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Finance (No. 2) Bill


Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

1

 

A

Bill

[AS AMENDED IN PUBLIC BILL COMMITTEE]

To

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

connection with finance. 

Most Gracious Sovereign

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:—

Part 1

Income tax, corporation tax and capital gains tax

Income tax and corporation tax

1       

Shared lives care

Schedule 1 contains provision extending foster-care relief to other forms of

5

care.

2       

Payments to special guardians and those in receipt of residence orders

(1)   

Part 6 of ITTOIA 2005 (exempt income) is amended as follows.

 

Bill 100                                                                                                

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Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

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(2)   

In section 744 (payments to adopters: England and Wales)—

(a)   

the existing provision becomes subsection (1),

(b)   

in that subsection, omit the “and” before paragraph (e) and after that

paragraph insert—

“(f)   

payments made under regulations under section 14F of

5

the Children Act 1989 (special guardianship support

services) to a person appointed as a child’s special

guardian,

(g)   

payments made to a person under section 17 of that Act

(provision of services for children in need, their families

10

and others) by reason of that person being a person in

whose favour a residence order with respect to a child is

in force,

(h)   

payments made to a person, in respect of a child, under

paragraph 15 of Schedule 1 to that Act (local authority

15

contribution to child’s maintenance to recipients in

whose favour residence order is in force), and

(i)   

payments made in accordance with—

(i)   

an order under that Schedule (orders for

financial relief against parents etc), or

20

(ii)   

a maintenance agreement,

   

for the benefit of a child, to a person appointed as the

child’s special guardian or a person in whose favour a

residence order with respect to the child is in force.”,

(c)   

after that subsection insert—

25

“(2)   

But a payment is not within subsection (1)(f), (g), (h) or (i) if—

(a)   

it is made to an excluded relative of the child,

(b)   

it is made to a person appointed as the child’s special

guardian and an excluded relative is also appointed as

the child’s special guardian, or

30

(c)   

it is made to a person in whose favour a residence order

is in force with respect to the child and that order is also

in favour of an excluded relative.

(3)   

In this section—

“excluded relative”, in relation to a child, means—

35

(a)   

a parent of the child, or

(b)   

a person who is, or has been, the husband or wife

or civil partner of a parent of the child;

“maintenance agreement” has the meaning given by

paragraph 10(1) of Schedule 1 to the Children Act 1989;

40

“residence order” has the meaning given by section 8 of

that Act.”, and

(d)   

in the heading, after “adopters” insert “, etc”.

(3)   

In section 745 (payments to adopters: Scotland)—

(a)   

the existing provision becomes subsection (1),

45

(b)   

in that subsection, omit the “and” before paragraph (d) and after that

paragraph insert—

“(e)   

payments made to a person under section 50 of the

Children Act 1975, or section 22 of the Children

 
 

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

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(Scotland) Act 1995, by reason of that person being a

person with whom a child is to live by virtue of a

residence order, and

(f)   

payments of aliment made—

(i)   

in accordance with an award of aliment under

5

the Family Law (Scotland) Act 1985, or

(ii)   

under an agreement (within the meaning of

section 7(5) of that Act),

   

for the benefit of a child, to a person in whose favour a

residence order with respect to the child is in force.”,

10

(c)   

after that subsection insert—

“(2)   

A payment is not within subsection (1)(e) or (f) if—

(a)   

it is made to an excluded relative of the child, or

(b)   

it is made to a person in whose favour a residence order

is in force with respect to the child and that order is also

15

in favour of an excluded relative.

(3)   

In this section—

“excluded relative”, in relation to a child, means—

(a)   

a parent of the child, or

(b)   

a person who is, or has been, the husband or wife

20

or civil partner of a parent of the child;

“residence order” has the meaning given by section

11(2)(c) of the Children (Scotland) Act 1995.”, and

(d)   

in the heading, after “adopters” insert “, etc”.

(4)   

In section 746 (payments to adopters: Northern Ireland)—

25

(a)   

the existing provision becomes subsection (1),

(b)   

in that subsection, omit the “and” before paragraph (c) and after that

paragraph insert—

“(d)   

payments made to a person under Article 18 of the

Children (Northern Ireland) Order 1995 (S.I. 1995/755

30

(NI 2)) (general duty of authority to provide personal

social services) by reason of that person being a person

in whose favour a residence order with respect to a child

is in force,

(e)   

payments made to a person, in respect of a child, under

35

paragraph 17 of Schedule 1 to that Order (local authority

contribution to child’s maintenance to recipients in

whose favour residence order is in force), and

(f)   

payments made in accordance with—

(i)   

an order under that Schedule (orders for

40

financial relief against parents etc), or

(ii)   

a maintenance agreement,

   

for the benefit of a child, to a person in whose favour a

residence order with respect to the child is in force.”,

(c)   

after that subsection insert—

45

“(2)   

But a payment is not within subsection (1)(d), (e) or (f) if—

(a)   

it is made to an excluded relative of the child, or

 
 

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

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(b)   

it is made to a person in whose favour a residence order

is in force with respect to the child and that order is also

in favour of an excluded relative.

(3)   

In this section—

“excluded relative”, in relation to a child, means—

5

(a)   

a parent of the child, or

(b)   

a person who is, or has been, the husband or wife

or civil partner of a parent of the child;

“maintenance agreement” has the meaning given by

paragraph 12 of Schedule 1 to the Children (Northern

10

Ireland) Order 1995;

“residence order” has the meaning given by Article 8 of

that Order.”, and

(d)   

in the heading, after “adopters” insert “, etc”.

(5)   

The amendments made by this section have effect in relation to the tax year

15

2010-11 and subsequent tax years.

3       

Qualifying care relief: capital allowances

(1)   

Chapter 2 of Part 7 of ITTOIA 2005 (qualifying care relief) is amended as

follows.

(2)   

In section 824 (capital allowances: introduction), after subsection (2) insert—

20

“(2A)   

In this group of sections, in relation to a relevant individual—

(a)   

“the care business” means the provision of qualifying care by

the individual,

(b)   

“care business expenditure” means qualifying expenditure

incurred on the provision of plant or machinery wholly or

25

partly for the care business,

(c)   

“care business pool” means a pool of care business expenditure

(even if the balance for the time being is nil), and

(d)   

a reference to “another activity” is to a qualifying activity

carried on by the individual other than the care business.

30

(2B)   

In this group of sections, plant or machinery is referred to as being “in”

a pool if qualifying expenditure incurred on its provision has been

allocated at any time to that pool.”

(3)   

For section 825 substitute—

“825    

Unallocated capital expenditure

35

(1)   

This section applies if—

(a)   

at the beginning of a relevant chargeable period of a relevant

individual, there is care business expenditure which has not

been allocated to a care business pool,

(b)   

the individual is entitled under CAA 2001 to allocate the

40

expenditure, or a part of it, to a care business pool for that

period, and

(c)   

the previous chargeable period was not a relevant chargeable

period.

 
 

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

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(2)   

So much of the expenditure as the individual is entitled to allocate to a

care business pool for that period is to be treated for the purposes of

CAA 2001 as allocated to the appropriate kind of care business pool for

that period (whether or not any of it is actually so allocated).

(3)   

For the different kinds of pool, see section 54 of CAA 2001.

5

825A    

Deemed disposal event

(1)   

Subsection (2) applies to a care business pool for a relevant chargeable

period of a relevant individual if the previous chargeable period was

not a relevant chargeable period.

(2)   

CAA 2001 is to apply as if—

10

(a)   

a disposal event occurs immediately after the beginning of the

relevant chargeable period in respect of plant or machinery in

the pool,

(b)   

disposal receipts fall to be brought into account in the pool for

the period because of that event, and

15

(c)   

the total of the receipts equals the sum of amount A and amount

B (or nil if there are no such amounts).

(3)   

Amount A is the amount of any expenditure treated as allocated to the

pool for the period by virtue of section 825 (whether or not any of it is

actually so allocated).

20

(4)   

Amount B is the amount of any unrelieved qualifying expenditure

carried forward in the pool from the previous chargeable period.

825B    

Plant or machinery used for care business

(1)   

This section applies if—

(a)   

disposal receipts fall to be brought into account in a pool for a

25

relevant chargeable period by virtue of section 825A, and

(b)   

on the re-start date, the relevant individual still owns any of the

plant or machinery which was in that pool and is still using any

of it for the purposes of the care business.

(2)   

The re-start date is the first day of the first subsequent chargeable

30

period which is not a relevant chargeable period.

(3)   

A reference in this section to the retained plant or machinery is to so

much of the plant or machinery in the pool as the relevant individual—

(a)   

still owns on the re-start date, and

(b)   

is still using on that date for the purposes of the care business.

35

(4)   

The individual is to be treated under CAA 2001—

(a)   

as having brought the retained plant or machinery into use on

the re-start date for the purposes of the care business,

(b)   

as having incurred capital expenditure on the provision of that

plant or machinery for those purposes on that date, and

40

(c)   

as owning that plant and machinery as a result of having

incurred that expenditure.

(5)   

The total amount of expenditure which the individual is to be treated

as having incurred (for all of the retained plant or machinery) is the

smaller of—

45

 
 

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

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(a)   

the total market value of the retained plant or machinery on the

re-start date, and

(b)   

an amount equal to the disposal receipts brought into account

in the pool as described in subsection (1)(a).

(6)   

If the individual is treated under section 13 of CAA 2001 as having

5

incurred notional expenditure before the re-start date as a result of

bringing plant or machinery in the pool into use for the purposes of

another activity, the amount mentioned in subsection (5)(b) must be

reduced by the total amount of that expenditure, as determined in

accordance with section 825C(2).

10

(7)   

But subsection (6) does not apply if the plant or machinery which was

brought into use for the purposes of another activity is the retained

plant or machinery (for example, where it was brought into use only

partly for the purposes of that other activity).

(8)   

The question whether the provision of the retained plant or machinery

15

is to be treated as wholly or only partly for the purposes of the care

business is to be determined according to whether the use referred to in

subsection (3)(b) is wholly or only partly for those purposes.

825C    

Plant or machinery used for other qualifying activities

(1)   

This section applies if—

20

(a)   

disposal receipts fall to be brought into account in a pool by

virtue of section 825A because of a disposal event, and

(b)   

after that disposal event, the relevant individual brings any of

the plant or machinery in that pool into use for the purposes of

another activity.

25

(2)   

Section 13 of CAA 2001 has effect as if the total amount of the notional

expenditure which the individual is treated under that section as

having incurred, for all of the plant or machinery in that pool which is

brought into use for the purposes of the other activity, were the smaller

of—

30

(a)   

the total market value of that plant or machinery on the day on

which it is brought into use for the purposes of that other

activity, and

(b)   

an amount equal to the disposal receipts brought into account

in the pool as mentioned in subsection (1)(a).

35

(3)   

Subsection (2) does not apply to plant or machinery brought into use

for the purposes of another activity if—

(a)   

the individual is treated by virtue of section 825B as having

already brought that plant or machinery into use for the

purposes of the care business, or

40

(b)   

this section has already applied to that plant or machinery since

the disposal event.

(4)   

The amount mentioned in subsection (2)(b) must be reduced by the

appropriate sum if some plant or machinery in the pool is brought into

use for the purposes of another activity after —

45

(a)   

the individual is treated by virtue of section 825B as having

brought other plant or machinery in that pool into use for the

purposes of the care business, or

 
 

Finance (No. 2) Bill
Part 1 — Income tax, corporation tax and capital gains tax

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(b)   

this section has applied to other plant or machinery in that pool

since the disposal event.

(5)   

The appropriate sum is—

(a)   

in a case within paragraph (a) of subsection (4), the total amount

of expenditure which the individual is treated by virtue of

5

section 825B as having incurred on the provision of that other

plant or machinery, and

(b)   

in a case within paragraph (b) of that subsection, the total

amount of the notional expenditure (as determined in

accordance with subsection (2)) which the individual is treated

10

under section 13 of CAA 2001 as having incurred on the

provision of that other plant or machinery since the disposal

event.

825D    

Subsequent disposal events

(1)   

This section applies to an item of plant or machinery which a relevant

15

individual—

(a)   

is treated by virtue of section 825B as bringing into use, or

(b)   

brings into use in circumstances where section 825C(2) applies.

(2)   

The date (in either case) on which the item is brought or treated as

brought into such use is referred to in this section as the applicable date.

20

(3)   

The first disposal event to occur in respect of the item on or after the

applicable date is to be regarded for the purposes of section 60(3) of

CAA 2001 as the first such event.

(4)   

That event requires a disposal value to be brought into account

regardless of anything to the contrary in section 64(1) of that Act.

25

(5)   

But a reference in section 62 of that Act to the amount of qualifying

expenditure incurred by the individual on the provision of that item is

a reference to the amount of qualifying expenditure originally incurred

by the individual on its provision (and not to any proportion of the total

amount treated by virtue of section 825B or 825C as having been

30

incurred).”

(4)   

The amendments made by this section have effect in relation to chargeable

periods ending on or after the day on which this Act is passed (“the

commencement day”).

(5)   

For anyone who was a relevant individual for the most recent chargeable

35

period ending before the commencement day, sections 825B and 825C of

ITTOIA 2005 have effect (on and after that day) as if references in those sections

to section 825A were references to section 825 as it was in force immediately

before the commencement day.

4       

Seafarers’ earnings

40

(1)   

Section 378 of ITEPA 2003 (deductions from seafarers’ earnings: eligibility) is

amended as follows.

(2)   

In subsection (1)(a), after “relevant taxable earnings” insert “or EEA-resident

earnings”.

 
 

 
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