Finance Act 2006

• (a) the grant of the old lease was chargeable to stamp duty land tax, and

• (b) the new lease is granted on or after commencement day.

“The old lease” and “the new lease” mean the leases referred to in sub-paragraphs (1)(a) and (1)(b), respectively, of paragraph 9A of Schedule 17A to FA 2003 (inserted by paragraph 3).

• (3) Paragraphs 4 and 5 have effect in relation to any agreement that is substantially performed on or after commencement day.

• (4) Paragraph 6 has effect in relation to any variation of a lease made on or after commencement day.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) In this paragraph “commencement day” means the day on which this Act is passed.

SCHEDULE 26

Part 1 — Excise duties

Part 2 — Value added tax

Part 3 — Income tax, corporation tax and capital gains tax

Part 4 — Real Estate Investment Trusts

Part 5 — Oil

Part 6 — Inheritance tax

Part 7 — Stamp taxes

Part 8 — Miscellaneous provisions

Rates of tobacco products duty

Rate of duty on beer

Rates of duty on wine and made-wine

Repeal of provisions of ALDA 1979 of no practical utility etc

Rates until 1st September 2006

Rates from 1st September 2006

Road vehicles

Rates of gaming duty

Classes of machine and rates of duty

Rates

Reduced pollution certificates

Gaming machines

Buildings and land

Missing trader intra-community fraud

Directions to keep records where belief VAT might not be paid

Charge and rates for 2006-07

Charge and main rate for financial year 2007

Group relief where surrendering company not resident in UK

Meaning of “film” and related expressions

Trade profits

Extension of restrictions on gift aid payments by close companies

Other avoidance involving losses accruing to companies

Restrictions on effect of elections under section 266 of CAA 2001

Computer equipment

Power to exempt use of vouchers or tokens to obtain exempt benefits

Restrictions on effect of elections under section 266 of CAA 2001

Insurance companies

Amendment of section 30 of the Energy Act 2004

Repeal of s.106 of TCGA 1992

Accountancy change: spreading of adjustment

Joint ventures

Nomination scheme

Leases of plant or machinery

Disposal of plant or machinery subject to lease where income retained

PAYE: retrospective notional payments

Insurance companies

Settlements, etc: chargeable gains

Profit share agency

Diminishing shared ownership

Diminishing shared ownership

Partnerships

Amendment of section 30 of the Energy Act 2004

Alternative finance

Movement of assets out of ring-fence

Reliefs for certain company acquisitions

New basis for determining the market value of oil

Effect of deemed disposal and re-acquisition

Distributions: liability to tax

New basis for determining the market value of oil

Rate of landfill tax

126A

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Availability of group reliefs

Climate change levy: rates

Abolition of half-rate supplies etc

Abolition of half-rate supplies etc

Repeals

International tax enforcement arrangements

Amendment of Schedule 10 to FA 1987

Nomination excesses and corporation tax

Election to defer capital allowances

Rates and rate bands for 2008-09 and 2009-10

Raising of thresholds

Taxable property held by investment-regulated pension schemes

Reliefs for certain company acquisitions

Partnerships

Reallocation of trust property as between beneficiaries

Demutualisation of insurance companies

Alternative finance

Reliefs for certain company acquisitions

Rate of landfill tax

Climate change levy: rates

Abolition of half-rate supplies etc

International tax enforcement arrangements

Repeals

Availability of relief

Limits on group relief

Relief for or in respect of non-resident companies within the charge to corporation tax

Relief in respect of overseas losses of non-resident companies

Interpretation of Chapter 4 of Part 10 of ICTA

Group relief: equity holders and profits or assets available for distribution

Meaning of conditions in section 403F etc

Claims for group relief

Commencement

Amendments to Schedule 20 to FA 2000

Amendments to Schedule 12 to FA 2002

Amendments to Schedule 13 to FA 2002

Introductory

Claims to be included in return

Claims for R&D tax relief

Claims for relief under Schedule 12 to FA 2002

Claims for relief under Schedule 13 to FA 2002

Commencement and transitional provision

Films to which this Schedule applies

Activities treated as separate trade

When the trade begins

Pre-trading expenditure

Costs of the film

Income from the film

Calculation of profit or loss

Estimates

When costs are taken to be incurred

Exclusion of expenditure relieved under other provisions

Introduction

Additional deduction in computing profits of trade

Qualifying expenditure

Amount of additional deduction

Rate of enhancement

Film tax credits

Amount of credit

Payable credit rate

Payment in respect of film tax credit

Payment in respect of film tax credit not income

Trading loss reduced by amount surrendered for film tax credit

No account to be taken of amounts if unpaid

Artificially inflated claims for deduction or film tax credit

Interpretation

Confidentiality of information

Wrongful disclosure

Interest

Claim to be made in tax return

Recovery of excessive film tax credit

Claims for film tax credits

Introduction

Certification as a British film

The UK expenditure condition

Whether film a limited-budget film

Time limit for amendments and assessments

Repeal of rent factoring provisions

Dividend stripping: subsequent sales etc of rights to receive dividends etc

Deemed interest: cash collateral under stock lending arrangements

Quasi-stock lending arrangements and quasi-cash collateral

Multiple holders of securities subject to sale and repurchase agreement: no relief for deemed manufactured payments

Structured finance arrangements: factoring of income receipts etc

Rent factoring of leases of plant or machinery

Transactions associated with loans or credit

Structured finance arrangements: chargeable gains treatment of acquisitions and disposals

Loan relationships: mandatory convertibles

Loan relationships: computation in accordance with generally accepted accounting practice

Loan relationships: amounts not fully recognised for accounting purposes

Shares treated as loan relationships: shares subject to outstanding third party obligations

Shares treated as loan relationships: application of rules to non-qualifying shares

Shares treated as loan relationships: redeemable shares

Creditor relationships and benefit derived by connected persons

Loan relationships: money debts etc not arising from the lending of money

Loan relationships: meaning of “fair value” in Chapter 2 of Part 4 of FA 1996

Loan relationships: continuity of treatment of groups etc

Loan relationships: repo and stock-lending arrangements

Derivative contracts: computation in accordance with generally accepted accounting practice

Derivative contracts: transactions within groups

Derivative contracts: transactions within groups (fair value accounting)

Derivative contracts: meaning of “fair value” in Schedule 26 to FA 2002

Income and Corporation Taxes Act 1988

Amendments of ICTA: introductory

Section 741: application subject to sections 741B and 741C

Exemption from sections 739 and 740: new provision

Application of sections 741 and 741A

Just and reasonable apportionment in certain cases

Section 742: interpretation of the Chapter

ITTOIA 2005

Gains from contracts for life insurance etc

Introductory

Use for other qualifying activity of plant or machinery previously used for long funding leasing

Expenditure on plant or machinery for long funding leasing not to be qualifying expenditure

General exclusions applying to certain sections

Commencement of leasing under long funding lease: disposal events and disposal values

Lessee under long funding lease: capital allowances, disposal events and disposal values

Interpretation of provisions relating to long funding leases

Cases in which short-life asset treatment is ruled out

Fixtures

Introductory

Special rules for long funding leases

Introductory

Special rules for long funding leases

Application of Chapter 10A for calculating the profits of a property business

Commencement

Election for lease to be treated as long funding lease for tax purposes

Excepted leases

Extended time limit: the additional conditions

Events beyond the control of the parties etc

Pre-existing heads of agreement relating to two or more assets

Expenditure incurred before passing of this Act where lease is not an excepted lease

When expenditure is incurred for the purposes of paragraph 21

When a lease is “finalised”

When an asset is “under construction”

Combined assets and constituent assets

Mixed leases

Interpretation of this Part

Income and Corporation Taxes Act 1988

Petroleum extraction activities: sale and leaseback

Supplementary charge in respect of ring fence trades

Leased assets: special cases

Taxation of Chargeable Gains Act 1992

Long funding leases: deemed disposals and re-acquisitions

Restriction of losses: long funding leases of plant or machinery

Definition of market value

Finance Act 1997

Leasing arrangements

Finance Act 2000

Tonnage tax: introductory

Meaning of “finance costs”

Capital allowances: ship leasing

Capital Allowances Act 2001

Withdrawal of first year allowances for lessors of certain plant or machinery

Plant or machinery treated as owned by person entitled to benefit of contract etc

Phasing out of overseas leasing rules

Anti-avoidance: meaning of “finance lease”

Capital allowances: allocation of expenditure to a chargeable period

Contents of Schedule

Commencement

Income and matching expense in different accounting periods

Amount of income and expense

No carry back of the expense

Meaning of “business of leasing plant or machinery”

Provision for the purposes of condition A in paragraph 6

Provision for the purposes of condition B in paragraph 6

Meaning of “associated company”

Meaning of “a qualifying change of ownership” in relation to a company

Qualifying 75% subsidiaries

Consortium relationships

No qualifying change of ownership in the case of certain intra-group reorganisations

Meaning of “company owned by a consortium” etc

Meaning of qualifying 75% or 90% subsidiary etc

The amount of the income: the basic amount

Meaning of “PM” in paragraph 16

Meaning of “TWDV” in paragraph 16

Amount to be nil if basic amount negative

Adjustment to basic amount: qualifying 75% subsidiaries

Adjustment to the basic amount: consortium relationships

Migration

Change in company's interest in business: income treated as received etc

Amount of income and expense

Meaning of “business of leasing plant or machinery”

Meaning of “associated company”

Meaning of “qualifying change” in company's interest in a business

Determining the percentage share in the profits or loss of business

The amount of the income: the basic amount

Amount to be nil if basic amount negative

Adjustment of basic amount

Amount of expense

Income and matching expense in different accounting periods

Amount of income and expense

No carry back of the expense

Amount of the income

Meaning of “profits” etc

Anti-avoidance

38A

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

38B

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

Relief for expense under paragraph 3 , 23(4A) or 33 otherwise giving rise to carried forward loss

Relationship of Schedule with section 228K of CAA 2001

Definitions for purposes of Schedule

Index of definitions

Consequential amendments

Continuing the effect of orders under section 431A(3) of ICTA

Section 432B apportionment: participating funds

Transfers of business: excess of assets or liabilities

Transfers of business: modification of s. 83(2B) of FA 1989

Surpluses of mutual and former mutual businesses

Receipts to be taken into account

Changes in value of assets brought into account: non-profit companies

Contingent loans

Basic trust concepts

Interests in settlements

Introduction

General

Residence of trustees

Sub-fund settlements

Amendments of other Acts

Enterprise investment scheme

Venture capital trusts

Corporate venturing scheme

Application of this Part of this Schedule

Spreading of adjustment income

Effect of cessation of business

Election to accelerate charge

Liability of personal representatives

Meaning of “business”

Application of provisions to partnerships

Cases where spreading already available

Application of this Part of this Schedule

Spreading of adjustment

Accounting periods of less than twelve months

Effect of other events bringing accounting period to an end

Election to accelerate charge

Meaning of “business” etc

Application of provisions to partnerships

Introduction

General modification

Conditions

Entering Real Estate Investment Trust Regime

Assets, etc

Profits

Capital gains

Leaving Real Estate Investment Trust Regime

Anti-avoidance

Manufactured dividends

Financial statements

Non-UK resident members

Takeovers

Demergers

34

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Introductory

Assessable profits and allowable losses

Allowance of exploration and appraisal expenditure

Interpretation

Date of delivery or appropriation for shipped oil not disposed of in sales at arm's length

“The Board”

Returns by participators

Gas fractionation

Aggregate market value of oil for purposes of section 2(5)

Power to make regulations

Finance (No. 2) Act 1987

The designated fraction for the month

Income and Corporation Taxes Act 1988

Valuation of oil disposed of or appropriated in certain circumstances.

The following is the Schedule to be inserted as Schedule 19C to ICTA—

Trusts for bereaved minors and Age 18-to-25 trusts

Section 71 of IHTA 1984 not to apply to property settled on or after 22nd March 2006

Section 71 of IHTA 1984 to cease to apply to certain settled property from 6th April 2008

Aggregation with person's estate of property in which interest in possession subsists

“Immediate post-death interests” and “transitional serial interests”

Disabled persons' trusts: meaning of “disabled person's interest” and “disabled person”

Commencement

Deemed disposition where omission to exercise a right increases value of another person's estate or of settled property not aggregated with a person's estate

Potentially exempt transfers: provision in consequence of section 71 of IHTA 1984 not applying to property settled on or after 22nd March 2006

Person's “estate” not to include certain interests in possession

Life assurance policies entered into before 22nd March 2006

Tax where interest in possession ends, or is treated as ending, during beneficiary's life

Non-aggregation with deceased person's estate of property in which he had interest in possession if property reverts to settlor or passes to settlor's spouse or civil partner etc

Rate of tax on ending of interest in possession in property settled during settlor's life

Property entering maintenance fund after death of person entitled to interest in possession

“Relevant property” not to include property held on trust for a bereaved child

“Relevant property” to include property held on employee trusts or newspaper trusts if certain interests in possession subsist in the property

Certain interests in possession to which a person becomes entitled on or after 22nd March 2006 not to be “qualifying interests in possession” for purposes of Chapter 3 of Part 3 of IHTA 1984

New meaning of “qualifying interest in possession” not to apply in section 72 of IHTA 1984

No charge under sections 71B, 71E etc where property held on trusts for bereaved child becomes held on trusts for charitable purposes etc

No postponement of commencement date of settlement where property settled on or after 22nd March 2006 unless settlor, or spouse or civil partner, has immediate post-death interest

Protective trusts

Alterations of capital etc of close company where participator holds shares etc in company as trustee of settled property in which an interest in possession subsists

Close company's interest in possession treated as interest of its participators

Distributions within two years of person's death out of property settled by his will

Interpretation of IHTA 1984

Introductory

Dispositions

Secured pension funds

Liability

Delivery of accounts

Payment

Interest

Interpretation

Rates of tax

Transitional

Introduction

Meaning of “pension credit member” etc: person dying before discharge of liability

Unauthorised payments: former members and sponsoring employers etc

“Bridging” pensions

Pension commencement lump sum: scheme pensions under money purchase arrangements

Short service refund lump sum: protected rights etc.

Refund of excess contributions lump sum: excess relief at source

Annuity protection lump sum death benefit: benefits from unsecured pension fund

Benefit crystallisation events: reaching 75 after designation for unsecured pension

Availability of individual's lifetime allowance: previous benefit crystallisation events

Overseas pension schemes: extension of migrant member relief

Abatement

Amendments and transitionals

Transitional provision: uncrystallised rights under paragraph 9 to include separate lump sums

Transitional protection: taking account of death benefits

Transitional protection: right to take benefits before normal pension age

Transitional provisions: minor corrections

Introduction

Transfer of chargeable interest to a partnership

Transfer of chargeable interest from a partnership

Transfer of chargeable interest from a partnership to a partnership

Transfer of partnership interest: restriction of charge to property-investment partnerships

Prevention of double charge where money etc withdrawn from partnership

Commencement

Introduction

Agricultural tenancies variable under statutory provisions

Backdated lease granted to tenant holding over

Disapplication of “single lease” treatment where agreement for lease followed by grant

Disapplication of “new lease” treatment for certain rent increases after fifth year

Abnormal rent increase after fifth year

Commencement

Editorial notes