Finance Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Finance Bill

Finance Bill
Part 3 — Other provisions
35

69
Alcoholic liquor duties: power to amend definition of “cider”
In section 1 of ALDA 1979 (dutiable alcoholic liquors), after subsection (6)
insert—
“(6A)
The Treasury may by order made by statutory instrument amend
subsection (6) above.
5
(6B)
An order under subsection (6A) above may make—
(a)
consequential amendments in this Act or any other enactment,
(b)
other consequential provision, and
(c)
supplementary, incidental and transitional provision.
(6C)
A statutory instrument containing an order under subsection (6A)
10
above is to be laid before the House of Commons after being made; and,
unless it is approved by that House before the end of the period of 28
days beginning with the date on which it is made, ceases to have effect
at the end of that period (but without that affecting anything previously
done under it or the making of a new order).
15
(6D)
In reckoning that period no account is to be taken of any time—
(a)
during which Parliament is dissolved or prorogued, or
(b)
during which the House of Commons is adjourned for more
than 4 days.”
70
Climate change levy: compatible state aid
20
In paragraph 42 of Schedule 6 to FA 2000 (amount payable by way of levy),
after sub-paragraph (2) insert—
    “(3)
If a reduced-rate supply is part of an aid scheme within Article 25 of
Commission Regulation (EC) No. 800/2008, sub-paragraph (4) cites
the title and publication reference of that Regulation for the purpose
25
of complying with Article 3(1) of that Regulation.
      (4)
That citation is Commission Regulation (EC) No. 800/2008 of 6
August 2008 declaring certain categories of aid compatible with the
common market in application of Articles 87 and 88 of the Treaty
(General block exemption Regulation) (O.J. 2008 No. L214/3) (with
30
the reference to Articles 87 and 88 being read, as a result of the Treaty
of Lisbon, as a reference to Articles 107 and 108 of the Treaty on the
Functioning of the European Union).”
71
Pensions: minor corrections
(1)
Section 280(2) of FA 2004 (Part 4: index) is amended as follows.
35
(2)
After the definition of “active membership period (in sections 221 to 223)”
insert—

“additional rate
section 6(2) of ITA 2007 (as

applied by section 989 of that

Act)”.

40
(3)
In the definition of “basic rate limit”, for “20(2)” substitute “10”.

Finance Bill
Part 3 — Other provisions
36

(4)
After the entry relating to “higher rate” insert—

“higher rate limit
section 10 of ITA 2007”.

(5)
The amendments made by subsections (2) and (4) have effect for the tax year
2010-11 and subsequent tax years.
(6)
The amendment made by subsection (3) has effect for the tax year 2008-09 and
5
subsequent tax years.
Final provisions
72
Interpretation
(1)
In this Act—
“ALDA 1979” means the Alcoholic Liquor Duties Act 1979;
10
“BGDA 1981” means the Betting and Gaming Duties Act 1981;
“CAA 2001” means the Capital Allowances Act 2001;
“CEMA 1979” means the Customs and Excise Management Act 1979;
“CTA 2009” means the Corporation Tax Act 2009;
“CTA 2010” means the Corporation Tax Act 2010;
15
“FISMA 2000” means the Financial Services and Markets Act 2000;
“HODA 1979” means the Hydrocarbon Oil Duties Act 1979;
“ICTA” means the Income and Corporation Taxes Act 1988;
“IHTA 1984” means the Inheritance Tax Act 1984;
“ITA 2007” means the Income Tax Act 2007;
20
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act
2005;
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992;
“TIOPA 2010” means the Taxation (International and Other Provisions)
25
Act 2010;
“TMA 1970” means the Taxes Management Act 1970;
“TPDA 1979” means the Tobacco Products Duty Act 1979;
“VATA 1994” means the Value Added Tax Act 1994;
“VERA 1994” means the Vehicle Excise and Registration Act 1994.
30
(2)
In this Act—
“FA”, followed by a year, means the Finance Act of that year;
“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year.
73
Short title
This Act may be cited as the Finance Act 2010.
35

Finance Bill
Schedule 1 — Bank payroll tax
Part 1 — The tax
37

Schedules
Schedule 1
Section 22

Bank payroll tax
Part 1
The tax
5
The tax
1     (1)
This Schedule makes provision for taxable companies to be charged to a tax
to be known as “bank payroll tax”.
      (2)
Bank payroll tax is chargeable on the aggregate of the amounts of chargeable
relevant remuneration awarded during the chargeable period to or in
10
respect of relevant banking employees of a taxable company by reason of
their employment as relevant banking employees.
      (3)
Relevant remuneration awarded during the chargeable period to or in
respect of a relevant banking employee of a taxable company by reason of
the employee’s employment as a relevant banking employee is “chargeable”
15
relevant remuneration only if and to the extent that its amount exceeds
£25,000.
Rate
2
Bank payroll tax is charged at the rate of 50%.
“Taxable company”
20
3
“Taxable company” means a company which—
(a)
is a UK resident bank or a relevant foreign bank,
(b)
is a company not within paragraph (a) which is a member of a
banking group and—
(i)
is a UK resident investment company or a UK resident
25
financial trading company, or
(ii)
is a relevant foreign financial trading company, or
(c)
is a building society or is a UK resident investment company, or a UK
resident financial trading company, which is a member of the same
group as a building society.
30
“Relevant remuneration”
4     (1)
“Relevant remuneration”, in relation to a relevant banking employee of a
taxable company, means anything that—

Finance Bill
Schedule 1 — Bank payroll tax
Part 1 — The tax
38

(a)
constitutes earnings (within the meaning of section 62 of ITEPA
2003) in relation to the employee’s employment by the taxable
company as a relevant banking employee, or
(b)
while not constituting earnings, constitutes a benefit provided by
reason of that employment.
5
      (2)
Whether or not the relevant banking employee is chargeable to income tax
in respect of anything is irrelevant in determining whether or not it is
relevant remuneration.
      (3)
Excluded remuneration is not relevant remuneration.
“Excluded remuneration”
10
5     (1)
“Excluded remuneration” means—
(a)
anything which is regular salary or wages or a regular benefit,
(b)
anything in the case of which a contractual obligation to pay or
provide it to or in respect of the employee concerned arose before the
beginning of the chargeable period,
15
(c)
any shares awarded under an approved share incentive plan (within
the meaning of section 488 of ITEPA 2003), or
(d)
any share option granted under an approved SAYE option scheme
(within the meaning of section 516 of that Act).
      (2)
In sub-paragraph (1)(a) “regular”, in relation to salary or wages or a benefit,
20
means so much of the amount of the salary or wages or benefit as cannot
vary according to—
(a)
the performance of, or of any part of—
(i)
any business of the taxable company concerned, or
(ii)
any business of a person connected with the taxable
25
company,
(b)
the contribution made by the employee concerned to the
performance of, or of any part of, any business within paragraph
(a)(i) or (ii),
(c)
the performance by the employee of any of the duties of the
30
employment, or
(d)
any similar considerations.
      (3)
For the purposes of sub-paragraph (1)(b) a contractual obligation to pay or
provide something to or in respect of the employee does not arise until—
(a)
the amount to be paid or provided is fixed or is capable of becoming
35
fixed without the exercise of discretion by any person, or
(b)
the total amount of things to be paid or provided to or in respect of a
number of employees including the employee is fixed or is capable
of becoming fixed without the exercise of discretion by any person.
      (4)
A contractual obligation to pay or provide something is taken to arise for
40
those purposes even if payment or provision of it is dependent on
compliance by the employee with any conditions.
“Awarded”
6     (1)
Relevant remuneration is “awarded” during the chargeable period if—

Finance Bill
Schedule 1 — Bank payroll tax
Part 1 — The tax
39

(a)
a contractual obligation to pay or provide it arises during the
chargeable period, or
(b)
the relevant remuneration is paid or provided during the chargeable
period without any such obligation having arisen during the
chargeable period,
5

but subject to sub-paragraph (3).
      (2)
Sub-paragraph (3)(a) of paragraph 5 applies for the purposes of sub-
paragraph (1) as for the purposes of sub-paragraph (1)(b) of that paragraph.
      (3)
Relevant remuneration is not to be taken to be awarded during the
chargeable period by virtue of sub-paragraph (1)(a) if—
10
(a)
it is required to be paid or provided at intervals,
(b)
it is to be paid or provided in respect of contribution, performance or
similar considerations only for times after the end of the chargeable
period, and
(c)
the reduction or elimination of a liability to bank payroll tax is not the
15
main purpose or one of the main purposes of any person in assuming
the obligation to pay or provide it.
      (4)
Sub-paragraph (4) of paragraph 5 applies for the purposes of this paragraph
as for the purposes of sub-paragraph (1)(b) of that paragraph.
“Amount” of remuneration
20
7     (1)
Subject to sub-paragraphs (2) to (4), the amount of any relevant
remuneration is—
(a)
if it is money, its amount when awarded,
(b)
if it is money’s worth, the amount of the money’s worth when
awarded, or
25
(c)
if it is a benefit not constituting earnings, the cost of providing it.
      (2)
Where relevant remuneration is awarded to or in respect of an employee by
virtue of paragraph 6(1)(a) and its amount is not fixed when it is awarded,
its amount is such as it is reasonable at that time to assume would be its
amount (in accordance with sub-paragraph (1)) if and when paid or
30
provided.
      (3)
Where the market value of any relevant remuneration at the time it is
awarded exceeds, or would exceed, what would otherwise be its amount, its
amount is that market value.
      (4)
Where anything constituting relevant remuneration is or would be, when
35
awarded, subject to any restriction or restrictions, the restriction is, or
restrictions are, to be ignored in arriving at its amount.
      (5)
For this purpose “restriction” means any condition, restriction or other
similar provision which causes the value of the relevant remuneration to be
less than it otherwise would be.
40
“The chargeable period”
8
“The chargeable period” is the period—
(a)
beginning at 12.30 pm on 9 December 2009, and
(b)
ending with 5 April 2010.

Finance Bill
Schedule 1 — Bank payroll tax
Part 1 — The tax
40

“Relevant banking employee”
9     (1)
An employee of a taxable company is a relevant banking employee of the
taxable company if—
(a)
the employment in which the employee is employed by the taxable
company is a banking employment, and
5
(b)
either—
(i)
the employee is resident in the United Kingdom in the tax
year 2009-10, or
(ii)
the duties of the banking employment are at any time in that
tax year performed wholly or partly in the United Kingdom.
10
      (2)
“Banking employment” means an employment the duties of which are
wholly or mainly concerned (whether directly or indirectly) with activities
to which sub-paragraph (3) applies.
      (3)
This sub-paragraph applies to activities which are—
(a)
listed regulated activities, or
15
(b)
activities which are not listed regulated activities but consist of the
lending of money or of dealing in currency or commodities as
principal.
      (4)
“Listed regulated activity” means an activity which is a regulated activity for
the purposes of FISMA 2000 by virtue of any of the following provisions of
20
the Financial Services and Markets Act 2000 (Regulated Activities) Order
2001 (S.I. 2001/544)—
(a)
article 5 (accepting deposits),
(b)
article 14 (dealing in investments as principal),
(c)
article 21 (dealing in investments as agent),
25
(d)
article 25 (arranging deals in investments),
(e)
article 40 (safeguarding and administering investments),
(f)
article 53 (advising on investments), and
(g)
article 61 (entering into regulated mortgage contracts).
      (5)
But an activity is not a listed regulated activity in relation to an employee of
30
a taxable company if—
(a)
the taxable company is an insurance company, or a member of the
same group as an insurance company, and the activity is carried on
wholly on behalf of the insurance company, or
(b)
it—
35
(i)
is either of the activities described in the provisions
mentioned in sub-paragraph (4)(c) and (d), and
(ii)
is carried on as part of, or wholly in support of, activities of
the taxable company, or of a company which is a member of
the same group as the taxable company, and the activities
40
consist of acting as discretionary investment manager for
clients none of which is a linked entity.
      (6)
An employee of a taxable company who spends no more than 60 days in the
United Kingdom in the tax year 2009-10 is to be treated as not being a
relevant banking employee of the taxable company.
45
      (7)
In determining for the purposes of sub-paragraph (6) whether an individual
spends no more than 60 days in the United Kingdom treat a day as a day

Finance Bill
Schedule 1 — Bank payroll tax
Part 1 — The tax
41

spent by the individual in the United Kingdom if (and only if) the individual
is present in the United Kingdom at the end of the day.
      (8)
But in determining that issue for those purposes do not treat as a day spent
by the individual in the United Kingdom any day on which the individual
arrives in the United Kingdom as a passenger if—
5
(a)
the individual departs from the United Kingdom on the next day,
and
(b)
during the time between arrival and departure the individual does
not engage in activities which are to a substantial extent unrelated to
the individual’s passage through the United Kingdom.
10
Multiple employments
10    (1)
The threshold of £25,000 in paragraph 1(3) applies whether or not an
employee has more than one employment as a relevant banking employee
with a taxable company.
      (2)
If relevant remuneration is awarded during the chargeable period to or in
15
respect of a relevant banking employee by reason of the employee’s
employment as such by a number of associated taxable companies, the
threshold in paragraph 1(3) in relation to each of the taxable companies is
£25,000 divided by the number of the taxable companies.
      (3)
For this purpose taxable companies are associated if—
20
(a)
one of them is under the control of the other, or
(b)
one of them is under the control of a third person who controls or is
under the control of the other.
Payments etc to intermediaries
11    (1)
This paragraph applies where—
25
(a)
an individual personally performs banking services for a taxable
company,
(b)
the banking services are provided not under a contract directly
between the individual and the taxable company but under
arrangements involving any other person (“the intermediary”), and
30
(c)
the circumstances are such that, if the banking services were
provided under a contract directly between the taxable company and
the individual, the individual would be a relevant banking employee
of the taxable company.
      (2)
The individual is to be regarded as a relevant banking employee of the
35
taxable company.
      (3)
Anything done by the intermediary in relation to the individual which, if the
banking services were provided under a contract directly between the
taxable company and the individual, would be regarded as the award of
relevant remuneration during the chargeable period to or in respect of the
40
individual (as a relevant banking employee) by reason of the employee’s
employment as a relevant banking employee is to be so regarded.
      (4)
“Banking services” means services which are wholly or mainly concerned
(whether directly or indirectly) with activities which are activities to which
paragraph 9(3) applies.
45