Finance Bill

House of Commons

Session 2008 - 09
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 27 — Remittance basis
Part 1 — Amendments of ITA 2007
264

Power to provide for withdrawals and variations not to affect certain contracts
8
In section 706(3) (transitional provision for withdrawals and variations of
certifications) for the words from “the operation of” to the end substitute—
“(a)
the operation of the arrangement concerned before that date,
(b)
contracts made under that arrangement before that date, or
5
(c)
where the notice so provides, contracts which are of a
description specified in the notice and are made under that
arrangement after that date.”
Schedule 27
Section 51

Remittance basis
10
Part 1
Amendments of ITA 2007
1
Chapter A1 of Part 14 of ITA 2007 (remittance basis) is amended as follows.
2
In section 809C (claim for remittance basis by long-term UK resident:
nomination of foreign income and gains to which section 809H(2) is to
15
apply), after subsection (5) insert—
“(5A)
The references to income tax in subsection (5) do not include income
tax under section 424 (gift aid).”
3     (1)
Section 809D (application of remittance basis without claim where
unremitted foreign income and gains under £2,000) is amended as follows.
20
      (2)
In subsection (1), insert at the end (not as part of paragraph (c))—

“unless condition A or condition B is met.”
      (3)
After that subsection insert—
“(1A)
Condition A is that the individual is not domiciled in the United
Kingdom in that year and conditions A to F in section 828B are met.
25
(1B)
Condition B is that the individual gives notice in a return under
section 8 of TMA 1970 that this section is not to apply in relation to
the individual for that year.”
4     (1)
Section 809E (application of remittance basis without claim: other cases) is
amended as follows.
30
      (2)
In subsection (1), for paragraph (c) substitute—
“(c)
for that year the individual either has no UK income or gains
or has no UK income and gains other than taxed investment
income not exceeding £100.”
      (3)
In that subsection, insert at the end (not as part of paragraph (e))—
35

“unless the individual gives notice in a return under section 8 of
TMA 1970 that this section is not to apply in relation to the individual
for that year.”

Finance Bill
Schedule 27 — Remittance basis
Part 1 — Amendments of ITA 2007
265

      (4)
After subsection (2) insert—
“(2A)
For the purposes of subsection (1)(c) “taxed investment income”
means UK income or gains consisting of payments within section 946
from which a sum representing income tax has been deducted.”
5
In section 809H (claim for remittance basis by long-term UK resident:
5
charge), after subsection (5) insert—
“(5A)
The references to income tax in subsection (5) do not include income
tax under section 424 (gift aid).”
6     (1)
Section 809L (meaning of “remitted to the United Kingdom”) is amended as
follows.
10
      (2)
Omit subsection (8).
      (3)
In subsection (9), for “income or chargeable gains are used in respect of a
debt include cases where income or chargeable gains are” substitute
“property (including income or chargeable gains) is used in respect of a debt
include cases where the property is”.
15
7     (1)
Section 809M (meaning of “relevant person” for purposes of sections 809L,
809N and 809O) is amended as follows.
      (2)
In subsection (2)(e), insert at the end “or a company which is a 51%
subsidiary of such a close company”.
      (3)
In subsection (3), after paragraph (c) insert—
20
“(ca)
“participator”, in relation to a close company, means a person
who is a participator in relation to the company for the
purposes of section 419 of ICTA (see sections 417(1) and
419(7) of that Act),
(cb)
“51% subsidiary” has the same meaning as in the Corporation
25
Tax Acts (see section 838 of ICTA),”.
8
In section 809P (amount remitted), insert at the end—
“(13)
If the property forms part of a set only part of which is in the United
Kingdom, the amount remitted is such portion of what it would have
been had the complete set been brought to, or received or used in, the
30
United Kingdom when the part was as is just and reasonable (having
regard to the part of the set which is there).”
9     (1)
Section 809T (foreign chargeable gains accruing on disposals made other
than for full consideration) is amended as follows.
      (2)
In subsection (1)(b), after “amount” insert “at least”.
35
      (3)
In the heading, for “other” substitute “otherwise”.
10    (1)
Section 809X (property which is exempt property) is amended as follows.
      (2)
In subsection (4), omit “that derive from relevant foreign income”.
      (3)
In subsection (5), omit “of any description that derives from relevant foreign
income”.
40
11    (1)
Section 809Z5 (notional remitted amount) is amended as follows.
      (2)
In subsection (1), omit “of income”.

Finance Bill
Schedule 27 — Remittance basis
Part 3 — Commencement
266

      (3)
Omit subsections (2) and (3).
Part 2
Amendments of other Acts
TCGA 1992
12
In section 14A(3)(b) of TCGA 1992 (section 13: non-UK domiciled
5
individuals), after “amount” insert “at least”.
ITTOIA 2005
13
In section 648 of ITTOIA 2005 (income arising under a settlement), for
subsections (2) to (5) substitute—
“(2)
But if, in a tax year, the settlor is not UK resident, references in this
10
Chapter to income arising under a settlement do not include income
arising under the settlement in that tax year in respect of which the
settlor, if actually entitled to it, would not be chargeable to income
tax by deduction or otherwise because of not being UK resident.
(3)
And if, for a tax year, section 809B, 809D or 809E of ITA 2007
15
(remittance basis) applies to the settlor, references in this Chapter to
income arising under a settlement include in relation to any relevant
foreign income arising under the settlement in that tax year only
such of it as is remitted to the United Kingdom (in that tax year or
any subsequent tax year) in circumstances such that, if the settlor
20
remitted it, the settlor would be chargeable to income tax.
(4)
See Chapter A1 of Part 14 of ITA 2007 for the meaning of “remitted
to the United Kingdom” etc.
(5)
Where subsection (3) applies the remitted income is treated for the
purposes of this Chapter as arising under the settlement in the tax
25
year in which it is remitted.”
FA 2008
14
In paragraph 86 of Schedule 7 to FA 2008 (remittance basis: transitional
provisions), after sub-paragraph (4) insert—
   “(4A)
For the purposes of sub-paragraph (4), section 648(2) to (5) of
30
ITTOIA 2005 (and corresponding earlier enactments) do not apply
(so that relevant foreign income which arose under a settlement in
the tax year 2007-08 or any earlier tax year is to be treated as
income for the tax year in which it arose).”
Part 3
35
Commencement
15    (1)
The amendments made by paragraphs 2 to 5, 10, 11(2) and 14 have effect for
the tax year 2008-09 and subsequent tax years.
      (2)
The other amendments made by this Schedule come into force on 22 April
2009.
40

Finance Bill
Schedule 28 — Taxable benefits: cars
267

Schedule 28
Section 53

Taxable benefits: cars
Introduction
1
Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars) is amended as
follows.
5
Abolition of “price cap”
2     (1)
Section 121(1) (method of calculating cash equivalent of benefit of car) is
amended as follows.
      (2)
In step 3, insert at the end—

“The resulting amount is the interim sum.”
10
      (3)
Omit step 4 (interim sum to be £80,000 if step 3 amount exceeds £80,000).
3
In section 145(5) (modifications of provisions where car temporarily
replaced), for “step 4” substitute “step 3”.
4
In section 147(1) and (2), for “amount carried forward from” substitute
“interim sum calculated under”.
15
5
In section 170(1) (Treasury orders increasing various amounts), omit
paragraph (a) (amount in step 4 of section 121(1)).
Cars with CO2 emissions figures: the appropriate percentage
6
In section 139(4) (car with a CO2 emissions figure: the appropriate
percentage), for the table substitute—
20
“Table

Tax year
Lower threshold (in g/km)

2009-10
135

2010-11
130

2011-12 and subsequent tax years
125”.

25
Electrically propelled cars: the appropriate percentage
7
In section 140(3)(a) (appropriate percentage for electrically propelled cars),
for “15%” substitute “9%”.
8
In section 142 (special provision for cars registered before 1998)—
(a)
in subsection (3) (cars without internal combustion engine with
30
reciprocating pistons), for the words after “year is” substitute “32%”,
and
(b)
omit subsection (4) (definition of electrically propelled car).

Finance Bill
Schedule 29 — Manufactured overseas dividends
268

Consequential repeal
9
In consequence of the amendment made by paragraph 6, in FA 2008, omit
section 47(1).
Commencement
10    (1)
The amendments made by paragraphs 6 and 9 have effect for the tax year
5
2009-10 and subsequent tax years.
      (2)
The other amendments made by this Schedule have effect for the tax year
2011-12 and subsequent tax years.
Schedule 29
Section 58

Manufactured overseas dividends
10
Repos
1     (1)
Schedule 23A to ICTA (manufactured dividends and interest) is amended as
follows.
      (2)
In paragraph 4, in sub-paragraph (4)—
(a)
in paragraph (a), for “the amount deducted under section 922(2) of
15
ITA 2007 or (as the case may be)” substitute “the relevant amount in
relation to the amount deducted under section 922(2) of ITA 2007 or
the whole of the amount”,
(b)
in paragraph (b), for “the amount so deducted or” substitute “the
relevant amount in relation to the amount so deducted or the whole
20
of the amount”, and
(c)
insert at the end—

“For the meaning of references in this paragraph to the
relevant amount in relation to an amount deducted under
section 922(2) of ITA 2007, see paragraph 4A.”
25
      (3)
After that paragraph insert—
“4A   (1)
A reference in paragraph 4(4)(a) or (b) to the relevant amount in
relation to an amount deducted under section 922(2) of ITA 2007
is—
(a)
where the deduction is made in respect of a manufactured
30
overseas dividend that is treated as paid under paragraph
13(1) of Schedule 13 to FA 2007 (sale and repurchase of
securities), to amount A, and
(b)
otherwise, to the amount deducted under section 922(2) of
ITA 2007.
35
      (2)
Amount A is—
(a)
in a case to which sub-paragraph (3) applies, the amount
deducted under section 922(2) of ITA 2007,
(b)
in a case to which sub-paragraph (4) applies—
(i)
the amount deducted under section 922(2) of ITA
40
2007, less

Finance Bill
Schedule 29 — Manufactured overseas dividends
269

(ii)
the excess mentioned in that sub-paragraph, and
(c)
in any other case, nil.
      (3)
This sub-paragraph applies to a case in which—
(a)
an amount is actually paid by way of manufactured
overseas dividend,
5
(b)
the amount so paid equals the relevant net amount, and
(c)
it is reasonable to assume that, in deciding the repurchase
price of the securities, no account was taken of the fact that
the amount would be so paid.
      (4)
This sub-paragraph applies to a case in which—
10
(a)
an amount is actually paid by way of manufactured
overseas dividend,
(b)
the amount so paid exceeds the relevant net amount, and
(c)
it is reasonable to assume that, in deciding the repurchase
price of the securities, no account was taken of the fact that
15
the amount would be so paid.
      (5)
In this section “the repurchase price” of the securities means the
price at which the payer of the manufactured overseas dividend is
entitled or obliged to sell the securities, or similar securities, to the
recipient of the manufactured overseas dividend.
20
      (6)
In this section “the securities” means the securities in respect of
which the overseas dividend of which the manufactured overseas
dividend is representative is paid.
      (7)
In this section “the relevant net amount” means—
(a)
the gross amount of the overseas dividend of which the
25
manufactured overseas dividend is representative, less
(b)
the amount deducted under section 922(2) of ITA 2007.”
Stock lending
2     (1)
Section 736B of ICTA (deemed manufactured payments in the case of stock
lending arrangements) is amended as follows.
30
      (2)
In subsection (2), for “subsection (2A)” substitute “subsections (2A) and
(2B)”.
      (3)
After subsection (2A) insert—
“(2B)
In its application by virtue of subsection (2), paragraph 4(4) of
Schedule 23A has effect as if—
35
(a)
in paragraph (a), the words from “but paid after” to the end
were omitted, and
(b)
paragraph (b) were omitted.”
Commencement
3     (1)
The amendments made by paragraph 1 have effect in relation to overseas
40
dividends paid on or after 22 April 2009.
      (2)
The amendments made by paragraph 2 have effect in relation to interest on
securities paid on or after 22 April 2009.

Finance Bill
Schedule 30 — Financial arrangements avoidance
270

      (3)
In this paragraph—
“interest” has the same meaning as in section 736B of ICTA;
“overseas dividend” has the same meaning as in Schedule 23A to ICTA.
Schedule 30
Section 61

Financial arrangements avoidance
5
Interest payments: arrangements appearing very likely to produce post-tax advantage
1     (1)
In ITA 2007, after section 384 insert—
“384A
Restriction on relief where arrangements minimise risk to borrower
(1)
Relief is not to be given under this Chapter for interest paid by a
person on a loan if—
10
(a)
the loan is made to the person (“the borrower”) as part of
arrangements which appear very likely to produce a post-tax
advantage, and
(b)
the arrangements seem to have been designed to reduce any
income tax or capital gains tax to which the borrower (or any
15
person whose circumstances are like those of the borrower)
would be liable apart from the arrangements.
(2)
Arrangements “appear very likely” to produce a post-tax advantage
if (and only if) it would be reasonable to assume from either or both
of—
20
(a)
the likely effect of the arrangements, and
(b)
the circumstances in which the arrangements, or any parts of
the arrangements, are entered into or effected,

that there is no risk, or only an insignificant risk, that they will not
produce a post-tax advantage.
25
(3)
“Produce a post-tax advantage” means give rise to a sum or sums—
(a)
payable to the borrower or a person connected with the
borrower, or
(b)
payable to any other person for the benefit of the borrower or
a person connected with the borrower,
30

of an amount (or aggregate amount) which, after making the
appropriate tax adjustments, is equal to or greater than the relevant
amount.
(4)
“The relevant amount” is the aggregate of—
(a)
the amount required to meet the borrower’s obligations in
35
respect of the loan, and
(b)
any amount which is used by the borrower in the same way
as that which entitles the borrower to relief under this
Chapter in respect of the loan and is not money lent to the
borrower under any loan.
40
(5)
If, with a view to securing that the condition in subsection (1)(a) is
not met, the arrangements make provision for securing that, in all or
any circumstances in which they do not produce a post-tax