grant certain duties, to alter other duties, and to amend the law relating to the
National Debt and the Public Revenue, and to make further provision in
WE, Your Majesty’s most dutiful and loyal subjects, the Commons of the
United Kingdom in Parliament assembled, towards raising the necessary
supplies to defray Your Majesty’s public expenses, and making an addition to the
public revenue, have freely and voluntarily resolved to give and to grant unto Your
Majesty the several duties hereinafter mentioned; and do therefore most humbly
beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most
Excellent Majesty, by and with the advice and consent of the Lords Spiritual and
Temporal, and Commons, in this present Parliament assembled, and by the authority
of the same, as follows:—
Main rate of corporation tax for financial year 2011
In section 2(2)(a) of FA 2010 (main corporation tax rate for financial year 2011
on profits other than ring fence profits), for “28%” substitute “27%”.
Rates of capital gains tax
Schedule 1 contains provision in relation to the rates at which capital gains tax
Rate of value added tax
In section 2(1) of VATA 1994 (rate of VAT), for “17.5 per cent” substitute “20
In section 21(4) of that Act (restriction on value of imported goods), for “28.58
per cent” substitute “25 per cent”.
The amendment made by subsection (1) has effect in relation to any supply
made on or after 4 January 2011 and any acquisition or importation taking
place on or after that date.
The amendment made by subsection (2) has effect in relation to goods
imported on or after 4 January 2011.
Schedule 2 contains provision for a supplementary charge to value added tax
on supplies spanning the date of the VAT change.
Rates of insurance premium tax
In section 51(2) of FA 1994 (rates of insurance premium tax)—
in paragraph (a) (higher rate), for “17.5 per cent” substitute “20 per
in paragraph (b) (standard rate), for “5 per cent” substitute “6 per cent”.
The amendments made by subsection (1) have effect in relation to a premium
falling to be regarded for the purposes of Part 3 of FA 1994 as received under a
taxable insurance contract by an insurer on or after 4 January 2011.
In the application of sections 67A and 67C of FA 1994 (announced increase in
rate) in relation to the increases made by this section—
the announcement for the purposes of section 67A(1) is to be taken to
have been made on 22 June 2010, and
the date of the change is 4 January 2011.
In FA 1999, omit section 125; and the repeal of that section comes into force in
accordance with the provision made by this section for the coming into force of
the amendments made by subsection (1).
Power to repeal high income excess relief charge
The Treasury may by order made by statutory instrument repeal section 23 of,
and Schedule 2 to, FA 2010 (high income excess relief charge).
No order may be made under subsection (1) after 31 December 2010.
Section 1014 of ITA 2007 (orders and regulations under Income Tax Acts) does
not apply to the power under subsection (1).
Treatment of persons at age 75
Schedule 3 contains provision about the treatment of persons who reach the
age of 75 on or after 22 June 2010.
Expenses paid to MPs etc
Schedule 4 contains provision about expenses and allowances paid to members
of the House of Commons and other representatives.
Amounts not fully recognised for accounting purposes
Schedule 5 contains amendments of sections 311, 312 and 599A of CTA 2009
(loan relationships and derivative contracts: treatment of amounts not fully
recognised for accounting purposes).
Insurance companies: business transfers involving excess assets
In Chapter 1 of Part 12 of ICTA (insurance companies etc), after section 432CA
Transfers of business involving excess assets
This section applies where, under an insurance business transfer
scheme, there is a transfer of long-term business—
from a non-profit fund of an insurance company (“the
transferor”) which is not a non-profit company in relation to the
relevant period of account,
to another insurance company (“the transferee”) to constitute or
form part of a non-profit fund of the transferee (“the
transferee’s non-profit fund”),
(“the transfer”) and conditions A and B are met.
Condition A is that the fair value of the assets transferred by the
transfer exceeds by an amount (“the chargeable excess”) the amount of
the relevant liabilities transferred by the transfer.
For this purpose “relevant” liabilities are liabilities of a type shown (or
treated as shown) in any of lines 14, 17, 21 to 23 and 31 to 38 of Form 14
of a periodical return of an insurance company.
Condition B is that the main purpose, or one of the main purposes, of
the transferor or the transferee (or both) in entering into any part of the
transfer scheme arrangements is to secure a reduction in tax as a result
of section 432C having effect in the case of the transferee, rather than
the transferor, in relation to the business transferred by the transfer.
The chargeable excess is to be brought into account by the transferor as
mentioned in section 83(2)(b) of the Finance Act 1989 for the relevant
Where there is no amount shown in relation to the transferee’s non-
profit fund in column 1 of line 51 of Form 14 of the periodical return of
the transferee for the first period of account of the transferee ending on
or after the transfer date (“the first post-transfer period of account”), the
chargeable excess is to be brought into account by the transferee as
mentioned in section 83(2) of the Finance Act 1989 as a decrease in the
value of non-linked assets for the first post-transfer period of account.
there is an amount shown in relation to the transferee’s non-
profit fund in column 1 of line 51 of Form 14 of the periodical
return of the transferee for the first post-transfer period of
the amount so shown in column 1 of line 51 of Form 14 of the
periodical return of the transferee for that period of account, or
for any other period of account of the transferee ending after the
transfer date, (an “affected period of account”) is less than the
total chargeable excess amount,
the relevant amount is to be brought into account by the transferee as
mentioned in section 83(2) of the Finance Act 1989 as a decrease in the
value of non-linked assets for the affected period of account.
For this purpose “the relevant amount” is the amount by which—
the amount shown in relation to the transferee’s non-profit fund
in column 1 of line 51 of Form 14 of the periodical return of the
transferee for the affected period of account, is less than
the total chargeable excess amount less any amount brought
into account by the transferee as mentioned in section 83(2) of
the Finance Act 1989 as a decrease in the value of non-linked
assets for any earlier period of account by virtue of the
operation of this section in relation to the transferee’s non-profit
In subsections (6) and (7) “the total chargeable excess amount” means
the chargeable excess, and
any amount which is the chargeable excess in relation to any
other transfer of business to the transferee’s non-profit fund.
In this section “the relevant period of account” means—
the period of account of the transferor ending immediately
before the transfer date, or
if no period of account of the transferor so ends, the period of
account of the transferor covering the transfer date.
In this section “the transfer scheme arrangements” means the insurance
business transfer scheme and any relevant associated operations; and
for this purpose “relevant associated operations” means—
any other insurance business transfer scheme,
any contract of reinsurance, or
any reconstruction or amalgamation involving the transferor, a
dependant of the transferor which is an insurance undertaking
which is effected in connection with the insurance business transfer
have the same meaning as in the Insurance Prudential Sourcebook.
In this section “the transfer date” means the date on which the
insurance business transfer scheme takes effect.
For the purposes of this section an insurance company which has
elected under section 83YA(9) of the Finance Act 1989 (changes in value
of assets brought into account: non-profit companies) to be treated as a
non-profit company in relation to a period of account is to be regarded
as a non-profit company in relation to the period of account.”
The amendment made by subsection (1) has effect in relation to transfers of
business taking place on or after 24 March 2010.
“CTA 2009” means the Corporation Tax Act 2009;
“CTA 2010” means the Corporation Tax Act 2010;
“ICTA” means the Income and Corporation Taxes Act 1988;
“ITA 2007” means the Income Tax Act 2007;
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992;
“VATA 1994” means the Value Added Tax Act 1994.
In this Act “FA”, followed by a year, means the Finance Act of that year.
This Act may be cited as the Finance (No.2) Act 2010.