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amended in accordance with the following provisions of this Part of this | |
Schedule. | |
Required minimum aggregate expenditure: reduction from £25,000 to £10,000 | |
12 (1) Paragraph 7 (entitlement to relief under Part 2 of the Schedule) is amended | |
as follows. | 5 |
(2) In sub-paragraph (1)(b) (requirement for minimum R&D expenditure of | |
£25,000 or time apportioned part of that amount) in sub-paragraphs (i) and | |
(ii) for “£25,000” substitute “£10,000”. | |
Required minimum aggregate expenditure: inclusion of new class of expenditure | |
13 (1) Paragraph 7 is also amended as follows. | 10 |
(2) In sub-paragraph (2) (meaning of “aggregate R&D expenditure”) omit the | |
word “and” immediately preceding paragraph (b) and at the end of that | |
paragraph add “, and | |
(c) its qualifying additional SME expenditure (see paragraph | |
10B).”. | 15 |
R&D directly undertaken by SME: qualifying expenditure on externally provided workers | |
14 In paragraph 9 (expenditure on research and development directly | |
undertaken by SME) for sub-paragraph (2) (the second condition, that the | |
expenditure must be incurred on staffing costs or consumable stores) | |
substitute— | 20 |
“(2) The second condition is that the expenditure— | |
(a) is incurred on staffing costs, | |
(b) is incurred on consumable stores, or | |
(c) is qualifying expenditure on externally provided | |
workers.”. | 25 |
Part 4 | |
Entitlement of SME to certain relief available to large companies | |
Insertion of Part 2A of Schedule 12 to the Finance Act 2002 | |
15 After Part 2 of Schedule 12 to the Finance Act 2002 (c. 23) (entitlement to | |
relief for R&D expenditure: work sub-contracted to small or medium-sized | 30 |
enterprise) insert the following Part— | |
“Part 2A | |
Entitlement of SME to additional relief available to large companies | |
Entitlement to relief under this Part | |
10A (1) A company (“the SME”) is entitled to tax relief under this Part for | 35 |
an accounting period if— | |
(a) it qualifies as a small or medium-sized enterprise in that | |
period, and | |
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(b) its aggregate R&D expenditure for that period is not less | |
than— | |
(i) £10,000, if the accounting period is a period of 12 | |
months, or | |
(ii) such amount as bears to £10,000 the same | 5 |
proportion as the accounting period bears to 12 | |
months. | |
(2) Sub-paragraphs (2) and (3) of paragraph 7 (meaning of “aggregate | |
R&D expenditure” and “for an accounting period”) apply for the | |
purposes of this paragraph as they apply for the purposes of that | 10 |
paragraph. | |
(3) Any relief to which a company is entitled under this Part for an | |
accounting period is in addition to any relief to which it may be | |
entitled under— | |
(a) Schedule 20 to the Finance Act 2000, or | 15 |
(b) Part 2 of this Schedule. | |
Qualifying additional SME expenditure | |
10B For the purposes of this Schedule, the SME’s “qualifying | |
additional SME expenditure” is any expenditure which— | |
(a) had the SME been a large company throughout the | 20 |
accounting period in question, would have been | |
qualifying R&D expenditure of that company (see | |
paragraph 3), but | |
(b) is not qualifying R&D expenditure for the purposes of | |
Schedule 20 to the Finance Act 2000 (see paragraph 3 of | 25 |
that Schedule) in the case of the SME by reason only of | |
paragraph 3(7) or 10(2)(a)(iv) of that Schedule (subsidised | |
expenditure, within the meaning given by paragraph 8 of | |
that Schedule); and | |
(c) is not qualifying sub-contracted R&D expenditure for the | 30 |
purposes of this Schedule (see paragraph 8) in the case of | |
the SME.”. | |
Part 5 | |
Supplementary: amendments to Parts 3 to 6 of Schedule 12 to Finance Act 2002 | |
Introductory | 35 |
16 Parts 3 to 6 of Schedule 12 to the Finance Act 2002 (c. 23) are amended in | |
accordance with the following provisions of this Part of this Schedule. | |
Deduction in computing profits of trade | |
17 (1) Paragraph 11 is amended as follows. | |
(2) In sub-paragraph (1) (application of paragraph) for “Part 1 or 2” substitute | 40 |
“Part 1, 2 or 2A”. | |
(3) In sub-paragraph (3) (meaning of “qualifying expenditure”) omit the word | |
“and” immediately preceding paragraph (b) and at the end of that | |
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paragraph insert “, and | |
(c) in the case of relief under Part 2A, qualifying additional SME | |
expenditure (see paragraph 10B).”. | |
Refunds of contributions to independent research and development | |
18 In paragraph 15(1) (refunds of certain payments) omit the word “or” | 5 |
immediately preceding paragraph (c) and at the end of that paragraph insert | |
“, or | |
(d) any expenditure which is qualifying additional SME | |
expenditure,”. | |
Meaning of “qualifying expenditure on externally provided workers” | 10 |
19 (1) Paragraph 17 (which applies certain definitions from Schedule 20 to the | |
Finance Act 2000 (c. 17)) is amended as follows. | |
(2) Omit the word “and” immediately preceding paragraph (c). | |
(3) At the end of paragraph (c) add “; and | |
(d) paragraphs 8A to 8E (qualifying expenditure on externally | 15 |
provided workers).”. | |
(4) The heading to the paragraph accordingly becomes— | |
“Meaning of “relevant research and development”, “staffing costs”, “consumable | |
stores” and “qualifying expenditure on externally provided workers””. | |
Part 6 | 20 |
Expenditure on vaccine research etc: Schedule 13 to Finance Act 2002 | |
Introductory | |
20 Schedule 13 to the Finance Act 2002 (c. 23) (tax relief for expenditure on | |
vaccine research etc) is amended in accordance with the following | |
provisions of this Part of this Schedule. | 25 |
Reduction of required qualifying expenditure from £25,000 to £10,000 | |
21 (1) Paragraph 1 (entitlement to relief under the Schedule) is amended as | |
follows. | |
(2) In sub-paragraph (1) (requirement for minimum qualifying expenditure of | |
£25,000 or time apportioned part of that amount) in paragraphs (a) and (b) | 30 |
for “£25,000” substitute “£10,000”. | |
Direct research and development: qualifying expenditure on externally provided workers | |
22 In paragraph 3 (qualifying expenditure on direct research and development) | |
for sub-paragraph (5) (the fourth condition, that the expenditure is incurred | |
on staffing costs or consumable stores) substitute— | 35 |
“(5) The fourth condition is that the expenditure— | |
(a) is incurred on staffing costs, | |
(b) is incurred on consumable stores, or | |
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(c) is qualifying expenditure on externally provided | |
workers.”. | |
Meaning of “qualifying expenditure on externally provided workers” | |
23 (1) Paragraph 5(3) (which applies certain definitions in Schedule 20 to the | |
Finance Act 2000) is amended as follows. | 5 |
(2) Omit the word “and” immediately preceding paragraph (d). | |
(3) In paragraph (d), for “(subsidised expenditure),” substitute “(subsidised | |
expenditure); and”. | |
(4) After paragraph (d) insert the following paragraph— | |
“(e) paragraphs 8A to 8E (qualifying expenditure on externally | 10 |
provided workers),”. | |
(5) The heading to paragraph 5 accordingly becomes— | |
“Meaning of “relevant R&D”, “small or medium-sized enterprise”, “staffing | |
costs”, “consumable stores”, “subsidised” and “qualifying expenditure on | |
externally provided workers””. | 15 |
Relevant expenditure of sub-contractor: qualifying expenditure on externally provided workers | |
24 In paragraph 9 (relevant expenditure of sub-contractor) for sub-paragraph | |
(3) (the second condition, that the expenditure must be incurred on staffing | |
costs or consumable stores) substitute— | |
“(3) The second condition is that the expenditure— | 20 |
(a) is incurred on staffing costs, | |
(b) is incurred on consumable stores, or | |
(c) is qualifying expenditure on externally provided workers. | |
In applying for the purposes of this sub-paragraph (by virtue of | |
paragraph 5 above)— | 25 |
paragraph 5 of Schedule 20 to the Finance Act 2000 | |
(meaning of “staffing costs”), or | |
paragraphs 8A to 8E of that Schedule (qualifying | |
expenditure on externally provided workers), | |
the references to the company shall be read as references to the | 30 |
sub-contractor.”. | |
Schedule 32 | |
Section 169 | |
Tonnage tax: restrictions on capital allowances for lessors of ships | |
The ring fence: amendments to the provisions about capital allowances and ship leasing | |
1 (1) In Schedule 22 to the Finance Act 2000 (c. 17) (tonnage tax), Part 10 (the ring | 35 |
fence: capital allowances: ship leasing) is amended as follows. | |
(2) Omit the word “finance” from the expression “finance lease” in paragraphs | |
89(1), 90(1), 92(1), 93(1), 94(1), 98(1)(a) and 99(1)(a). | |
(3) At the end of sub-paragraph (1) of paragraph 89 (introduction to Part 10) | |
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insert— | |
“This is subject to paragraph 89A (exception for ordinary charters).”. | |
(4) For sub-paragraph (2) of that paragraph substitute— | |
“(2) In this Part of this Schedule “lease” means any arrangements that | |
provide for a ship to be leased or otherwise made available by a | 5 |
person (“the lessor”) to another person (“the lessee”).”. | |
(5) After that paragraph insert— | |
“Quantitative restrictions not to apply to ordinary charters | |
89A (1) Paragraphs 94 to 102, and paragraph 89(1) so far as relating to | |
those paragraphs, do not apply in the following cases. | 10 |
(2) The first case is where the ship is chartered out by a person who is | |
responsible— | |
(a) for the operation of the ship, including the appointment of | |
the master and those members of the crew engaged in | |
navigation, throughout the period of the charter, and | 15 |
(b) for defraying all expenses in connection with the ship | |
throughout that period, or substantially all such expenses | |
other than those directly incidental to a particular voyage | |
or to the employment of the ship during that period. | |
For the purposes of this sub-paragraph a person is “responsible” if | 20 |
he is responsible as principal or if he appoints another person, | |
other than the lessee or a person connected with the lessee, to be | |
responsible in his place. | |
(3) The second case is where— | |
(a) the ship is chartered out by a person acting in the course of | 25 |
a trade that consists of, or to a significant extent includes, | |
operating ships, and | |
(b) the conditions in sub-paragraph (4) are met. | |
(4) Those conditions are— | |
(a) that the period of the charter does not exceed seven years, | 30 |
and there is no provision or agreement under which it | |
could be extended beyond seven years; | |
(b) that the period of the charter, together with any other | |
periods in the same ten years during which the ship is | |
chartered out to the lessee or a person connected with him, | 35 |
does not exceed seven years in total; | |
(c) that there are no arrangements under which the lessee or a | |
person connected with him may acquire the ship, whether | |
directly or indirectly, from the lessor. | |
In paragraph (b) “the same ten years” means any period of ten | 40 |
years that includes the period of the charter mentioned in that | |
paragraph. | |
(5) References in this paragraph to the period of a charter are to the | |
term specified in the lease or, if longer, the actual period during | |
which the ship is chartered. | 45 |
(6) Section 839 of the Taxes Act 1988 (connected persons) applies for | |
the purposes of this paragraph.”. | |
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Consequential amendments | |
2 (1) In paragraph 41(4) of that Schedule (the requirement not to enter into tax | |
avoidance arrangements: exemption for finance leases)— | |
(a) in the first sentence omit “finance”; | |
(b) for the second sentence substitute— | 5 |
“In this sub-paragraph “lease”, and “lessor” in relation to a | |
lease, have the meaning given by paragraph 89(2).”. | |
(2) In paragraph 147 (index of defined expressions)— | |
(a) omit the entry for “finance lease (and lessor and lessee) (in Part X)”; | |
(b) insert at the appropriate place— | 10 |
“lease (and lessor and lessee) (in Part X) paragraph 89(2)”. | |
Commencement and temporary provision | |
3 (1) Subject to paragraph 4(2), the amendments made by paragraphs 1 and 2 | |
apply in relation to any lease entered into on or after 19th December 2002. | |
(2) In sub-paragraph (4)(b) of the paragraph 89A inserted by paragraph 1(5) | 15 |
above, the reference to any other periods during which the ship is chartered | |
out does not include any period during which it is chartered out under a | |
lease entered into before 19th December 2002. | |
4 (1) This paragraph applies in relation to any lease entered into on or after 19th | |
December 2002 and before 16 April 2003. | 20 |
(2) Part 10 of the Schedule 22 to the Finance Act 2000 (c. 17) has effect as if, | |
instead of the paragraph inserted after paragraph 89 by paragraph 1(5) | |
above, the following paragraph were inserted— | |
“Exception for ordinary charters | |
89A (1) Paragraph 89(1), and the provisions of this Part of this Schedule | 25 |
listed there, do not apply in the following cases. | |
(2) The first case is where the ship is chartered out by a person who is | |
responsible— | |
(a) for the operation of the ship, including the appointment of | |
the master and those members of the crew engaged in | 30 |
navigation, throughout the period of the charter, and | |
(b) for defraying all expenses in connection with the ship | |
throughout that period, or substantially all such expenses | |
other than those directly incidental to a particular voyage | |
or to the employment of the ship during that period. | 35 |
For the purposes of this sub-paragraph a person is “responsible” if | |
he is responsible as principal or if he appoints another person, | |
other than the lessee or a person connected with the lessee, to be | |
responsible in his place. | |
(3) The second case is where— | 40 |
(a) the ship is chartered out to another person (“the charterer”) | |
because of short-term over-capacity, | |
(b) the person chartering out the ship does so in the course of | |
a trade that consists of or includes operating ships, and | |
(c) the conditions in sub-paragraph (4) are met. | 45 |
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(4) Those conditions are— | |
(a) that the period of the charter does not exceed three years, | |
and there is no provision or agreement under which it | |
could be extended beyond three years; | |
(b) that the period of the charter, together with any other | 5 |
periods in the same five years during which the ship is | |
chartered out to the charterer or a person connected with | |
him, does not exceed three years in total; | |
(c) that neither the charterer nor any person connected with | |
him has an option to purchase the ship. | 10 |
(5) In sub-paragraph (4)(b)— | |
(a) the reference to any other periods during which the ship is | |
chartered out does not include any period during which it | |
is chartered out under a lease entered into before 19th | |
December 2002; | 15 |
(b) “the same five years” means any period of five years that | |
includes the period of the charter mentioned in that sub- | |
paragraph. | |
(6) References in this paragraph to the period of a charter are to the | |
term specified in the lease or, if longer, the actual period during | 20 |
which the ship is chartered. | |
(7) Section 839 of the Taxes Act 1988 (connected persons) applies for | |
the purposes of this paragraph.”. | |
(3) Paragraph 93(1) of that Schedule (certificates required to support claim by | |
lessor) has effect as if after paragraph (a) there were inserted— | 25 |
“(aa) that the lease is such that, by virtue of paragraph 89A | |
(exception for ordinary charters), paragraph 89(1) does not | |
apply, or”. | |
5 In paragraphs 3 and 4 “lease” means any arrangements that provide for a | |
ship to be leased or otherwise made available by one person to another. | 30 |
Schedule 33 | |
Section 170 | |
Insurance companies | |
Case I profits | |
1 (1) For section 82 of the Finance Act 1989 (c. 26) (calculation of profits of | |
insurance company in respect of life assurance business when computed in | 35 |
accordance with provisions applicable to Case I of Schedule D) substitute— | |
“82 Calculation of profits: bonuses etc | |
(1) This section and sections 82A and 82B below have effect where the | |
profits of an insurance company in respect of its life assurance | |
business are, for the purposes of the Taxes Act 1988, computed in | 40 |
accordance with the provisions of that Act applicable to Case I of | |
Schedule D. | |
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