Legalize / United Kingdom / Public General Act

Income Tax Act 2007

Type Public General Act

Publication 2007-03-20

Last updated 2026-01-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(i) provide for payment without deduction of sums representing income tax,

(ii) allow interest paid as a deduction from profits of the company's property rental business),

(k) require a company to provide a shareholder with a statement in writing containing specified information,

(l) make provision about the repayment to a shareholder of sums deducted and paid to the Commissioners for Her Majesty's Revenue and Customs in respect of income tax,

(m) make provision for the payment of interest in respect of repayments under paragraph (l),

(n) require notices to be given by or to a company,

(o) require a company to make returns, and

(p) require a company to make records available to the Commissioners for Her Majesty's Revenue and Customs for inspection.

(2) A reference in subsection (1) to a distribution in respect of profits of property rental business includes a distribution made after the company or group (as the case may be) has ceased to be a UK REIT.

(3) A distribution which is treated as having been made by virtue of section 530(6) of CTA 2010 is also to be treated as having been made for the purposes of regulations under section 973.

(4) Regulations under section 973—

(a) may make provision which applies generally or only in specified cases or circumstances,

(b) may make different provision for different cases or circumstances, and

(5) In subsections (1) and (2), so far as they apply to cases within section 973(1)(a), “profits” includes gains (including chargeable gains).

(6) In this section—

property rental business” has the same meaning as in Part 12 of CTA 2010 (see section 519 of that Act), and

“UK REIT” has the same meaning as in Part 12 of CTA 2010 (see section 518(4) of that Act).

(7) In relation to references to profits of property rental business, see section 549A of CTA 2010.

Chapter 19 — General

Supplementary

Statements about deduction of income tax

975

(1) Subsection (2) applies if—

(a) a person makes a payment from which a sum representing income tax must be deducted under any provision of Chapters 2 to 7 or under section 919 or 928 , and

(b) the person is not under a duty to provide a statement under section 975A.

(2) If the recipient requests it in writing, the person must provide the recipient with a statement showing—

(a) the gross amount of the payment,

(b) the amount of the sum deducted, and

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) A statement under this section must be in writing.

(6) The duty to comply with a request under subsection (2) ... is enforceable by the recipient ....

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Arrangements for payments of interest less tax or at specified net rate

976

(1) This section applies if—

(a) provision is made for the payment of interest, and

(b) the interest is payable without deduction of a sum representing income tax.

(2) It applies—

(a) whenever the provision was made, and

(b) whether it was made orally or in writing.

(3) If the provision is for the payment of interest “less tax” (or uses words to similar effect) it is to be read as if the words “less tax” (or the equivalent words) were not included.

(4) Subsection (5) applies if the provision is (however worded)—

(a) for the payment of interest to which subsection (6) applies, and

(b) for that interest to be paid at such a rate (“the gross rate”) that the amount of interest payable at that rate is, after deduction of a sum representing income tax, equal to the amount of interest payable at a specified rate (“the net rate”).

(5) In that case the provision is to be read as if it were for the payment of interest at the gross rate.

(6) This subsection applies to—

(a) interest on which the recipient is chargeable to income tax, which falls within Chapter 2 of Part 4 of ITTOIA 2005 but which is not relevant foreign income, or

(b) interest which is required to be brought into account under Part 5 of CTA 2009 (loan relationships) as a non-trading credit of the recipient.

Payments to companies

977

(1) The provisions of this Part relating to the deduction from payments of sums representing income tax are not affected by the fact that the recipient is a company not chargeable to income tax on the payment.

(2) References in subsection (1) to payments received by a company—

(a) include payments received by another person on behalf of or in trust for the company, but

(b) do not include payments received by the company on behalf of or in trust for another person.

(3) For further provision about payments received by companies, see—

(a) sections 7(2) and 11(3) of ICTA (set-off of income tax deducted at source against liability to corporation tax), and

(b) section 952 (set-off of income tax suffered against income tax payable under Chapter 15).

Application to public departments

978

(1) This Part applies in relation to payments made by public offices and departments of the Crown except as mentioned in subsection (2).

(2) This Part does not apply to payments made by public offices and departments of—

(a) any country mentioned in Schedule 3 to the British Nationality Act 1981 (c. 61) (which contains a list of Commonwealth countries) or the Republic of Ireland, or

(b) any state or province of a country within paragraph (a).

Designated international organisations: exceptions from duties to deduct

979

(1) The Treasury may by order designate for the purposes of this section any international organisation of which the United Kingdom is a member.

(2) The duty to deduct under section 874 (duty to deduct from certain payments of yearly interest) does not apply to a payment of interest made by—

(a) an organisation designated under subsection (1), or

(b) a partnership of which an organisation so designated is a member.

(3) None of the duties to deduct under Chapters 6, 7 (deduction from annual payments, patent royalties and other payments connected with intellectual property) and 14 (directions for duty to deduct to apply in tax avoidance cases) apply to a payment made by an organisation designated under subsection (1).

(4) The duties to deduct under sections 919(2) and 922(2) do not apply in a case where the payer of the manufactured interest or (as the case may be) the manufactured overseas dividend is an organisation designated under subsection (1).

Derivative contracts: exception from duties to deduct

980

(1) Despite the provisions of this Part, a company is not required to deduct a sum representing income tax from a payment made under a derivative contract to which this section applies.

(2) This section applies to a derivative contract if profits and losses arising from it are calculated in accordance with Part 7 of CTA 2009 .

Foreign currency securities etc: exception from duties to deduct

981

Despite the provisions of this Part there is no duty to deduct a sum representing income tax from a payment of interest within section 755(1) of ITTOIA 2005 (interest on foreign currency securities etc owned by non-UK residents).

Income tax is calculated by reference to gross amounts

982

If any provision of this Part requires the deduction from a payment of a sum representing income tax at a specified rate, the rate is to be applied to the gross payment, that is to the payment before deduction of a sum representing income tax under this Part.

Interpretation

Meaning of “deposit”

983

In this Chapter “deposit” means a sum of money paid on terms which mean that it will be repaid (with or without interest)—

(a) on demand, or

(b) at a time or in circumstances agreed by or on behalf of the person who pays it and the person who receives it.

Meaning of “financial instrument”

984

(1) In this Part “financial instrument” includes—

(a) any money,

(b) any shares or securities,

(c) an option, future or contract for differences if its underlying subject-matter is (or is primarily) one or more financial instruments, and

(d) an instrument the underlying subject-matter of which is (or is primarily) creditworthiness.

(2) For the purposes of subsection (1) if the effect of an instrument depends on an index or factor, the “underlying” subject-matter of the instrument is the matter by reference to which the index or factor is determined.

Meaning of “qualifying certificate of deposit”

985

(1) In this Part “qualifying certificate of deposit” means a certificate of deposit under which—

(a) the amount payable is at least £50,000, exclusive of interest, and

(b) that amount is payable at a specified time within 5 years beginning with the date on which the deposit is made.

(2) If an amount is denominated in a foreign currency, subsection (1)(a) has effect as if it referred to an amount which is at least the equivalent in that currency of £50,000 at the time the deposit is made.

(3) For the meaning of “certificate of deposit”, see section 1019.

Meaning of “qualifying uncertificated eligible debt security unit”

986

(1) In this Part “qualifying uncertificated eligible debt security unit” means an uncertificated eligible debt security unit under which—

(a) the amount payable is at least £50,000, exclusive of interest, and

(b) that amount is payable at a specified time within 5 years beginning with the date on which the deposit is made.

(2) If an amount is denominated in a foreign currency, subsection (1)(a) has effect as if it referred to an amount which is at least the equivalent in that currency of £50,000 at the time the deposit is made.

(3) In this section “uncertificated eligible debt security unit” means an uncertificated unit of an eligible debt security where the issue of the unit corresponds, in accordance with the current terms of issue of the eligible debt security, to the issue of a certificate of deposit.

(4) In subsection (3)—

(a) “eligible debt security”,

(b) “uncertificated” (in relation to a unit), and

have the meanings given by regulation 3(1) of the Uncertificated Securities Regulations 2001 (S.I. 2001/3755).

(5) For the meaning of “certificate of deposit”, see section 1019.

Meaning of “quoted Eurobond”

987

(1) In this Part “quoted Eurobond” means a security, including a share (in particular any permanent interest bearing share as defined in section 117 of TCGA 1992), that—

(a) is issued by a company,

(b) is listed on a recognised stock exchange or admitted to trading on a multilateral trading facility operated by a regulated recognised stock exchange, and

(2) For the purposes of this section—

(a) “regulated recognised stock exchange” means a recognised stock exchange that is regulated in the United Kingdom, the European Economic Area or Gibraltar, and

(b) “multilateral trading facility” means—

(i) a UK multilateral trading facility within the meaning given by Article 2.1(14A) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments,

(ii) an EU multilateral trading facility within the meaning given by Article 2.1(14B) of that Regulation, and

(iii) a Gibraltar multilateral trading facility within the meaning given by Article 26(11)(b)(ii) of that Regulation.

...

Part 16 — Income Tax Acts definitions etc

Chapter 1 — Definitions

Overview of Chapter

988

(1) This Chapter contains definitions which apply for the purposes of the Income Tax Acts, except where, in those Acts, the context otherwise requires.

(2) To find a definition go first to section 989, which sets out some of the definitions in full.

(3) If a definition is not set out in full in section 989, the section indicates where it is set out in full.

(4) In some cases it is stated that a definition does not apply for the purposes of specified provisions of the Income Tax Acts (see, for example, sections 990(2), 992(3) and 1007(4)).

(5) And in some cases it is stated that a definition has effect only for the purposes of specific provisions of the Income Tax Acts (see, for example, sections 991, 993, 995 and 1006).

The definitions

989

The following definitions apply for the purposes of the Income Tax Acts—

“Act” has the meaning given by section 990,

“additional rate” means the rate of income tax determined in pursuance of section 6(2) ...,

“authorised unit trust” is to be read in accordance with sections 616 and 619 of CTA 2010,

“bank” is to be read in accordance with section 991,

“basic rate” means the rate of income tax determined in pursuance of section 6(2) ...,

“basic rate limit” has the meaning given by section 10,

“body of persons” means any body politic, corporate or collegiate and any company, fraternity, fellowship and society of persons whether corporate or not corporate,

“building society” means a building society within the meaning of the Building Societies Act 1986 (c. 53),

“capital allowance” means any allowance under CAA 2001,

“the Capital Allowances Act” means CAA 2001,

“chargeable gain” has the same meaning as in TCGA 1992,

“chargeable period” means an accounting period of a company or a tax year,

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

“close company” is to be read in accordance with Chapter 2 of Part 10 of CTA 2010 (see in particular section 439 of that Act),

“company” has the meaning given by section 992,

“connected”, in relation to two persons being connected with one another, is to be read in accordance with sections 993 and 994,

“control”, in relation to the control of a body corporate or a partnership, is to be read in accordance with section 995,

“default additional rate” means the rate of income tax of that name determined pursuant to section 6C,

“default basic rate” means the rate of income tax of that name determined pursuant to section 6C,

“default higher rate” means the rate of income tax of that name determined pursuant to section 6C,

“distribution” has the meaning given by Chapters 2 to 5 of Part 23 of CTA 2010, disregarding section 1027A of that Act,

“dividend additional rate” means the rate of income tax specified in section 8(3),

“dividend income” has the meaning given by section 19,

“dividend nil rate” means the rate of income tax specified in section 8(A1),

“dividend ordinary rate” means the rate of income tax specified in section 8(1),

“dividend trust rate” means the rate of income tax specified in section 9(2),

“dividend upper rate” means the rate of income tax specified in section 8(2),

“farming” has the meaning given by section 996,

“for accounting purposes” has the meaning given by section 997(4),

“foreign employment election” means an election under section 41M of ITEPA 2003,

“foreign income claim” means a claim under section 845A of ITTOIA 2005,

“forestry” is to be read in accordance with section 996,

“generally accepted accounting practice” has the meaning given by section 997(1) and (3),

“grossing up” is to be read in accordance with section 998,

“higher rate” means the rate of income tax determined in pursuance of section 6(2) ...,

“higher rate limit” has the meaning given by section 10,

“hire-purchase agreement” is to be read in accordance with section 998A,

“international accounting standards” has the meaning given by section 997(5),

“local authority” has the meaning given by section 999,

“local authority association” has the meaning given by section 1000,

“market gardening” has the meaning given by section 996,

“net income” has the meaning given by section 23 (see Step 2 in that section),

“non-UK resident” means not resident in the United Kingdom (and references to a non-UK resident or a non-UK resident person are to a person who is not resident there),

“normal self-assessment filing date”, in relation to a tax year, means the 31 January following the tax year,

“notice” means notice in writing or in a form authorised (in relation to the case in question) by directions under section 43E(1) of TMA 1970,

“offshore installation” has the meaning given by sections 1001 and 1002,

“oil and gas exploration and appraisal” has the meaning given by section 1003,

“ordinary share capital”, in relation to a company, means all the company's issued share capital (however described), other than capital the holders of which have a right to a dividend at a fixed rate but have no other right to share in the company's profits,

“the overseas part”, in relation to a split year, has the meaning given in Part 3 of Schedule 45 to FA 2013 (statutory residence test: split year treatment);

“overseas property business” has the meaning given by Chapter 2 of Part 3 of ITTOIA 2005,

“period of account”—in relation to a person, means any period for which the person draws up accounts, andin relation to a trade, profession, vocation or other business, means any period for which the accounts of the business are drawn up,

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

“personal representatives” in relation to a person who has died, means—in the United Kingdom, persons responsible for administering the estate of the deceased, andin a territory outside the United Kingdom, those persons having functions under its law equivalent to those of administering the estate of the deceased,

“profits or gains” does not include chargeable gains,

“property investment LLP” has the meaning given by section 1004,

“qualifying new resident” has the meaning it has in Chapter 5 of Part 8 of ITTOIA 2005 (see section 845B of that Act),

“qualifying policy” means a policy of insurance which is a qualifying policy for the purposes of Chapter 1 of Part 7 of ICTA,

“recognised stock exchange” has the meaning given by section 1005,

“registered pension scheme” has the meaning given by section 150(2) of FA 2004,

“relevant foreign income” has the meaning given by section 830(1) to (3) of ITTOIA 2005 but also includes, for any purpose mentioned in any provision listed in section 830(4) of that Act, income treated as relevant foreign income for that purpose by that provision,

“research and development” is to be read in accordance with section 1006,

“retail prices index” means—the general index of retail prices (for all items) published by the Statistics Board, orif that index is not published for a relevant month, any substituted index or index figures published by the Board,

“savings additional rate” means the rate of income tax of that name determined pursuant to section 7A,

“savings allowance” has the meaning given by section 12B,

“savings basic rate” means the rate of income tax of that name determined pursuant to section 7A,

“savings higher rate” means the rate of income tax of that name determined pursuant to section 7A,

“savings income” has the meaning given by section 18,

“savings nil rate” means the rate of income tax specified in section 7(2),

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

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

“scheme administrator”, in relation to a pension scheme, has the meaning given by section 270 of FA 2004 (but see also sections 271 to 274 of that Act),

“Scottish basic rate” in relation to a tax year, means the Scottish basic rate set by a Scottish rate resolution for that year

“Scottish intermediate rate”, in relation to a tax year, means any Scottish rate for that year which is named “intermediate” by the Scottish rate resolution setting it,

“Scottish rate” in relation to a tax year, means a rate set by a Scottish rate resolution for that year,

“Scottish rate resolution” means a resolution of the Scottish Parliament under section 80C of the Scotland Act 1998

“Scottish taxpayer” has the same meaning as in Chapter 2 of Part 4A of the Scotland Act 1998

“settled property” (together with references to property comprised in a settlement) is to be read in accordance with section 466,

“settlor” is to be read in accordance with sections 467 to 473,

“shares, stock or other securities included in the official UK list” is to be read in accordance with sections 467 to 473,” is to be read in accordance with section 1005,

“shares, stock or other securities listed on a recognised stock exchange” is to be read in accordance with section 1005,

“split year”, in relation to an individual, means a tax year that, as respects that individual, is a split year within the meaning of Part 3 of Schedule 45 to FA 2013 (statutory residence test: split year treatment);

“starting rate for savings” means the rate of income tax specified in section 7(1),

“starting rate limit for savings” has the meaning given by section 12,

“stepchild”, in relation to a civil partner, is to be read in accordance with section 246 of the Civil Partnership Act 2004 (c. 33),

“51% subsidiary”, in relation to bodies corporate, has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of CTA 2010),

“75% subsidiary”, in relation to bodies corporate, has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of CTA 2010),

“tax”, if neither income tax nor corporation tax is specified, means either of those taxes,

“tax year” has the meaning given by section 4(2),

“the tax year 2007-08” (and any corresponding expression in which two years are similarly mentioned) has the meaning given by section 4(4),

“total income” has the meaning given by section 23 (see Step 1 in that section and also section 31),

“trade” includes any venture in the nature of trade,

“trade of dealing in or developing UK land”, in relation to a non-UK resident person, has the meaning given by section 6B of ITTOIA 2005,

“tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal,

“trust rate” means the rate of income tax specified in section 9(1),

“UK generally accepted accounting practice” has the meaning given by section 997(2),

“the UK part”, in relation to a split year, has the meaning given in Part 3 of Schedule 45 to FA 2013 (statutory residence test: split year treatment);

“UK property business” has the meaning given by Chapter 2 of Part 3 of ITTOIA 2005,

“UK resident” means resident in the United Kingdom (and references to a UK resident or a UK resident person are to a person who is resident there),

“umbrella scheme” is to be read in accordance with section 619 of CTA 2010,

“unauthorised unit trust” means a unit trust scheme which is neither an authorised unit trust nor an umbrella scheme,

“unit holder” is to be read in accordance with sections 616 and 619 of CTA 2010,

“unit trust scheme” has the meaning given by section 1007,

“venture capital trust” and “VCT” have the same meaning as in Part 6 (see section 259(1)),

“Welsh additional rate” means the rate of income tax of that name calculated in accordance with section 6B,

“Welsh basic rate” means the rate of income tax of that name calculated in accordance with section 6B,

“Welsh higher rate” means the rate of income tax of that name calculated in accordance with section 6B,

“Welsh taxpayer” has the same meaning as in Chapter 2 of Part 4A of the Government of Wales Act 2006

“woodlands” has the meaning given by section 996,

“year of assessment” means a tax year, and

“the year 1988-1989” means the tax year 1988-1989 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way).

Meaning of “Act”

990

(1) In the Income Tax Acts “Act” includes Northern Ireland legislation.

(2) This section does not apply for the purposes of—

(a) this Act (see instead section 1018), or

(b) ITTOIA 2005 (see instead sections 879 and 880 of that Act).

Meaning of “bank”

991

(1) This section has effect for the purposes of the provisions of the Income Tax Acts which apply this section.

(2) “Bank” means—

(a) the Bank of England,

(b) a person who has permission under Part 4A of FISMA 2000 to accept deposits (but see subsection (3) for exclusions),

(d) the European Investment Bank, and

(e) an international organisation designated as a bank for the purposes of this section by an order made by the Treasury.

(3) The reference to a person who has permission under Part 4A of FISMA 2000 to accept deposits does not include—

(a) a building society,

(b) a society registered within the meaning of the Friendly Societies Act 1974 (c. 46) or incorporated under the Friendly Societies Act 1992 (c. 40),

(c) a society registered as a credit union under the Co-operative and Community Benefit Societies Act 2014 or the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), or

(d) an insurance company within the meaning of section 275 of FA 2004.

(4) The Treasury may designate an international organisation for the purposes of this section only if the United Kingdom is a member of the organisation.

(5) An order under subsection (2)(e) may include provision for a designation to have effect only in relation to the application of this section by a provision specified in the order.

Meaning of “company”

992

(1) In the Income Tax Acts “company” means any body corporate or unincorporated association, but does not include a partnership, a local authority or a local authority association.

(2) Subsection (1) needs to be with read with section 617 of CTA 2010 (authorised unit trust treated as UK resident company).

(3) This section does not apply for the purposes of—

(a) Part 6 (venture capital trusts),

(b) Chapters 1, 3 and 4 of Part 13 (transactions in securities and land and sales of income from occupation), and

Meaning of “connected” persons

993

(1) This section has effect for the purposes of the provisions of the Income Tax Acts which apply this section.

(2) An individual (“A”) is connected with another individual (“B”) if—

(a) A is B's spouse or civil partner,

(b) A is a relative of B,

(d) A is a relative of B's spouse or civil partner, or

(e) A is the spouse or civil partner of a relative of B's spouse or civil partner.

(3) A person, in the capacity as trustee of a settlement, is connected with—

(a) any individual who is a settlor in relation to the settlement,

(b) any person connected with such an individual,

(d) any non-UK resident company which, if it were UK resident, would be a close company whose participators include the trustees of the settlement,

(e) any body corporate controlled (within the meaning of section 995) by a company within paragraph (c) or (d),

(f) if the settlement is the principal settlement in relation to one or more sub-fund settlements, a person in the capacity as trustee of such a sub-fund settlement, and

(g) if the settlement is a sub-fund settlement in relation to a principal settlement, a person in the capacity as trustee of any other sub-fund settlements in relation to the principal settlement.

(4) A person who is a partner in a partnership is connected with—

(a) any partner in the partnership,

(b) the spouse or civil partner of any individual who is a partner in the partnership, and

But this subsection does not apply in relation to acquisitions or disposals of assets of the partnership pursuant to genuine commercial arrangements.

(5) A company is connected with another company if—

(a) the same person has control of both companies,

(b) a person (“A”) has control of one company and persons connected with A have control of the other company,

(d) a group of two or more persons has control of both companies and the groups either consist of the same persons or could be so regarded if (in one or more cases) a member of either group were replaced by a person with whom the member is connected.

(6) A company is connected with another person (“A”) if—

(a) A has control of the company, or

(b) A together with persons connected with A have control of the company.

(7) In relation to a company, any two or more persons acting together to secure or exercise control of the company are connected with—

(a) one another, and

(b) any person acting on the directions of any of them to secure or exercise control of the company.

Meaning of “connected” persons: supplementary

994

(1) In section 993 and this section—

“company” includes any body corporate or unincorporated association, but does not include a partnership (and see also subsection (2)),

“control” is to be read in accordance with sections 450 and 451 of CTA 2010 (except where otherwise indicated),

“principal settlement” has the meaning given by paragraph 1 of Schedule 4ZA to TCGA 1992,

“relative” means brother, sister, ancestor or lineal descendant,

“settlement” has the same meaning as in Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act), and

“sub-fund settlement” has the meaning given by paragraph 1 of Schedule 4ZA to TCGA 1992.

(2) For the purposes of section 993—

(a) a unit trust scheme is treated as if it were a company, and

(b) the rights of the unit holders are treated as if they were shares in the company.

(3) For the purposes of section 993 “trustee”, in the case of a settlement in relation to which there would be no trustees apart from this subsection, means any person—

(a) in whom the property comprised in the settlement is for the time being vested, or

(b) in whom the management of that property is for the time being vested.

Section 466(4) does not apply for the purposes of this subsection.

(4) If any provision of section 993 provides that a person (“A”) is connected with another person (“B”), it also follows that B is connected with A.

Meaning of “control”

995

(1) This section has effect for the purposes of the provisions of the Income Tax Acts which apply this section.

(2) In relation to a body corporate (“company A”), “control” means the power of a person (“P”) to secure—

(a) by means of the holding of shares or the possession of voting power in relation to that or any other body corporate, or

(b) as a result of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of company A are conducted in accordance with P's wishes.

(3) In relation to a partnership, “control” means the right to a share of more than half the assets, or of more than half the income, of the partnership.

996

(1) In the Income Tax Acts “farming” means the occupation of land wholly or mainly for the purposes of husbandry, but does not include market gardening (see subsection (5)).

(2) In subsection (1) “husbandry” includes—

(a) hop growing, and

(b) the breeding and rearing of horses and the grazing of horses in connection with those activities.

(3) For the purposes of the Income Tax Acts the cultivation of short rotation coppice is regarded as husbandry and not as forestry.

(4) In the Income Tax Acts “woodlands” does not include land on which short rotation coppice is cultivated.

(5) In the Income Tax Acts “market gardening” means the occupation of land as a garden or nursery for the purpose of growing produce for sale.

(6) For the purposes of this section “short rotation coppice” means a perennial crop of tree species planted at high density, the stems of which are harvested above ground level at intervals of less than 10 years.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

997

(1) In the Income Tax Acts “generally accepted accounting practice” means UK generally accepted accounting practice.

This is subject to subsection (3).

(2) In the Income Tax Acts “UK generally accepted accounting practice”—

(a) means generally accepted accounting practice in relation to accounts of UK companies (other than IAS accounts) that are intended to give a true and fair view, and

(b) has the same meaning in relation to—

(i) individuals,

(ii) entities other than companies, and

(iii) companies that are not UK companies,

as it has in relation to UK companies.

(3) In relation to the affairs of a company or other entity that prepares IAS accounts, in the Income Tax Acts “generally accepted accounting practice” means generally accepted accounting practice in relation to IAS accounts.

(4) In the Income Tax Acts “for accounting purposes” means for the purposes of accounts drawn up in accordance with generally accepted accounting practice.

(5) In the Income Tax Acts “international accounting standards” has the same meaning as in the Corporation Tax Acts (see section 1127 of CTA 2010).

(6) In this section—

“IAS accounts” means accounts prepared in accordance with international accounting standards, and

“UK companies” means companies incorporated or formed under the law of a part of the United Kingdom.

Meaning of “grossing up”

998

(1) In the Income Tax Acts references to grossing up by reference to a rate of tax are to calculating the amount (“the grossed up amount”) which after deduction of income tax at that rate would equal the amount to be grossed up (“the net amount”).

(2) The grossed up amount is the sum of the net amount and the tax deducted.

(3) The grossed up amount may also be expressed as—

$$GA=NA+NA×R100-R$where—GA is the grossed up amount,NA is the net amount, andR is the percentage rate of tax by reference to which the net amount is to be grossed up.$

Meaning of “local authority”

999

(1) In the Income Tax Acts “local authority”, in relation to England and Wales, means—

(a) a billing authority as defined in section 1(2) of the Local Government Finance Act 1992 (c. 14),

(b) a precepting authority as defined in section 69(1) of that Act,

(c) a body with power to issue a levy (by virtue of regulations under section 74 of the Local Government Finance Act 1988 (c. 41)),

(d) a body with power to issue a special levy (by virtue of regulations under section 75 of that Act),

(e) a fire and rescue authority in Wales constituted by a scheme under section 2 of the Fire and Rescue Services Act 2004 (c. 21) or a scheme to which section 4 of that Act applies,

(ea) a corporate joint committee established by regulations under Part 5 of the Local Government and Elections (Wales) Act 2021 (asc 1),

(f) an authority with power to make or determine a rate, or

(g) a residuary body established by order under section 22(1) of the Local Government Act 1992 (c. 19).

(2) In the Income Tax Acts “local authority”, in relation to Scotland, means—

(a) a council constituted under section 2 of the Local Government etc (Scotland) Act 1994 (c. 39),

(b) a joint board or committee within the meaning of the Local Government (Scotland) Act 1973 (c. 65), or

(3) In the Income Tax Acts “local authority”, in relation to Northern Ireland, means a district council constituted under section 1 of the Local Government Act (Northern Ireland) 1972 (c. 9 (N.I.)).

(4) In this section “rate” means a rate—

(a) whose proceeds are applicable for public local purposes, and

(b) which is leviable by reference to the value of land or property.

Meaning of “local authority association”

1000

(1) In the Income Tax Acts “local authority association” means any incorporated or unincorporated association which meets conditions A and B.

(2) Condition A is that all of its members are local authorities, groups of local authorities or local authority associations.

(3) Condition B is that its purpose, or primary purpose, is to protect and further the general interests of local authorities or any description of local authorities.

(4) For the purposes of condition A, if a member (“M”) of a local authority association is a representative of, or is appointed by, a local authority, group of local authorities or a local authority association, the authority, group or association concerned (rather than M) is to be treated as a constituent member of the local authority association.

Meaning of “offshore installation”

1001

(1) In the Income Tax Acts “offshore installation” means a structure which is, is to be, or has been, put to a relevant use while in water (see subsections (3) and (4)).

(2) But a structure is not an offshore installation if—

(a) it has permanently ceased to be put to a relevant use,

(b) it is not, and is not to be, put to any other relevant use, and

(3) A use is a relevant use if it is—

(a) for the purposes of exploiting mineral resources by means of a well,

(b) for the purposes of exploration with a view to exploiting mineral resources by means of a well,

(d) for the recovery of gas so stored,

(e) for the conveyance of things by means of a pipe, or

(f) mainly for the provision of accommodation for individuals who work on or from a structure which is, is to be, or has been, put to any of the above uses while in water.

(4) For the purposes of this section references to a structure being put to a use while in water are to the structure being put to a use while—

(a) standing in any waters,

(b) stationed (by whatever means) in any waters, or

(5) In this section “structure” includes a ship or other vessel.

Regulations about the meaning of “offshore installation”

1002

(1) The Treasury may by regulations make provision as to the meaning of “offshore installation” in the Income Tax Acts.

(2) The regulations may—

(a) add to, amend or repeal any provision of section 1001,

(b) make different provision for different purposes, and

Meaning of “oil and gas exploration and appraisal”

1003

(1) In the Income Tax Acts “oil and gas exploration and appraisal” means activities carried out for the purpose of—

(a) searching for petroleum anywhere in an area,

(b) ascertaining a petroleum-bearing area's extent or characteristics, or

so that it may be determined whether the petroleum is suitable for commercial exploitation.

(2) In this section “petroleum” has the meaning given by section 1 of the Petroleum Act 1998 (c. 17).

Meaning of “property investment LLP”

1004

(1) In the Income Tax Acts “property investment LLP” means a limited liability partnership—

(a) whose business consists wholly or mainly in the making of investments in land, and

(b) the principal part of whose income is derived from investments in land.

(2) Whether a limited liability partnership is a property investment LLP is determined for each period of account of the partnership.

Meaning of “recognised stock exchange”

1005

(1) In the Income Tax Acts “recognised stock exchange” means—

(a) any market of a recognised investment exchange which is for the time being designated as a recognised stock exchange for the purposes of this section by an order made by the Commissioners for Her Majesty's Revenue and Customs, and

(b) any market outside the United Kingdom which is for the time being so designated.

(2) An order under subsection (1) may—

(a) designate a market by name or by reference to any class or description of market (including, in the case of a market outside the United Kingdom, one framed by reference to any authority or approval given in a country outside the United Kingdom),

(b) contain incidental, supplemental, consequential and transitional provision and savings, and

(2A) An order under subsection (1) may designate a stock exchange for the purposes of this section in its application to section 564G of this Act, section 151N of TCGA 1992 and section 507 of CTA 2009 only.

(3) References in the Income Tax Acts to securities which are listed on a recognised stock exchange are to securities—

(a) which are admitted to trading on that exchange, and

(b) which are included in the official UK list or are officially listed in a qualifying country outside the United Kingdom in accordance with provisions corresponding to those generally applicable in EEA states.

(4) For this purpose “qualifying country outside the United Kingdom” means any country outside the United Kingdom in which there is a recognised stock exchange.

(5) References in the Income Tax Acts to securities which are included in the official UK list are to securities which are included in the official list (within the meaning of Part 6 of FISMA 2000) in accordance with the provisions of that Part.

(6) In this section—

“recognised investment exchange” has the same meaning as in FISMA 2000 (see section 285), and

“securities” includes shares and stock.

Meaning of “research and development”

1006

(1) This section has effect for the purposes of the provisions of the Income Tax Acts which apply this section.

(2) “Research and development” means activities that fall to be treated as research and development in accordance with generally accepted accounting practice.

This is subject to subsection (3).

(3) The Treasury may by regulations specify activities which—

(a) are to be treated as being “research and development” for the purposes of this section, or

(b) are to be treated as not being “research and development” for the purposes of this section.

(4) The regulations may—

(a) make provision by reference to guidelines issued by the Secretary of State, and

(b) contain incidental, supplemental, consequential and transitional provision and savings.

(5) Unless otherwise expressly provided, “research and development” does not include oil and gas exploration and appraisal.

Meaning of “unit trust scheme”

1007

(1) In the Income Tax Acts “unit trust scheme” has the meaning given by section 237 of FISMA 2000.

This is subject to subsection (2).

(2) The Treasury may, in relation to a unit trust scheme within the meaning given by section 237 of FISMA 2000 whose trustees are UK resident, by regulations provide that the scheme is not to be a unit trust scheme for the purposes of the definition in section 989 of “unauthorised unit trust” if it is within a specified description.

(3) The regulations may contain incidental, supplemental, consequential and transitional provision and savings.

(4) This section does not apply for the purposes of section 558 (approved charitable investments).

Chapter 2 — Other Income Tax Acts provisions

Scotland

1008

(1) In the application of the Income Tax Acts to Scotland—

“assignment” means an assignation,

“estate in land” includes the land, and

“surrender” includes renunciation.

(2) In the application of the Income Tax Acts to Scotland, any reference to property or rights being held on trust or on trusts is a reference to the property or rights being held in trust.

Sources of income within the charge to income tax or corporation tax

1009

In the Income Tax Acts a source of income is within the charge to income tax or corporation tax if that tax—

(a) is chargeable on the income arising from it, or

(b) would be so chargeable if there were any income arising from it,

and references to a person, or income, being within the charge to income tax or corporation tax are to be read in the same way.

Application of Income Tax Acts to recognised investment exchanges

1010

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

References to married persons, or civil partners, living together

1011

Individuals who are married to, or are civil partners of, each other are treated for the purposes of the Income Tax Acts as living together unless—

(a) they are separated under an order of a court of competent jurisdiction,

(b) they are separated by deed of separation, or

Relationship between rules on highest part of total income

1012

(1) This section makes provision about the relationship between rules requiring particular income to be treated as the highest part of a person's total income.

(2) It has effect for the purposes of the Income Tax Acts except sections 535 to 537 of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief).

(3) If more than one of the provisions listed in subsection (4) applies in relation to a person, a provision mentioned earlier in the list has priority over a provision mentioned later in the list.

(4) The provisions are—

section 465A of ITTOIA 2005 (gains from contracts for life insurance etc to be treated as highest part of total income),

section 685A(5A) of ITTOIA 2005 (payments from trustees of settlor-interested settlements to be treated as highest part of total income),

section 404A of ITEPA 2003 (payments and other benefits on termination of employment to be treated as highest part of total income), and

section 16 (savings and dividend income to be treated as highest part of total income).

(5) The provisions listed in subsection (4) have priority over—

section 619A(2) of ITTOIA 2005 (income treated as highest part of settlor's total income),

section 768(6) and (7) (income treated as arising under Chapter 3 of Part 13 to be treated as highest part of total income),

section 786(6) and (7) (income treated as arising under Chapter 4 of Part 13 to be treated as highest part of total income), and

any other provisions of the Income Tax Acts requiring income of any description to be treated as the highest part of a person's total income.

(6) The effect of one provision having priority over another is that the second provision has effect subject to the first.

Territorial sea of the United Kingdom

1013

The territorial sea of the United Kingdom is treated for the purposes of the Income Tax Acts as part of the United Kingdom.

Orders and regulations

1014

(1) This section applies to all powers under the Income Tax Acts of the Treasury or the Commissioners for Her Majesty's Revenue and Customs to make orders or regulations, other than excluded powers.

(2) All powers under the following are excluded—

(a) ICTA (see instead section 828 of that Act),

(b) section 178(5) of FA 1989 (setting of rates of interest),

(ba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) ITEPA 2003 (see instead section 717 of that Act),

(e) Part 4 of FA 2004 (see instead section 282 of that Act),

(f) ITTOIA 2005 (see instead section 873 of that Act),

(fa) TIOPA 2010 (see instead section 499 of that Act), and

(g) the following provisions of this Act—

(i) section 184(3)(b) and (c) (EIS: the unquoted status requirement (designated exchanges etc)),

(ii) section 295(3)(b) and (c) (venture capital trusts: the unquoted status requirement (designated exchanges etc)),

(iia) section 432(2) (gifts of shares, securities and real property to charities etc: meaning of “qualifying investment”), ...

(iib) section 827(2) (meaning of “investment transaction”), ...

(iic) section 835S(4) (meaning of “investment transaction”), and

(iii) section 1005(1) (meaning of “recognised stock exchange”).

(3) Any orders or regulations made under a power to which this section applies must be made by statutory instrument.

(4) Any orders or regulations made under a power to which this section applies are subject to annulment in pursuance of a resolution of the House of Commons.

(5) Subsection (4) does not apply if the order or regulations are made under—

(a) section 73A of FA 2004 (exemption for designated international organisations), or

(b) any of the following provisions of this Act—

(ai) section 10(5B) (the higher rate limit),

(i) section 21(5) (indexation of basic rate limit and starting rate limit for savings ),

(ii) section 57 (indexation of allowances),

(iia) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(iii) section 114 or 802 (exclusion of amounts in calculating individual's contribution to the firm),

(iiia) section 257MNE (social investment relief: amendment of limits on investments),

(iv) section 400(4)(e) (amounts treated as contributed by an individual to investment partnership capital),

(v) section 897 (UK public revenue dividends: regulations about collection of income tax),

(vi) section 962 (regulations modifying Chapter 15 of Part 15),

(vii) section 979 (designated international organisations: exceptions from duties to deduct),

(viii) section 991(2)(e) (meaning of “bank”), or

(ix) section 1030(2) (power to make transitional or saving provision in connection with coming into force of this Act).

(6) Further, subsection (4) does not apply—

(a) if any other Parliamentary procedure is expressly provided to apply in relation to the order or regulations, or

(b) if the order or regulations provide for any provision of the Income Tax Acts to come into force or have effect in accordance with the order or regulations,

and is also subject to any other provision to the contrary.

Territorial scope of charges under certain provisions to which section 1016 applies

1015

(1) This section applies in relation to any amount chargeable to income tax under or by virtue of any provision—

(a) to which section 1016 applies, and

(b) which is listed in Part 2 or 3 of the table in that section (provisions not in ITTOIA 2005).

(2) An amount arising to a UK resident is chargeable to tax whether or not it is from a source in the United Kingdom.

(3) An amount arising to a non-UK resident is chargeable to tax only if it is from a source in the United Kingdom.

(4) References in this section to amounts which are from a source in the United Kingdom include, in the case of any amount which does not have a source, references to amounts which have a comparable connection to the United Kingdom.

(5) This section is subject to any express or implied provision to the contrary in any provision of the Income Tax Acts.

Table of provisions to which this section applies

1016

(1) In the Income Tax Acts references to any provision to which this section applies are references to any provision listed in the following table so far as it relates to income tax (but subject to any applicable limitation in subsections (3) and (4)).

(2) This is the table—

Provisions of ITTOIA 2005	Description
Chapter 18 of Part 2	Post-cessation receipts: trades, professions and vocations
Chapter 8 of Part 3	Rent receivable in connection with a UK section 12(4) concern
Chapter 9 of Part 3	Rent receivable for UK electric-line wayleaves
Chapter 10 of Part 3	Post-cessation receipts: UK property businesses
Chapter 2 of Part 4	Interest
Chapter 9 of Part 4	Gains from contracts for life insurance etc
Chapter 11 of Part 4	Transactions in deposits
Chapter 12 of Part 4	Disposals of futures and options involving guaranteed returns
Section 579	Royalties and other income from intellectual property
Section 583	Income from disposals of know-how
Section 587	Income from sales of patent rights
Chapter 3 of Part 5	Films and sound recordings: non-trade businesses
Chapter 4 of Part 5	Certain telecommunication rights: non-trading income
Chapter 5 of Part 5	Settlements: amounts treated as income of settlor
Section 682(4)	Adjustments after the administration period
Chapter 8 of Part 5	Income not otherwise charged
Section 844(4)	Withdrawal of relief for unremittable foreign income after source ceases
Provisions of this Act	Description
---	---
Chapter 2 of Part 12	Accrued income profits
Section 681BB(8) and (9)	New lease after assignment or surrender
Section 681DD	Leased assets: capital sums
Section 720, 727 or 731	Transfer of assets abroad
. . .	. . .
Section 776	Sales of occupation income
Section 796	Individuals benefited by film relief
Section 804	Losses derived from exploiting licence: individuals in partnership
Section 809CZC(2)	Income transferred under a loan or credit transaction
Other provisions	Description
---	---
. . .	. . .
Section 571(1) of ICTA	Cancellation of certificates: schemes for rationalising industry
...	...
...	...
Section 774(1) of ICTA	Transactions between dealing company and associated company
. . .	. . .
. . .	. . .
. . .	. . .
Section 68(2) of FA 1989	Employee share ownership trust (chargeable event)
Section 71(4) of FA 1989	Employee share ownership trust (borrowing)
Section 258(4) of CAA 2001	Special leasing
Section 479(4) of CAA 2001	Persons having qualifying non-trade expenditure
Section 394(2) of ITEPA 2003	Charge on administrator of non-approved pension scheme
Section 476(5) of ITEPA 2003	Charge on occurrence of chargeable event
Regulation 17 of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001)	Offshore income gains
Section 1086(2) of CTA 2010	Chargeable payments connected with exempt distributions

(3) For the purposes of this section—

(a) any reference to any provision of ITTOIA 2005 does not include that provision so far as relating to relevant foreign income,

(b) the reference to Chapter 2 of Part 4 of ITTOIA 2005 is a reference to that Chapter only so far as relating to an issue of funding bonds where—

(i) the issue is treated under section 380 of that Act as a payment of interest, and

(ii) the person by or through whom they are issued is required to retain bonds under section 939(2) of this Act but it is impracticable for the person to do so,

(i) which are from a policy or contract specified in section 531(3) of that Act, and

(ii) which do not fall within section 532 or 534 of that Act,

(d) the reference to section 579 of ITTOIA 2005 does not include that section so far as relating to any annual payment,

(e) the reference to Chapter 4 of Part 5 of ITTOIA 2005 does not include that Chapter so far as relating to any annual payment, and

(f) the reference to Chapter 5 of Part 5 of ITTOIA 2005 does not include that Chapter so far as relating to income which falls within section 619(3) of that Act.

(4) For the purposes of this section the reference to section 720 or 727 of this Act does not include those sections so far as relating to income falling within subsection (3) of section 745.

Part 17 — Definitions for purposes of Act and final provisions

Definitions for the purposes of Act

Abbreviated references to Acts

1017

In this Act—

“CAA 2001” means the Capital Allowances Act 2001 (c. 2),

“CTA 2009” means the Corporation Tax Act 2009,

CTA 2010” means the Corporation Tax Act 2010,

“FA”, followed by a year, means the Finance Act of that year,

“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year,

“FISMA 2000” means the Financial Services and Markets Act 2000 (c. 8),

“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),

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

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1),

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5),

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),

“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010, and

“TMA 1970” means the Taxes Management Act 1970 (c. 9).

“Act” to include Scottish and Northern Ireland legislation in some cases

1018

(1) In the following provisions of this Act, “Act” includes an Act of the Scottish Parliament—

section 66 (restriction on relief unless trade is commercial),

section 532 (exemption for savings and investment income),

section 536 (exemption for miscellaneous income),

section 558 (approved charitable investments),

section 1028 (power to make consequential provision), and

section 1029 (power to undo changes).

(2) In the following provisions of this Act, “Act” includes Northern Ireland legislation—

section 66 (restriction on relief unless trade is commercial),

section 114 (exclusion of amounts in calculating contribution to the firm),

section 532 (exemption for savings and investment income),

section 536 (exemption for miscellaneous income),

section 558 (approved charitable investments),

section 802 (exclusion of amounts in calculating partner's capital contribution),

section 1028 (power to make consequential provision), and

section 1029 (power to undo changes).

Meaning of “certificate of deposit”

1019

In this Act “certificate of deposit” means a document—

(a) relating to the deposit of money in any currency,

(b) recognising an obligation to pay a stated principal amount to bearer or to order, with or without interest, and

(c) by the delivery of which, with or without endorsement, the right to receive that stated amount, with or without interest, is transferable.

Claims and elections

1020

(1) In this Act any reference to a claim or election is to a claim or election in writing or in any form authorised (in relation to the case in question) by directions under section 43E(1) of TMA 1970.

(2) For further information about claims and elections, see TMA 1970 more generally (but in particular, section 42(2), (10) and (11) and Schedule 1A).

Application of definitions of “connected” persons and “control”

1021

(1) Section 993 (meaning of “connected” persons) applies for the purposes of this Act unless otherwise indicated.

(2) Section 995 (meaning of “control”) applies for the purposes of this Act unless otherwise indicated.

Meaning of “debenture”

1022

(1) In this Act “debenture” has the meaning given by section 738 of the Companies Act 2006.

(1A) For the meaning of “debenture” in sections 257KB(3) to (5), 257L(4), 257LA(2) and 392(3A)(a), see also sections 257KB(6), 257L(6), 257LA(4) and 392(3B).

(2) This section does not apply for the purposes of sections 559, 560 and 691.

Meaning of “double taxation arrangements”

1023

In this Act “double taxation arrangements” means arrangements which have effect under section 2(1) of TIOPA 2010.

Meaning of “gilt-edged securities”

1024

In this Act “gilt-edged securities” means any securities which—

(a) are gilt-edged securities for the purposes of TCGA 1992 (see Schedule 9 to that Act), or

(b) will be such securities on the making of an order under paragraph 1 of that Schedule, if the making of the order is anticipated in the prospectus under which the securities were issued.

Meaning of “modified net income”

1025

(1) For the purposes of this Act a person's modified net income for a tax year (“year X”) is the person's net income for year X calculated in accordance with Steps 1 and 2 of section 23 (calculation of income tax liability) as modified by subsection (2).

(2) In applying Steps 1 and 2 of section 23, ignore—

(a) any non-qualifying income included in the person's total income (see section 1026),

(b) any relief under Chapter 2 of Part 4 for a loss incurred or treated as incurred, or a payment made, in a tax year later than year X,

(d) any adjustment of profits resulting from a claim under Chapter 16 of Part 2 of ITTOIA 2005 (averaging profits of farmers and creative artists), if year X is any earlier tax year in relation to which the claim is made,

(e) any adjustment resulting from an election under section 257 of ITTOIA 2005 (election to carry back post-cessation receipts), and

(f) any relief or adjustment resulting from the making, amendment or revocation of a claim for relief, if the claim, amendment or revocation would have been out of time but for section 224(4) of ITTOIA 2005 (averaging profits of farmers and creative artists: extension of deadline for claiming other reliefs).

(3) This section applies for the purposes of section 427 as if subsection (2)(c) were omitted.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In this section “claim” includes an election or notice.

Meaning of “non-qualifying income” for the purposes of section 1025

1026

For the purposes of section 1025 an amount included in a person's total income is non-qualifying income if it is—

(a) income on which income tax is treated as paid under section 399(2) ... of ITTOIA 2005 (distributions to non-UK resident persons,

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d) income on which an individual is liable to income tax as a result of section 465 of ITTOIA 2005 or trustees are so liable as a result of section 467 of that Act (gains from contracts for life insurance etc), being income to which section 530 of that Act applies (income tax treated as paid etc),

(e) income which is included in the aggregate income of an estate as a result of section 664(2)(c), (d) or (e) of ITTOIA 2005 (income arising to personal representatives and corresponding to income within paragraph (b), (c) or (d)), or

(f) income on which income tax is treated as paid under section 685A(3) of ITTOIA 2005 (settlor-interested settlements), ...

(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Final provisions

Minor and consequential amendments

1027

Schedule 1 (minor and consequential amendments) has effect.

Power to make consequential provision

1028

(1) The Treasury may by order make such provision as the Treasury consider appropriate in consequence of this Act.

(2) The power conferred by subsection (1) may not be exercised after 5 April 2010.

(3) An order under this section may amend, repeal or revoke any provision made by or under an Act.

(4) An order under this section may contain provision having retrospective effect.

(5) An order under this section may contain incidental, supplemental, consequential and transitional provision and savings.

Power to undo changes

1029

(1) The Treasury may by order make such provision as the Treasury consider appropriate, in relation to a case in which the Treasury consider that a provision of this Act changes the effect of the law, for the purpose of returning the effect of the law to what it was immediately before 6 April 2007.

(2) The power conferred by subsection (1) may not be exercised after 5 April 2010.

(3) An order under this section may amend, repeal or revoke any provision made by or under this Act or by or under any other Act.

(4) An order under this section may contain provision having retrospective effect.

(5) An order under this section may contain incidental, supplemental, consequential and transitional provision and savings.

Transitional provisions and savings

1030

(1) Schedule 2 (transitional provisions and savings) has effect.

(2) The Treasury may by order make such transitional or saving provision as the Treasury consider appropriate in connection with the coming into force of this Act.

(3) An order under subsection (2) may contain provision having retrospective effect.

(4) At any time before section 1014 of this Act (orders and regulations) comes into force, section 828(4) of ICTA (order-making powers excluded from negative resolution procedure) has effect as if it included a reference to an order made under subsection (2) of this section.

Repeals and revocations

1031

Schedule 3 (repeals and revocations, including of spent enactments) has effect.

Index of defined expressions

1032

(1) Schedule 4 (index of defined expressions that apply for the purposes of this Act) has effect.

(2) That Schedule lists the places where some of the expressions used in this Act are defined or otherwise explained.

Extent

1033

(1) This Act extends to England and Wales, Scotland and Northern Ireland (but see subsection (2)).

(2) An amendment, repeal or revocation contained in Schedule 1 or 3 has the same extent as the provision amended, repealed or revoked.

Commencement

1034

(1) This Act comes into force on 6 April 2007 and has effect—

(a) for income tax purposes, for the tax year 2007-08 and subsequent tax years, and

(b) for corporation tax purposes, for accounting periods ending after 5 April 2007.

(2) Subsection (1) is subject to subsections (3) and (4).

(3) The following—

(a) Part 5 (enterprise investment scheme),

(b) Part 3 of Schedule 1 (consequential amendment associated with Part 5), and

do not have effect in relation to shares issued before 6 April 2007.

This is subject to Schedule 2 (transitional provisions and savings).

(4) Subsection (1) does not apply to the following provisions of this Act (which therefore come into force on the day on which this Act is passed)—

(a) in Part 15, section 852, and

(b) in this Part, sections 1017, 1018, 1028, 1029, 1030(2) to (4) and 1033, this section and section 1035.

Short title

1035

This Act may be cited as the Income Tax Act 2007.

SCHEDULE 1

Part 1 — Income and Corporation Taxes Act 1988

1

The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

2

Omit sections 1 to 2 (the charge to income tax, application of lower rate to income from savings and distributions, rates of tax applicable to distribution income etc, and fractions of a pound and yearly assessments).

3

Omit section 3 (certain income charged at basic rate).

4

Omit section 4 (construction of references in Income Tax Acts to deduction of tax).

5

Omit section 7(1) (deduction of income tax from payments to companies).

6

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

7

Omit section 42A (non-resident landlords and their representatives).

8

Omit sections 50, 51 and 51AA (United Kingdom securities: Treasury directions for payment without deduction of tax etc).

9

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

10

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

11

Omit section 109A (relief for post-cessation expenditure).

12

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

13

Omit section 117 (restriction on relief for limited partners: individuals).

14

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

15

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16

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17

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18

Omit sections 118ZE to 118ZK (restriction on reliefs for non-active general partners and non-active members of LLPs).

19

Omit sections 118ZL and 118ZM (restriction on reliefs for partnerships exploiting films).

20

Omit sections 118ZN and 118ZO (partners: meaning of “contribution to the trade”).

21

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

22

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

23

Omit section 214(1)(b) (chargeable payments connected with exempt distributions: deduction of tax at source).

24

(1) Amend section 231AA (no tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement) as follows.

(2) In subsection (1) omit “above or section 397(1) of ITTOIA 2005”.

(3) Omit subsection (1A).

25

(1) Amend section 231AB (no tax credit for original owner under repurchase agreement in respect of certain manufactured dividends) as follows.

(2) In subsection (1) omit “above or section 397(1) of ITTOIA 2005”.

(3) Omit subsection (1A).

26

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27

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28

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29

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30

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31

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32

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33

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34

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35

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36

(1) Amend section 266 (life assurance premiums) as follows.

(2) In subsection (3)(c) omit the words from “, except” to “subsection (6) below”.

(3) In subsection (4) for “subsections (6) to (8)” substitute “ subsections (7) and (8) ”.

(4) Omit subsections (6) and (6A).

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

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In subsection (13) omit “this section and”.

37

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

38

Omit section 276 (effect on relief of charges on income).

39

Omit section 277 (partners).

40

(1) Amend section 278 (non-residents) as follows.

(2) Omit subsection (1).

(3) In subsection (2)—

(a) for the words from the beginning to “individual” substitute “ Subject to subsection (2ZA) below, relief under this Chapter shall be given only to an individual ”,

(b) before paragraph (a) insert—

(za) is not resident in the United Kingdom, (zb) does not meet the condition in section 56(3) of ITA 2007, and

, and

(4) After subsection (2) insert—

(2ZA) Relief under section 266 above (except relief given by virtue of subsection (7) of that section) may also be given to an individual who— (a) is resident in the United Kingdom, or (b) meets the condition in section 56(3) of ITA 2007.

41

Omit section 282 (construction of references to spouses or civil partners living together).

42

Omit sections 282A and 282B (jointly held property).

43

Omit section 305A (relief for loss on disposal of shares).

44

In section 312(2A) (interpretation of Chapter 3), as it applies in relation to shares issued before 6 April 2007, for paragraph (a) substitute—

(a) references to a company being “in administration” are to— (i) it being in administration within the meaning of Schedule B1 to the Insolvency Act 1986 (c. 45) or Schedule B1 to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (ii) there being in force in relation to it, under the law of a country or territory outside the United Kingdom, any appointment corresponding to an appointment of an administrator under either of those Schedules;

45

Omit section 320 (Commonwealth Agents-General and official agents etc).

46

Omit section 323 (visiting forces).

47

Omit section 332A (venture capital trusts: relief).

48

Omit section 334 (Commonwealth and Irish citizens temporarily abroad).

49

Omit section 335 (residence of persons working abroad).

50

Omit section 336 (temporary residents in the United Kingdom).

51

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

52

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

53

Omit section 347B (qualifying maintenance payments).

54

Omit section 348 (payments out of profits or gains brought into charge to income tax: deduction of tax).

55

Omit section 349 (payments not out of profits or gains brought into charge to income tax, and annual interest).

56

Omit section 349ZA (extension of section 349: proceeds of sale of UK patent rights).

57

Omit sections 349A to 349D (exceptions to section 349 for payments between companies).

58

Omit section 349E (deductions under section 349(1): payment of royalties overseas).

59

Omit section 350 (charge to tax where payments made under section 349).

60

Omit section 350A (UK public revenue dividends: deduction of tax).

61

Omit section 352 (certificates of deduction of tax).

62

(1) Amend section 353 (relief for payments of interest: general) as follows.

(2) In subsection (1)—

(a) omit “sections 359 to 368 of this Act and”, and

(b) for “sections 359 to 365” substitute “ section 365 ”.

(3) For subsection (1A) substitute—

(1A) Where a person is entitled for a year of assessment to relief under this section in respect of an amount of interest which is eligible for relief by virtue of section 365, the relief is given as a tax reduction for that tax year. (1AA) The amount of the tax reduction is 23% of the amount of the interest. (1AB) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.

(4) Omit subsection (1B).

(5) In subsection (1E)—

(a) omit “under this section”,

(b) for “subsection (1B) above” substitute “ section 383 of ITA 2007 (relief for interest payments) ”,

(d) for the words from “and subsection (1A) or (1B)” to the end substitute “ and subsection (1A) above or section 383 of ITA 2007 shall apply accordingly to the case in which that subsection or section applies ”.

(6) Omit subsections (1F) to (1H).

63

Omit section 359 (loan to buy machinery or plant).

64

Omit section 360 (loan to buy interest in close company).

65

Omit section 360A (meaning of “material interest” in section 360).

66

Omit section 361 (loan to buy interest in co-operative or employee-controlled company).

67

Omit section 362 (loan to buy into partnership).

68

Omit section 363 (provisions supplementary to sections 360 to 362).

69

Omit section 364 (loan to pay inheritance tax).

70

In section 366(1)(c) (information) omit the words from “(or” to “income)”.

71

In section 367 (provisions supplementary to sections 354 to 366) omit subsections (2) to (4).

72

Omit section 368 (exclusion of double relief etc).

73

Omit Chapter 1 of Part 10 (loss relief: income tax).

74

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

75

(1) Amend section 398 (transactions in deposits with and without certificates or in debts) as follows.

(2) For “a person” substitute “ a company ”.

(3) Omit “above or Chapter 11 of Part 4 of ITTOIA 2005 (transactions in deposits)”.

(4) In paragraph (a)—

(a) after “chargeable to” insert “ corporation ”, and

(b) omit “above or that Chapter”.

(5) In paragraph (b) for the words from “he is chargeable” to “that Act” substitute “ the company is chargeable to corporation tax under Schedule D ”.

(6) For the words from “the amount of his loss may be set off in pursuance” to the end substitute “ the amount of its loss may be set off under section 396. ”

76

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77

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78

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

79

In section 459 (exemption for unregistered friendly societies) omit “income tax and”.

80

In section 460(1) (exemption for registered friendly societies: life or endowment business) omit “income tax and”.

81

(1) Section 461 (exemption for registered friendly societies: other business) is amended as follows.

(2) In subsection (1) omit “income tax and”.

(3) In subsection (4)(b) omit “income tax or”.

82

(1) Amend section 461B (exemption for qualifying incorporated friendly societies: other business) as follows.

(2) In subsection (1) omit “income tax and”.

(3) In subsection (5) omit “income tax or”.

83

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

84

(1) Amend section 467(1) (exemption for trade unions and employers' associations) as follows.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In paragraph (a) omit “to exemption from income tax and corporation tax”.

(4) In paragraph (b) omit “to exemption from tax”.

85

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86

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87

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

88

(1) Amend section 477A (building societies: regulations for deduction of tax) as follows.

(2) Omit subsections (1) to (2A).

(3) In subsection (3)—

(a) omit the words from “For any” to “above apply,”, and

(b) in paragraph (b) omit the words “paid or credited in the year of assessment”.

(4) Omit subsection (7).

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

(6) In subsection (10) omit the definitions of “qualifying certificate of deposit”, “qualifying deposit right” and “security”.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

89

Omit sections 480A to 482 (deduction of tax by deposit-takers).

90

(1) Amend section 486 (industrial and provident societies and co-operative associations) as follows.

(2) Omit subsections (2), (3) and (6).

(3) In subsection (7) for “subsection (6)” substitute “ section 887(2) of ITA 2007 ”.

91

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

92

(1) Amend section 492 (treatment of oil extraction activities etc for tax purposes) as follows.

(2) Omit subsection (2).

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93

Omit section 504A (letting of furnished holiday accommodation treated as trade for certain income tax purposes).

94

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95

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96

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97

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98

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99

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100

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101

(1) Amend section 510A (tax treatment of European Economic Interest Groupings) as follows.

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Income Tax Act 2007

Chapter 19 — General

Supplementary

Statements about deduction of income tax

975

Arrangements for payments of interest less tax or at specified net rate

976

Payments to companies

977

Application to public departments

978

Designated international organisations: exceptions from duties to deduct

979

Derivative contracts: exception from duties to deduct

980

Foreign currency securities etc: exception from duties to deduct

981

Income tax is calculated by reference to gross amounts

982

Interpretation

Meaning of “deposit”

983

Meaning of “financial instrument”

984

Meaning of “qualifying certificate of deposit”

985

Meaning of “qualifying uncertificated eligible debt security unit”

986

Meaning of “quoted Eurobond”

987

Part 16 — Income Tax Acts definitions etc

Chapter 1 — Definitions

Overview of Chapter

988

The definitions

989

Meaning of “Act”

990

Meaning of “bank”

991

Meaning of “company”

992

Meaning of “connected” persons

993

Meaning of “connected” persons: supplementary

994

Meaning of “control”

995

Meaning of “farming” and related expressions

996

Meaning of “generally accepted accounting practice” and related expressions

997

Meaning of “grossing up”

998

Meaning of “local authority”

999

Meaning of “local authority association”

1000

Meaning of “offshore installation”

1001

Regulations about the meaning of “offshore installation”

1002

Meaning of “oil and gas exploration and appraisal”

1003

Meaning of “property investment LLP”

1004

Meaning of “recognised stock exchange”

1005

Meaning of “research and development”

1006

Meaning of “unit trust scheme”

1007

Chapter 2 — Other Income Tax Acts provisions

Scotland

1008

Sources of income within the charge to income tax or corporation tax

1009

Application of Income Tax Acts to recognised investment exchanges

1010

References to married persons, or civil partners, living together