Finance Act 2004

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

62

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Miscellaneous

64

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

67

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Interpretation

68

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

69

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequential amendment

70

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 3 — Intangible fixed assets

Excluded assets: assets in respect of which capital allowances previously made

71

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustment on change of accounting policy

72

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References to amounts recognised in profit and loss account

73

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequential amendments

74

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

75

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

76

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part 4 — Foreign currency accounting

Main provisions

77

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consequential amendments

78

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 11

Part 1 — Conditions to be satisfied by individuals

General

1

• (1) In the case of an application for an individual to be registered for gross payment, the following conditions must be satisfied by the individual.

• (2) But where the application is for the registration of the individual as a partner in a firm, this Part of this Schedule has effect with the omission of paragraphs 2 and 3.

The business test

2

The applicant must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that he is carrying on a business in the United Kingdom which—

• (a) consists of or includes the carrying out of construction operations or the furnishing or arranging for the furnishing of labour in carrying out construction operations, and

• (b) is, to a substantial extent, carried on by means of an account with a bank.

The turnover test

3

• (1) The applicant must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that the carrying on of the business mentioned in paragraph 2 is likely to involve the receipt in the year following the making of the application of an aggregate amount by way of relevant payments which is not less than the amount specified in regulations made by the Board as the minimum turnover for the purposes of this sub-paragraph.

• (2) In sub-paragraph (1) “relevant payments” means payments under contracts relating to, or to the work of individuals participating in the carrying out of, any operations which—

• (a) are of a description specified in subsection (2) of section 74; but

• (b) are not of a description specified in subsection (3) of that section,

other than so much of the payments as represents the direct cost to the person receiving the payments of materials used or to be used in carrying out the operations in question.

• (3) The Board may make regulations for the purpose of enabling a person who does not satisfy the condition in sub-paragraph (1) to be treated as satisfying that condition in such circumstances as may be prescribed.

The compliance test

4

• (1) The applicant must, subject to sub-paragraphs (3) and (4), have complied with—

• (a) any obligation imposed on him in the qualifying period (see paragraph 14)—

• (i) to pay the amount liable to be deducted under section 61 of this Act from payments made during that period,

• (ii) to submit returns as required by regulations made under section 70 of this Act,

• (iii) to pay the tax liable to be deducted under PAYE regulations, and

• (iv) to submit a self-assessment return, and

• (v) to account for or pay VAT as required by or under the Value Added Tax Act 1994, and

• (b) all requests made in the qualifying period to supply to the Inland Revenue accounts of, or other information about, any business of his.

• (2) An applicant who at any time in the qualifying period had control of a company is to be taken not to satisfy the condition in sub-paragraph (1) unless the company has satisfied that condition in relation to the period or periods within the qualifying period during which he had control of it; and for this purpose “control” is to be construed in accordance with sections 450 and 451 of the Corporation Tax Act 2010.

• (3) An applicant or company that has failed to comply with such an obligation or request as—

• (a) is referred to in sub-paragraph (1), and

• (b) is of a kind prescribed by regulations made by the Board of Inland Revenue,

is, in such circumstances as may be prescribed by the regulations, to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request.

• (4) An applicant or company that has failed to comply with such an obligation or request as is referred to in sub-paragraph (1) is to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that—

• (a) the applicant or company had a reasonable excuse for the failure to comply, and

• (b) if the excuse ceased, he or it complied with the obligation or request without unreasonable delay after the excuse had ceased.

• (5) Where the applicant states, for the purpose of showing that he has complied with all obligations imposed on him as mentioned in sub-paragraph (1), that he was not subject to any of one or more obligations in respect of any period within the qualifying period—

• (a) he must satisfy the Board of Inland Revenue of that fact by such evidence as may be prescribed in regulations made by the Board; and

• (b) if for that purpose he states that he has been outside the United Kingdom for the whole or any part of the qualifying period, he must also satisfy them, by such evidence as may be so prescribed, that he has complied with any obligations imposed under the tax laws of any country in which he was living during that period which are comparable to the obligations mentioned in sub-paragraph (1).

• (6) The applicant must, if any contribution has at any time during the qualifying period become due from him under—

• (a) Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or

• (b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),

have paid the contribution when it became due.

• (7) There must be reason to expect that the applicant will, in respect of periods after the qualifying period, comply with—

• (a) such obligations as are referred to in sub-paragraphs (1) to (6), and

• (b) such requests as are referred to in sub-paragraph (1).

• (8) Subject to sub-paragraphs (3) and (4), a person is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraphs (1) to (5) if there has been a contravention of a requirement as to—

• (a) the time at which, or

• (b) the period within which,

the obligation or request was to be complied with.

Part 2 — Conditions to be satisfied by firms

General

5

In the case of an application for an individual or a company to be registered for gross payment as a partner in a firm, the following conditions must be satisfied by the firm.

The business test

6

The applicant must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that the firm’s business—

• (a) is carried on in the United Kingdom, and

• (b) satisfies the conditions mentioned in paragraph 2(a) and (b).

The turnover test

7

• (1) The partners must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that the carrying on of the firm’s business is likely to involve the receipt in the year following the making of the application of an aggregate amount by way of relevant payments which is not less than whichever is the smaller of—

• (a) the multiple turnover threshold; and

• (b) the amount specified for the purposes of this paragraph in regulations made by the Board;

and in this sub-paragraph “relevant payments” has the meaning given by paragraph 3(2).

• (2) In sub-paragraph (1) “the multiple turnover threshold” means the sum of—

• (a) the amount obtained by multiplying the number of partners in the firm who are individuals by the amount specified in regulations as the minimum turnover for the purposes of paragraph 3(1); and

• (b) in respect of each partner in the firm which is a company (other than one to which paragraph 11(1)(b) would apply), the amount equal to what would have been the minimum turnover for the purposes of paragraph 11 (1) if the application had been for registration of that company for gross payment.

• (3) The Board may make regulations—

• (a) for determining the number of partners in the firm to be taken into account for the purposes of sub-paragraph (2) (for example, where the number of partners has fluctuated over a period);

• (b) for the purpose of enabling a firm which does not satisfy the condition in sub-paragraph (1) to be treated as satisfying that condition in such circumstances as may be prescribed.

The compliance test

8

• (1) Subject to sub-paragraphs (2) and (3), each of the persons who are partners at the time of the application must have complied, so far as any such charge to income tax or corporation tax is concerned as falls to be computed by reference to the profits or gains of the firm’s business, with—

• (a) any obligation imposed on that partner in the qualifying period (see paragraph 14)—

• (i) to pay the amount liable to be deducted under section 61 of this Act from payments made during that period,

• (ii) to submit returns as required by regulations made under section 70 of this Act,

• (iii) to pay the tax liable to be deducted under PAYE regulations, and

• (iv) to submit a self-assessment return, and

• (v) to account for or pay VAT as required by or under the Value Added Tax Act 1994, and

• (b) all requests made in the qualifying period to him as such a partner to supply to the Inland Revenue accounts of, or other information about, the firm’s business or his share of the profits or gains of that business.

• (2) Where a person has failed to comply with such an obligation or request as—

• (a) is referred to in sub-paragraph (1), and

• (b) is of a kind prescribed by regulations made by the Board of Inland Revenue,

the firm is, in such circumstances as may be prescribed by the regulations, to be treated, in relation to that partner, as satisfying the condition in that sub-paragraph as regards that obligation or request.

• (3) Where a person has failed to comply with such an obligation or request as is referred to in sub-paragraph (1), the firm is to be treated, in relation to that partner, as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that—

• (a) the person had a reasonable excuse for the failure to comply, and

• (b) if the excuse ceased, he complied with the obligation or request without unreasonable delay after the excuse had ceased.

• (4) There must be reason to expect that each of the persons who are from time to time partners in the firm will, in respect of periods after the qualifying period, comply with such obligations and requests as are referred to in sub-paragraph (1).

• (5) Subject to sub-paragraphs (2) and (3), a person is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraph (1) if there has been a contravention of a requirement as to—

• (a) the time at which, or

• (b) the period within which,

the obligation or request was to be complied with.

• (6) This paragraph is subject to paragraph 8A (exception from compliance test: firms).

Part 3 — Conditions to be satisfied by companies

General

9

In the case of an application for a company to be registered for gross payment (whether as a partner in a firm or otherwise), the following conditions must be satisfied by the company.

The business test

10

The company must satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that—

• (a) it is carrying on (whether or not in partnership) a business in the United Kingdom, and

• (b) that business satisfies the conditions mentioned in paragraph 2(a) and (b).

The turnover test

11

• (1) The company must either—

• (a) satisfy the Inland Revenue, by such evidence as may be prescribed in regulations made by the Board of Inland Revenue, that the carrying on of its business is likely to involve the receipt in the year following the making of the application of an aggregate amount by way of relevant payments which is not less than the amount which is the minimum turnover for the purposes of this sub-paragraph; or

• (b) satisfy the Inland Revenue that the only persons with shares in the company are companies which are limited by shares and themselves are registered for gross payment;

and in this sub-paragraph “relevant payments” has the meaning given by paragraph 3(2).

• (2) The minimum turnover for the purposes of sub-paragraph (1) is whichever is the smaller of—

• (a) the amount obtained by multiplying the amount specified in regulations as the minimum turnover for the purposes of paragraph 3 (1) by the number of persons who are relevant persons in relation to the company; and

• (b) the amount specified for the purposes of this paragraph in regulations made by the Board of Inland Revenue.

• (3) For the purposes of sub-paragraph (2) a person is a relevant person in relation to the company—

• (a) where the company is a close company, if he is a director of the company (within the meaning given by section 67 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1)) or a beneficial owner of shares in the company; and

• (b) in any other case, if he is such a director of the company.

• (4) The Board may make regulations—

• (a) for determining the number of relevant persons to be taken into account for the purposes of sub-paragraph (2) (for example, where the number of such persons has fluctuated over a period);

• (b) for the purpose of enabling a company which does not satisfy the condition in sub-paragraph (1) to be treated as satisfying that condition in such circumstances as may be prescribed.

The compliance test

12

• (1) The company must, subject to sub-paragraphs (2) and (3), have complied with—

• (a) any obligation imposed on it in the qualifying period (see paragraph 14)—

• (i) to pay the amount liable to be deducted under section 61 of this Act from payments made during that period,

• (ii) to submit returns as required by regulations made under section 70 of this Act,

• (iii) to pay the tax liable to be deducted under PAYE regulations, and

• (iv) to submit a self-assessment return, and

• (v) to account for or pay VAT as required by or under the Value Added Tax Act 1994, and

• (b) all requests made in the qualifying period to supply to the Inland Revenue accounts of, or other information about, its business.

• (2) A company that has failed to comply with such an obligation or request as—

• (a) is referred to in sub-paragraph (1), and

• (b) is of a kind prescribed by regulations made by the Board of Inland Revenue,

is, in such circumstances as may be prescribed by the regulations, to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request.

• (3) A company that has failed to comply with such an obligation or request as is referred to in sub-paragraph (1) is to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that—

• (a) the company had a reasonable excuse for the failure to comply, and

• (b) if the excuse ceased, it complied with the obligation or request without unreasonable delay after the excuse had ceased.

• (4) The company must, if any contribution has at any time during the qualifying period become due from the company under—

• (a) Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or

• (b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7),

have paid the contribution when it became due.

• (5) The company must have complied with any obligations imposed on it by the following provisions of the Companies Act 1985 (c. 6) in so far as those obligations fell to be complied with within the qualifying period—

• (a) sections 226, 241 and 242 (contents, laying and delivery of annual accounts);

• (b) section 288(2) (return of directors and secretary and notification of changes therein);

• (c) sections 363 to 365 (annual returns);

• (d) section 691 (registration of constitutional documents and list of directors and secretary of oversea company);

• (e) section 692 (notification of changes in constitution or directors or secretary of oversea company);

• (f) section 693 (oversea company to state its name and country of incorporation);

• (g) section 699 (obligations of companies incorporated in Channel Islands or Isle of Man);

• (h) Chapter 2 of Part 23 (accounts of oversea company).

• (6) The company must have complied with any obligations imposed on it by the following provisions of the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) in so far as those obligations fell to be complied with within the qualifying period—

• (a) Articles 234, 249 and 250 (contents, laying and delivery of annual accounts);

• (b) Article 296(2) (return of directors and secretary and notification of changes therein);

• (c) Articles 371 to 373 (annual returns);

• (d) Article 641 (registration of constitutional documents and list of directors and secretary of Part XXIII company);

• (e) Article 642 (notification of changes in constitution or directors or secretary of Part XXIII company);

• (f) Article 643 (Part XXIII company to state its name and country of incorporation);

• (g) Article 649 (accounts of Part XXIII company).

• (7) There must be reason to expect that the company will, in respect of periods after the qualifying period, comply with—

• (a) all such obligations as are referred to in paragraphs 10 and 11 and sub-paragraphs (1) to (6), and

• (b) such requests as are referred to in sub-paragraph (1).

• (8) Subject to sub-paragraphs (2) and (3), a company is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraphs (1) to (6) if there has been a contravention of a requirement as to—

• (a) the time at which, or

• (b) the period within which,

the obligation or request was to be complied with.

• (9) This paragraph is subject to paragraph 12A (exception from compliance test: companies).

Part 4 — Supplementary provisions

Power to amend conditions for registration for gross payment

13

• (1) The Treasury may by order made by statutory instrument amend this Schedule by—

• (a) adding,

• (b) varying, or

• (c) removing,

a condition for registration for gross payment.

• (2) No statutory instrument containing an order under this paragraph shall be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

“Qualifying period”

14

In this Schedule “the qualifying period” means the period of 12 months ending with the date of the application in question.

Regulations under this Schedule

15

Any power under this Schedule to make regulations prescribing the evidence required for establishing what is likely to happen at any time includes power to provide for such matters to be presumed (whether conclusively or unless the contrary is shown in the manner provided for in the regulations) from evidence of what has previously happened.

16

Regulations under paragraph 3(1), 7 (1) or 11 (1) prescribing the evidence required for establishing the amount by way of relevant payments likely to be received by a person may make different provision according to whether—

• (a) the person is applying for registration for gross payment, or

• (b) the Board of Inland Revenue are considering whether to make a determination under section 66(1)(a) cancelling the person’s registration for gross payment.

SCHEDULE 12

Records to be kept for purposes of returns

1

• (1) Section 12B of the Taxes Management Act 1970 (c. 9) is amended as follows.

• (2) In subsection (4A) (records in respect of which duty to preserve records may not be satisfied by preservation of information contained in them) for paragraph (b) substitute—

(b) any record (however described) which is required by regulations under section 70(1)(c) of the Finance Act 2004 to be given to a sub-contractor (within the meaning of section 58 of that Act) on the making of a payment to which section 61 of that Act (deductions on account of tax) applies;

.

General rule as to when corporation tax is due and payable

2

• (1) Section 59D of the Taxes Management Act 1970 is amended as follows.

• (2) In subsection (4)(d) (amounts taken into account in determining whether repayment is due under subsection (2)) for “by virtue of regulations under section 559A of the principal Act” substitute “ by virtue of regulations under section 62 of the Finance Act 2004 ”.

Claim for repayment in advance of liability being established

3

• (1) Section 59DA of the Taxes Management Act 1970 is amended as follows.

• (2) In subsection (7) (deductions under section 559 of the Taxes Act 1988 to be disregarded in considering whether amount paid by company exceeds its probable tax liability, where claim made before return delivered) for “section 559 of the principal Act” substitute “ section 61 of the Finance Act 2004 ”.

Priority of claim for tax

4

• (1) Section 62 of the Taxes Management Act 1970 is amended as follows.

• (2) In subsection (1A)(b) (goods or chattels of person in default not to be taken in execution etc unless person seeking execution pays to collector sums due from person in default in respect of deductions under section 559 of the Taxes Act 1988) for “section 559 of the principal Act” substitute “ section 61 of the Finance Act 2004 ”.

Recovery of tax in Scotland

5

• (1) Section 63 of the Taxes Management Act 1970 (c. 9) is amended as follows.

• (2) In subsection (3)(b) (application for summary warrant relating to sums due in respect of deductions required to be made under section 559 of the Taxes Act 1988: no requirement to state that 14 days have elapsed since demand) for “section 559 of the principal Act” substitute “ section 61 of the Finance Act 2004 ”.

Priority of claim for tax in Scotland

6

• (1) Section 64 of the Taxes Management Act 1970 is amended as follows.

• (2) In subsection (1A)(b) (moveable goods and effects of person in default not to be taken by diligence etc unless person proceeding to take goods and effects pays to collector sums due from person in default in respect of deductions under section 559 of the Taxes Act 1988) for “section 559 of the principal Act” substitute “ section 61 of the Finance Act 2004 ”.

Special returns etc

7

• (1) Section 98 of the Taxes Management Act 1970 is amended as follows.

• (2) In the first column of the Table, omit the entry relating to section 561(8) of the Taxes Act 1988.

• (3) In the second column of the Table, omit the entry relating to regulations under section 566(1), (2) or (2A) of that Act.

• (4) In the first column of the Table, insert at the appropriate place— “ Regulations under section 70(3) of the Finance Act 2004. ”.

• (5) In the second column of the Table, insert at the appropriate place— “ Regulations under section 65(2), 69(1), 70(1)(a) or (c) or 71 of the Finance Act 2004. ”.

Special penalties in the case of certain returns

8

• (1) Section 98A of the Taxes Management Act 1970 is amended as follows.

• (2) In subsection (1) (regulations which may provide for section 98A to apply) for “section 566 (1) (sub-contractors) of the principal Act” substitute “ section 70(1)(a) or 71 of the Finance Act 2004 (sub-contractors) ”.

• (3) In subsection (2)(b) (penalty for failure to make return continuing beyond 12 months)—

• (a) after “not exceeding” insert—

(i) in the case of a provision of PAYE regulations,

, and

• (b) at the end insert

, or (ii) in the case of a provision of regulations under section 70(1)(a) or 71 of the Finance Act 2004, £3,000.

.

• (4) In subsection (4)(a) (penalty for fraudulently or negligently making incorrect return) after “year of assessment” insert “ (in the case of a provision of PAYE regulations) or period (in the case of a provision of regulations under section 70(1)(a) or 71 of the Finance Act 2004) ”.

Sub-contractors in the construction industry

9

• (1) The Taxes Act 1988 is amended as follows.

• (2) In Part 13, omit Chapter 4.

Designated international organisations: miscellaneous exemptions

10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application of Income Tax Acts to public departments etc

11

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions for securing payment by company of outstanding tax

12

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions relating to contributions: Great Britain

13

• (1) Schedule 1 to the Social Security Contributions and Benefits Act 1992 (c. 4) is amended as follows.

• (2) In paragraph 7 (special penalties in case of certain returns) in sub-paragraph (1) (paragraph 7 to apply to certain returns made at the same time as a return made under regulations under section 566 (1) of the Taxes Act 1988 etc) in paragraph (a) for “section 566 (1) (sub-contractors) of the Income and Corporation Taxes Act 1988” substitute “ section 70(1)(a) or 71 (sub-contractors) of the Finance Act 2004 ”.

Supplementary provisions relating to contributions: Northern Ireland

14

• (1) Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) is amended as follows.

• (2) In paragraph 7 (special penalties in case of certain returns) in sub-paragraph (1) (paragraph 7 to apply to certain returns made at the same time as a return made under regulations under section 566 (1) of the Taxes Act 1988 etc) in paragraph (a) for “section 566 (1) (sub-contractors) of the Income and Corporation Taxes Act 1988” substitute “ section 70(1)(a) or 71 (sub-contractors) of the Finance Act 2004 ”.

Transitional provisions concerning construction workers supplied by agencies

15

• (1) Section 56 of the Finance Act 1998 (c. 36) is amended as follows.

• (2) In subsection (8) (meaning of “construction trade”) for “Chapter 4 of Part 13 of the Taxes Act 1988” substitute “ section 74 of the Finance Act 2004 ”.

Company tax returns, assessments and related matters

16

• (1) Schedule 18 to the Finance Act 1998 is amended as follows.

• (2) In paragraph 22 (preservation of information instead of original records) in sub-paragraph (3) (records in respect of which duty to preserve records may not be satisfied by preservation of information contained in them) for paragraph (b) substitute—

(b) any record (however described) which is required by regulations under section 70(1)(c) of the Finance Act 2004 to be given to a sub-contractor (within the meaning of section 58 of that Act) on the making of a payment to which section 61 of that Act (deductions on account of tax) applies;

.

Calculation of deemed employment payment

17

• (1) Section 54 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as follows.

• (2) In subsection (2) (intermediary to be treated, in calculating the deemed employment payment, as if amounts received subject to deduction under section 559 of the Taxes Act 1988 had been received without deduction) for “section 559 of ICTA” substitute “ section 61 of the Finance Act 2004 ”.

SCHEDULE 13

Childcare

1

In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (miscellaneous exemptions), for section 318 (care for children) substitute—

(318) (1) No liability to income tax arises by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the provision for an employee of care for a child if conditions A to D are met. For the meaning of “care” and “child”, see section 318B. (2) If those conditions are met only as respects part of the provision, no such liability arises in respect of that part. (3) Condition A is that the child— (a) is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense, (b) is resident with the employee, or (c) is a person in respect of whom the employee has parental responsibility. For the meaning of “parental responsibility”, see section 318B. (4) Condition B is that— (a) the premises on which the care is provided are not used wholly or mainly as a private dwelling, and (b) any applicable registration requirement is met. (5) The registration requirements are— (a) in England and Wales, that under Part 10A of the Children Act 1989; (b) in Scotland, that under Part 1 or 2 of the Regulation of Care (Scotland) Act 2001; (c) in Northern Ireland, that under Part XI of the Children (Northern Ireland) Order 1995. (6) Condition C is that— (a) the premises on which the care is provided are made available by the scheme employer alone, or (b) the partnership requirements are met. In this section “scheme employer” means the employer operating the scheme under which the care is provided (who need not be the employer of the employee). (7) The partnership requirements are— (a) that the care is provided under arrangements made by persons who include the scheme employer, (b) that the premises on which it is provided are made available by one or more of those persons, and (c) that under the arrangements the scheme employer is wholly or partly responsible for financing and managing the provision of the care. (8) Condition D is that the care is provided under a scheme that is open— (a) to the scheme employer’s employees generally, or (b) generally to those of the scheme employer’s employees at a particular location, and that the employee to whom it is provided is either an employee of the scheme employer or is an employee working at the same location as employees of the scheme employer to whom the scheme is open. (318A) (1) If conditions A to C are met in relation to the provision for an employee of care for a child, liability to income tax by virtue of Chapter 10 of Part 3 (taxable benefits: residual liability to charge) arises only in respect of so much of the cash equivalent of the benefit as exceeds the exempt amount. For the meaning of “care” and “child”, see section 318B. (2) If those conditions are met only as respects part of the provision, subsection (1) applies in respect of that part. (3) Condition A is that the child— (a) is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense, or (b) is resident with the employee and is a person in respect of whom the employee has parental responsibility. For the meaning of “parental responsibility”, see section 318B. (4) Condition B is that the care is qualifying child care. For the meaning of “qualifying child care”, see section 318C. (5) Condition C is that the care is provided under a scheme that is open— (a) to the employer’s employees generally, or (b) generally to those at a particular location. (6) For the purposes of this section the “exempt amount”, in any tax year, is £50 for each qualifying week in that year. (7) A “qualifying week” means a tax week in which care is provided for a child in circumstances in which conditions A to C are met. A “tax week” means one of the successive periods in a tax year beginning with the first day of that year and every seventh day after that (so that the last day of a tax year or, in the case of a tax year ending in a leap year, the last two days is treated as a separate week). (8) An employee is only entitled to one exempt amount even if care is provided for more than one child. But it does not matter that another person may also be entitled to an exempt amount in respect of the same child. (9) An employee is not entitled to an exempt amount under this section and under section 270A (limited exemption for childcare vouchers) in respect of the same tax week. (318B) (1) For the purposes of sections 318 and 318A (exemptions for employer-provided or employer-contracted childcare) “care” means any form of care or supervised activity that is not provided in the course of the child’s compulsory education. (2) For the purposes of those sections a person is a “child” until the last day of the week in which falls the 1st September following the child’s fifteenth birthday (or sixteenth birthday if the child is disabled). (3) For the purposes of subsection (2) a child is disabled if— (a) a disability living allowance is payable in respect of him, or has ceased to be payable solely because he is a patient, (b) he— (i) is registered as blind in a register compiled by a local authority under section 29 of the National Assistance Act 1948 (welfare services), (ii) has been certified as blind in Scotland and in consequence is registered as blind in a register maintained by or on behalf of a local authority in Scotland, or (iii) has been certified as blind in Northern Ireland and in consequence is registered as blind in a register maintained by or on behalf of a Health and Social Services Board, or (c) he ceased to be so registered as blind within the previous 28 weeks. (4) In subsection (3)(a) “patient” means a person (other than a person who is serving a sentence imposed by a court in a prison or youth custody institution or, in Scotland, a young offenders' institution) who is regarded as receiving free in-patient treatment within the meaning of the Social Security (Hospital In-Patients) Regulations 1975 or the Social Security (Hospital In-Patients) Regulations (Northern Ireland) 1975. (5) For the purposes of sections 318 and 318A “parental responsibility” means all the rights, duties, powers, responsibilities and authority which by law a parent of a child has in relation to the child and the child’s property. (6) In this section and section 318C “local authority” means— (a) in relation to England, the council of a county or district, a metropolitan district, a London Borough, the Common Council of the City of London or the Council of the Isles of Scilly; (b) in relation to Wales, the council of a county or county borough; (c) in relation to Scotland, a council constituted under section 2 of the Local Government etc. (Scotland) Act 1994. (318C) (1) For the purposes of section 318A “qualifying child care” means registered or approved care within any of subsections (2) to (6) below that is not excluded by subsection (7) below. (2) Care provided for a child in England is registered or approved care if it is provided— (a) by a person registered under Part 10A of the Children Act 1989, (b) by a school or establishment that does not need to be registered under that Part to provide the care because of an exemption under paragraph 1 or 2 of Schedule 9A to that Act, (c) in the case of care provided for a child out of school hours between the child’s 8th birthday and the last day on which he is treated as being a child, by a school on school premises or by a local authority, or (d) by a child care provider approved by an organisation accredited under the Tax Credit (New Category of Child Care Provider) Regulations 1999, (e) wholly or mainly in the child’s home by a child care provider approved in accordance with the Tax Credits (Approval of Home Child Care Providers) Scheme 2003, or (f) by a domiciliary care worker under the Domiciliary Care Agencies Regulations 2002. (3) Care provided for a child in Wales is registered or approved care if it is provided— (a) by a person registered under Part 10A of the Children Act 1989, (b) by a school or establishment that does not need to be registered under that Part to provide the care because of an exemption under paragraph 1 or 2 of Schedule 9A to that Act, (c) in the case of care provided for a child out of school hours between the child’s 8th birthday and the last day on which he is treated as being a child, by a school on school premises or by a local authority, or (d) by a child care provider approved by an organisation accredited under the Tax Credit (New Category of Child Care Provider) Regulations 1999. (4) Care provided for a child in Scotland is registered or approved care if it is provided— (a) by a person in circumstances where the care service provided by him— (i) consists of child minding or of day care of children within the meaning of section 2 of the Regulation of Care (Scotland) Act 2001, and (ii) is registered under Part 1 of that Act, or (b) by a local authority in circumstances where the care service provided by the local authority— (i) consists of child minding or of day care of children within the meaning of section 2 of the Regulation of Care (Scotland) Act 2001, and (ii) is registered under Part 2 of that Act. (5) Care provided for a child in Northern Ireland is registered or approved care if it is provided— (a) by a person registered under Part XI of the Children (Northern Ireland) Order 1995, or (b) by an institution or establishment that does not need to be registered under that Part to provide the care because of an exemption under Article 121 of that Order, or (c) in the case of care provided for a child out of school hours between the child’s 12th birthday and the last day on which he is treated as being a child, by a school on school premises or by an education and library board or an HSS trust. (6) Care provided for a child outside the United Kingdom is registered or approved child care if it is provided by a child care provider approved by an organisation accredited under the Tax Credit (New Category of Child Care Provider) Regulations 2002. (7) Child care is excluded from section 318A— (a) if it is provided by the partner of the employee in question, or (b) if it is provided by a relative of the child wholly or mainly in the child’s home or (if different) the home of a person having parental responsibility for the child. (8) In subsection (7)— - “partner” means one of a married or unmarried couple; and - “relative” means parent, grandparent, aunt, uncle, brother or sister, whether by blood, half blood or marriage. (318D) (1) The Treasury may by order amend section 318A(6) (employer-contracted care: the exempt amount) so as to substitute a different sum of money for that for the time being specified. (2) The Treasury may by regulations make such amendments of the provisions of sections 318 to 318C relating to the qualifying conditions for the exemptions conferred by sections 318 and 318A as appear to them appropriate having regard to the corresponding provisions of regulations under section 12 of the Tax Credits Act 2002 relating to entitlement to the child care element of working tax credit.

.

Childcare vouchers

2

• (1) Chapter 4 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (taxable benefits: vouchers and credit-tokens) is amended as follows.

• (2) In section 84 (meaning of “non-cash voucher”)—

• (a) in subsection (1), after paragraph (a) insert—

(ab) a childcare voucher,

, and

• (b) after subsection (2) insert—

(2A) In this Chapter “childcare voucher” means a voucher, stamp or similar document or token intended to enable a person to obtain the provision of care for a child (whether or not in exchange for it).

.

• (3) In section 87 (benefit of non-cash voucher treated as earnings), after subsection (3) insert—

(3A) In the case of a childcare voucher, the reference in subsection (3)(b) to the services for which the voucher is capable of being exchanged is to the provision of care for a child which may be obtained by using it.

.

• (4) In section 95 (disregard for money, goods or services obtained), after subsection (3) insert—

(3A) In the case of a childcare voucher, the reference in subsection (2)(a) to the services obtained in exchange for the voucher is to the provision of care for a child obtained by using it.

.

3

In Chapter 6 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (exemptions: non-cash vouchers and credit-tokens), after section 270 insert—

(270A) (1) If qualifying childcare vouchers are provided for an employee, liability to income tax by virtue of Chapter 4 of Part 3 (taxable benefits: vouchers and credit tokens) arises only in respect of so much of the cash equivalent of the benefit as exceeds the exempt amount. (2) A “qualifying childcare voucher” means a non-cash voucher in relation to which Conditions A to C are met. (3) Condition A is that the voucher is provided to enable an employee to obtain care for a child who— (a) is a child or stepchild of the employee and is maintained (wholly or partly) at the employee’s expense, or (b) is resident with the employee and is a person in respect of whom the employee has parental responsibility. (4) Condition B is that the voucher can only be used to obtain qualifying child care. (5) Condition C is that the vouchers are provided under a scheme that is open— (a) to the employer’s employees generally, or (b) generally to those at a particular location. (6) For the purposes of this section the “exempt amount”, in any tax year, is £50 for each qualifying week in that year. (7) A “qualifying week” means a tax week in respect of which a qualifying childcare voucher is received. A “tax week” means one of the successive periods in a tax year beginning with the first day of that year and every seventh day after that (so that the last day of a tax year or, in the case of a tax year ending in a leap year, the last two days is treated as a separate week). (8) An employee is only entitled to one exempt amount even if care is provided for more than one child. But it does not matter that another person may also be entitled to an exempt amount in respect of the same child. (9) An employee is not entitled to an exempt amount under this section and under section 318A (limited exemption for employer-contracted childcare) in respect of the same tax week. (10) In this section “care”, “child”, “parental responsibility” and “qualifying child care” have the same meaning as in section 318A (see sections 318B and 318C). (11) The powers conferred by section 318D (childcare: power to vary exempt amount and qualifying conditions) are exercisable— (a) in relation to the exempt amount specified in subsection (6) above as in relation to the exempt amount specified in section 318A(6), and (b) in relation to the qualifying conditions for the exemption conferred by this section as in relation to the qualifying conditions for the exemption conferred by section 318A.

.

SCHEDULE 14

1

The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as follows.

2

• (1) Section 114 (cars, vans and related benefits) is amended as follows.

• (2) In subsection (2), in paragraph (c), for “166” substitute “ 159 ”and after that paragraph insert

; and (d) sections 160 to 164 provide for the cash equivalent of the benefit of any fuel provided for the van to be treated as earnings in certain circumstances.

• (3) After subsection (3) insert—

(3A) This Chapter does not apply to a van in relation to a tax year if the private use of the van during the tax year by the employee or member of the employee’s family or household is insignificant.

• (4) In subsection (4), insert at the end— “ section 169A (van available to more than one member of family or household employed by same employer). ”

3

In section 116(2) (when car is first made available and last day on which car is available), after “car”, in each place, insert “ or van ”.

4

In section 119 (where alternative to benefit of car offered), after “car”, in each place (including the heading), insert “ or van ”.

5

For sections 155 to 166 substitute—

(155) (1) What is the cash equivalent of the benefit of a van for a tax year depends on whether or not the restricted private use condition is met in relation to the van for the year. (2) The cash equivalent of the benefit of the van for the year is— (a) nil if that condition is met in relation to the van for the tax year, and (b) the amount given by subsection (3) if it is not. (3) That amount is— (a) where the tax year is the tax year 2005-06 or 2006-07— (i) £500 if the age of the van is less than 4 years at the end of the tax year, and (ii) £350 in any other case, and (b) where the tax year is a later tax year, £3,000. (4) The restricted private use condition is met in relation to a van for a tax year if— (a) the commuter use requirement is satisfied throughout the year (or the part of the year on which it is available to the employee) or the extent to which it is not satisfied during that period is insignificant, and (b) the business travel requirement is satisfied throughout the year (or the part of the year on which it is available to the employee). (5) The commuter use requirement is satisfied at any time if— (a) the terms on which the van is available to the employee at the time prohibit its private use otherwise than for the purposes of ordinary commuting or travel between two places that is for practical purposes substantially ordinary commuting, and (b) neither the employee nor a member of the employee’s family or household makes private use of the van at the time otherwise than for those purposes. (6) In subsection (5) “ordinary commuting” has the same meaning as in section 338 (travel for necessary attendance) (see subsection (3) of that section). (7) The business travel requirement is satisfied at a time if the van is available to the employee at the time mainly for use for the purposes of the employee’s business travel (see section 171(1)). (8) The cash equivalent of the van may be reduced— (a) under section 156 for any periods when the van is unavailable, (b) under section 157 where the van is shared, and (c) under section 158 in respect of payments by the employee for the private use of the van. (156) (1) The cash equivalent of the benefit of a van for a tax year under section 155(2)(a) or (b) is to be reduced if the van has been unavailable on any day during the year. (2) For the purposes of this section a van is unavailable on any day if the day— (a) falls before the first day on which the van is available to the employee, (b) falls after the last day on which the van is available to the employee, or (c) falls within a period of 30 days or more throughout which the van is not available to the employee. (3) The amount of the reduction is given by the formula— $$UY×CE$where—U is the number of days in the year on which the van is unavailable,Y is the number of days in the year, andCE is the amount of the cash equivalent before any reduction.$ (157) (1) This section applies if in a tax year a van— (a) is available to more than one employee concurrently, (b) is so made available by the same employer, and (c) is available concurrently for each employee’s private use. (2) The cash equivalent of the benefit of the van to each of those employees for that year— (a) is to be calculated separately under sections 155 and 156, and (b) is then to be reduced on a just and reasonable basis. (3) If — (a) any of the employees mentioned in subsection (1)(a) (“E”) is a member of the family or household of another of them (“M”), and (b) E’s employment is an excluded employment, the availability of the van to E is to be disregarded when applying subsection (2)(b) in respect of M. (4) In this section the reference to the van being available for each employee’s private use includes a reference to the van being available for the private use of a member of the employee’s family or household. (158) (1) The cash equivalent of the benefit of a van for a tax year under section 155(2)(a) or (b) (after any reduction under sections 156 and 157) is to be reduced if, as a condition of the van being available for the employee’s private use, the employee— (a) is required in that year to pay (whether by way of deduction from earnings or otherwise) an amount of money for that use, and (b) makes such payment. (2) If the amount paid by the employee in respect of that year is equal to or exceeds that cash equivalent, it is reduced to nil. (3) In any other case that cash equivalent is reduced by the amount paid by the employee. (4) In this section the reference to the van being available for the employee’s private use includes a reference to the van being available for the private use of a member of the employee’s family or household. (159) (1) This section applies if— (a) the van normally available to an employee (“the normal van”) is not available to the employee for a period of less than 30 days, (b) another van (“the replacement van”) is made available to the employee in order to replace the normal van for the whole or part of that period, and (c) the employee is chargeable to tax in respect of both the normal van and the replacement van by virtue of section 154. (2) If this section applies— (a) section 156 applies so that the replacement van is to be treated as unavailable on the days during the period on which it replaces the normal van, and (b) sections 155, 157 and 158 apply as if the replacement van were the normal van. (160) (1) If in a tax year— (a) fuel is provided for a van by reason of an employee’s employment, (b) that person is chargeable to tax in respect of the van by virtue of section 154, and (c) the cash equivalent of the van for that year is that under section 155(2)(b), the cash equivalent of the benefit of the fuel is to be treated as earnings from the employment for that year. (2) The cash equivalent of the benefit of the fuel is calculated in accordance with sections 161 to 164. (3) Fuel is to be treated as provided for a van, in addition to any other way in which it may be provided, if— (a) any liability in respect of the provision of fuel for the van is discharged, (b) a non-cash voucher or a credit-token is used to obtain fuel for the van, (c) a non-cash voucher or a credit-token is used to obtain money which is spent on fuel for the van, or (d) any sum is paid in respect of expenses incurred in providing fuel for the van. (4) References in this section to fuel do not include any facility or means for supplying electrical energy for an electrically propelled vehicle. (161) The cash equivalent of the benefit of the fuel is— (a) where the tax year is the tax year 2005-06 or 2006-07, nil, and (b) where the tax year is a later tax year, £500. (162) (1) The cash equivalent of the benefit of the fuel is nil if condition A or B is met. (2) Condition A is met if in the tax year in question— (a) the employee is required to make good to the person providing the fuel the whole of the expense incurred by that person in connection with the provision of the fuel for the employee’s private use, and (b) the employee does make good that expense. (3) Condition B is met if in the tax year in question the fuel is made available only for business travel (see section 171(1)). (163) (1) The cash equivalent of the benefit of the fuel is to be proportionately reduced if for any part of the tax year in question the van for which the fuel is provided is unavailable (within the meaning of section 156 (reduction for periods when van unavailable)). (2) But if section 159 (van temporarily replaced) applies— (a) section 160 applies as if the replacement van were the normal van, and (b) for the purposes of subsection (1) the replacement van is to be treated as unavailable on the days during the period on which it replaces the normal van. (3) The cash equivalent of the benefit of the fuel is also to be proportionately reduced if for any part of the tax year in question— (a) the facility for the provision of fuel as mentioned in section 160 (1) is not available, (b) the fuel is made available only for business travel (see section 171(1)), or (c) the employee is required to make good to the person providing the fuel the whole of the expense incurred by that person in connection with the provision of the fuel for the employee’s private use and the employee does make good that expense. (4) The fact that any of the conditions specified in subsection (3) is met for part of a tax year is to be disregarded if there is a time later in that year when none of those conditions is met. (5) Where the cash equivalent is to be proportionately reduced under subsection (1) or (3) (or under both those subsections), the reduced amount is given by the formula— $$CE×Y-DY$where—CE is the amount of the cash equivalent before any reduction,Y is the number of days in the tax year in question, andD is the total number of days in the tax year on which either the van is unavailable or one or more of the conditions in subsection (3) is met.$ (164) If a reduction of the cash equivalent of the benefit of the van for which the fuel is provided is made under section 157 (reduction of cash equivalent where van is shared), a corresponding reduction is to be made in relation to the cash equivalent of the benefit of the fuel.

6

After section 169 insert—

(169A) (1) This section applies where— (a) an employee (“E”) and a member of the employee’s family or household (“M”) are employed by the same employer, and (b) as a result of a van being made available to M in a tax year, E would (apart from this section) be chargeable to tax in respect of the van in that year by virtue of section 154. (2) The cash equivalent of the benefit of the van and of any fuel provided for the van by reason of E’s employment is not to be treated as E’s earnings for that year if— (a) M is chargeable to tax in respect of the van in that year by virtue of section 154, or (b) where M’s employment is an excluded employment, M had the benefit of the van in M’s own right as an employee and condition A or B is met. (3) Condition A is met if equivalent vans are made available on the same terms to employees who— (a) are in similar employment to M with the same employer, and (b) are not members of the family or household of employees of that employer who are employed in employment which is not an excluded employment. (4) Condition B is met if the making available of an equivalent van is in accordance with the normal commercial practice for an employment of the kind held by M.

7

• (1) Section 170 (orders etc.) is amended as follows.

• (2) After subsection (1) insert—

(1A) The Treasury may by order substitute a different amount for that for the time being specified in— (a) section 155(2)(a) (cash equivalent where van subject only to restricted private use by employee), and (b) section 155(3)(b) (cash equivalent in other cases).

• (3) In subsection (2), after “(1)” insert “ or (1A) ”.

• (4) In subsection (5), insert at the end “ or section 161(b) (van fuel: cash equivalent) ”.

8

In section 237 (exemption from Chapter 10 of Part 3 in respect of provision of workplace parking), in subsection (3)(a) (car parking space to be “workplace parking”), for “car parking space” substitute “ parking space for a car or van ”.

SCHEDULE 15

Introductory

1

In this Schedule—

• “IHTA 1984” means the Inheritance Tax Act 1984 (c. 51);

• “ITTOIA 2005” means the Income Tax (Trading and Other Income Act) 2005;

• “the 1986 Act” means the Finance Act 1986 (c. 41);

• “chattel” means any tangible movable property (or, in Scotland, corporeal movable property) other than money;

• “excluded transaction” has the meaning given by paragraph 10;

• “intangible property” means any property other than chattels or interests in land;

• “interest in land” has the same meaning as in Chapter 4 of Part 6 of IHTA 1984;

• “land” has the same meaning as in IHTA 1984;

• “prescribed” means prescribed by regulations;

• “property” has the same meaning as in IHTA 1984;

• “regulations” means regulations made by the Treasury under this Schedule;

• “settlement” and “settled property” have the same meanings as in IHTA 1984.

2

• (1) For the purposes of this Schedule whether a person is connected with another person is determined in accordance with section 993 of the Income Tax Act 2007.

• (2) But for those purposes sections 993 and 994 of that Act are to be read as if in those sections—

• (a) “relative” included uncle, aunt, nephew and niece, and

• (b) “settlement”, “settlor” and “trustee” had the same meanings as in IHTA 1984.

Land

3

• (1) This paragraph applies where—

• (a) an individual (“the chargeable person”) occupies any land (“the relevant land”), whether alone or together with other persons, and

• (b) the disposal condition or the contribution condition is met as respects the land.

• (2) The disposal condition is that—

• (a) at any time after 17th March 1986 the chargeable person owned an interest—

• (i) in the relevant land, or

• (ii) in other property the proceeds of the disposal of which were (directly or indirectly) applied by another person towards the acquisition of an interest in the relevant land, and

• (b) the chargeable person has disposed of all, or part of, his interest in the relevant land or the other property, otherwise than by an excluded transaction.

• (3) The contribution condition is that at any time after 17th March 1986 the chargeable person has directly or indirectly provided, otherwise than by an excluded transaction, any of the consideration given by another person for the acquisition of—

• (a) an interest in the relevant land, or

• (b) an interest in any other property the proceeds of the disposal of which were (directly or indirectly) applied by another person towards the acquisition of an interest in the relevant land.

• (4) For the purposes of this paragraph a disposition which creates a new interest in land out of an existing interest in land is to be taken to be a disposal of part of the existing interest.

• (5) Where this paragraph applies to a person in respect of the whole or part of a year of assessment, an amount equal to the chargeable amount determined under paragraph 4 is to be treated as income of his chargeable to income tax.

4

• (1) For any taxable period the chargeable amount in relation to the relevant land is the appropriate rental value (as determined under sub-paragraph (2)), less the amount of any payments which, in pursuance of any legal obligation, are made by the chargeable person during the period to the owner of the relevant land in respect of the occupation of the land by the chargeable person.

• (2) The appropriate rental value is—

$$R×DVV$where—R is the rental value of the relevant land for the taxable period,DV is—(a) in a case falling within paragraph 3(2)(a)(i), the value as at the valuation date of the interest in the relevant land that was disposed of as mentioned in paragraph 3(2)(b) by the chargeable person or, where the disposal was a non-exempt sale, the appropriate proportion of that value,(b) in a case falling within paragraph 3(2)(a)(ii), such part of the value of the relevant land at the valuation date as can reasonably be attributed to the property originally disposed of by the chargeable person or, where the original disposal was a non-exempt sale, to the appropriate proportion of that property, and(c) in a case falling within paragraph 3(3), such part of the value of the relevant land at the valuation date as can reasonably be attributed to the consideration provided by the chargeable person, andV is the value of the relevant land at the valuation date.$

• (3) The “rental value”of the land for the taxable period is the rent which would have been payable for the period if the property had been let to the chargeable person at an annual rent equal to the annual value.

• (4) The disposal by the chargeable person of an interest in land is a “non-exempt sale”if (although not an excluded transaction) it was a sale of his whole interest in the property for a consideration paid in money in sterling or any other currency; and, in relation to a non-exempt sale, “the appropriate proportion” is—

$$MV-PMV$where—MV is the value of the interest in land at the time of the sale;P is the amount paid.$

• (5) Regulations may—

• (a) in relation to any valuation date, provide for a valuation of the relevant land or any interest in the relevant land by reference to an earlier valuation date to apply subject to any prescribed adjustments, and

• (b) in relation to any year of assessment, provide for a determination of the rental value of the land by reference to any earlier year of assessment to apply subject to any prescribed adjustments.

• (6) In this paragraph—

• “the taxable period” means the year of assessment, or part of a year of assessment, during which paragraph 3 applies to the chargeable person;

• “the valuation date”, in relation to a taxable period, means such date as may be prescribed.

5

• (1) For the purposes of paragraph 4 the annual value of the relevant land is the rent which might reasonably be expected to be obtained on a letting from year to year if—

• (a) the tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and

• (b) the landlord undertook to bear the costs of the repairs and insurance and the other expenses (if any) necessary for maintaining the property in a state to command that rent.

• (2) For the purposes of sub-paragraph (1) that rent—

• (a) is to be taken to be the amount that might reasonably be expected to be so obtained in respect of a letting of the land, and

• (b) is to be calculated on the basis that the only amounts that may be deducted in respect of services provided by the landlord are amounts in respect of the cost to the landlord of providing any relevant services.

• (3) In this paragraph “relevant service” means a service other than the repair, insurance or maintenance of the premises.

Chattels

6

• (1) This paragraph applies where—

• (a) an individual (“the chargeable person”) is in possession of, or has the use of, a chattel, whether alone or together with other persons, and

• (b) the disposal condition or the contribution condition is met as respects the chattel.

• (2) The disposal condition is that—

• (a) at any time after 17th March 1986 the chargeable person had (whether alone or jointly with others) owned—

• (i) the chattel, or

• (ii) any other property the proceeds of the disposal of which were (directly or indirectly) applied by another person towards the acquisition of the chattel, and

• (b) the chargeable person disposed of all or part of his interest in the chattel or other property otherwise than by an excluded transaction.

• (3) The contribution condition is that at any time after 17th March 1986 the chargeable person had directly or indirectly provided, otherwise than by an excluded transaction, any of the consideration given by another person for the acquisition of—

• (a) the chattel, or

• (b) any other property the proceeds of the disposal of which were (directly or indirectly) applied by another person towards the acquisition of the chattel.

• (4) For the purposes of this paragraph, a disposition which creates a new interest in a chattel out of an existing interest in a chattel is to be taken to be a disposal of part of the existing interest.

• (5) Where this paragraph applies to a person in respect of the whole or part of a year of assessment, an amount equal to the chargeable amount determined under paragraph 7 is to be treated as income of his chargeable to income tax.

7

• (1) For any taxable period the chargeable amount in relation to any chattel is the appropriate amount (as determined under sub-paragraph (2)), less the amount of any payments which, in pursuance of any legal obligation, are made by the chargeable person during the period to the owner of the chattel in respect of the possession or use of the chattel by the chargeable person.

• (2) The appropriate amount is—

$$N×DVV$where—N is the amount of the interest that would be payable for the taxable period if interest were payable at the prescribed rate on an amount equal to the value of the chattel as the valuation date,DV is—(a) in a case falling within paragraph 6(2)(a)(i), the value as at the valuation date of the interest in the chattel that was disposed of as mentioned in paragraph 6(2)(b) by the chargeable person or, where the disposal was a non-exempt sale, the appropriate proportion of that value,(b) in a case falling within paragraph 6(2)(a)(ii), such part of the value of the chattel at the valuation date as can reasonably be attributed to the property originally disposed of by the chargeable person or, where the original disposal was a non-exempt sale, to the appropriate proportion of that property, and(c) in a case falling within paragraph 6(3), such part of the value of the chattel at the valuation date as can reasonably be attributed to the consideration provided by the chargeable person, andV is the value of the chattel at the valuation date.$

• (3) The disposal by the chargeable person of an interest in a chattel is a “non-exempt sale”if (although not an excluded transaction) it was a sale of his whole interest in the chattel for a consideration paid in money in sterling or any other currency; and, in relation to a non-exempt sale, “the appropriate proportion” is—

$$MV-PMV$where—MV is the value of the interest in the chattel at the time of the sale;P is the amount paid.$

• (4) Regulations may, in relation to any valuation date, provide for a valuation of the chattel or any interest in the chattel by reference to an earlier valuation date to apply subject to any prescribed adjustments.

• (5) In this paragraph—

• “the taxable period” means the year of assessment, or part of a year of assessment, during which paragraph 6 applies to the chargeable person;

• “the valuation date”, in relation to a taxable period, means such date as may be prescribed.

Intangible property comprised in settlement where settlor retains an interest

8

• (1) This paragraph applies where—

• (a) the terms of a settlement, as they affect any property comprised in the settlement, are such that any income arising from the property would be treated by virtue of section 624 of ITTOIA 2005 (income arising under settlement where settlor retains an interest) as income of a person (“the chargeable person”) who is for the purposes of Chapter 5 of Part 5 of that Act the settlor,

• (b) any such income would be so treated even if section 625(1) of ITTOIA 2005 (settlor's retained interest) did not include any reference to the spouse or civil partner of the settlor, and

• (c) that property includes any property as respects which the condition in sub-paragraph (2) is met (“the relevant property”).

• (2) The condition mentioned in sub-paragraph (1)(c) is that the property is intangible property which is or represents property which the chargeable person settled, or added to the settlement, after 17th March 1986.

• (3) Where this paragraph applies in respect of the whole or part of a year of assessment, an amount equal to the chargeable amount determined under paragraph 9 is to be treated as income of the chargeable person chargeable to income tax.

• (4) For the purpose of deciding whether the condition in sub-paragraph (1)(a) is met, ignore section 628A of ITTOIA 2005 (which provides for section 624 of that Act not to apply to certain foreign income arising under a settlement).

9

• (1) For any taxable period the chargeable amount in relation to the relevant property is N minus T where—

• N is the amount of the interest that would be payable for the taxable period if interest were payable at the prescribed rate on an amount equal to the value of the relevant property at the valuation date, and