or agreement to surrender) rights to payments
under an annuity in any case covered by regulations under
paragraph 3(2B) or 17(3) of Schedule 28;”.
      (5)
After subsection (9) insert—
“(9A)
References in this section to a benefit to which the member or a
person has an entitlement under the pension scheme includes rights
to payments under—
(a)
a scheme pension or dependants’ scheme pension provided
by the scheme administrator or as a result of the application
of sums or assets held for the purposes of the pension
scheme, or
(b)
a lifetime annuity or dependants’ annuity purchased by the
application of sums or assets held for the purposes of the
pension scheme.”
4     (1)
Section 172B (increase in rights of connected person on death) is amended as
follows.
      (2)
In subsection (2), at the end of paragraph (a) (but before the “or”) insert—
“(aa)
rights to payments under a scheme pension or dependants’
scheme pension provided by the scheme administrator or as
a result of the application of sums or assets held for the
purposes of the pension scheme or under a lifetime annuity
or dependants’ annuity purchased by the application of sums
or assets held for the purposes of the pension scheme,”.
      (3)
In subsections (3)(a) and (7)(b), for “is actually or prospectively entitled”
substitute “has an actual or prospective entitlement”.
      (4)
In subsection (7)—
(a)
omit paragraph (a) (including the “and” at the end), and
(b)
in paragraph (b), for “them” substitute “at least 20 members of the
pension scheme”.
      (5)
After subsection (7) insert—
“(7A)
This section does not apply if—
(a)
the increase mentioned in subsection (1)(a) is an increase in
the rate of a dependants’ annuity or dependants’ scheme
pension or in rights representing a dependants’ unsecured
pension fund or dependants’ alternatively secured pension
fund, and

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(b)
the increase is attributable to rights of the dead member to
payments under a dependants’ annuity or dependants’
scheme pension or rights representing a dependants’
unsecured pension fund.
(7B)
References in this section to a benefit to which the member or a
person has an entitlement under the pension scheme includes rights
to payments under—
(a)
a scheme pension or dependants’ scheme pension provided
by the scheme administrator or as a result of the application
of sums or assets held for the purposes of the pension
scheme, or
(b)
a lifetime annuity or dependants’ annuity purchased by the
application of sums or assets held for the purposes of the
pension scheme.”
5
In paragraph 16(2) of Schedule 28 (dependants’ scheme pension), after
“pension” insert “for the purposes of this Part”.
Amendments of IHTA 1984
6
IHTA 1984 is amended as follows.
7     (1)
Section 151A (person dying with alternatively secured pension fund) is
amended as follows.
      (2)
In subsection (2), after “charged if it” insert “and any amount on which tax
was previously charged under this section in relation to the member”.
      (3)
In subsection (4B) —
(a)
for the words from “that” to “per cent.” substitute “amount that
could be transferred by a chargeable transfer made (under section 4
above) on the member’s death if it were to be wholly chargeable at
the rate of nil per cent. (assuming, if necessary, that the value of the
member’s estate were sufficient but otherwise having regard to the
circumstances of the member)”, and
(b)
for “that chargeable transfer” substitute “the chargeable transfer so
made”.
8     (1)
Section 151BA (rate or rates of charge under section 151B) is amended as
follows.
      (2)
In subsection (1), for the words after “(4) of that section)” substitute “less the
amount of any previously charged income tax (within the meaning of
subsection (4A) of section 151A) constituted the relevant amount for the
purposes of subsection (2) of that section, but subject as follows.”
      (3)
Omit subsection (2).
      (4)
In subsection (3)—
(a)
for the words from “on the taxable amount” to “of that section”
substitute “is to be determined on the assumption that the references
in section 151A(4A) and (5)”, and
(b)
for “this section” substitute “section 151B above”.
9     (1)
Section 151C (dependant dying with alternatively secured pension fund
where section 151B does not apply) is amended as follows.